YouSaid · the spoken record

Rick Yang

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21
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2022-01-28
most recent
2022-01-28
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1
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  1. “Goes back to that genuine mission driven nature of the founders and their real native understanding of this consumer segment that they were a part of.”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “I think a lot of it had to do with some of the questions you asked, which was could millennial accounts scale, right? The incumbents didn't really care about this demographic, and there was a reason for that, but we felt compelled that there was a business model disruption here and a technology delivery mechanism that would allow those to scale and that thesis turned out correctly. I think the other one was, you know, how would the company perform in volatile markets? And I think what we've seen is, you know, first of all, the markets have been pretty much up and to the right, and that's benefited this company. But as the company has expanded their product offering, I think they would fare really well in volatile markets too.”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “So, you really have to be confident, in my opinion, and I think Robin Hood has certainly executed extremely well on this, is when you go out and launch sort of that next product and that next product and you build out that product roadmap, you have to be very keenly aware you can build that best in class experience as you expand. I think Robin Hood's done a great job of that. Other companies have. Other companies haven't. And it's something that you really have to think about as a company that's trying to disrupt incumbents and try not to get disrupted themselves along the way.”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “You could actually argue that Robin Hood has been, especially kind of early on, was slower to roll out some of these expansion products because they were seeing such growth in sort of their core initial offering, right? And I think this team has been super thoughtful about not overwhelming their customer and not overwhelming the consumer. Over time, you see this happen, though, right? We talk a lot about kind of the shifts in the fintech thesis on a macro level from the disaggregation of the bank to the reaggregation to the fintech super app, right? And you have to find that right balance because frankly the threshold for consumer experience, they want a best in class experience no matter who they're working with or what product they're using, right? So if you want a standalone basis can offer that best in class experience and then you can expand and offer a best-in-class experience to something adjacent, then you'll retain that consumer. But the consumers have a choice, right? And we've seen that with companies like Robin Hood coming along and disrupting the income.”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “I mean, I would add to that in the sense that thinking back to the initial investment, at the time the hottest fintech companies were better met in Wealthfront, right? Which was on the complete other end of the spectrum from kind of where Robinhood was pointed. And that was a real discussion point at the time, right? It was like, look, are these robo advisors sort of going to capture so much of the AUM and market share here? Because people, they just want to set it in and forget it, right? And they want the machine to kind of figure it out for them. And, you know, frankly, we kind of understood that even if they did take a decent chunk of the market, there was always going to be a sizable segment of the market that wanted to control their own destiny. They wanted to learn themselves. They wanted to put their own capital, their own hard-earned capital to work into the markets, and they wanted to do their own research. And they wanted a really accessible and simple kind of delightful user experience to do that. So we never had a doubt that that was going to be a segment of the market. The question was like, what was that balance going to look like going forward?”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “And I know that Vlad is a big fan of Phil Knight and his memoir and Shoe Dog and things like that. But, you know, you look at Nike, and one of their taglines is if you have a body, you're an athlete. And seeing Robinhood go out and execute on this mission of if you have a phone, you're an investor. And seeing that drive a lot of really interesting consumer shifts and it turning into sort of the tsunami of consumer investing and really opening up access to that, that's what we're trying to capture when it comes to looking at companies. Again, sometimes it's hard to quantify, but sometimes it's just you see it and you know it. And the people at the company and the founders have to be really connected to that.”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “Yeah, it's interesting. Robin Hood from the very beginning struck a chord around this idea. I used to call it just consumer magic or consumer taste. Like it's one of those things that it's so hard to quantify or describe until you see it. But both Bejou and Vlad had it from the very beginning. They understood the consumer. They were part of that piece of consumer culture and they were very natively meme driven before it was mainstream and before it was cool, right? And they continue to be. But as this company has evolved and as we've sort of seen it evolve, I think some of it has to do with not just really understanding the consumer, but becoming part of the culturally relevant conversation, which is what I think this company has become. And we think about all of these really big trends that are happening on the consumer fintech side around asset ownership and what is an asset, sort of the changing definition of what it means to be an investor. And I go back to this analogy that I love from Nike.”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Well, obviously, you have to recognize success. And then I think you pick your moments and you try to wade in gently if you have.”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “Well, I think one of the things that has stood out about this company from the very earliest days Rick already touched on, which is engagement. Engagement metrics were always incredibly impressive, and so was the growth in users. Without spending a penny, they were growing organically at scale in a way that I don't think any other consumer internet property was growing at the time. And they did it for years and years and years. So that really, really stood out to me. But I think the third thing which Rick also alluded to is the cost structure was designed from the beginning to be self-serve, basically completely automated with software. And that turns out to be an enormous advantage in a business where you're trying to offer something for free.”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “That this demographic was still adding funds over time and deposits as they went on. I think you have to continuously innovate, right? And that's what we've seen from the company. I think you start mobile first, for example. They released Web, they released option trading, they released crypto, you become more and more embedded into not only this customer base that you initially acquire, but also sort of what is happening around you in the market and how you stay culturally relevant to that. And so you kind of grow and you innovate and you serve the needs of this cohort as they mature, as they have other needs that come in. And you see even when you kind of look at Robin Hood today, there's a whole gamut of financial services that they're offering their customer that we're all on the roadmap at the time when we invested, but certainly we're not built yet.”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “Yeah, I would say there were two key things that really stood out from those three months of sort of closed beta that we saw. One of them was this idea of Tao Mao, right? And this was not something that, this was a very typical of kind of looking at gaming companies and social networks and kind of these consumer internet apps at the time, but was not applied very often to fintech applications and financial services. And they were showing, you know, Dow Mountain, those early cohorts of 30 to 40 percent. Certainly above the benchmark of the average typical consumer app. but really kind of showing best in class metrics when it came to a fintech app at the time and the second piece was really around this understanding this consumer you know they're going to come in with a much smaller kind of account value but were they growing that over time by depositing more funds as they got used to kind of this product as they built trust in this brand in this company and we had already started seeing even though it was starting from a smaller base than incumbents that yes like the experience was superior”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “would rather interact sort of via their phone. And lastly, I think we also forget that this company spent two plus years prior to actually launching to the public of just building, just heads down building. And this was done during a time where everybody was really adopting that lean startup mentality of like launch first and then build and iterate and launch and build and iterate. They basically just went heads down for two and a half years and building a lot of this infrastructure and a lot of this technology that would automate a lot of the things that they saw the incumbents were not doing great. So you think about customer support as one of those areas that we spend a lot of time digging in with them and seeing how thoughtful they were about thinking about how do we address our customers needs at a higher kind of quality point even around customer support without needing all of the infrastructure of call centers and things like that early on.”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “Of their top line revenue really came from these trading fees. So you kind of think to yourself, if you're going to shrink that top line opportunity conservatively by a third, where do you make that up? And certainly one big part of the thesis was you're going to make that up by expanding the market, by increasing kind of the demographic that's coming in. You also have to fit the business model to make sure you can support a potential lower addressable market by that 30% or that value compression within the ecosystem. When you really looked at kind of the top spend items for the discount brokerages at the time, first of all, it's marketing, right? And we saw how powerful this team was at acquiring users virally and really looking much more like a consumer internet or a social network type of acquisition model. So that was the first piece that they disrupted quite a bit. And then the second and third line items were really around infrastructure and support. And a lot of these brokerages had branches that they served their customers in. Frankly, this demographic didn't want to come face to face with tellers and branch managers.”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “Yeah, you know, when you look at it, we were really excited about the velocity of new account creation of almost like market expansion in this demographic. You know, that was one of the risks was how long would it take for this particular demographic to continue to contribute from a monetization perspective to increase AUM over time? That was the bet that we were willing to take because we felt like this was a superior product and a superior positioning and brand of the company that had been crafted by this team and by these founders. And it turned out to work out really well just in terms of there were many, many years from the launch of this company where they didn't spend a dime on marketing and they just kept increasing that account number and engaged customers. And so that part was really exciting for us. But you also have to have a business model that matches that, right? So if you're talking about it, first of all, like what I would say is as we dug into this space, it was pretty surprising to me and to the broader team that, you know, you look at the incumbents and only about a quarter to a third.”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “This one was pretty unique, and certainly times have changed too, in the sense that because we did have that sort of straight line base case, hey, look, there's $70 billion of market cap that is ripe for disruption and we see that. And there were just three models that we thought were very close to sort of what Robin Hood was doing. In reality, we usually have many more comps for our companies, and it's usually not that straightforward. And look, Harry, as you know, when you look at public comps today, there's actually plenty of disruptors and innovators that are getting high premiums in the public markets too. And so in some cases, you're justifying higher valuations than you might be comfortable paying in the private market by looking at the consts in the market.”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “Waiting list of over 800,000 people that wanted the product. They had started letting in and inviting folks on from that waiting list over the previous three months to us investing. And so we were starting to see the signals that that very straightforward part of the thesis was actually quite true and was happening already.”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “Actually, pretty straightforward. I'm not going to lie. I mean, the way we looked at this investment at the time is a little bit different than kind of the lookback on it, right? Because at the time, we kind of looked at the history of brokerage firms. You had sort of this period where investment banks like Merrill Lynch really controlled the market. And then you had this whole period of discount brokerages coming in, some leveraging the internet very effectively like e-trade. But you had e-trade, Ameritrade, you had Schwab that came in. And we really felt like it was time a new player emerged and could take advantage of a bunch of different trends around. technology and distribution and just the consumer internet. So we kind of looked at it as like, look, there's about $70 billion of market cap we think is ready to be disrupted in the same way that they had disrupted the incumbents that came before them. And we saw a pretty straight line there with Robin Hood because we had gotten to know the company over at a period of time. We invested and led the series B and they were still in closed beta at the time, but there were some really interesting signals at the time, right? They had built this amazing.”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “Pretty quickly, I mean, Vlad and Bejou are such unique people in that they are very natively and authentically tied to the mission of the company and also embedded in sort of consumer culture and consumer behavior. But if you look at kind of the prior experience to Robin Hood, they were actually in the high-frequency trading world. So they were highly technical too. Pretty rare that you find that combination of things coming together in a set of founders. So they had built software for high frequency trading firms. And you saw sort of this shift in their founding story when they kind of realized that they were part of the problem that was starting to manifest itself at the time with Occupy Wall Street, really the whole world kind of coming out of the global financial crisis. And they were hearing it from their friends about being part of the problem. And that's when they really kind of shifted their thoughts to Robin Hood and really what made Robin Hood great was sort of this idea of democratizing access to financial services. But they were so true to that mission through and through and continue to be today.”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “In the corner, there's this stuffed gorilla that's in a cage where you grab peanuts and there's peanut shells everywhere. But this was emblematic of sort of the relationship starting from there. And unfortunately, that bar is no longer with us anymore. That's where I first spent time with Vlad, got really excited about what they were building and really hearing the founding story behind him and Beiju coming together for a third time actually for Robin Hood.”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “Our principles at the time shield knew Vladimir Beju very well from Stanford, and our partner Kitu was actually working closely with Jan Hammer over at Index who had led the Series A. So we got to know the company very well there. And I rounded out the team at the time, you know, having previously been involved with Braintree and Plaid and sort of the FinTech experience. But I actually very vividly remember my first meeting with Vlad. And it's because it was at this dive bar in Palo Alto called Antonio's Nuthouse. And Harry, this is not the kind of bar that you and I would go and grab mojitos at. So just”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “Harry, thanks for inviting me back. It's great to be with you again. We're excited to tell you about how we got started with Robin Hood all the years ago. Thanks, Harry, for having us.”

    2022-01-28 · The Twenty Minute VC · 20VC: The Robinhood Memo: The Early Metrics That Showed Robinhood was a Breakout Company, The Cost Structure of Robinhood in the Early Days and Why it is a More Efficient Business than eTrade & How Vlad Has Developed as a Leader Over Time with Rick Yang a · IDENTIFIED FROM THE TRANSCRIPT · source