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From Physics Grad Student To Financial Disruptor: Robinhood's Vlad Tenev

A Q&A with a Fintech bro.

This interview comes courtesy of Benzinga, host of the 2016 Benzinga Fintech Awards

Like many others who are driven to create startups, Robinhood co-founder and co-CEO Vlad Tenev has had the entrepreneurial spark since his youth. Like a lot of other future CEOs, young Tenev ran a lemonade stand before he was 10 years old. Unlike most other lemonade stand owners, however, Tenev diversified by selling household tools to his neighbors. Before he even got close to age 30, he would be running a company that had executed over $1 billion in trades.

Initial Steps

Tenev went to Stanford in 2004 looking to become an academic, first studying physics and later math. His first job out of school was a graduate assistant position in UCLA's mathematics department, a role that he hoped would put him on the path to becoming a research mathematician.

"There are very few places where you get thrown into the deep end and you have to lead discussions with hundreds of people on a daily basis," Tenev said. "I learned a lot about how to make sure your message is heard."

However, the obsessive nature of lab work showed Tenev that he needed an environment where his ideas could run free.

"When you're in a lab and you're doing all these procedures, you spend a minority of your time thinking and a majority of it going through rote protocols," Tenev said. "What I realized pretty early was in whatever I'd like to do, I want to spend the majority of my time actually thinking. That's where you get to the heart of the problem and where you can be most useful."

Reigniting Passion

It would take Baiju Bhatt, his Stanford roommate and future Robinhood co-founder, to reignite his drive to build a business.

Bhatt had taken a job at a small trading firm in Marin County, California after he finished school at Stanford. Unfortunately, the time was August 2008, and the Financial Crisis hit as Bhatt was getting started in trading and Tenev began teaching undergrad math classes. The inside look at the finance industry excited Bhatt, however, and he called Tenev up to tell him about the opportunities the upended industry presented.

Tenev and Bhatt decided in the summer of 2009 in a San Francisco apartment to start their own trading venture.

Quick To Adjust

"We basically put all of our stuff into this crappy 1997 Infiniti Q45, this giant boat of a car, and drove across the country to New York to start up a little trading company," Tenev said.

However, the market conditions had changed so much by the time the company was more established, the trading ideas Bhatt and Tenev had worked out weren't effective. Their second company, Chronos Research, was formed to respond to the increased influence of algorithmic trading in the financial industry. The company provided backend trading technology to hedge funds and banks to run automated trades.

"What we realized was that hedge funds and banks were using our software to place millions of transactions per day, and the portfolios they came up with were these incredibly rich. We realized that making software that allowed one trading firm to place millions of trades per day is equivalent to a customer retail offering and we had a million customers trading once per day. From a technology structure, they're one and the same, and the cost structure should reflect that. Institutional traders aren't pay $7-10 a trade and trading millions of times a day. They're basically paying zero. We saw an opportunity in taking the software behind a sophisticated algorithmic trading firm and making it available to retail consumers."

Fintech's Rise

This pivot from institutional to customer-based financial services coincided with the rise of Fintech.

"People in our age group were disillusioned with the state of the financial markets," Tenev said. "We realized that there's a need for a new brand in the space, that for a long time the financial industry was known for a lot of things that are anti-consumer, a lot of hidden fees, unnecessary middle-manning, building out these very complex products that in many cases only serve to mask that end customers are being charged for things that they don't really understand."

Tenev even applies his drive to activities most consider relaxing. Tenev didn't just practice yoga as a high school student in northern Virginia. He set up a yoga club, which quickly ballooned to nearly 100 members.

Staying Humble And Creative

Tenev, at 28, is still humble about his place at Robinhood and gives credit to his team and Bhatt.

"The coolest part of my job is the fact that I get to work with some of the the smartest people I have had the pleasure of knowing who are also supremely creative," Tenev said. "In particular, my co-founder. The type of person at Robinhood is of a caliber that I couldn't even imagine when I was younger.

"It's exciting when you put these smart, creative people together and watch them come up with ideas that are surprising and awesome," Tenev said. "It's our job as leaders to nurture those ideas that are really powerful, to pour gas on them and watch them blossom into something that actually gets shipped out into the product."

For more information on sponsoring or attending the 2016 Benzinga Fintech Awards go to their website.



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