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Aparna Chennapragada
Photo Illustration by Grayson Blackmon / The Verge

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How Robinhood’s Aparna Chennapragada is building the future of investing

Robinhood is launching a new cash card today

Aparna Chennapragada is the chief product officer at Robinhood, the popular stock and crypto trading app. And we have some news to discuss: Robinhood is launching a new cash card today that allows people to spend money directly out of their Robinhood account and set up various plans to automatically invest by rounding up purchase amounts to the nearest dollar and putting the difference in various investments.

Robinhood attracted a ton of mainstream attention last year when a subreddit called WallStreetBets bought up a lot of GameStop stock in an attempt to drive the price up — a lot of people were using Robinhood to do that because it doesn’t charge any commission for trades. How does Aparna think about what features to put in the app to balance things like ease of use and engagement for first-time investors against things like the danger of making it too easy for people to lose money on risky trades? After all, the data says the more often people trade, the more likely they are to lose money. I was curious how Aparna approaches that from a product and design perspective — something she’s clearly thinking about.

And, of course, I wanted to talk about crypto. Robinhood lets people buy and sell various cryptocurrencies, and the company has said it wants to be a crypto-first company. I was curious how Aparna is thinking about designing a product for that world, where she sees the real promise in crypto and what’s just hype, and whether she thinks Robinhood is part of Web3 or not. And I’ll tell you — she got a little spicy on that.

This one runs a little long, but I think it’s worth the time. OK, Aparna Chennapragada. Here we go.

This transcript has been lightly edited for clarity.

Aparna Chennapragada, you are the chief product officer at Robinhood after a long and sterling career at Google. Your work is all over The Verge.

Indeed. Nilay, I have to say, one of my favorite parts of my job at Google — especially post-Google IO — was just going through the hilarious live blog on The Verge with a cup of coffee the next day. That was one of my favorite parts.

At this point, I think we do the live blogs mostly for the executives of the company. We get a lot of that feedback. It’s a good time. But you’re at Robinhood now, and you’ve been there almost exactly a year. You joined the company before it was public and went through the process of going public. I’ve yet to say welcome to Decoder, so welcome to Decoder.

Thanks for having me.

I have a lot of questions; there’s a lot of news. I want to talk about crypto. You have a new cash card that I want to talk about, but it’s Decoder, so we’re going to start at the beginning. I think a lot of people are familiar with Robinhood as a trading app. It burst into the mainstream consciousness last year with meme stocks and all of that, but the ambition for Robinhood is to do more than just buy and sell stocks, right? How would you describe Robinhood?

The thing that got me into the company, and just really excited, is the bold mission of democratizing finance for all. A singular, key operative word here is “access.” Traditionally, I think it started with trading, but there’s a whole bunch of financial services that are just for the ultra-wealthy. There are walls all over the place.

I think the first place that the company started, Robinhood 1.0, had been about starting with trading and investing and saying, “How can you get started with as little as a dollar? How can you own a fraction of a stock that you admire, the company that you believe in?” Then go from there. And, “How can you actually do that in an intuitive, mobile-first way?” Which wasn’t happening before.

As I said, you were at Google for a long time and had many roles there. At one point you were a technical advisor to the CEO at Google. Google is a large company and it’s very stable, while Robinhood is a startup. What led you to jump from Google to the startup world?

I did have a foray into financial services because I was on the board of Capital One, bridging these worlds of tech and finance. It’s something that intrigues me, and I think it’s a really big opportunity for core tech product builders to make a difference. If you think about it, finance and health are the most important things that people have. Money is the fuel for life. And yet I think that tech — and this idea of consumer product thinking — hasn’t really changed finance dramatically. I saw Robinhood as a prime example of what it can do to make people more confident and give access to financial services like trading and investing.

And I think that Google is a fantastic place. I cut my teeth in Google Search, worked on many different things, but the steel thread running through all of it is this idea of “access,” right? But for me, that mission really resonated when Robinhood and the founders talked about it. I was like, “Sign me up.”

How big is Robinhood now?

It’s a few thousand people. There is a core product and engineering team of under 1,000. There is an operational team as well, with about 3,000-plus people. So it’s not just startup-startup anymore.

When you think of finance, those are big companies, right?

Those are big companies. The thing is, when you think about what I said earlier, “democratizing finance for all” — if you look at where money goes — it’s of course helping people to invest in their future. But I think for a lot of people, spending, where your day-to-day cash flows, is a big part of it. Today, most of the products just dig you deeper into the hole. There’s loans. There’s retirement. There’s a whole bunch of places where I feel like the problem has been cast as a finance problem and not as a consumer problem. Those are all opportunities for a consumer tech company like Robinhood to rethink and help.

You said around 3,000 people, with less than 1,000 people on the product team. How is the company structured overall? How is Robinhood organized?

Because it is at the intersection of finance and tech, we have very clear, separate regulatory entities for the overall parent company, Robinhood Markets. You have specific entities that focus on brokerage, specific entities focused on crypto, for example. Then, of course, there are functions that spike across them. There is G&A, there is finance, and so on.

Within the product organization, there are really three big areas. One is of course this core business, like the Google Search equivalent, right? The core business is investing and brokerage. Then there is crypto, which I think is growing much faster than even in the last few years. Then there are ideas around this one-minus investing. What are emerging products that we are building around? What is the step before investing? How do we help people save and spend better?

So there’s a parent company, then there are individual companies that do brokerage and crypto?

Yes.

And that is all expressed in a single app. Are you saying that depending on what screen of the app you’re on, you’re interacting with a different company?

I think it’s more about the regulatory entity. We are pretty well-organized in terms of having the controls in place as a public company. We make sure there are clear risk committees. There is a board that is associated with each of these entities so that the committees can make those decisions. You’re right. All of it, for the customer, needs to be expressed in a single app. Interestingly, that is actually one of the things I was going to say; that’s a departure from a traditional consumer internet company. I think when you go into regulated spaces — financial services is one — you do have to make sure that safety and access are both present. I think that’s one of the things that the company is doing a great job of now.

I just want to drill on that for one more second. So when I click the button to buy and sell stocks — on that screen in Robinhood — that is one company that has the risk and the regulation? Then when I click the tab to go buy and sell crypto, I am now interacting with another company within the Robinhood app?

Yes. The reason is that there are very clear regulatory requirements and boundaries for a brokerage dealer — for an introducing broker dealer like Robinhood that allows for equities. Then, as you know, there are emerging discussions around regulation with multiple regulatory bodies on crypto. We want to make sure that the customers are kept safe and that there is clarity and transparency on what they are interacting with and what the specific contracts are, if you will.

You are correct that most companies that have that kind of structure will ship multiple apps. Here, you have a product that is just one app, that’s Robinhood. People think they are dealing with Robinhood as one single company. It’s fascinating to see the corporate structure reflect the product design. Are there moments where you say, “Oh, there’s a feature I can’t put in the brokerage screen because that’s actually the crypto company’s remit?”

Look, this is a muscle group that the company has to build and is building. I’ve been really impressed with the cross-functional team. The legal team is actually very clear about, “Hey, what are the customer benefits and where do the regulatory lines lie?” The product team is as well. There’s a very tight cross-functional team that looks at, for example, “If we want to provide this kind of customer benefit, what kind of disclosures do we need to make?” So that the customers themselves are not confused about what is happening, and at the same time they get the benefit.

Is your product team also cross-functional or are you broken up across those different lines of business?

We do have both. Obviously there are folks who are looking at, as you said, the whole overall app performance on Android, on iOS, et cetera, for example. Somebody has to look at it across the board, regardless of specific entities, and that is set at the parent company level.

There are places where you say, “This is a dedicated crypto team. This is a dedicated brokerage team that is just looking at specific features that people want.”

The other thing is, I think the customers are also different in some of these cases. For example, on crypto, we have a much more diverse set of users. Both compared to other platforms, but also over time. We have a lot more women and we are a lot more racially diverse in terms of users and first-time investors in crypto.

So this is the classic Decoder question. How do you make decisions? What is your decision-making framework?

Decision-making framework? I feel like I need to have an acronym that is really catchy, but I don’t. Spoiler alert.

This is like thought-leader bait. This is influencer bait. I feel every time I ask a question I’m out on the ledge, but you don’t need to sell it.

I do. Frankly, I tell my team and I tell my leads, when you are in the business — when you are a senior operator in a company — the day-to-day currency is decision-making. It’s a contact sport and you do that over years.

I do have a framework, now that I think about it. I can think of the acronym as the five Ws, if you will. That’s how I think about it. For example, often much to the annoyance of the team, I start with the “why.” When they have just framed the problem and have come in to say, “Hey, do you think we should do X or Y?” I respond with, “No, no, no, no. Step back. Pop one layer in the stack.” Sorry, tech nerd here.

That’s what the show is all about. Go for it.

Right? Now you say, “Okay, why do you need to do this?” The “why” is nuanced because one of the specific questions I ask is, “What game are we playing? Is it a game of inches or is it a game of miles?”

What I mean by that, Nilay, is that there are problems that are optimization problems. If you think about when you have a core experience, a core product, there are features — things that customers want — and you’re cranking the wheel. It happens. If you take Facebook, you take Google, you take Robinhood, there are enough optimization problems that those are games of inches. If it is a game of inches, I basically try to delegate this as much as possible, because you can actually learn. Any one step is not actually a huge detour.

Then there are things that are games of miles, meaning if you set the direction wrong, you have screwed it up for years. That, of course, never happens at all.

No. No one has ever heard of that concept.

Exactly! I think the goal is to intentionally slow down — to actually spend a lot of time on “why” — because it is uncomfortable. It feels like navel-gazing. But 10 out of 10 times, I have found that if you are embarking on something brand new, the more you can front-load these questions: “Who are you building it for? Why do you think this problem is important? What does the outlier success look like? If it is ridiculously successful, does it matter?”

The number of times the answer is, “Actually, it may not be,” is amazing. The only trap is that sometimes we are awful at predicting hyperlinear outcomes. Humans are very linear, so sometimes a lack of imagination may show for the team. They may say they can’t think of an outlier success. Anyway, that is the “why.”

Then there is of course the “who.” I ask this question even before the “what.” Whose neck is on the line? Who is the pig? “The pig is committed, but the chicken is involved” in breakfast, is that right?

Yes. This is a long analogy about agile development and how to make breakfast. The pig is the bacon and the hen is the eggs.

That’s right. Thank you for explaining that. So then you want that person to own the decision and come up with all the specific details that help make the decision.

Then there is a “when.” People often think of it as yes or no, but there is a big third option which is “not now.” Actually, I think I’ve found it even in my past life, I think tech product blockbusters are all mostly sequels. You never get it right the first time. Often, timing is a huge, huge thing. I have worked on products that were well before their time. I worked on something that eventually turned into Google Assistant, but at that time, it was just the early mobile years.

Was it Google Now?

Yes, Google Now. It became the foundation, but it took years because the presence and footprint of mobile devices — as well as NLP and speech recognition — didn’t get there fast enough. So there is the yes, no, and not now.

Then the last thing I look at is, “what else?” This is a trap. Typically people come in with a particular problem frame, and I force them to say, “If we were not doing this, what else would we be doing? What is the opportunity cost?”

So as you can tell, this is not an easy, neat process with me, but that is decision-making in real life versus on TV. It is messy and kind of non-linear, but that is what you need to make the right decisions.

This is why I ask this question every time. Everyone’s approach is different, but the practical application of the approach is always the same, which is, “Yeah, this is really hard and there’s not one way of going about it.”

I want to talk about how you use that framework for various things. I absolutely want to talk about crypto and the card. One of the things that is most fascinating about Robinhood is that when I look at the array of companies that want to revolutionize finance, they are mostly either all crypto, or they are all traditional finance. Robinhood cuts across both. The traditional finance part seems really hard to me, and I just want to spend a little bit of time on it.

When you have an app like Robinhood, and you say, “Okay, retail investors are going to show up, download an app in the App Store. It’s easy to use. You’re going to push a button and execute a trade.” What does the backend of that look like for you? How do you go about building that? Who do you talk to? Where does that trade get executed? How does that work and how much of your time do you spend making that better?

Those are good questions. Again, the analogy I sometimes think of is Google Search. The interface is simple; it’s a search box. Anyone can type into it. Then under the hood there’s indexing, there’s crawling, there’s ranking. There is a whole bunch of machinery that needs to go into it.

It is something similar if you look at a life of a trade. There’s the easy interface, but under the hood, there are a few things happening. First of all, you need to make sure that you have interpreted the trade. Whether there are parameters there, limit order versus market, a whole bunch of things. Then there are more complex things when it comes to things like options. Within the walls of Robinhood, there’s actually a trading platform that we have built over the years.

The next set of things that happen is the clearing platform. It balances out the buy and the sell and makes sure that we have a net order. Then we can actually then go to the market makers and say, “Hey, the set of retail order flows here.”

Then you have counterparties that match the order, and then the trade gets executed. One of the things that I didn’t appreciate before coming in is the number of steps in the value chain, in the execution chain, and the non-real-timeness of it all. In tech, you are used to saying, “Yeah, I post this thing and it shows up on Instagram.” I think this whole settlement process being two days actually introduces buffers in places that have all sorts of implications. Vlad [Tenev], my CEO, actually educated me in this whole thing about how we should be pushing from T+2. He actually did a tweetstorm around this.

Now the SEC is actually looking at this. How can you advance or compress the settlement process so that you don’t have to hold as much of a buffer, in case the settlement goes in a different direction than you expect?

Truth be told, I would say a lot of my time goes into two areas. One is the existing business that we have and the existing set of products. How can you make them better? How can you get more of the retail investors starting and growing with us? That’s the other thing. You get started, but how do you actually increasingly control more of your financial freedom? Then the second area is the one-minus investing. Yes, investing is a great place to start for say, 20 to 30 million people, but then there are 100 million people who have no line of sight to investing. How do you help them?

When I talk to crypto folks, a lot of the impetus for what they are building is the existing payment rails. The existing financial institutions are old and broken. They all run on COBOL code. “We don’t want to deal with it. We’re just going to remake the financial system with modern code and crypto.” Do you see that as a problem? Are there open APIs for clearinghouses? Is it built on an addressable tech stack that you can replace, or is it all tied into the existing infrastructure in a way that is inextricable?

It is interesting. The company relied on external partners and they built their own self-clearing system, so it can be done.

I would think of it in three different buckets. There is the Fortran COBOL, which has not changed since the ‘90s, with banks and financial services companies. Then I think about fintech. Folks who have actually been mobile first — thinking about the interface, thinking about the customer outside-in — and looking at more of the building blocks, the Lego approach, to more parts of the financial system. Then there is the “rethink everything, rewrite everything,” DeFi [decentralized finance] as an alternative, parallel to the TradFi [traditional finance] system.

Where do you fit? Are you TradFi? Are you DeFi? How does this work?

The thing I am most excited about is that we can be a bridge. We are fundamentally a technology and product company that helps solve customers’ financial problems. Now, to me, it has to be based on use cases; it has to be based on the specific problems that can be made 10X better. That is the approach we took with creating and investing. “Why are there commissions? Why is this so hard? Why is this buying a stock like a Rube Goldberg machine? What is the mobile-first experience?” I think rooted in those use cases, there are specific areas where crypto can really help rebuild some of these experiences. People talk about diseases. These are not new, but doing them right will take time and includes doing them safely. It has to be safe, affordable, and intuitive. Like cross-border payments, for example, in every leg of the chain there is an inefficiency built in. How do you compress that? Those are areas that we are absolutely interested in. How do you actually bridge between what we think of as traditional finance to DeFi and crypto?

You mentioned no commissions, which brings me to payment for order flow. That is how Robinhood makes money. Can you just quickly explain to people what payment for order flow is?

If you think about this, the notion is no different from when you buy something from a retailer and then the retailer buys from a wholesaler. The customer gets a benefit of, let’s say, 90 cents. We take a small percentage of that benefit when we are able to say, “Okay, we can take 10 cents of it.” Let’s say we save you $1 total. Ninety cents of it goes to the customer, 10 cents of it goes to Robinhood. I am obviously giving numbers just as a symbolic thing here.

Payment for order flow is not new. What is new — and what Robinhood has pioneered — is commission-free. Previously, it was extraordinarily difficult for people to say, “Well, I’ll just buy this stock because I believe in it,” because of three reasons. One is that every trade, if you are charged $10 or $35, is expensive for most people.

The other reason is that, for example, take a stock that is $3,000 or $4,000. Most people may believe in the company, but they cannot afford to buy parts of it. That is why we did what we did with fractional shares.

Then the third is actually the intuitive experience. I feel like it is a bit underrated as an e-thing. I saw it in Google too. It is not so much that it’s just for young people, it’s for folks who have never had a laptop. This is the primary computing device that they have. Building something that is intuitive and easy to navigate is a big plus.

You have talked a lot about the product and democratizing the product, making it easy to use, and initiating a new set of investors. If I had a criticism of the existing big tech companies, like Facebook or Google, it’s that their products do not communicate the business models to the users. Particularly for the advertising-based big tech companies, the disconnect between the user experience and where the money is leads to conspiracy theories and all kinds of weirdness. It leads to misalignment between what is good for Facebook and what is good for users. It leads to people believing that Facebook is listening to them.

When I look at Robinhood, I don’t know that the way the company is making money is by collating a bunch of trades, selling them to a clearinghouse, and giving them data about what the retail investors are doing. It’s relatively opaque in the product. Do you think that needs to be more transparent? That the way the commission is zero is by, effectively, letting another organization have access to that kind of mass data for order flow?

It is not access to data. We don’t give any aggregate any access to data, to the market makers. In fact, one of the things that is interesting is that we commissioned a study by MIT professors and said, “Hey, does this actually help customers?” It turns out over the last two years alone, $8 billion in price execution. It was just price improvements, from payment for order flow and commission-free. I think that’s why your analogies are imperfect, because it is nothing like the big tech. In this case, we are saying that when you participate you have zero fees and then you get discounts. You actually get money back because you are not paying for the commission, out of which, we charge a tiny amount of money.

It is not taking it from the customers. That is the big point here.

Stepping back, I think one of the questions that we do think about is, “How do we also have other businesses that are more diversified too?” That is why I think this is one of the areas we are excited about. For example, we have a subscription business where we say, “You can have much better margin rates and you can have instant withdrawals called Robinhood gold.” It is small, but it is growing.

One of the important tasks for any investment platform — especially one that’s trying to initiate people new to investing — is to educate that class of consumer. I think Robinhood has some education and safeguards in the app already. I am just wondering, dead ahead, do you think that explaining how the business model of Robinhood works to users is important? Are there ways you can bring that into the app?

Yes. I think one of the areas that we have been focused on is news and learning, and this idea of being able to have familiarity with what you are looking at. It is simple things like P/E ratio, or looking at the chart and saying, “What is this?” We have a dedicated team focused on it. One of the things we have found is that — of course we have learn.robinhood.com, lots of articles — that the most interesting thing has been actually doing product work, to do these things in situ and in context and proportional to where people are in their journey. For example, if you are starting out, we see that and say, “Hey, you haven’t made a trade, but you are actually trying to feel your way through it.” Then we will actually show you more of the educational content proportional to where you are in the journey.

These are products and features that we have shipped in the last few months. I am seeing that both quantitatively and also qualitatively, when we do customer research, they really like it. There are economic barriers, obviously. Then there are experience barriers, like you don’t know how to do it. I think there is the emotional barrier. For a lot of people, this just feels like a black box and they are intimidated. So when you explain this in very intuitive normal layman terms, it actually turns out it works. It helps people.

This is the classic software conundrum. You are going to initiate a bunch of new users to make them use a product. They are going to get really good at using the product. Then they are going to want features for them, all while you are still in the business of initiating new users and teaching them how to use a product. Have you experienced that split anywhere?

There are definitely some specific features that the really advanced power users demand with an intensity that early investors or first-time investors don’t. I think one of my colleagues puts it well. It is as if you are on pavement. If you are walking, you see a few cracks, but if you are running, you just see them faster.

If you have somebody who is using the product a lot, they are just calling out the things that are actually broken or can be improved even for early and first-time investors. For example, making the charts and the product much more intuitive — every single time there is improvement there it lifts all boats. Everybody else appreciates it too. I think we have to do both. That is no different from any consumer product, like you rightly pointed out.

Thank you for answering all of my foundational questions first. Part of the reason you’re here is because Robinhood has some news. Today you are announcing a cash card. Tell us about that.

Yes. We are announcing Robinhood cash card. It’s a debit card and a spending account. It actually does three things. One, when you go about swiping your card or using it anywhere you go, it helps you round up the spare change that you can invest in crypto, stocks, or cash. The second thing is interesting because as we said, how can we reward you for investing in yourself? Let’s say you round it up, I don’t know, a dollar. We say we will match from 10 percent to 100 percent of that round-up. We are matching and we are giving you a bonus in addition to that. That incentivizes folks to do the good thing more. Again, that can be invested in cash, in crypto, in stocks, in expenses, and so on.

Then we have the third thing. Over the next few months, what we are going to do is make sure that you can have additional rewards and additional cash back from merchants. If you shop at your favorite store, can you get cash back for doing that?

The third thing may seem like, “Oh, that’s fine, I’ve heard this before.” But I think what’s interesting, and I feel really passionate about it right now — I do not know if you see this, Nilay, but for every one of us, prices are on rise. Inflation is getting real — I think this idea of, “how can you ease the pain?” both today and tomorrow, I think that is the goal here with the Robinhood cash card. It will help you get some cash back and some rewards back, both from merchants and from us. But it will also help you put that money towards investing. Right now, most of us are so caught up in spending. How can you turn that spending into investing? That is the prompt that started us on this journey.

Cash card is a very TradFi idea. I am assuming you have to be connected to various payment processors and those networks. How does that work? Is that something like, “We want to start this thing, so we are going to call Visa, MasterCard, and whoever, to use their APIs and just be off to the races and build our own systems?” What is the process there?

There are some parts of the system that we have had to build. But there are great partnerships with companies like Visa or MasterCard. We had to figure out what parts they do well and just rely on their expertise in terms of payment processing and so on. I think what is interesting here is that we are, as you noted, bridging the TradFi/DeFi link here in a couple different ways.

In the spending account, if you have your paycheck, you can split it. You can actually say, “Look, I think there is something interesting in terms of crypto and I believe in some parts of it. I am not going to spend all day or all night deeply embedded in Reddit and Discord learning all about crypto, but is there a way I can participate in this emerging ecosystem in a very small way that I can afford?” This is the same notion as before. It was internally saying, “You know, you can get started for as little as one dollar.” Now they are saying you can get started with as little as zero dollars. As you go about your business you can start to put some money away for the future.

So, you get your paycheck, you give it to Robinhood, then you go out and spend some money. If you spend $1.97, 3 cents is going to go towards crypto?

Then we will throw an additional bonus and that can be anywhere from 10 percent to 100 percent of the round-up.

Is there an algorithm that decides that?

Yes, it is a variable reward algorithm.

Do you have a knob in your office where you can turn the reward to 100 percent? How does the rate get set?

We are starting with this because the customer research has been really positive when they feel like we are in there with them, versus all these other card products that they have to pay to get these rewards, like they have to pay a monthly fee. Here, we are saying there are no hidden fees, no ATM fees, no overdraft fees. So I think we are going to launch and learn here exactly what works and what does not. That is the initial thing that we are starting with. We are saying that if you do right for yourself, we’ll pitch in.

The connection to investing here is basically that you are going to take the round-offs and add the bonus and automatically invest for people.

Yes, and they can choose, too. That is the beauty of it. If you believe in a specific stock — plus the combination of everything that works, which is the fractional shares, no commission — that is what makes it really interesting for folks to do that on Robinhood.

There is an infinite amount of credit cards. This is maybe the most competitive market, such that there is now a secondary ecosystem of businesses that just recommend credit cards to people. How are you going to compete in that extraordinarily crowded market?

My first observation is that a lot of these credit cards are, whether intentionally or not, predatory. They have the low rates, et cetera. What is interesting — and the reason we actually focused on a debit card — is that often all these rewards, perks, and points are reserved for credit cards.

People who are debit-primary is increasing by the year. A lot more younger folks are debit-primary, first of all, either because their credit score is not built up or, with the credit card companies, they can see how they can get bogged down, they want to be more in control of their cash flows. There is more and more of America that is debit-primary. So we said “Why shouldn’t the debit card or a cash card have the same kind of rewards? And on top of that, actually put a line of sight on investing.” Which none of these products today enable you to do.

So the idea here is that you want people to use debit cards more, so you hold their cash for them. Do you have any obligations when you hold their cash to be more of a bank in that regard?

No. I think this is why it is a cash card in the sense that we have the standard insurance there. This is not a bank. What we are trying to enable the customers to do is to be able to spend the way they do. It is a spending account. On top of it, you can divert some of your spending accounting to some of these potential investing areas. The idea is that with the spending account, with the cash card, you don’t really have to change your behavior. People have their set ways; they know where they shop and they know what they need.

Right. Let me just question this. So you think that there is going to be some set of users that direct deposit their entire paycheck to you, send some of it to investment, and then spend the rest on a debit card?

We already have people who do direct deposit. We have a cash management license. We have state licenses in most states and we are working on the rest. Again, the idea here is to have the licenses that are called money transfer licenses, and it is the same that a classic cash card plus a spending account would have.

I think you operate in such a deeply regulated space. At some point, someone is going to say, “That sounds an awful lot like a bank with a checking account”, and ask you why you do not have to follow those regulations.

We work very very closely with regulators. We wouldn’t launch anything without working closely with them.

You have competitors who just YOLO products out, I’m not talking about you. Are you saying that you have had the conversations? As the head of product, are there things you want to launch that you can’t, because regulators won’t let you?

I think I would reframe this more. In some of these areas the regulations are very clear; the bright red lines are clear. The goals are common — like customer protection, access to more financial inclusion, which the regulatory bodies also want. And education, we have had many conversations with regulators, they see how we have done this in product, and they’re like, “That’s how it should be done.” We’re not sending them away to a boring seminar and lecture. So I think there are many, many things where things are super aligned.

There are cases where we are all trying to figure out what the regulation is and what the product space is, and how it evolves. Crypto is a good example. We have to do it together, right? And that is the way it has to be. We are talking about people’s money. For me, it is very clear that this is a really important space where we want to make sure that anything we do is safe, compliant, and has customer benefit.

We have talked a lot about the bridge between traditional finance and decentralized finance. This card seems like it is right on the bridge. Let’s go all the way to crypto for a second. A lot of Robinhood executives say they want Robinhood to be a crypto-first company when they do interviews. It is a big part of the international expansion strategy, presumably because crypto is easier to move than regular money as you expand internationally. How are you thinking about being the bridge? Do you think crypto is one day the entire future and the bridge is over? Do you think that the dollar has a future? This product will shape the future of both of these things, so how are you thinking about that long-term future?

First of all I am thinking a lot about this. As things go, this is probably one of the most fascinating, interesting problems to have. The product and computer scientist in me is like a pig rolling in the mud.

Just think about the problems we are looking at. On one hand, it is the consumer experience and customer experience that you want to think about, and on the other hand, it is the finance and culture intersection. As cheesy as it sounds, I think crypto is as much a cultural phenomenon as it is a technical and financial phenomenon. What parts of it click? What parts can be done today? Are you kind of standing on your head just to say, “Hey, here is some other new technology for technology’s sake?” I am dating myself now, but I spent a bunch of time in the early ‘90s to late ‘90s with dial-up and modem. I dropped out of a PhD in computer science in the late ‘90s because everybody was joining a dot-com start-up.

I remember the other day, I was trying to explain to somebody that before Netscape, there was this browser called Lynx. It was a command-line browser; it was a text browser. You typed it and then you went to render a page. HTML had nothing. So I think for me, just by analogy, this whole space is in that era, like pre-browser, pre-Netscape. What does that mean? I think there is a lot of general undifferentiated enthusiasm. If I can get a bit spicy? I do think that there is a lot of undifferentiated enthusiasm around this.

I love that you think the phrase “undifferentiated enthusiasm” is spicy. It’s great. You can get spicier, go for it.

I think it comes from a very good place. There are three groups of people, as I see it. Some that are believers and I think it is a self-fulfilling thing, in tech at least. The more a whole bunch of smart people actually say “this must be,’’ many of these things actually come to be. You have seen it with open source, you have seen it with the web, and with the entire internet, for that matter. I think there is a second set of folks who are just like, “get off my lawn,” right?

I feel very seen. That’s fine. Now you are getting spicy.

Then I think of the bridge again. I think that is the space that I see myself in. The company is saying, “Amidst all this enthusiasm, what fundamental invariance can you bet on?” It’s the law of user physics. If it is much easier to do something, that will work out. If it is much faster, speed always wins. So if you are sending money and it takes one second versus seven days, the water will flow there, the energy will flow there.

And then there’s the third thing. In the uncertainty that we are facing at the world level, how does inflation, fiat currency, how do those things intersect? Is there an alternative that is more stabilizing for people?

That is where yield and savings come in. That is where I like to play. What are the real use cases and what do consumers really have? What problems do they want solved?

Then of course, there are certain things that blockchain will solve better. There are certain things where scaling will happen and then the right things will happen. Then there are certain other things where there are other ways to solve these problems.

I think that is exactly right. That is basically how I think about it. I am skeptical but I want to make sure it is honest skepticism. I can see some things are exciting and can certainly see enthusiasm.

Fundamentally, I would say I’m a “cryptoptimist,” if that is a word. I bet on tech optimism. I think even in the cases where folks say, “well, right-click and save” with NFTs, you cannot throw the baby out with the bath water. The bath water may very well be some specific JPEGs or whatever rug-pulling that is happening. I think the baby here is this proof of access, proof of engagement, proof of ownership. To both digital assets that matter, such as access to events, or access to things that you otherwise can’t prove. Or access to even real-life assets and fractional parts of it. There is a lot there.

Whenever we do an episode about crypto — or whenever we cover crypto on The Verge — we do hear from the second group that just wants it to go away. Their number-one criticism, that I think is real and valid, is that the climate impacts of crypto outweigh any benefits that we can see. You are in charge of a platform and on your way to 500,000 wallets, soon to be millions of wallets. You have some responsibility to this impact. How are you thinking about adjusting the product to mitigate the climate impact of crypto?

My honest answer here is that I think that it is not at the crypto level, it is actually at specific coins and specific tech. If you look even between Bitcoin and other alternatives, there is a difference. We are constantly talking to our crypto leads. We are actively talking to other folks. This is an actively emerging area and we want to make sure that we understand the implications of it, and the long-term steady-state implications.

Right now there may be a short-term window, where there are certain approaches or certain coins or certain tokens that do have that downside. But I think that there is a lot of work going into figuring out the long-term implications.

Meanwhile, do not underestimate the amount of work that is going in the crypto community to actually solve precisely that problem. We want to do our part to do that and then say, “What are ways that we can adjust the product?” The last thing I want to do is actually tweak the product in a way that has unintended negative consequences for the long term.

I buy that, but have you dedicated any of your product resources to that work in the crypto community to make it more efficient?

We are starting to. I think this is one where, instead of each of these companies trying to do this in their own silos, crypto is fundamentally such an open community and there are a lot of pieces that are developed in the public. Our thinking right now is that it is much better to participate in that broader effort and pitch in. We are starting to do that. I don’t have anything specific that I can share yet, but it is on our minds. If we are ushering in this new approach, we want to learn from previous sets of technology and platform shifts and say, “How can we actually do that better?”

Every time I have this conversation, someone else will pop up and say, ”Soon Ethereum will move to proof of stake and it will be fine.” I do not know when that is going to happen. Do you know when that is going to happen? I think one realistic answer is “never,” by the way.

No, I don’t believe that. There are actually multiple efforts going on there. The computer science part of it is solvable. I think there’s enough of a need for it. If you really want to rethink parts of the traditional financial system, we will have to accelerate that. I think there’s also a pull that will happen with one or two of these really important use cases. That’s actually often how the scaling happens in the internet world and in the tech world. You will have this amazing use case that is just crawling, and then you have a bunch of smart people start to say, “Okay, how can we actually make this significantly faster so that it is usable?”

Right now there are seven coins you can buy in Robinhood. Looking at the list, it is Bitcoin, Ethereum, Dogecoin (which is very funny), Litecoin, Ethereum Classic, Bitcoin Cash, and Bitcoin SV. How did you decide on those seven, and how do you think about expanding?

We have a very well-formed asset listing framework that we use. First of all, it is really important that all of these are safe and are things that customers want. That’s been our guiding principle. And, is it something that we can provide on the platform with ease of use.

You said earlier that people had undifferentiated optimism. I would delineate that. There is the cryptocurrency world and there is the Web3 world, which is where you get the “Blockchain will solve everything,” or, “Tokens, in some way, will solve everything.” Do you think Robinhood is part of Web3?

I don’t know. This whole Web1, Web2, Web3 thing is a little bit post hoc. I remember living through those times, and Web2 was a little bit of a post hoc recognition of the fact that, “Oh, Ajax was used,” and like, “Flickr.” Do you remember those years? I remember this guy who did the mashup of Craigslist and Google Maps. That was the housing maps thing.

Without shitting on any of those different conversations, I think cryptocurrency, as an asset class, makes a lot of sense. If I look at Robinhood and its aperture as more around financial services, helping people with their financial lives, helping give them access to more investing, and giving them access to better spending, I think cryptocurrency is a strong asset class.

The second thing that is really interesting is this idea of embedded crypto. Do the things that you need to do, but if crypto can make them significantly better, whether it is sending payments, spending money in more efficient ways, or getting more yield on your savings, that is the aperture that we are putting on for Robinhood. Cryptocurrency is an asset class, as an investing company. Then embedded crypto, we try to rethink and help people if there is a 10X, in terms of how they do things.

Do you think about NFTs in Robinhood, or are you just focused on the currencies?

We absolutely think about NFTs. I have been fascinated by them and I think that the crypto team is excited. We are always looking at what makes sense here, in terms of products to offer through Robinhood.

I think there is a lot of potential in the use of NFTs. Now, some of these are far-reaching. There are two levels of indirection from the core business of Robinhood. There are things that are happening with in-game for NFTs, what Axie is doing, et cetera. I think it kind of affects the entire space.

The reason I ask about NFTs in particular, is that when you think about products on smartphones that allow you to transact — where you push a button and spend some money and then digital goods move around — Robinhood is actually very unique. It does not pay a 30 percent commission to either of the smartphone platforms, even if you are buying Bitcoin, which is a digital good. Because it’s money. Which is a very philosophical, like you’re dancing on the head of a pin there, that Apple has not said, “I want 30 percent.”

I am pretty sure Tim Cook thinks about that every day, that he could take 30 percent off of every button on his phone. When you get to NFTs, now they represent outfits in games, or JPEGs, or whatever it is. You could see both platforms saying, “That’s the same as a Kindle book, we want 30 percent.” Do you think about that as you explore NFTs, as you explore expanding the range of digital goods in the app?

I think the thing that is interesting about NFTs is that it’s an end in itself, in some cases. I think the really fascinating opportunity is, “How is it a means to an end?” It’s access, for example. It is a portable identity that you can carry around, say if you are moving from one product to another, or one game to another, and so on. It is going to be less and less specific as a purchase. At least that’s my personal opinion. I think, as a team, and a company, we are looking at the space and saying, “How can we best participate? What are the customer problems that we can solve?”

Do you run into App Store policy issues every time you ship an update? We just had Matt Mullenweg from Automattic, and he was like, “Every time we ship an update to the Tumblr app, we cross our fingers and hold our breath to see what Apple is going to do.”

Wait, Matt is doing Tumblr now?

Yes. Automattic.

WordPress Matt?

Yes. They bought Tumblr in 2019.

I guess I missed that.

You have got to listen to Decoder.

That’s fair.

Do you run into the same issue? Does Apple look very closely at what you are doing?

No. Obviously, we are multi-platform. We work on iOS, work on Android. I can’t say that we do.

Do you ever call your Google contacts and say, “Let this one through?”

Never.

I am going to note that Aparna just smiled when she said that.

I have a little bit of a lightning round for you, and then we can wrap this up. The first question is about crypto though. Robinhood is all about investing, it’s all about helping people build wealth and giving them access to markets. Crypto is extraordinarily volatile. How do you think about protecting people from the volatility of crypto?

In general, there are other volatile asset classes too. I think that’s one of the things where access is the first step. I think the second is agency, so that is where education comes in. How do you make sure that folks are not overreacting or under-reacting, based on the market conditions and so on? Then there is the third thing, which is, how do you actually help them with new products that help them toward the longer term?

Retirement is something that is top of mind for me. We talked about it a few months ago, and we are working on this. It is a great example. You are trying to extend the horizon of people’s thinking, and that’s really hard. We are all kind of here-and-now, so how do you help? Surprisingly, very few Americans actually have retirement accounts open, and even fewer have employer matches. It is just one of those things where you say, “Of course, you get access to investing, but how do you grow?” That’s the next step here. Both with education, but also products that extend the horizon in the long run.

When I talk to the heads of products, they want their phone apps to be stickier, they want people to use the apps more. Primarily, what you use Robinhood to do is trade. Famously, the more you trade, the more likely it is that you will lose money. How do you think about balancing that dynamic?

I don’t think of our goal to be about increasing or encouraging trading, per se. I think we want access to investing. If you ask anyone how they got started, they say, “Oh yeah, I first bought this A, B, and C stock.” So, that is often the first step, and that gives you courage and interest to go further. That is why I think we have a product, for example, that helps you do recurring investments. You drip, drip, drip; you start to almost dollar-cost average into funds, into stocks, into crypto, et cetera. So I do feel like it is a matter of taking a long-term view, and not looking for things about specific, short-term engagement.

There are lots of product features that do incentivize monetary behaviors, like transactions. Do you have folks who think about what kinds of notifications you should send, or do you do tests to make sure you’re not incentivizing the wrong kind of behavior?

Yes. The most recent feature that the team shipped, that I am really proud of, is a notification around price alerts. Which actually has a really positive educational effect of saying, “Here are the things that are happening. These are the price movements that are happening.” Then there are other educational features too saying, “Did you know X, Y, and Z happened in the market?”

We have a huge investment in a product called Robinhood Snacks. It is a newsletter, and it is probably one of the biggest newsletters in the US. It has more opens than most of the usual newsletters. With Snacks, we try to — in a very bite-sized, mobile-first way — explain what’s going on in the market. So that way we are pushing information, but information that makes you more familiar with the market and removes the intimidation.

You recently acquired a company called Say that lets people ask questions during earnings calls and you’ve put that functionality into the the Robinhood app. How do you moderate that? Every episode of Decoder ends on a content moderation question at the end. It is a real theme for us.

It’s a thing. Say is part of Robinhood, as the parent company. We had acquired the company a few months ago. Say is a platform that works for Robinhood as a broker dealer, but other brokers as well. My eyes lit up because I think this is one of the most amazing things that we can do in the space, which is connect the customers with the companies that they are investing in.

If you think about institutional investors, they get the song and dance. Companies spend a bunch of time, they get to talk to the IR team. With retail shareholders, there is none of that. Say has launched this shareholder Q&A, and we have the in-app Q&A that we have launched. Take Coinbase, take Tesla, we have Q&A with all of these companies.

What is fascinating, and the thing that makes me really excited, is the questions that people have. They are about the product roadmap, they are about corporate responsibility, they are about sustainability, in a way that they just couldn’t connect. That is why I always say your stocks go way further on Robinhood, because a trade is not a trade. These are the experience. If you own stock on Robinhood, you can actually participate in this in-app Q&A and get a lot more questions answered. Yes, there is moderation, in terms of offensive comments and so on. We do have a content moderation team, but what’s been interesting is most of the questions are really on point.

Is that content moderation team built to scale? You’ve got a handful of companies, so you can have a handful of moderators. You know when the Tesla earning is going to be. If you scale that to every company on Robinhood, now you have a massive content moderation problem.

We have it on 5,000 public companies in the US, ballpark. We have a few earning calls. We are building out the team to be able to scale to that, but obviously that is something we’ll watch.

Okay, last lighting round question. How often do you, yourself, trade on Robinhood?

I use spots of the product that I think need testing, but I would say that the product that I am most excited about recently has been the recurring investment, where I can just basically say, “Hey, here is the amount of money, and here are the stocks that I really would like to invest in, or the cryptocurrency that I would like to invest in.” Before you know it, you are saying, “Oh, this is a good deal.” Instead of spending it all on a cup of coffee.

Well, Aparna, thank you so much for your time. This is really great. Thank you for being on Decoder.

Thank you, Nilay.

Update March 29th, 1:20PM ET: After this interview was published, Robinhood clarified that Robinhood Money LLC is a licensed Money Service Business. Robinhood provides information on how the bonus is calculated on its help center here.

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