The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch 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
Jan 28, 2022
In this engaging discussion, Scott Sandell, Managing General Partner at NEA, and Rick Yang, Head of Consumer Investing at NEA, share insights about their investment in Robinhood. They recount the pivotal moments that led to backing the startup, highlighting early metrics indicating product-market fit. The duo compares Robinhood's innovative cost structure with E-Trade's, revealing how automation drives efficiency. They also delve into Vlad's evolution as a leader and the company's mission to democratize finance, keeping user engagement at the forefront.
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First Meeting
- Rick Yang's first meeting with Vlad Tenev was at a dive bar in Palo Alto called Antonio's Nuthouse.
- This unconventional setting reflected the unique and mission-driven nature of Robinhood's founders.
Disruption Thesis
- NEA viewed Robinhood as the next disruptor in the brokerage market, following the trajectory of firms like E-Trade and Charles Schwab.
- They saw a $70B market cap ripe for disruption due to evolving technology and consumer internet trends.
Targeting Underserved Demographics
- Scott Sandell saw Robinhood's potential to be the next Charles Schwab by targeting an underserved younger demographic.
- The "free" model for stock trading was a key differentiator and disruptive force, aligning with NEA's investment theme.
