SAN FRANCISCO – Vlad Tenev, CEO of online brokerage firm Robinhood, has practiced damage control.
Last March, he told a customer that “we owe you to do better” after a protracted shutdown of Robinhood’s application left many people unable to trade.
In June, he wrote in a blog post that he was “personally devastated” and wanted to improve “customer experience” after a 20-year-old had a negative $ 730,000 balance on the app. application has committed suicide.
And in December, when federal regulators fined his company $ 65 million for misleading users about how it made money, he said the accusations “did not reflect Robinhood’s day. now on”.
Mr. Tenev, 33, is now in the hot seat again after Robinhood abruptly cut customer trades last week amid stocks like the frenetic GameStop, which has been pushed by an army of online investors. towering. These limits angered Robinhood’s users who were locked out of action, and the seven-year-old startup was accused by lawmakers and others of acting unfairly against investors. normal.
For days, Robinhood was slow to explain why it restrained people from trading stocks. It was not until later that Mr. Tenev revealed that Robinhood introduced restrictions because it did not have enough cash to protect against risky transactions. To increase that buffer and avoid further problems, Robinhood urgently raised $ 1 billion last week, followed by an additional $ 2.4 billion this week.
On Sunday, Mr. Tenev told Elon Musk in an impromptu interview on the online chat app Clubhouse that he knew that Robinhood’s curbing was “a bad result for the client”. He said the whole experience was challenging, “but we had no choice in this case.”
It’s no surprise that Robinhood was caught unknown in the past week, said Robinhood’s current and former employees and analysts. While Mr. Tenev has helped revolutionize online transactions for the younger generation with an application that makes investing easy and fun, his startup has repeatedly been unprepared to deal with problems. commonplace as technology glitches and transaction glitches, they say.
Many startups experience growing difficulties. But “there is a consistent pattern that makes one question whether he knows what’s going on inside his company,” says Vijay Raghavan, analyst at Forrester Research, who is in charge of Robinhood and Other brokers, talking about Mr. Tenev.
Lawmakers and some Robinhood users have been even tougher on the CEO. Representatives of Alexandria Ocasio-Cortez, a New York Democrat and Senator Ted Cruz, a Texas Republican, criticized Robinhood for freezing the user’s ability to buy GameStop shares. Mr. Tenev agreed to testify on this matter before Congress on February 18.
Even some of Robinhood’s biggest supporters turned their backs on Mr. Tenev. Dave Portnoy, founder of Barstool Sports and a popular Robinhood supporter, wrote about a picture of Mr. Tenev on Twitter last week: “Cheating, lying, Scumbag.”
Robinhood, a private company in Menlo Park, California, refused to let Mr. Tenev be present for an interview. But Jason Warnick, chief financial officer, says Mr. Tenev has broad support internally.
“When I watched Vlad, there was absolutely no one else I wanted to be with,” Mr. Warnick said of the events of last week. “He mobilized us extremely effectively.”
Venture capitalists who have backed Robinhood, which is valued at nearly $ 12 billion and is likely to go public this year, also say they trust Mr. Tenev. Rahul Mehta, a partner at joint venture DST Global, said the speed at which Mr. Tenev has raised $ 3.4 billion urgently over the past few days “shows you the support around the table and the confidence that Everyone is for Vlad. “
Mr. Tenev, who moved to the United States from Bulgaria when he was 5 years old and raised in the Washington, DC area, founded Robinhood with Baiju Bhatt in 2013. The two met while studying mathematics at Stanford University.
After graduating from Stanford in 2008, Mr. Tenev attended the University of California, Los Angeles, to pursue his Ph.D. in math but dropped out to work with Mr. Bhatt. Initially, the couple had two other ventures, including a Wall Street venture.
But they are short-lived. Instead, inspired by the 2011 Occupy Wall Street movement – aimed at the power of the big banks – they started talking about how to “financially democratize” for everyone by ending fees. that most brokers do to trade stocks. They named Robinhood after the British legend who stole the rich and gave it to the poor.
In particular, Mr. Tenev and Mr. Bhatt want an app that the younger generation can easily use. “People of my age, millennials, do not enter the market and do not trust the institutions that provide financial services,” Mr. Tenev told CNBC in January. 2015.
Mr. Tenev and Mr. Bhatt, the co-CEO, made Robinhood simple. Users can start stock trading with just one iPhone app and no fees. It also makes trading like a game. New customers get a free share of shares after scratching off what looked like a digital version of a lottery ticket.
These men looked for famous investors such as actor Jared Leto and rapper Snoop Dogg. Co-CEOs often show up in the office with Tesla sports cars, one black and one white, two former employees said.
Inside Robinhood, Mr. Tenev is known as the brain code writer in charge of operations, six current and former employees said they spoke on condition of anonymity. He is known for having lunch with employees to talk about his latest books or theories from science fiction. They say Mr. Bhatt loves design and more fun handling.
Both are active on social media, with Mr. Tenev tweeting hilarious emoticons to Musk. Mr. Bhatt plays their pictures from his seats on the floor during the Golden State Warriors basketball match.
However, when Robinhood grew up quickly, so did the mistakes. In 2018, the company announced that it would start offering bank accounts. But it was not approved by the financial regulators, which is standard practice, causing the startup to quickly be blamed.
That same week, Robinhood released software to reverse the wrong direction of a client’s trading, meaning that a bet on a bullish stock was converted into a bet that it would go down. Mr. Tenev oversees the technology.
Technology problems continue to pile up. In 2019, customers discovered that Robinhood’s software inadvertently allowed them to borrow an almost limitless amount to multiply the stakes on their shares. Last March, when a pandemic hit the United States and the stock market volatile, Robinhood’s application was suspended for nearly two days, costing some customers more than $ 1 million.
That’s when Mr. Tenev said in a blog post that “we owe you to do better.” By that time, Robinhood had more than 13 million customers.
Mr. Warnick and other staff members say Mr. Tenev has a knack for staying calm in difficult situations. “He’s not emotional,” said Mr. Warnick.
But five former and current Robinhood employees said Mr. Tenev moved quickly to new projects without fixing previous problems. After the outage incident in March, Mr. Tenev told the company that it would significantly strengthen its infrastructure and customer support. However, almost a year later, the startup doesn’t provide customer service numbers, unlike its competitors.
Robinhood did not respond to a request for comment on customer service issues.
Last year, Mr Bhatt resigned as co-executive after returning from maternity leave, leaving Mr. Tenev in power. Mr. Bhatt remains chief executive officer and remains on the board of directors of the company.
Robinhood technical problems continue. Last month, the site crashed 19 times, more than twice as much as Charles Schwab or Fidelity, according to data from web-tracking company DownDetector.
Mr. Tenev has always kept a low profile lately. Last year, he said in a podcast interview that he left his phone out of his bedroom at night to avoid the temptation to check social media.
But in the last week, as the craze for GameStop’s stock grew and Robinhood was forced to react, Mr. Tenev had no choice but to step out more. He has appeared on television at least eight times from the sparsely decorated living room of the house where he lives with his wife and children.
In most of his appearances, Mr. Tenev used technical language and quickly moved on to talk about Robinhood’s going into another stage of expansion.
“This is just a standard part of brokerage practice,” he told Yahoo Finance last Friday, referring to his decision to suspend some purchases. “We are very confident about our future.”
Kitty Bennett has contributed to the research.