Robinhood, creator of the popular stock-trading app of the same name, announced on Friday that Vlad Tenev will be the company’s sole chief executive, ending an arrangement in which Tenev and cofounder Baiju Bhatt have shared the top job since the company’s launch in 2013.
“Today, Robinhood co-founders Baiju Bhatt and Vlad Tenev shared with our employees that Vlad will assume the role of sole CEO. Baiju will continue in his role as co-founder, supporting key business initiatives and serving on Robinhood’s board of directors,” said a Robinhood spokesperson.
A person close to the company, who spoke on condition of anonymity, said the decision to name Tenev as sole leader came in part because Robinhood recognized that a dual-CEO structure had become less viable as the company expands. The person added that the move did not come about as result of political machinations and that Tenev and Bhatt, who became friends as Stanford undergraduates, remain close.
According to former Robinhood executives, Tenev is the more visionary and strategy-oriented of the two founders, while Bhatt is regarded as more jocular and focused on product development. The person close to Robinhood said the new arrangement will let Bhatt devote more time to projects he most enjoys.
Robinhood is riding high after its giant funding round, which valued the firm at $11.7 billion, and from an influx of new users who have helped fuel a record level of trading this year among retail investors. Earlier this year, the company said it has grown to 13 million accounts, 3 million of which were added in the first six months of 2020 alone. The phenomenon led BusinessWeek to dub the mass of new traders “Generation Robinhood” in a recent cover story.
Despite the hype, Robinhood faces numerous challenges. Critics have decried the app as casino-like and exploitive, arguing that it encourages reckless trading. Others have warned that novice users can easily get in over their head—a point driven home in June when a 20-year-old trader took his life after mistakenly believing he had incurred $700,000 in debt while trading complicated options contracts. The company has also incurred a barrage of customer complaints and fines from regulators, and bungled major product rollouts.
While Robinhood has become a darling among venture capitalists, it’s unclear when or if it will turn a profit. The firm doesn’t charge users to trade—an innovation that led the rest of the industry last year to follow suit. Robinhood has earned $453 million so far this year from “payment for order flow,” which involves obtaining rebates from market-making firms like Citadel Securities that execute Robinhood customers’ trades. The tactic accounts for around 70% of Robinhood’s revenue, raising questions of whether this is sustainable and if the firm will be able to diversify its revenue stream in the future.
In stepping into the solo CEO role, the 33-year-old Tenev will be under considerable pressure to show Robinhood is built for the long term—pressure that will only increase once the company goes public.
In interviews with Fortune, Tenev predicted that the company’s young customer base (the median age of Robinhood investors is 31) will grow more affluent over time, allowing the company to sell them more products. He also described reading widely to buttress his leadership skills—mostly biographies of figures like Steve Jobs, Albert Einstein and Howard Hughes, but also science treatises like Steven Wolfram’s A Project to Find the Fundament Theories of Physics.
For now, Tenev has considerable runway to prove himself thanks to Robinhood’s fat balance sheet and a surge in stock trading. The company’s lead investor, Jan Hammer of Index Ventures, said by email he is confident Tenev is up to the job.
“Vlad’s leadership has been instrumental to Robinhood’s success in reaching incredible scale. I’m confident that Robinhood will continue to lead in building innovative products and serving customers as the company moves into its next phase of growth,” Hammer wrote.
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