(October 21, 2021) Nine years ago two young men shook up the world of investing in America with the launch of their app Robinhood. The investment app, geared towards the millennials, wanted to equalize the world of investing through a unique no-brokerage stock trading model. The concept caught on and pretty soon Robinhood was the go-to app for most Americans when it came to trading in stocks. Before the turn of the decade, it was valued at over $6 billion, was racing towards an IPO and its founders were catapulted into America’s big league. One of them is Indian-American billionaire entrepreneur Baiju Bhatt, who is credited as the creative one with a focus on product development.
As it successfully listed on Nasdaq, it also made Bhatt the latest entrant in the Forbes 400 list for 2021 with a net worth of $2.9 billion. Today the app has over 21 million active users and is valued at over $40 billion and continues to enjoy popularity among America’s younger investors and traders who enjoy the fact that they can invest in some of the country’s top stocks of major companies in an otherwise seemingly intimidating stock market.
The Indian connect
Born in 1984 in a Gujarati family to Indian immigrant parents, Bhatt grew up in small town Poquoson, Virginia as an only child. His parents migrated to the US when his father was accepted into a PhD program in theoretical physics at University of Huntsville, Alabama. Bhatt followed in his father’s footsteps and went on to study Physics at Stanford University. He stayed on at Stanford to do his Master’s in Mathematics and it was during this time that he met and befriended Vlad Tenev, his roommate and future co-founder. In an interview with Life Hacker, Bhatt said, “In college, I met Vlad Tenev, who at the time was a long-haired, string-bean kid with a quirky sense of humor and a penchant for late-night games of chess. The two of us would become the best of friends and go on to co-create two companies in New York together before starting Robinhood in California.”
Like Bhatt said, he and Tenev together launched two companies in New York: high-frequency trading company Celeris in 2010 which they closed in 2011 to create Chronos Research to sell low-latency software to trading firms and banks. By 2013, the duo co-founded Robinhood, a disruptive new trading platform that let people trade easily in some of the country’s top stocks and with no-brokerage costs involved. They struck gold with Robinhood and a funding round in 2018 increased the company’s valuation to $6 billion, making both Bhatt and Tenev billionaires.
Baiju Bhatt with his co-founder Vlad Tenev
Protests that inspired
Bhatt’s idea for Robinhood stemmed from the 2011 Occupy Wall Street protests; offering no-brokerage stock trading, the app cut out the high fees charged by stockbrokers, which otherwise made investing in stocks feel like an intimidating experience for those with low funds. They also moved back to California to launch Robinhood (named after the legendary outlaw who stole from the wealthy to give to the poor) with the mission to democratize finance for all.
What made Robinhood also click was its efficient and frictionless interface that made trading in stocks feel like a game to the younger investors. It offers an expansive range of investments, including stocks, options, and cryptocurrencies. Given that there are no commission fees involved, Robinhood makes revenue from back-end payments. So popular was Robinhood’s no-brokerage model that it forced other major brokers to eliminate commissions as well. The app opened the door to trading to millions of people, mostly millennials. Bhatt estimates that nearly half of all new US brokerage accounts in the last few years are by Robinhood accounts.
The COVID-19 pandemic has only helped the app see a surge in users and business with millions of first-time investors signing on. However, in 2020, this Global Indian decided to step down as co-CEO of the company as it headed towards an IPO and decided to focus on product development.
A focus on self
Over the years, Robinhood has been battered by controversies, most of which it has managed to emerge from and Bhatt continues to ride the wave. The 37-year-old, who is married to Adrienne Sussman with whom he has a son, is an avid runner who’s participated in several half marathons over the years. He told Life Hacker, “I run outside almost every day of the week. I’ll usually step out during lunch for an hour-long jog around the neighborhoods of Palo Alto and through Stanford campus. It helps me clear my head and put all the things I’ve been thinking about back together in creative ways. Also, by the time I get back, I’m energetic and generally feeling awesome.”
Baiju Bhatt with his father
What keeps him ticking is his strong willpower, which he says has helped him overcome several challenges over the years. “A personal but very important example comes from my childhood. As a kid, I had always struggled with being overweight. When I was a sophomore in high school, I decided I wanted to change that once and for all. That spring, I started exercising every single day, and by the time I started junior year, I had lost nearly 70 pounds. I looked and felt like a completely different person.”
That same willpower is what helped this Indian American entrepreneur launch Robinhood, disrupt a centuries-old industry and see it through its share of rough patches.
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