Six weeks before Lehman Brothers went under, Shiv Verma tells us, he joined a hedge fund as the world felt like it was falling apart. After building structured-credit and CLO models at J.P. Morgan from 2006 to 2008, Verma says he helped buy back assets originated at par for five cents on the dollar.
A mentor there supplied a rule Verma still carries: “The best trade you ever make is often the trade you don’t make.”
For Robinhood’s CFO, the line offers a double meaning—and a little fun. In the interview, however, Verma applies it to corporate resource allocation. According to Verma, it is easy to make an investment, become excited, and sell yourself on the idea. The harder work is asking the right questions and “knowing when to say no.”
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That standard reaches beyond securities. Verma says he applies it when Robinhood considers funding an investment, approving a marketing campaign, or pursuing an acquisition. Restraint is not timidity: Robinhood wants to grow and say yes to many opportunities, he tells us, while balancing business enablement and controllership.
According to Verma, acquisitions must offer technology, talent, or greater speed to market, generally accelerating Robinhood by 18 to 24 months. They must also pass the company’s IRR, NPV, and internal thresholds.
The title may wink playfully at Robinhood’s trading platform, but Verma’s underlying finance lesson is serious: sound capital allocation is ultimately defined not only by the opportunities a CFO pursues, but also by those finance has the judgment to decline.
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CFOTL: How has leading finance at Robinhood changed the way you lead in general? What has changed in this operating environment as far as leadership goes?
Verma: I joined as a team of one. I was hired as the treasurer and to build out that team. As I mentioned, we were small. So it’s been really organic, building out the team over time. Our prior CFO, Jason Warnick, joined from Amazon. He was there for 20 years and then recently retired. He’s one of my favorite people—a mentor and friend. I learned a lot about leadership from him, and I still use a lot of those principles today.
Part of it is that you hire great people, you empower them, you don’t micromanage, and you try to hire people who are smarter than you. You hire people who have both high EQ and high IQ. For us, it’s really important that people come in and want to work hard. We’re known to have a hard, high-performance culture, but we also want people you want to spend 10 or 12 hours a day with. So we look for a mix of that.
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A lot of it is that I just do what I think comes naturally to me, and hopefully the rest comes best. For example, I go really deep into the weeds. I’m at my best when I’m looking at the raw model and understanding it. That doesn’t mean I don’t trust the team or that I micromanage. But people know that if I’m going to look at something, we can’t stay at 40,000 feet; we have to go super deep. So I say, just be your authentic self and let people do great.
The other thing I’ve learned over time is that as you build out the team, when an opportunity happens, just say yes. This is something I share with some of our younger folks and something Jason shared with me. When I was hired to be the treasurer, about six months later Jason said, “Hey, could you run IR?” I said, “I’ve never done IR before.” He said, “You’re a former investor; you’ll figure it out.” A few months later, he said, “Hey, we don’t have a finance team. Can you build it out?” I said, “I’ve never done finance before.” He said, “You’re a smart guy; you’ll figure it out.”
If I look back, some of the best leadership opportunities I’ve had—or other opportunities—have come from doing what’s needed and just saying yes. That’s what I teach a lot of our younger folks today. Everyone is looking for more scope, or they want to make an impact, or they want to be a leader in the company. I say there are two things you can do. Just crush your core responsibilities, whatever that is. Even if it doesn’t seem that big, own it, crush it, and give it 150%. Two, if you see something that’s broken, just go fix it. When an opportunity happens, just say yes.
That’s a little bit of what we do, and I think it just naturally happens. I give a lot of credit to Jason. I give a lot of credit to the team. We’re all still trying to figure it out. It’s amazing to have gone from a team of one to helping lead a finance team of more than 200 people and a company of nearly 3,000 people—and to see how far we’ve come in the past eight years.
CFOTL: We would love to better understand Robinhood. What does the business offer today? What is this opportunity about now?
Verma: Yeah, absolutely. You start with the mission: democratize finance for all. That’s how we build all our products. It’s really not just a poster on the wall; it’s what we take and embed. If you look at how we started, we started with commission-free trading. Very simple. There was a pain point in the markets. Most consumers didn’t have access to the equity market. There were high minimums, high fees, and a lot of jargon.
That’s how we started: a mobile-first platform in the cloud and great design. If you look at where we are today, we’ve evolved into the financial super app, or that’s what we aspire to be. To be honest, we said that five years ago when we went public, and we were still learning what it meant. But what it means for us is serving every single one of our customers’ needs. Any financial transaction or asset you want to custody, you should be able to do that at Robinhood.
We have the core brokerage business. That’s your equities trading, options trading, and a big active-trader platform. We’re number one in market share in options and number two in equities and gaining. So it’s really about being in that ecosystem.
The second part of our business is a big crypto business. Anything you want to do on the crypto side, whether it’s trading assets or something else, we’re really focused on the infrastructure layer. We have the Robinhood Chain that just came out. We have the Robinhood Wallet, so you can hold assets in DeFi. We think crypto and the blockchain are here to stay and will be a big part of the financial ecosystem.
Then we have what we call our money business, which is banking and credit. We have banking, so you can have checking and savings, and you can get the Robinhood credit card. If you want to be able to spend and save, you can do that.
We also have a big passive-investment business. Whether it’s your retirement—we have $30 billion of retirement assets—or ETFs, it’s about creating long-term wealth. I have my daughter’s accounts on here. I have a young daughter, so you can have custodial accounts and trust accounts, building out that whole hub.
Our last bucket is what we call a global financial ecosystem. We’re going global. We started in the U.S. Today, we’re in Canada, the U.K., Europe, and Singapore, and we have a pending acquisition in Indonesia. So we’re getting broader there. Ecosystem also means B2B or institutional.
When we talk to our institutional or B2B customers, they want the same things traditional retail customers want: low cost, easy to use, and great design. That’s how we’re starting to build that out. We bought a crypto exchange a few years ago called Bitstamp, and that’s doing great. We bought an RIA custodian called TradePMR a few years ago, and that’s going great. We’re starting to build that out.
We’ve come a long way from commission-free stock trading to building out this financial ecosystem. You can start to see that in the financial super app, and it’s translating into our financial profile. For your listeners and viewers, big picture, we’re at about $5 billion of run-rate ARR and about $3 billion of EBITDA. We have 13 businesses doing more than $100 million of ARR. We call them cylinders.
It’s a big, diversified platform across a lot of different business lines. The fun part is that we’re just getting started. There are a whole lot of things we still have in the hopper.
Robinhood | www.robinhood.com | Menlo Park, CA