Mike Murphy and Mitch Roschelle analyze the controversial GameStop in ‘Maria Bartiromo’s Wall Street’
The brokerage app Robinhood made headlines this week when it emerged as a major player in the dispute between retail investors and hedge funds over GameStop shares.
Founded in 2013, the company launched its app in 2014, providing business access to anyone with a phone.
Robinhood helped democratize finance and provided the portal through which online communities were able to organize themselves and initiate a short squeeze on hedge funds seeking to sell GameStop shares short.
After making a controversial call to stop all GameStop purchases on Thursday, Robinhood is under significant scrutiny, both in the public eye and in Congress.
Here’s what you need to know about Vlad Tenev, the man who is already facing the consequences of Robinhood’s decisions last week.
Vlad Tenev, co-founder and co-CEO of investment app Robinhood, speaks during the TechCrunch Disrupt event in Brooklyn, New York, USA, May 10, 2016. REUTERS / Brendan McDermid (Reuters)
1 Tenev is living the American dream
Tenev represents the American dream: born in Bulgaria, he migrated to America with his parents when he was 5, according to his profile at Rosenblatt Securities.
Tenev grew up in Washington, DC, and studied mathematics at Stanford University. He went to UCLA to get a PhD in mathematics, but gave up to start a company with his friend, Baiju Bhatt.
The duo launched their first venture, Celeris, in 2010, but abandoned it to create Chronos research, a software company.
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Their next venture, Robinhood, would catapult the pair into a new industry stratosphere.
When the duo raised additional funding for Robinhood in 2018, the company’s valuation reached $ 6 billion, turning each of its founders into billionaires, according to The Focus.
NEW YORK, NY – MAY 10: Co-founder and co-CEO of Robinhood Vladimir Tenev speaks on stage during TechCrunch Disrupt NY 2016 at Brooklyn Cruise Terminal on May 10, 2016 in New York City. (Photo by Noam Galai / Getty Images for TechCrunch) (Getty Images)
two Tenev and Bhatt started Robinhood because of the Occupy Wall Street movement
The idea of ”democratizing investments” started with Tenev and Bhatt’s experiences at FinTech during the recession.
The pair worked in New York City when they tried their first two ventures, the second of which coincided with the Occupy movement.
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While other companies closed, Tenev and Bhatt prospered, prompting one of their friends to accuse them of profiting from other people’s misery, according to Forbes.
After an examination of conscience, they created Robinhood with two main objectives: no commissions and no minimum balances.
These two points made Robinhood stand out compared to his rivals and helped him to prosper in the early days, as he presented himself as a tool for the boy.
MOUNTAIN VIEW, CALIFORNIA – NOVEMBER 03: (LR) Vlad Tenev and Celina Tenev participate in the 2020 Breakthrough Prize Red Carpet at NASA Ames Research Center on November 3, 2019 in Mountain View, California. (Photo by Ian Tuttle / Getty Images for Breakthroug (Getty Images)
3 – Tenev has been celebrated for its success … until now
Before GameStop’s decision on Thursday, Tenev was acclaimed for his work.
At 28, Tenev was recognized as part of the Forbes 30 under 30 for Finance series. Tenev was also featured on the Fortune 40 lists under the age of 40.
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However, his recent decision to stop buying GameStop and then limit the purchase of shares from then on, has brought him charges of market manipulation.
Tenev went from a celebrated businessman to a target of intense hatred among retailers who used Robinhood.
Some users have accused Tenev of prostrating himself in front of financiers and protecting hedge funds, which shows how opinion has radically changed in relation to the man who has long advocated democratization of investments.
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Tenev’s legacy will depend on how he handles the coming weeks and any subsequent investigations into Robinhood’s actions last month.