The problem with VC-backed founders who say they don’t care about getting rich

The problem with VC-backed founders who say they don’t care about getting rich

In the legend, Robin Hood is a beloved outlaw stealing from the rich to give to the poor.

Now the company named after the folktale—the decacorn stock trading app Robinhood—is at the center of an identity crisis as critics accuse the company of giving up their populist roots in favor of hyper-growth. While its founders may not have sought to become wealthy, they are still likely to become billionaires if Robinhood goes public, and the company’s investors are likely to be significantly enriched by a deal expected to be announced in coming months.

Robinhood’s rise and struggles in recent months are the topic of my colleague Jeff John Roberts’ most recent magazine feature, detailing the founders’ motivations and the inherent issues with them as a company scales up into a business worth $11.7 billion:

“Those who knew Tenev and Bhatt at Stanford say the pair were more bookish than boorish. Tenev says personal wealth has never been their primary motivation—notwithstanding that they will likely become billionaires if Robinhood goes public. “We both wanted to be physics or math professors,” says Tenev. “You don’t do that because you want money.” (Bhatt was on paternity leave and unavailable for interviews during the reporting of this story.) When they launched Robinhood, the duo said they were inspired by the ideals of Occupy Wall Street; their corporate namesake, of course, is a folk hero who stole from the rich. 

Still, like many of their tech-startup forebears, the founders have been criticized for forsaking populist principles in the pursuit of hyper-growth. For Robinhood, that criticism has revolved around both its gamified, casino-like design and its business model. And in the arena of options trading, the combination of those factors has put the startup on the defensive.”

Herein lies the issue for startups that say they are driven by a mission rather than money. Yes, it is possible that such founders want to make the world a better place, but they also must deliver real financial results to their venture capital backers. Hyper-growth is, after all, the name of the game.

Robinhood’s influence is hard to deny. While the company hasn’t become a verb akin to Google, its name has made its way into financial vernacular. Nothing has made that more apparent than the pandemic, when Robinhood helped fuel strange moves in the market. Remember how shares of bankrupt car rental company Hertz and equally bankrupt department store J.C. Penney soared over the summer? I can’t help but wonder to what extent Robinhood’s name has become a proxy for this new class of retail traders as a whole. In short? Read the full story here.

BLING RINGS UP A NEW FUND: Bling Capital, an early-stage venture fund founded by former Khosla Ventures General Partner Ben Ling, has raised $110 million across two funds, $77 million for its second seed fund and $36 million for a fund to make follow-on checks. Ling, who has invested in Palantir and Lyft personally and made bets on fintech Vise and at-home fitness company Tempo through Bling, plans to keep check sizes steady at $400,000 to a million per company through its second seed fund. 

Ling told Term Sheet he will stick with his wheelhouse of subscription-based businesses and mobile marketplaces. And as vaccine news stirs hopes of a return back to normal, Ling says he sees an opportunity for “a new generation of companies” to serve what will be “younger, more tech-savvy” small businesses that will spring up as others shut down in the pandemic.

The investor is also considering leaving San Francisco for either Texas or Florida, largely due to tax reasons. He wouldn’t be alone.

Lucinda Shen
Twitter: @shenlucinda
Email: [email protected]

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