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 very poor.

Now the business named just after the folktale—the decacorn stock investing app Robinhood—is at the centre of an id disaster as critics accuse the business of providing up their populist roots in favor of hyper-development. When its founders may well not have sought to turn into wealthy, they are still most likely to develop into billionaires if Robinhood goes community, and the company’s traders are likely to be significantly enriched by a offer expected to be declared in coming months.

Robinhood’s increase and struggles in new months are the subject of my colleague Jeff John Roberts’ most recent journal aspect, detailing the founders’ motivations and the inherent problems with them as a organization scales up into a enterprise truly worth $11.7 billion:

“Those who knew Tenev and Bhatt at Stanford say the pair have been extra bookish than boorish. Tenev says own prosperity has hardly ever been their most important motivation—notwithstanding that they will likely become billionaires if Robinhood goes public. “We both required to be physics or math professors,” states Tenev. “You really do not do that mainly because you want funds.” (Bhatt was on paternity go away and unavailable for interviews through the reporting of this story.) When they launched Robinhood, the duo reported they have been encouraged by the beliefs of Occupy Wall Avenue their company namesake, of system, is a people hero who stole from the loaded. 

Nonetheless, like many of their tech-startup forebears, the founders have been criticized for forsaking populist concepts in the pursuit of hyper-advancement. For Robinhood, that criticism has revolved all over each its gamified, on line casino-like design and its business product. And in the arena of selections buying and selling, the blend of those people elements has set the startup on the defensive.”

Herein lies the situation for startups that say they are pushed by a mission instead than income. Yes, it is feasible that such founders want to make the globe a better place, but they also must produce actual money benefits to their venture funds backers. Hyper-expansion is, just after all, the identify of the activity.

Robinhood’s affect is difficult to deny. Although the company hasn’t turn out to be a verb akin to Google, its title has built its way into monetary vernacular. Nothing at all has created that a lot more apparent than the pandemic, when Robinhood served fuel weird moves in the sector. Bear in mind how shares of bankrupt automobile rental corporation Hertz and similarly bankrupt department shop J.C. Penney soared over the summer months? I just cannot enable but wonder to what extent Robinhood’s title has come to be a proxy for this new course of retail traders as a complete. In small? Read through the full story below.

BLING RINGS UP A NEW FUND: Bling Cash, an early-phase undertaking fund started by former Khosla Ventures Standard Spouse Ben Ling, has raised $110 million across two funds, $77 million for its 2nd seed fund and $36 million for a fund to make stick to-on checks. Ling, who has invested in Palantir and Lyft individually and designed bets on fintech Vise and at-residence health and fitness company Tempo through Bling, designs to maintain verify dimensions regular at $400,000 to a million for each enterprise by means of its 2nd seed fund. 

Ling instructed Term Sheet he will stick with his wheelhouse of membership-centered businesses and cell marketplaces. And as vaccine information stirs hopes of a return back to ordinary, Ling states he sees an option for “a new technology of companies” to provide what will be “younger, far more tech-savvy” compact corporations that will spring up as others shut down in the pandemic.

The trader is also thinking about leaving San Francisco for possibly Texas or Florida, largely thanks to tax good reasons. He would not be by yourself.

Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com





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