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Sohn Conference Foundation · · 10 min

Kristov Paulus pitches Robinhood at Sohn 2025

Kristov Paulus

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TL;DR
  • The speaker—identified in the transcript heading as Kristov Paulus but introducing himself as Christoff Pollace—pitches Robinhood as a “hyperco competitor.” These organizations “build products faster,” have “incredible vision,” and are “structurally underestimated by Wall Street.” Cultura Capital Management Fund’s largest position is Robinhood, up 30% in the last five days before the presentation. His core claim is that post-GameStop dysfunction has materially changed: “the product vision was always there, but now the execution and organization have caught up.”
  • Diligence conversations with former employees and people at the company anchor the turnaround case. One described the GameStop era as “everything was falling apart”; another, who joined in 2022, said the company had grown from 300 to 3,000 people with no structure. Today, business units sit under general managers, products are shipping at “absolute breakneck pace,” and Gold, a key initiative, is finally coming together. This contrasts with the 18 months after June 2021’s 22M funded accounts, when Robinhood added fewer than 1M total accounts and wasn’t shipping products.
  • The metrics corroborate the culture story: customer retention went from 80% in 2021 to a last-12-month rate of 95%, “in line with best-of-breed enterprise SAS”; NPS rose from negative to 18, the second-highest across brokerages behind Interactive Brokers, which he says is not really comparable; and organic net deposits in the last 12 months were more than 2x the GameStop-period level.
  • The qualitative asymmetry is the $84T U.S. wealth transfer expected over the next two decades from baby boomers to millennials and Gen Z. Even excluding the top 2% of assets on the assumption they go to private banks and real estate, he sees a $30T opportunity, with Robinhood having less than 1% penetration. Robinhood has nearly 2x its closest comparable in millennial/Gen Z accounts, reaching roughly 14% of that cohort, and 75% of its users are in the cohort versus a roughly teens percentage at Schwab.
  • The catch-up math: assets per funded account are roughly $9,000 versus Schwab’s $157,000, up 58% year over year, while new account transfers arrive at roughly 10x that level, or $90,000 per account. ARPO could roughly double by 2028 and still be only half of Schwab’s ARPO per user.
  • Optionality stacks on top: crypto generates roughly 40x higher take rates per dollar traded than equities while Robinhood prices roughly two-thirds below Coinbase’s consumer pricing; retirement has more than $10B in assets, with users growing 100% and assets 140%; international has 150,000 customers and is not really factored into the model, making it “sort of a free option”; and Robinhood bought back roughly $600M in the last three quarters, with 2% of the float remaining in its existing buyback.
  • Valuation: traditional players trade at 17–24x P/E and 0.8–3x PEG, while Robinhood has 51% last-12-month revenue growth and 60%+ margins; he believes incremental margins can be higher. After noting that the stock was up 30% in five days and that the valuation figures were no longer fully accurate, he cited roughly 26x 12-month EPS, around 12x earnings in the base case, and 10x in the bull case. He views it as reasonably priced even in a negative macro scenario, while acknowledging that interest income makes it not macro-immune. Below a 1x PEG, he sees a 3-to-6-times risk-reward, betting on products that could surprise to the upside.
Digest · the substance, structured for research

1. The hyperco competitor frame — and why GameStop is the wrong prior

  • The speaker’s setup: Cultura Capital Management Fund hunts “hyperco competitors”—companies with “incredible vision” run by “leaders who will run through walls”—that are “structurally underestimated by Wall Street.” Robinhood qualifies; Vlad Tennv’s “unbelievably great hair” does not factor into the recommendation.
  • The prior he is fighting is the GameStop episode and Vlad Tennv testifying before Congress. Diligence conversations describe that era as one in which “everything was falling apart,” while another account said the company had grown from 300 to 3,000 people with no structure.

2. The turnaround is measurable, not just anecdotal

  • Robinhood’s early period, from 2013 to 2020, featured rapid product launches and growth to 10M users. During the GameStop episode, it scaled overnight to 22M funded accounts in June 2021; 18 months later, it had added fewer than 1M total accounts and wasn’t shipping products. In the last 18–24 months, the organization has changed entirely, restructuring business units under general managers and executing at breakneck pace.
  • Hard evidence: customer retention rose from 80% in 2021 to a last-12-month rate of 95%, in line with best-of-breed enterprise SAS; NPS rose from negative to 18, second only to Interactive Brokers, which the speaker says is a different and not really comparable market; and organic net deposits in the last 12 months were more than 2x the GameStop-period level.

3. The $84T wealth transfer is the mispriced qualitative asymmetry

  • The speaker distinguishes quantitative asymmetries—risk-reward and healthy valuations—from qualitative asymmetries, which he says are often mispriced: situations where “more things can go right than go wrong.” The anticipated $84T U.S. transfer from baby boomers to millennials and Gen Z over the next two decades remains a $30T opportunity even excluding the top 2% of assets assumed to go to private banks and real estate. Robinhood has less than 1% penetration.
  • Robinhood has nearly 2x its closest comparable in millennial/Gen Z accounts, reaching roughly 14% of all millennials and Gen Z. Those users represent 75% of Robinhood’s base versus a roughly teens percentage at Schwab. Assets per funded account are roughly $9K versus Schwab’s $157K, up 58% year over year, while new account transfers arrive at roughly 10x that level, or $90K per account.

4. Stacked optionality plus capital return

  • Crypto generates roughly 40x higher take rates per dollar traded than equities and remains priced at a two-thirds discount to Coinbase’s consumer pricing. Retirement has more than $10B in assets, with users growing 100% and assets growing 140%.
  • International markets are still early, with 150,000 customers, but Robinhood is making investments to enter them. The speaker does not really factor this into the model, calling it “sort of a free option.” Robinhood also bought back roughly $600M in the last three quarters, with 2% of the float remaining in the existing buyback.

5. Valuation after the run — still 3–6x risk-reward

  • The speaker’s candid caveat: Robinhood is Cultura’s largest position and was up 30% in the last five days, so the valuation figures were no longer “100% accurate.”
  • Traditional players trade at 17–24x P/E and 0.8–3x PEG. Robinhood has 51% last-12-month revenue growth and 60%+ margins, with the speaker believing incremental margins can be higher. He cited roughly 26x 12-month EPS, around 12x earnings in the base case, and 10x in the bull case. He considers it reasonably priced even in a negative macro situation, while noting that interest income means the business is not macro-immune. Below a 1x PEG, he sees a 3-to-6-times risk-reward, underwriting an organization that could surprise to the upside with products “that not even we are thinking about.”
Kristov Paulus

Hi, everyone. Thanks so much for having me. It’s a true honor, and I’m thrilled. I’m Christoff Pollace, founder of Cultura Capital Management Fund that I launched in February of last year. I’m excited to talk to you today about Robinhood—and, to be perfectly clear, not that Robin Hood. Furthermore, I’m not the CEO of Robinhood. While we can agree that Vlad Tennv, CEO of Robinhood, has unbelievably great hair, that has nothing to do with my recommendation today.

In terms of our investment process, we look for hyperco competitors. These are organizations that build products faster, have incredible vision, and are run by leaders who will run through walls. At the bottom of the slide, you can see some of the organizations that we have identified and worked with in the past. We believe that these types of companies are structurally underestimated by Wall Street, and I’m here to tell you why we believe that Robinhood is a hyperco competitor.

Talking about all this organizational excellence, that might not be your first impression when thinking about Robinhood. I think a lot of people, when they think about Robinhood, think about the GameStop scandal. Vlad ended up testifying before Congress. But that wasn’t always Robinhood. This was an incredibly innovative company from the very beginning, employing some of the smartest and best engineers in Silicon Valley, where I’m based.

Speaking with former employees and people there to understand how these organizations make decisions and assess opportunities is a big part of our investment process. In those conversations, we’ve seen tremendous organizational change since the period around GameStop. One conversation mentioned that it felt like everything was falling apart back in that era, around GameStop, and they realized they needed to be more careful. Fast-forward to today, and our conversations are saying that they’re combining the smartest engineering leaders with the best operations and finance people around the organization.

Another conversation with someone who joined in 2022 said the stock was tanking and the company was a mess. The company had grown from 300 to 3,000 people with no structure. Fast-forward to today: they’ve restructured all their business units under general managers, and they’re executing at an absolute breakneck pace, shipping incredible products. Another conversation talked about how they were shipping features rather than holistic strategies. Fast-forward to today, Gold, which is a key initiative, is finally coming together.

I’ll leave you with this one: in 2021, the company could have used more gray hairs on the executive team, which I think is a fair assessment. Fast-forward to today, the product vision was always there, but now the execution and organization have caught up.

One of the hallmarks of a hyperco competitor is product velocity. This is one of the things that we look for. If you look at the early period for Robinhood, from 2013 to 2020, they were tremendously successful, shipping unbelievable products and gaining 10 million users in short order. Then, when the whole GameStop debacle happened, they grew overnight and scaled overnight, reaching 22 million funded accounts in June 2021, when that occurred. Eighteen months later, they had added less than 1 million total accounts and weren’t shipping products.

In the last 18 to 24 months, that has entirely changed. This organization is executing better than it ever has before, and we see many different ways that they can be successful. This isn’t just on the culture side; we’re seeing it show up in business metrics as well. Their customer retention rate was 80% in 2021, and their last-12-month customer retention rate is now 95%, in line with best-of-breed enterprise SAS. Looking at net new deposits, when they had this massive inflow from the GameStop situation, their organic net deposits in the last 12 months have been more than 2x that period.

They went from a negative Net Promoter Score, a customer-satisfaction measure, to an 18 NPS. While that’s not a heroic number, it’s actually the second-highest NPS across all brokerages, second only to Interactive Brokers, which isn’t really comparable because it’s a very different market.

For our philosophy, it’s not enough to have a hyperco competitor. We pick our spots and try to find situations where we see both quantitative and qualitative asymmetries. Quantitative asymmetries are pretty well understood: good risk-rewards and healthy valuations. But qualitative asymmetries are very often mispriced, and what I mean by that is situations where more things can go right than go wrong.

Chief among those, I believe, is that Robinhood has tremendous qualitative asymmetry. The biggest piece is the $84 trillion of wealth transfer due to take place over the next 2 decades in the United States, from the baby boomer generation to millennials and Gen Z. Even if you exclude the top 2% of assets and assume those go to private banks and real estate, that is still a $30 trillion opportunity, and Robinhood has less than 1% penetration in it.

Who is going to benefit from this tsunami of cash that’s coming? When you look at the number of accounts for millennial and Gen Z users, Robinhood has nearly 2x its closest comparable, with roughly 14% of all millennials and Gen Z. Comparing that with Schwab, roughly a teens percentage of Schwab’s users are millennials and Gen Z, versus 75% for Robinhood.

We see multiple ways that Robinhood can close the gap with incumbents. If you look at assets per funded account, it’s roughly $9,000 today versus $157,000 at Schwab. Those numbers are advancing rapidly: assets per account grew 58% year over year in the most recent quarter. Even more impressively, new account transfers are coming in at roughly 10x that level, at $90,000 per account.

We think this is going to be a durable tailwind for years to come, and we believe this is a situation where many things can go right. Obviously, this is not a macro-immune business; they derive interest income, but we see multiple ways those risks could be mitigated. We talked about the growth in assets per account. Another big opportunity for them is crypto: they get roughly 40x higher take rates from crypto per dollar traded than from equities. It’s massively accretive to their business, and they’re still pricing below Coinbase, at a two-thirds discount to Coinbase’s pricing for consumers.

They’re entering new verticals like retirement, which is in excess of $10 billion in assets, with users growing 100% and assets growing 140%. They’re very early in international markets, with 150,000 customers, but they’re making the investments today to enter those markets. We don’t even really factor this into our model; it’s sort of a free option. On top of that, they are actively buying back stock. They bought back roughly $600 million worth in the last 3 quarters, and they have 2% of the float remaining in their existing buyback.

Adding all this up, as we look at their ARPO, we think that, versus today, it can roughly double by 2028. To put that into comparison, that would still only be half of Schwab’s ARPO per user.

In terms of valuation, traditional players trade at 17 to 24 times P/E and 0.8 to 3 times PEG. When you look at Robinhood, its business metrics are far superior to those of any of the companies on that list: 51% last-12-month revenue growth and 60%-plus margins. We believe there are multiple reasons why their incremental margins are even higher than that.

A couple of caveats: fortunately for Cultura, this is our largest position, and it’s up 30% in the last 5 days. Unfortunately for this presentation, all these valuation numbers are no longer 100% accurate, but we still believe this is a highly asymmetric opportunity. It’s roughly 26 times 12-month EPS; in our base case, around 12 times earnings. We think that in a bull case this could be 10 times, and even in a more negative macro situation, this is quite reasonably priced.

Assuming this trades below a 1x PEG, we still believe this is a 3-to-6-times risk-reward. Again, underwriting this business as a hyperco competitor is betting on the organizations that are more likely to surprise us to the upside with products that not even we are thinking about.

Kristov Paulus pitches Robinhood at Sohn 2025 | BidClub