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Did memestonks destroy Robinhood’s IPO chances?

February 19, 2021, 3:16 PM UTC

One thing is certain after Thursday’s Congressional hearing looking into Gamestonks: Massachusetts resident Keith Gill, a former financial marketer and one of the leading proponents on Reddit of buying GameStop stock, is not a cat.

Gill, who appeared at the nearly six-hour virtual hearing in a suit and tie from his basement vlogging set up, made the declaration right off the bat:

“I am not a cat,” he told the lawmakers. “I am not an institutional investor nor am I a hedge fund. I do not have clients and I do not provide personalized investment advice for fees or commissions.”

It was one of the few moments of clarity and directness during the hearing, which largely focused on Robinhood CEO Vlad Tenev with a minor spotlight on Citadel CEO Ken Griffin. Hedge fund manager Gabe Plotkin of Melvin Capital, whose fund lost billions shorting GameStop, was the day’s designated sad sack, beaming in to the hearing sitting next to a laser printer from an otherwise completely nondescript office. Reddit CEO Steve Huffman and the panel’s token finance expert, Jennifer Schulp of the Cato Institute, got the least airtime.

Tenev, whose 1970s-era bowl haircut was immediately meme-ed to death on Twitter, had the most at stake and his performance was shaky at best. I couldn’t help being reminded of deadpan comic Demetri Martin, who sported a similar haircut and often used the same low-key, slightly saddened demeanor that Tenev presented.

Up until a few months ago, Robinhood was a raging success story, attracting millions of young customers, forcing its rivals in the brokerage industry to eliminate stock-trading commissions, and heading to go public in a welcoming stock market. But the rise and fall of meme stocks like GameStop and AMC has exposed Robinhood to a series of embarrassments, especially when it had to shut down further buying (but not selling) of those most volatile stocks for a few days. The restrictions followed a demand from Robinhood’s clearing broker that the upstart firm post some $3 billion in additional capital overnight to cover its customers’ trades, $3 billion it didn’t have at that moment.

Lawmakers on the House Finance Committee brought up each and every one of Robinhood’s past slip-ups, including when it was fined $65 million in December for misleading disclosures about its sources of revenue and when one of its young customers, Alex Kearns, took his own life last year because he mistakenly believed he’d racked up huge losses trading options. But the memestock trading restrictions drew the most criticism.

Tenev had a mildly effective first line of defense. “I’m sorry and I apologize,” he opened with. “Please know that we are doing everything we can to make sure this won’t happen again.” He also repeatedly said Robinhood would learn from the mistakes it made. Just what were those mistakes, what was Tenev apologizing for, one rep asked.

“I, I admit to always improving,” he responded unsurely. “And certainly we’re not going to be public, perfect,” he stumbled. Asked again, Tenev went with the “that’s a great question” pivot and ran out the clock on the questioner.

Several representatives went after Robinhood for making stock and option trading seem like a video game. “We want to give people what they want in a responsible, serious way,” Tenev said unconvincingly. “Most of our customers are buy and hold.”

Demetri Martin’s best bit was a series of comedic charts, like one that graphed how cute a girl was against how likely Martin would be to listen to her cat stories. For Vlad Tenev, perhaps Data Sheet should whip up a chart of our own:

Aaron Pressman
@ampressman
aaron.pressman@fortune.com

NEWSWORTHY

You can't fight in here–this is the war room. With shortages of the hottest new video game cards bumming out its customers, Nvidia came up with a new idea to reduce demand: create cards that can't be used for cryptocurrency mining. Microsoft had a slightly more pleasing product idea, finally creating versions of its top business apps specifically for the iPad.

Reboot. The troubles on Google's A.I. research team have been generating the wrong kind of news at least since Timnit Gebru left in December. Now the company is responding by reorganizing the team and putting ethical A.I. specialist Marian Croak in charge. Speaking of tech troubles, the Supreme Court of the United Kingdom let stand a ruling that Uber drivers and other gig workers should be considered employees and entitled to certain benefits.

He's in the bestselling show. Percy made it! That's NASA's Perseverance Rover, which successfully landed on Mars right in the middle of Thursday's hearing. Now let's get excited for the first flight of the drone helicopter Ingenuity.

Mobility of the future. We haven't quite nailed 5G wireless service yet, but eventually, someday we'll start hearing about 6G. Oh wait, that's today. Apparently Apple has posted job descriptions for working on (if it's not a typo) the development of 6G products.

Shelf to shelf. The latest unicorn is of the robotic variety. Locus Robotics, which makes automated warehouse package movers, raised $150 million of venture capital in a deal valuing the Boston-area startup at more then $1 billion. Elsewhere in finance, Dropbox said it was taking a one-time charge of $400 million for office space it wouldn't need anymore due to remote working. Its shares, up 31% over the past year, lost 3% in premarket trading on Friday.

FOOD FOR THOUGHT

Zoom backgrounds have been filled with bookshelves showing off our varied libraries. But maybe instead of having home libraries, we should have home "antilibraries," posits Ness Labs founder Anne-Laure Le Cunff. An antilibrary, she explains, is a private collection of unread books.

The goal of an antilibrary is not to collect books you have read so you can proudly display them on your shelf; instead, it is to curate a highly personal collection of resources around themes you are curious about. Instead of a celebration of everything you know, an antilibrary is an ode to everything you want to explore.

The vastness of the unknown can feel terrifying, which is why many people feel uncomfortable with the idea of accumulating books they haven’t read. But embracing the unknown is what drives discovery. As Scottish scientist James Clerk Maxwell once said: “Thoroughly conscious ignorance is the prelude to every real advance in science.” An antilibrary is a reminder of everything we don’t know.

FOR YOUR WEEKEND READING PLEASURE

A few great long reads I came across this week:

Tim Cook Pivots to Fitness (Outside)
Why Apple’s CEO wants to make health and wellness the company’s greatest legacy

Instagram Fruit (Grow)
The secret behind Del Monte’s Pink Pineapple™

What I worked on By Paul Graham (paulgraham.com)
I couldn't have put this into words when I was 18. All I knew at the time was that I kept taking philosophy courses and they kept being boring. So I decided to switch to AI.

Why Were There So Many Serial Killers Between 1970 and 2000 — and Where Did They Go? (Rolling Stone)
The answer is manyfold — encompassing everything from sociological changes, to biology, to technology, to linguistics

IN CASE YOU MISSED IT

Bitcoin offers freedom from political repression—and that’s a key to its future By Alex Tapscott

How Yeti plans to make its next billion By Phil Wahba

Can LSD cure our pandemic anxiety? MindMed is spending big to find out By Jeff John Roberts

Can ‘returnships’ help companies hire back millions of working moms? By Maria Aspan and Emma Hinchliffe

Sorry, Robinhood traders. Timing the stock market is a loser’s game, new study shows By Lee Clifford

WhatsApp cofounder spent more than $300 million on L.A. mansions By Chris Morris

Avid Ventures raises $68 million for debut fund By Lucinda Shen

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BEFORE YOU GO

Andrea Capodilupo is a writer in Beverly, Mass. with what she describes as a big Italian family with 15 aunts and uncles and more than 20 cousins. And they are a hungry bunch after my own heart. Capodilupo's family will go anywhere for a good doughnut. I loved her story of the 1,000 doughnut runs her family has made. Make it a great weekend and find a great doughnut near you.