Elon Asking Vlad About The Buy Button Getting Turned Off on January 28, 2021

I’ll put down the most relevant parts of the conversation here:

8:55 (Musk): Who controls those organizations, those clearing houses?

9:02 (Vlad): [Awkward pause] Um . . . you know . . . it’s a consortium. It’s not quite a government agency. You know . . . I don’t really know the details of all that.

9:15 (Musk): OK . . .

9:16 (Vlad): But, you know, and to be fair, we were . . . we were . . . uh . . . I think there was legitimate sort of turmoil in the markets. Like these are events with these meme stocks and there was a lot of activity, so there probably is some amount of extra risk in the system that warrants higher requirements so it’s not entirely unreasonable.”

**Now square this with Vlad’s earlier comments during the interview:**

4:02 (Vlad): The request was around $3 billion dollars. Um, which is, an order of magnitude of what it typically is. Right so, um.

4:17 (Musk): This seems like this sounds like an unprecedented increase in the demand for capital. What formula did they use to calculate that?

4:25 (Vlad): Well, um, yeah, just to give context Robinhood up until that point has raised, uh, you know a little bit around $2 billion in total venture capital up until now. So, it’s a big number. Like $2 billion dollars is a large number right. So, um, basically, the, and, you know, and I, the details are, we don’t have the full details, it’s a little bit of an opaque formula but there’s a component called the “VAR” of it, which is “Value at Risk” and, um, that’s based on some fairly quantitative things although it’s not fully transparent, but it’s not kind of publicly shared. So, uh, there are ways to reverse engineer it but it’s not kind of publicly shared. And then there’s a special component that’s discretionary and that kind of acts like a multiplier. And, um, basically . . .

5:24 (Musk): Discretionary, like meaning it is just their opinion.

5:29 (Vlad): Yeah, there, uh, it’s a little bit, I mean I’m sure there’s something definitely more than just their opinion.