Please enjoy this transcript of my conversation with Adam Nash, Co-Founder and CEO of Daffy. We cover donor-advised funds, getting kids involved in charity, and philosophies on angel investing. Transcripts for other episodes can be found here.
“I think the center of solving problems with products and software is to just always remember that people are the heart of everything. You're solving a problem for a person.” – Adam Nash
Adam Nash is co-founder and CEO of Daffy, which is building a modern platform for giving, and in the process rethinking how we all give to the causes and charities we care about. Daffy has taken something typically only known and used by the ultra wealthy, the donor-advised fund, and made it available to anyone.
With a Daffy account, anyone can contribute cash, stock and even crypto, which is all tax deductible, and then give whatever amount they'd like to over 1.5 million charities on their platform. You can invest your contribution so that your donor-advised fund compounds in value, allowing you to give even more in the years to come, all with the goal of making giving easy and affordable enough that we can all make giving a part of our daily lives.
In this episode, we explore what Adam learned building eBay, LinkedIn, and Wealthfront and how he thinks about reshaping consumer behavior, like getting consumers to trust an algorithm, to invest their savings at Wealthfront. We talk about how the U.S. already gives 2.3% of GDP, contributing more than $400 billion to charities in 2020 alone, which is more than double major sectors like agriculture, which accounts for just 1% of GDP. We discuss why even 2.3% of GDP is too small, and how Adam is working to get that percentage up to 5% of GDP given annually through his work at Daffy. Finally, we cover everything you've ever wanted to know about giving, from how much to give to how to assess charities and how to get your kids involved in giving.
Transcript – #117 Daffy: Reinventing Charitable Giving and Building a Modern Platform for Giving | Adam Nash, Co-Founder & CEO
Daniel Scrivner (00:00:06):
Hello, and welcome to another episode of our Outlier Founder Series, where we dig into the ideas, frameworks and strategies used to build the world's best companies. I'm Daniel Scrivner, and on the show today, I'm joined by Adam Nash, co-founder and CEO of Daffy, which is building a modern platform for giving and in the process rethinking how we all give to the causes and charities we care about. Daffy has taken something typically only known and used by the ultra wealthy, which is called a donor-advised fund and made it available to anyone.
Daniel Scrivner (00:00:35):
With a Daffy account, anyone can contribute cash, stock and even crypto, which is all tax deductible, and then give whatever amount they'd like to over 1.5 million charities on their platform. You can invest your contribution so that your donor-advised fund compounds and value allowing you to give even more in the years to come, all with the goal of making, giving easy and affordable enough that we can all make giving a part of our daily lives.
Daniel Scrivner (00:00:59):
In this episode, we explore what Adam learned building eBay, LinkedIn, and Wealthfront, how he thinks about reshaping consumer behavior, like getting consumers to trust an algorithm, to invest their savings at Wealthfront, how the US already gives 2.3% of GDP contributing more than $400 billion to charities in 2020 alone, which is more than double major sectors like agriculture, which accounts for just 1% of GDP. And why even 2.3% of GDP is too small and how Adam is working to get that percentage up to 5% of GDP given annually through his work at Daffy.
Daniel Scrivner (00:01:34):
Plus, we cover everything you've ever wanted to know about giving from how much to give, to how to assess charities, and how to get your kids involved in giving. You can find the show notes and transcript for this episode at outlieracademy.com/114. That's 114. To learn more about Daffy and create your own giving account today, download Daffy from the app store or visit daffy.org. With that, here's my conversation with Adam Nash, co-founder and CEO of Daffy.
Daniel Scrivner (00:02:03):
Adam Nash, I am thrilled to have you on Outlier Academy. Thank you so much for the time and thanks for coming on.
Adam Nash (00:02:08):
Great to be here. Thanks for having me.
Daniel Scrivner (00:02:10):
So we're going to spend most of the time today talking about Daffy, but you have done a lot in your career so far. You've been a VP at LinkedIn, an entrepreneur in residence at Greylock. You were the president, CEO of Wealthfront, and you have a very long list of advisory roles, including incredible companies like Gusto and Bitwise. So can you maybe, just to start, give us a quick overview of your background and talk about how your career has progressed over time?
Adam Nash (00:02:41):
Oh, sure. Happy to. Well, like a lot of folks in Silicon Valley, I came out of school with a couple degrees in computer science. I was very focused on being an engineer. I found software amazing and powerful, this ability to encode what we want to have happen and then have it repeated almost without cost at scale was almost intoxicating back in the '90s. And then since then, I've been fortunate enough to work at a wide range of companies looking to push software into more and more areas of our lives where we can improve it. So my first job was at Apple in the old days. I saw Craig Federigh yesterday announcing at WDC.
Daniel Scrivner (00:03:18):
Did you work with him on his team?
Adam Nash (00:03:21):
He was my first manager who hired me.
Daniel Scrivner (00:03:23):
Adam Nash (00:03:24):
I'm not sure if he's happy about that or not, but I'm certainly grateful that he took the shot on me and then went to my first startup that focused on early days of software distribution. Basically, it was a company called Preview Systems. Everything that we take for granted in the app store now, we were doing badly back then. But trying to make it work in the '90s. And then went to business school, spent some time in venture capital and then did a run of really great companies. Spent four years learning product at eBay. Spent four and a half years at LinkedIn helping build that company and build out their core product function through the IPO, spent a little bit more time in venture capital and then did a wonderful run.
Adam Nash (00:04:04):
FinTech was just starting. There wasn't even a word for it. It wasn't even FinTech. But in 2012, discovered Wealthfront. Joined Andy there and helped run that company for four years. Took another breather after that, spent a little bit of time, a couple years at Dropbox helping them scale after the IPO. And then of course in 2020, in the midst of the pandemic founded Daffy where I am now.
Daniel Scrivner (00:04:26):
It is an incredible run. You mentioned at the beginning of your career, LinkedIn and eBay today may seem like old companies, but these were incredible companies, especially very early on in Silicon Valley. Just recently, I was reading the Power Law, which was just an incredible overview of kind of venture capital. And I love just they had so many incredible stories of the very early days of venture capital backed companies like eBay, like PayPal. What do you feel like you took away from the culture and the experience in those early days at places like eBay?
Adam Nash (00:05:01):
One of the interesting things about technology, it's both a gift and a curse in a way, which is technology is all about what have you done for me lately? We take these unimaginable things, right? Take eBay for example. Just the idea that you would go online to do business with someone you've never met to send them money just on the faith that random person will send you what you paid for. Obviously, we take it for granted now. Marketplaces do hundreds of billions of dollars of business online every year.
Adam Nash (00:05:32):
But that was hard to believe in the early days. So I think working at early companies, whether it was Apple, whether it's eBay, LinkedIn, Wealthfront, you get very used to this fact that in the beginning, some of the most ridiculous ideas or ones that most people have trouble imagining at scale actually turned out to be the ideas that happen, and you have to ask why not?
Adam Nash (00:05:54):
What's really getting in the way of doing it? I mean, LinkedIn is a great example where I don't think today many people even recognize or remember what looking for a job was like in the early days. Even with the internet, Monster.com. If you're looking for a job, you're going to go search job posting, submit your resume and hope someone gets back to you.
Adam Nash (00:06:17):
This world where recruiters reach out to you and actually try to sell you on joining the company may not be perfect, but it's an amazing empowerment, I think, and help for people looking to find the right role, even when frankly they're not looking and they're happily employed somewhere.
Daniel Scrivner (00:06:35):
Yeah. When we were talking about doing this interview, you brought up this concept that before LinkedIn, one, the only people that would get outreach for job offers would be people in the Fortune 500, which makes sense, but it's also staggering to think about the lack of opportunity and the lack of mobility. So it seems like part of this as well too, at least with, with LinkedIn, Wealthfront, it seems like as well too, is democratizing things and the ability of technology to be able to bring down the cost and open up the access of things that previously you just couldn't access. In the case of Wealthfront, world class, asset management, or investment management.
Daniel Scrivner (00:07:09):
In the case of LinkedIn, career opportunity, career mobility. Talk a little bit about that for a little bit and your lens on why technology is important and how it moves that needle.
Adam Nash (00:07:20):
Yeah. Well, I think the truth is if you have your eyes open for it, you'll see it in almost every great technology company and startup. Even my first job at Apple, right, taking tools and software and hardware that was unimaginable for people, normal consumers to have. And now, of course, we all have it in our pockets with the iPhone, et cetera, as an amazing thing. Like I said, for eBay, what was amazingly motivating to me was just watching how hundreds of thousands of even millions of small businesses were able to all of a sudden go online and engage with customers, right?
Adam Nash (00:07:52):
That local coin shop that used to just take care of folks who collected coins in their neighborhood could go on eBay and find a global community that was interested in their products and services. LinkedIn, like I said, I mean, you're being generous saying the Fortune 500. It was really just executives. Executive recruiters had made their business to know a relatively small number of up and coming executives that they could assign.
Adam Nash (00:08:18):
And they would build relationships, keep track of their career moves so that they would have a Rolodex available, right? A Rolodex, that sort of thing.
Daniel Scrivner (00:08:27):
Adam Nash (00:08:28):
To have that available to call them for a job. And this idea of using technology to democratize or to empower everyone to have some of those features. I mean, at LinkedIn, we really gave a lot of thought to what it meant to be in a world where your career isn't guaranteed. No one gets to work for the same company for 40 years and get a golden watch at the end as a thank you. Companies lay off people all the time. It's mostly at-will employment. So this idea of building a platform where anyone could own their reputation and their relationships, and then turning that into a marketplace where recruiters and others could find those people really meaningful if you believe that the labor market matters at scale well from the same thing.
Adam Nash (00:09:10):
You look at the wealthy. For 30 plus years, we've known what sophisticated asset management looks like. We know what the endowments do. We knew what high end wealth managers do, billionaires with family offices, et cetera. Why can't we bring that in software to more people, millions of people. Hopefully everyone. This is one of the advantages that software brings. So I love this. This is what I think technology is for.
Adam Nash (00:09:34):
As an angel investor, as an entrepreneur myself, or just as an engineer, for me, the question of why use technology is almost always the same thing to take something that was rare and expensive and make it as broadly available and inexpensive as possible. And that's a little bit of a magic of having these computers to do the work for us.
Daniel Scrivner (00:09:53):
Yeah. No, and that's so well said. You talked a little bit at the beginning about radical ideas and that obviously it's well known that investors, founders of venture-backed companies, startups are typically one optimist, which there's a lot of reasons why you're an optimist. But one of them clearly is you're in the business whether you're a founder or an investor in venture companies of taking bets on crazy ideas.
Daniel Scrivner (00:10:22):
And what I mean by that is like in the case of Wealthfront betting that a large enough mass of people would want to have an algorithm or a robot effectively manage their investments, which seems like a crazy idea from the beginning. What have you learned about being open to radical ideas and betting on radical ideas? Because I think this is an area where if you're in the tech ecosystem, you generally get it. If you're not, people just think you're investing in crazy things. Maybe that's a fine line. How do you think about that line?
Adam Nash (00:10:53):
Well, yeah, that's actually a very hard problem. So one of the things you learn early in venture capital, it's great that you read Power Law, for example. I think that does a great job telling some stories, but there's an old saying and a number of the best investors have laid out this framework. You're looking to be contrarian and right and correct. And then the problem is, listen, conventional wisdom is all around us, right? We take a lot of things in our world for granted. And the hard part is actually conventional wisdom is mostly correct. Right?
Adam Nash (00:11:24):
You have to have some humility. The world is filled with lots of smart people who've looked at problems. And chances are the solutions that you're using today, every solution, every product, every service was someone's inspired moment. And the votes of millions of people that this is the way they were going to get things done.
Adam Nash (00:11:40):
So the hard part is being a contrarian is you're going to be wrong most of the time. Right? And actually there are some sectors in some areas where that's a luxury you can't afford. It started out in software and in technology, this idea of being contrarian and right. I think it's misinterpreted. Some people are contrarian for contrarian's sake. You can do that, and there's actually some good research and evidence that it's very useful in a population and a group to have some people that are almost habitually contrarian just to widen the space of things you're thinking about.
Adam Nash (00:12:10):
But the thing I fell in love with in technology are those rare moments where, no, you think of something that isn't what everyone does, isn't conventional wisdom. You mentioned Wealthfront. The idea that people would trust their hard earned money not to another person, but to an algorithm, to software, to manage really hard to believe if you frame it like that. And you could have talked to anyone over the last hundred years, they would've been skeptical that anyone would trust money to a system like that.
Adam Nash (00:12:39):
But you can imagine a different world. So it turns out when those breakthrough, it's a big win, right? The problem with conventional wisdom is even if you're right, well, everyone knew it already, right? So that market is very competitive. It's unlikely to build a big brand new business. Being contrarian and right means that you have the chance to build something new, a new business, right? LinkedIn can come in and replace Monster.
Daniel Scrivner (00:13:02):
Adam Nash (00:13:02):
Right? So I think that's the excitement of the industry. But you have to be willing to be wrong a lot and you have to be excited about the destination. I think the center of solving problems with products and software is to just always remember that people are the heart of everything. You're solving a problem for a person. Wealthfront isn't just a tour de force of what can we do as software today, it was addressing a real need. Right?
Adam Nash (00:13:30):
Most people want sophisticated financial advice. Most of us don't have the confidence or education to believe that if we just manage our money ourselves, it will all turn out okay. And yet we know that the existing industry, the costs are so high that very few people even qualify to get a financial advisor. And so are we just happy with the world where most people can't have one or do we look for new solutions? So I think when you focus on the human problems that usually puts you in the right direction that it's the people that you're going to help who give you the clues all along the way of what solutions you could come up with that actually are valuable to them.
Daniel Scrivner (00:14:10):
Yeah. I mean, and not to put Wealthfront up on a pedestal, but I feel even more strongly maybe than you do about it, because I came from a family where both of my parents had reasonably good jobs, but they were not interested and didn't spend much time in thinking about investing. So they generally went with the defaults and their plans. As I now think back about their investment performance is atrocious. And when you think that the average American relies extremely heavily on the performance of their savings in order to fuel their retirement, it is so important that everybody has access to the best generating returns and the lowest fees possible.
Daniel Scrivner (00:14:48):
So for me, it's almost like there's a justice angle of it of just how important it is. Anyways, so I think it's incredible what you've been able to do with Wealthfront because I think things like those truly feel like technology is able to democratize something for the good of humanity, which feels really important to me.
Adam Nash (00:15:06):
I mean, listen, I think all of these solutions are just small pieces of the puzzle. But you're right. I mean, this is one of the potential things of software. And it goes beyond the products you build, right? So I'm very excited to this day that almost half a million customers are getting sophisticated financial advice at an extremely low cost thanks to a platform like Wealthfront. But I also believe that when you build new products and services, if you're right about the future, eventually what it means is that everyone's going to do, right?
Adam Nash (00:15:36):
So I used to tell the team at Wealthfront to look at companies like Vanguard. There are millions of people who get fantastic service from Vanguard every day. But Vanguard has helped far more people than just their customers because every other Titan of industry in the US and elsewhere has to change their products and services to compete with Vanguard.
Adam Nash (00:15:58):
So I used to tell the team at Wealthfront that what we were doing was bigger than just Wealthfront itself, that by innovating, by pushing the frontier of technology and service forward, we were helping all those customers of our competitors, all those customers of the incumbents who will now get better service at a lower cost because Wealthfront exists. So I think when you think about founding companies, not just as what you do for your own product and service, for your own customers, for your own employees, but what you could do for the industry, it is really inspiring, especially if you believe that it's only through action that we can change things, right? Building companies is one way that we change the market for everyone.
Daniel Scrivner (00:16:38):
Yeah. I love the way you framed that and thinking about it as a ripple of effects as opposed to just focusing on the first order effects. I want to ask one more question and then we'll move on and spend a lot of time talking about Daffy. But the question I wanted to ask was you talk about... So with radical ideas, there's two things that need to happen. Initially, you need to be able to build conviction in them to be able to move forward and believe that this is something worth doing and decide to set it on that path.
Daniel Scrivner (00:17:08):
Then once you've started, from my perspective, the hardest part is slowly incrementally shaping consumer behavior so that this thing you believed actually becomes a reality. So with something like Wealthfront as an interesting example, my guess is now as we look back, it's clear that this should have always existed and it makes a ton of sense. My guess is in the early innings, it wasn't necessarily easy. So you can get this idea right, and you still have the hard work of slowly shifting consumer behavior.
Daniel Scrivner (00:17:38):
How do you think about that? And I guess have you learned any lessons there at Wealthfront and Acorns and some of the other companies you've been a part of?
Adam Nash (00:17:45):
Yeah, I think it's a great question. Some of this has been written about when I think of real... I don't want to say titans of industry thinking, but strategists that really influenced me. I mean, going back to the '90s, Geoffrey Moore, Crossing the Chasm, I realized that those books are more than 20 years old. But this basic idea of understanding that it doesn't happen all at once, right? That for most people, they look to other people for the products and services that they use to gain confidence.
Adam Nash (00:18:15):
And by the way, in FinTech, this is even more true because money is always a trust business. As well it should be. And so I think the counterintuitive thing, when you're trying to build this big idea, you have this big idea that the whole world could be different, that millions of people could be using your service or billions. And yet you don't start with billions. You don't even start with millions. I mean, you start in some ways with your first few customers. And figuring out how do you design a great product for those early adopters that can then slowly scale over time to adjacent audiences to grow over time.
Adam Nash (00:18:48):
Geoffrey Moore thought of these as bowling pins that you knock over as you grow. But that's actually the way it works in my experience with startups and services. You've probably seen that video, that old video that goes around the internet every now and again of that one guy randomly dancing at a concert on the field. And first, you're just almost embarrassed. You're like, "Well, he's really comfortable dancing alone. He's dancing alone for a lot longer than I would dance."
Adam Nash (00:19:13):
And then suddenly a second person gets up, and a third. And then all of a sudden you realize that intuitive thing that actually, it's not that hard to join a group of three people. And it's certainly not that hard to join a group of 50 people or 100 people. So I think for founders, keeping that in mind that most of your customers in the future are not ready for you yet, that there's a whole process of phasing. There's a reason why startups and venture funding comes in phases.
Adam Nash (00:19:38):
You solve one problem at a time. This is how I feel as an angel investor. It's how I feel as a founder, and it's certainly how I pursue things. But different companies have different stories. Every now and again, you have companies that explode out of the gate and reach a large audience, and you get this amazing opportunity to then say, "Well, what do we do with this platform?"
Adam Nash (00:20:01):
Like Acorns to me is amazing. An app that started with such a simple idea. I mean, just an idea that's been around for hundred plus years, right? I mean, you remember the beginning of that movie, Up Pixar?
Daniel Scrivner (00:20:13):
Adam Nash (00:20:14):
Right? It's like putting a little bit of spare change in that jar. And so Acorns says, "Hey, there's an app for that." And all of a sudden millions of people discover that even though they used to have trouble saving money, that now thanks to Acorns, money they never saw they have a hundred, 200 bucks at the end of the month, fantastic. And what does that platform turned into now? Right. Almost 5 million paying customers who are using Acorns not just to save a little bit of money here and there, but they're saving for retirement. They're saving for their kids. It's really a phenomenal platform.
Adam Nash (00:20:45):
So I see every one of these products as the chance to build a platform where you have real power to help people with a whole host of problems. I hope by the way that Daffy ends up being the same thing for giving.
Daniel Scrivner (00:20:56):
No. I mean, I think it will. And we'll talk about Daffy and explore that now. I just wanted to say, one, thanks for throwing out a reminder to read, Crossing the Chasm, because that's still something I haven't read. And I also love, and it'll probably be stuck in my mind from now on thinking about adoption as the dancing guy video, because I think that's actually very right in many ways. That's what you're trying to build and your customer base and the first few people you're able to land and get excited about what you're building and what you're working on.
Adam Nash (00:21:25):
Yeah. It's completely true. I think it's hard because like I said, the mission pushes you to help everyone. You want to solve every customer problem. Engineers want to solve every technical problem. Marketers want to solve how to frame and understand what everyone wants to have done. But in the early days of Wealthfront, we knew that it was going to be hard to convince people to trust a computer with their money. So what did we do? We started with a lot of engineers. We figured they had a bias, that engineers happen to have careers where make early, so they did have money to invest. And also engineers businesses software. Right?
Adam Nash (00:21:59):
So if we could convince them that software was good enough to manage their money, maybe other people would look to them as relative to experts. Well, if the engineers trust the software, then I will as well. And they may not be perfect framing, but I think that too many founders just try to jump to the end, the mass market kind of view of going to everyone without thinking through, now, who are those first thousand customers who will trust you. Who are the first 10,000 customers? And then growing from there and learning.
Daniel Scrivner (00:22:27):
Yeah. And I love that idea of thinking about it in terms of bowling pins that are knocking down one another, because it's also, I don't know, just snaps into place in your mind. Talk about Daffy and I want to explore kind of giving at a high level and talk about that as a problem space, and then we'll get a little bit lower level into what you're building. But where I wanted to start was just at a very high level because you're disrupting giving. Giving obviously, I think in most people's mind is something done by the wealthy and probably the very old.
Daniel Scrivner (00:22:56):
And it clearly shouldn't be that way. It should be something that's much, much easier. It's much more mainstream that's built into our daily lives. How did you discover this problem and build conviction that this was the right thing to tackle? And then can you just share a quick elevator pitch of what Daffy is for everyone listening?
Adam Nash (00:23:16):
I'm happy to. Although, I will say I'm still okay with rich people and older people.
Daniel Scrivner (00:23:22):
Yes. I think everybody is.
Adam Nash (00:23:24):
Daniel Scrivner (00:23:25):
You should do that too.
Adam Nash (00:23:25):
Although those markets are well covered today. I think like everything, it's hard to trace a single idea, but there's a couple clues that brought me to Daffy. Clue number one was that the data doesn't really match our impression. If you look at most data in the United States, for example, the United States has often lauded as a very generous country because of its heavy philanthropy. I mean philanthropy 2020, I think it was 400. Over 470 billion was given to charity.
Daniel Scrivner (00:23:55):
Adam Nash (00:23:55):
That's more than 2.3% of GDP. That's actually bigger than agriculture. Agriculture, I think is a little less than 1% of GDP. So it's an amazingly big sector. And most of that money doesn't come from large foundations or wealthy individuals. It looks like over 60 million households gift to charity in one form or another every single year.
Adam Nash (00:24:16):
So why do we all feel like it's the province of billionaires and retirees when in reality the data says we all give. And the second clue of course is I'm a parent. I have four children and my kids go to this wonderful school. One of the things they do at an early age is every Friday they bring in spare change and they put in a little bank, right? And then every quarter they vote as a class on which local charity you give the money to.
Adam Nash (00:24:42):
And it's a one other way to teach them about giving and thinking about that process. They put a little money aside every day. I was just struck by the fact like, why do we teach our children to do this? But as adults, we don't. Who puts money aside for charity? Right? And I struggled with this a bit. And then I realized, of course, that it turns out, to your point, the wealthy do. Right?
Adam Nash (00:25:04):
donor-advised funds have existed for decades. And most people, whether they've been successful in business or otherwise, if they have a financial advisor or an accountant, at some point, they tell them, "Hey, you had a good year. You could save some money on taxes this year if you give money to charity." And people say, "Well, I don't know exactly what charity to give to yet. I've been too busy working." And say, "Well, you can put the money in a donor-advised fund. It's invested tax free. And then you can give whenever it suits you, whenever you do the research."
Adam Nash (00:25:35):
But most of us don't have wealthy wealth managers, personal accounts, et cetera. And so most of us don't ever hear that there's such a thing as a donor-advised fund. And so basically put two to two together, a little bit of the Acorns experience, a little bit of the LinkedIn experience and said, "What if we had a very simple app?" So if it's the elevator pitch, it's a very simple thing. You can download this app, set a simple goal for yourself, how much money do you want to give to charity every year? A few hundred dollars, few thousand dollars. We don't judge.
Adam Nash (00:26:10):
Whatever you give, we're happy to support. And then just decide whether you want to put it aside money every month, every quarter, every year. What are the charities you support? You can set up recurring donations. And then that money just gets put aside for you. Every month, goes into an investment portfolio. We have standard portfolios, ESG portfolios, crypto portfolios. And then anytime you want to give, you have this app in your pocket that has almost every legal charity in the US. Just with a few taps, you can give.
Adam Nash (00:26:40):
That was the idea. So I was fortunate enough to find my co-founder, Alejandro. One of my favorite engineers at LinkedIn back in the day. We built a lot of things together. He had done some work for DonorsChoose and was really inspired about philanthropy. We agreed that this wasn't going to just happen unless someone built an organization to do it. And so we founded the company.
Daniel Scrivner (00:27:02):
That's amazing. I mean, it's incredible to walk through those stats that you shared because, one, I've never heard those. And even just the stat around 60 million households, collectively giving almost the majority of donations in a year is staggering. And just even the GDP stat, I wish that was talked about more because I feel like it's very uplifting, very gratifying kind of data point, and yet it feels like all that we amplify are all the negative data points all the time.
Daniel Scrivner (00:27:32):
I want to talk about... So people give today, but people aren't aware of a donor-advised fund, which kind of gets to the, what are the hurdles that you've had to tackle in terms of educating consumers about why they should do this? Because it feels like at the high level, one, giving is accessible. You can do it and you can donate as little as $5 or $50 or $100. So just, it seems like part of it is lowering the bar for people just so they feel like it's doable for them.
Daniel Scrivner (00:28:03):
And then another piece seems like leaning into and getting comfortable with some of the sophistication and having the investments there. What have you had to overcome in terms of customer perception and customer behavior to try to get them to adopt Daffy and get comfortable with it?
Adam Nash (00:28:17):
Well, I think, I mean, there's a lot to do and there's a lot still to do because I do believe that Daffy is a bit of an outlier in the entire sector. And not to quibble with what you said, but as impressive as it is that the US gives 471 billion to charity every year or that over 300 billion of that comes from individuals. Talk about contrarian. We actually believe that that number is too small. We actually believe that if we all put money aside, for those less fortunate ourselves, we could actually be putting aside more than a hundred billion extra every year, which of course adds up to being more than a trillion dollars over the next decade.
Adam Nash (00:28:58):
But that confidence isn't just playing with numbers. It comes from the original use of research that Alejandro and I did when we started the company. So you have a lot of ideas. By the way, as an executive in residence, I had the requisite, I startup ideas list. I think my Google doc was up to 82 ideas before actually landing on Daffy. And by the way, I'll just let you know, they were not all good. Although, some of them as an angel investor, I've been able to fund on the side. You go out and talk to people. You have a hypothesis, you have to actually go talk to real people.
Adam Nash (00:29:30):
When I talked to a few dozen people about how they give, it was very interesting. Some things I was very wrong about, right? The first question I asked to people was how much do you think people should give to charity every year? I knew that people would disagree, but I thought there'd be a couple common answers. There was not. You asked 25 people that question, I'd be surprised if you don't get 20 different answers. Some people use percentages. Some are a little biblical. Some kind of use 1%. Some people use absolute numbers. Some people have caveats.
Adam Nash (00:30:00):
Once you own a house, then you can afford to give. Some people it's just religious. I always give to my church. I always give to my synagogue. So they were very consistent there. If you ask them a second question, which is, "Well, how much do you think you should give to charity every year?" They're pretty consistent, right? So at least as far as interviews go, most people, whatever they said everyone else should do, they say that they should do, or more, was the only variant. So that's great.
Adam Nash (00:30:26):
Then the third question just floored me though because the third question I asked was just how much did you actually give to charity last year? Look, people aren't good at budgeting, so I know it's a little bit of a hard question. But there was a real guilty pause there. Most of us were taught when we were young to realize that no matter what's going on in your life, that there are people less fortunate theirselves that you should be grateful for what you have. And that giving is part of being a good person.
Adam Nash (00:30:54):
What I could tell was there's this moment where people said, "Yeah, I know I'm busy. I know there's a lot going on my life." Let's be clear when I did this user research, there's a pandemic going on. People have families, people have work. There's plenty to do.
Daniel Scrivner (00:31:06):
Yeah. So you need time.
Adam Nash (00:31:07):
They felt genuinely terrible that they didn't give as much as they felt people should. They weren't living up to their own ideal. So what we discovered, of course, well, first of all was, well, software can help with that. I mean, you talked about some of the previous companies, but this idea that if you have organizations you support, you don't have to make being busy and obstacle to making sure that you give and support them.
Adam Nash (00:31:31):
You can automate that. But more importantly, what we realize is as generous as people are, they're not as generous as they want to be. We've seen a whole range of apps in the last few years with people using software to help them be the type of people they want to be. Health and fitness. Things like calm and head space where people get in the zone of who they want to be and be balanced. Why can't an app help us be generous? Right? All this software we've built, we all can shop a million ways. We save a million ways. We can invest a million ways. Why can't we make it easier to give?
Adam Nash (00:32:07):
We were surprised to find that the research supports this idea that actually people will give on average 32% more if they just pick a number and automate it. That's where the idea for Daffy was really born and where the confidence we have that even though, today, let's be clear, most people do not have a donor-advised fund. Most people do not set a given goal.
Adam Nash (00:32:29):
We asked the question of why not? Why couldn't millions of people set a goal, put money aside, and then why can't we build a community where those people educate, inspire each other and remind us all that we all actually are more generous probably than our actions would suggest.
Daniel Scrivner (00:32:49):
Yes. I mean, I love those. I love everything you shared there. I love that progression of questions. I love the way you ask them. And the way that people answered them and the fact that people one wanted to give more. And I think it speaks to the fact which you alluded to that this is a case where technology can help. Technology can bring down the friction and the barriers and it can automate something, so it requires less effort, less continual effort on your part to be able to do something that you want to do.
Daniel Scrivner (00:33:17):
I want to talk for a second about donor-advised funds because it obviously sounds very similar to primitives that we're all now very comfortable with like a 529 fund for saving for education or a 401k. Were there any good reasons you discovered why donor-advised funds were not more popular and were not more accessible or was it truly just a knowledge gap?
Adam Nash (00:33:39):
Yeah. Well, unfortunately it is all those things, right? It is a knowledge gap. I think people are not educated about it but you have to get to the heart of why. And this is where I'll lean on another business classic. Actually, one of my old advisors from business school who unfortunately is now passed away, Clay Christensen, who wrote the Innovator's Dilemma. This fundamental book about understanding that companies are actually very good. They're filled with smart people. They know who their best customers are and they optimize.
Adam Nash (00:34:11):
Unfortunately, it turns out the business model for donor-advised funds for almost all of the history I can find has been to charge a percent of assets just like financial advisors do. And the problem with that is who can afford to put aside a lot of money for charity, right? Huge amounts, multimillion dollar accounts. That's not even a 1% problem. That's like a 0.1%.
Adam Nash (00:34:34):
So what you see in the existing industry is they spend most of their time focused on the ultra wealthy, right? A donor-advised fund with a few hundred dollars. First of all, most providers won't even support it. Vanguard, Vanguard, a wonderful firm has a $25,000 minimum. If you're not willing to put aside $25,000, you can't even open a donor-advised fund at Vanguard.
Adam Nash (00:34:57):
Vanguard is a wonderful firm, but they charge a percent of assets. So for this particular area, it causes a lot of issues. By the way, it also causes issues with how willing they are to see that money go out the door because of course they lose revenue every time you actually donate. So I do think, and I talk to founders a lot about this. I do think business models have a bigger impact on the future of your company than a lot of founders give it credit, right?
Adam Nash (00:35:22):
If you build a business that's optimized for advertising, well, eventually most smart people get hired into your company will focus on how to make that successful. So this is a place where I was really inspired by Acorns and what they've been able to do with a simple subscription service. Daffy of course, is like a lot of nonprofits membership based, right? Just like there's a monthly fee to join a community center or a local zoo or even a church in a synagogue. But fundamentally, it turns out we use the same model and it actually makes us very unique.
Adam Nash (00:35:55):
So I think that the big problem is the reason the industry hasn't spent the effort to educate is that to them, most of us aren't great customers for this product. So I was excited about building a business where actually it was about people, not dollars. And the more people we have on the platform giving the better.
Daniel Scrivner (00:36:12):
Yeah. I love the way that you literally inverted the model saying, "Okay, if the rest of the industry is high minimum and a fixed percentage of assets like a wealth manager would charge, then we're literally going to invert it. One, we're going to start by being a nonprofit. And two, we're going to make it membership based. And three we're going to make it so there are no minimums. And that point you said around business model, having a huge impact on the future of your company, I think is really well said because it's not typically discussed.
Daniel Scrivner (00:36:42):
A lot of people think about the problem they want to tackle. They don't necessarily think about the vehicle they're going to take to get there, which is business model and how you derive your revenue and all of the incentives that come around that, which is fascinating. I want to talk for a second about just to make it a little bit clearer because I myself first found out about donor-advised funds. I want to say maybe three or four years ago.
Daniel Scrivner (00:37:04):
And similarly with you, it was, one, a word I had literally never heard. So my first thought was, what? This is a thing and it's a well-known thing. You can type it into Google and learn much more about it? And yet it never come up. It's relatively unique and that one, you can donate cash, but you can also, in the case of Daffy and others donate stock and crypto and appreciating assets, and then you can literally invest those as you talked about a little bit inside the fund.
Daniel Scrivner (00:37:32):
So that it's really two things. You're giving to charity, but you're also, and I think this is what got me really excited about it, you're basically developing a portfolio that as long as it's appreciating as much or more as what you're giving, it's like a reciprocal balance that never goes away. So you can put, say, a few thousand dollars inside there and have it be able to keep up and literally be giving away your investment returns, which is just fascinating.
Daniel Scrivner (00:37:57):
So talk for a little bit about how the types of assets people can put inside there and the importance of appreciating assets, and then just how the investing side of it works because I think it's really fascinating.
Adam Nash (00:38:07):
Yeah. Well, there's two sides to it, but it's a great question, and I don't mind at all. I mean, like I said, most people don't know what a donor-advised fund is. And actually one of the reasons we put it in our name, Daffy is the donor-advised fund for you is we wanted a little bit of that trust that when people heard about a donor-advised fund, they didn't think we made it up or that's some small company out in Silicon valley decided to make a new type of account and do we need it?
Adam Nash (00:38:31):
I wanted people to understand that this existed for a long time, but just like most financial services have existed for a long time, it has a number of wonderful features. So first of all, most of us know that our income isn't level. We have some good years. We have some bad years. And the great thing about donor-advised funds in our current tax system ,your tax rate goes up in good years, right? So this idea of like, "Well, if you have a good year, maybe put some of that money aside for charity," is not only something that makes sense almost emotionally in terms of how you integrate and feel by society, but also our tax system rewards it.
Adam Nash (00:39:06):
So you can contribute cash. We accept Apple Pay debit card, credit card. You can also donate stock or actually very popular this past year has been donating crypto. We accept over 120 different coins. So anything where you feel like you've made money and you'd actually like to put that aside for charity, you can do it.
Adam Nash (00:39:24):
The second piece, once you put the money inside, you contribute the money, it's invested. And we have nine different portfolios to pick from. We have standard ETFs from Vanguard. We have ESG portfolios for people who care about how that money is invested against governance, social environmental concerns. And then we have crypto portfolios because it's 2022, and a lot of people believe in the future of digital assets.
Adam Nash (00:39:47):
From our point of view, the fact that you have investing not only as excitement to people about seeing their money grow, but it also covers one of the objections that people have about putting money aside, which is like, "Well, I already have my money invested this way." If I take the money out, I'm almost losing money. So I'll wait until I know the charity that I want to give to put it aside.
Adam Nash (00:40:07):
Unfortunately in real life, it makes that decision to give harder because every time someone asks you to give, you have to answer two hard question. One, how much can afford to give? And then second, who to give it to?
Adam Nash (00:40:20):
So we wanted everything could to encourage people to take that first step. Just put that money aside. You get a tax deduction. And by the way, as that money is invested, it grows tax-free, right? Which is a fantastic benefit, especially if you're young. And then our confidence is that having this app making it very easy to see what other people are giving to, to remind you to give, to let you set up recurring donations, that we can help people be the generous people they want to be.
Adam Nash (00:40:46):
But yeah, it's all those pieces of the system. We didn't come up with them. Like I said, if you're a multimillionaire and your accountant told you to open up a donor-advised fund, you've been doing this for a while. Right? But we actually think it's a wonderful habit. The biggest change that we put in place is the pricing model, right? We're free under a hundred dollars, right?
Adam Nash (00:41:06):
By the way, if someone invites you to Daffy, you get $25 for free to give to whatever charity you care about. We do that because we believe that it's so powerful to be able to give to something you care about that we think that when people get into the habit of doing it, they'll like it. They'll like themselves. They'll like doing it and they'll keep doing it. We charge $3 a month for amounts above $300. And then of course, if you move large amounts of stock or crypto into the fund, more than $25,000, we have a higher tier of membership, which is $20 a month.
Daniel Scrivner (00:41:38):
I want to talk for a second about the other part of that problem that you just alluded to, which is who should I give to? I think the stat you guys quote is there's one and a half million charities on the platform that people can choose from. So I guess the question I'd want to just ask, and this is, one, it's subjective. I know everyone's going to weigh charities differently. But I would just love your lens as I'm sure having thought about this more than most people, one, I guess, is there anything in the app that you guys do to help people be able to find the charities that might make sense for them?
Daniel Scrivner (00:42:14):
And then do you just have any rules of thumb and it can even just be for yourself about how you think about whether a charity is a responsible recipient of funds. And what I mean by that is there's, I think, Charity Navigator and a couple of other platforms people can use where you can go and see things like for every $10 I give, how much that $10 actually goes to the cause and how much of it goes to overhead and operating expenses?
Daniel Scrivner (00:42:39):
But there's many, many other axes than just costs. So just again, one, do you do anything on the platform to help people find charities and then two, any rules of thumb or helpful tips to help people think about making sure that a charity is worthwhile to give to?
Adam Nash (00:42:54):
Well, I think you hit a really popular topic and an important one for our members, and something that we're going to keep investing in quite a bit because we actually do think that one of the benefits of having a community platform is learning from each other and actually learning about what charities and causes your friends and colleagues support, et cetera.
Adam Nash (00:43:13):
But actually we use Daffy... So we have integrated a lot. We spent quite a bit of money integrating with a number of third party data sets. You mentioned some of them. So that all the information about those charities are available within the app, right? You can use Daffy as a search engine exclusively for nonprofits. And actually some of the most popular features, when we launched the app, we had this general ability to search all these nonprofits and we discovered thanks to the pandemic, as it turns out, there's a renewed interest in local charities, food banks, helping others.
Adam Nash (00:43:43):
I think the pandemic emphasized to a lot has reminded us that despite the fact that there are global efforts and causes, we all support, that there's actually a lot of local needs right around us. And a lot of people who needed help. So one of the first features we added to the app was this ability to find the charities near you. We index them across over a dozen different causes to make it easier to filter them down, and we allow everyone to have a profile where, of course, you say which charities you support. And actually we're already seeing a little bit of this behavior, right? So we opened up invitations, right?
Adam Nash (00:44:19):
If I invite you to Daffy, you might check out my profile in Daffy and actually see the causes and nonprofits that I support. And maybe one of those will inspire you to give. Actually, one of our early investors and members actually talked about this, that one of the reasons he shares what he gives is because he's hoping it'll inspire others to give and discover the cause.
Adam Nash (00:44:40):
So we think there's a lot to do here. We've seen across the sector, a lot of wonderful groups who are investing efforts into helping people find the best organizations, et cetera. Our goal with Daffy is to pull in as much of that information as possible and integrate to help people. Because from our perspective, our mission is really simple. We exist to help people be more generous more often and we do think that seeing other people give, finding wonderful organizations, most nonprofits struggle to get anyone to know any of the work that they're doing.
Adam Nash (00:45:15):
So this is one of the places we think that technology can add a lot of value, right? There isn't a great place where we can all go. I mean, the social platforms, I mean, Facebook has done some great work with birthday campaigns, et cetera. LinkedIn, I'm very proud of the fact that products still people will list the nonprofits they volunteer at or the boards they belong to., but there's too much other stuff going on. Right?
Adam Nash (00:45:36):
I mean, this is actually one of the reasons we built LinkedIn in the first place. We knew that professional activities, reputation couldn't compete on traditional social networks with shopping, and dating, and news, and all the things that people do. I feel the same way about giving. I think there needs to be a place where people can go. They don't have to go every day, but where they can learn about other organizations, see what other people are giving to. And actually, like I said make it very easy that if they like an organization and they want to give to it, not only is that easy to do, but it's easy to do on an ongoing basis. So those organizations really get ongoing support, which if you talk to them is mostly what they want.
Daniel Scrivner (00:46:14):
Yeah. Not one-off gifts, but actually consistent giving. And just a membership base of people that really care about the cause, I'm sure.
Adam Nash (00:46:22):
Yep. That's right.
Daniel Scrivner (00:46:24):
I'd love to close this out, and then I want to ask you a few other questions, but I would love to close this portion out. For people listening, one, if you're listening, you can go to the app store and download the Daffy app. You can also go to daffy.org and sign up and create your own donor-advised fund. But I wanted to ask for people listening that maybe just want to know one, two, three, four, what are the things I should do in what order, what does that list look like? So obviously, they can go and they can download the app.
Daniel Scrivner (00:46:53):
Is there a minimum? Do you recommend people set up a donation first before looking at charities. For people that are listening and want to take action, any general advice or steps to take?
Adam Nash (00:47:04):
Yeah. For using Daffy, we've really tried to make it quite simple, but I'm glad you brought this up. The most important step you take when you download Daffy is you set a goal. You answer that question. We will ask you how much money you want to give. By the way, most people don't know how to answer that question. We have a little calculator built in. You can enter your income to know what a percentage might be. We also give you data. We've licensed data to show you what the average household in your area give to charity.
Adam Nash (00:47:32):
So you have some context. But the most important thing is to pick a goal. Then yes, automate your contributions. Right? We love people who are generous and just know that I want to donate stock. I want to donate crypto. And we let you do that. If that's what you want to do, if you just want to use Apple Pay and put money in off to the races, pick your charities, donate. It'll be great.
Adam Nash (00:47:52):
But for a lot of people, that's a lot to ask. Most people don't know all the charities that they want to support. And so, just set up a simple contribution, something every month to build that account. And then you have time to explore. Although, we have found that most people have at least a couple organizations they already support, and we've tried to make it very easy to just add them to your profile so that you can automate that right away.
Adam Nash (00:48:15):
So that's the way I use Daffy. Right? I have my funded account. I have more than a dozen organizations that I love to support. I tend to give them the same amount every year. So the first thing I did was set up all those recurring contributions. But for most people just download the app, pick a goal, set up a contribution. The rest can come. The rest can come.
Daniel Scrivner (00:48:34):
I want to ask one more question just because you brought up that you have four girls, and I've got two sons. And one of the things we talk about is-
Adam Nash (00:48:40):
Daniel Scrivner (00:48:40):
Oh, sorry, four kids.
Adam Nash (00:48:41):
It's three boys and a girl. And they're somewhat particular.
Daniel Scrivner (00:48:47):
One of the things I think every family thinks about is how to involve the family, especially young children in giving. Do you have a specific approach that you follow there or are there any general rules of thumb about how if I have a donor-advised funds, just the best way to make it a conversation topic and turn it into something that you do as a family?
Adam Nash (00:49:06):
Yeah. So I love this question. I think it's really important. I wouldn't pretend to have all the right answers here, but I have found a lot of reward in sharing the organizations and the causes you believe in with your children. If they're local organizations, usually that means you can actually visit them. And not everyone thinks that's something that they can take their children to, or they wonder what age they can be. And then of course, I think taking toddlers and preschool students to organizations sometimes isn't the best idea from a productivity standpoint.
Adam Nash (00:49:39):
But it really can be fantastic to expose your children early. I mean, in the US, most children who are looking to go to college, et cetera, know that the colleges look at their volunteer activity, their philanthropy as one of the indicators of character, et cetera.
Adam Nash (00:49:55):
But from my point of view, that's late, right? And it's almost procedural. I've gotten quite a bit of delight with sharing the organizations I'm involved with answering questions for my children and why I care about them, why we give to them. And I think there's a lot more to do there. Actually, we've been surprised when we rolled out Daffy, we rolled out individual accounts. And the first request we got was people saying, "Wait, I do this with my partner. I do this with my spouse. How can we do it where we have our own causes and charities we support, but are still giving out of one common fund."
Adam Nash (00:50:29):
And actually we rolled that out a couple months ago, which allows people to have their own charities, right? It's very often that different partners have different causes they believe in and support, but we're big believers in bringing that together.
Adam Nash (00:50:40):
So I think that including your children is fantastic. I would encourage you that it's not just about money. And in fact, I think the money can distract from this idea that just that basic fundamental gift that you give your children where you teach them that giving matters to you. I mean, sorry, not to sound too much advice, but children, it's not just based on what you say, right? Your children are always watching. They see what you do. They see what you spend time on. They see what you prioritize.
Adam Nash (00:51:14):
If you take them down places, organizations to give, et cetera, whatever you're doing, whatever activities. If you're packing up gifts for the holiday season or going to a food bank, they don't just remember what that was or where that place was or the cause what they remember is that you thought it mattered. So I think that's an important thing as a parent to just remember.
Daniel Scrivner (00:51:36):
Yeah. No, that's wonderful advice. I'd love to now take a hard left turn and talk about a few things that are not Daffy related, just because I was just researching more about your background, there's just so many interesting things that I can't help, but ask a few kind of final closing questions.
Adam Nash (00:51:53):
Daniel Scrivner (00:51:53):
One of the ones that I wanted to ask was one of the most surprising things is that you teach a personal finance course at Stanford and specifically personal finance for engineers, which is fascinating for a whole bunch of reasons. What was the origin story of that class and what are some of the topics that you cover in it?
Adam Nash (00:52:13):
Yeah, well that class is actually a little bit of wish fulfillment for me and I'm really grateful for Stanford for letting me teach it. I've now taught it for five years. We'll be teaching it again this fall.
Daniel Scrivner (00:52:21):
Adam Nash (00:52:22):
It's the class that I wish existed when I was in school and didn't, which is very practical walkthrough of almost all the topics you need to know to become an educated individual and actor in the economic world or at least that we find ourselves in. The way that the talk came into being was actually very accidental. So when I first started working through tech, I, of course, have always been interested in personal finance.
Adam Nash (00:52:48):
I think my senior project at Stanford back in the day was a better Quicken. So I've always been into this kind of area. But I started researching myself and then we had informal groups like when I graduated from school, a group of my friends formed investment clubs so we could learn about investing.
Adam Nash (00:53:01):
Obviously, I went to business school to learn a bit more, but when I started becoming a manager and then an executive, what I discovered that the companies we mentioned before, eBay, LinkedIn, et cetera, HR at the time was very risk averse about talking about anything financial even topics that every employee in a tech company has to deal with, like stock options, right? What does equity even mean? They were very unwilling to talk about it.
Adam Nash (00:53:26):
They were afraid of liability. So being a bit risk seeking myself, I started these informal groups where I would talk to my team or other folks brown bag lunches just about personal finance topics, help them with different issues. And it grew in such popularity that before LinkedIn went public, I gave this talk personal finance for engineers to about 800 people a few weeks before LinkedIn went public.
Daniel Scrivner (00:53:50):
Adam Nash (00:53:51):
The engineer branding really is just a Silicon Valley thing. It just turns out in Silicon Valley that anything for engineers is assumed to be good and everyone wants it, so that's fine. But the real topic of it was just that this is something worth learning about, that just personal finance education shouldn't just be what bits and pieces you got from your parents, from uncles and aunts. That old joke, it's the friends of your parents, the parents of your friends, personal finance is too important to leave it to chance. And most people don't have great exposure to personal finance basics.
Adam Nash (00:54:24):
So I gave that talk. It turned out a lot of other companies in Silicon Valley wanted that talk. So I ended up giving it in Facebook and Twitter. I think I gave it at over a hundred different companies. I even gave it overseas, a couple companies in Europe. But fundamentally after putting that material together, I realized it was just a talk, but maybe we could turn into a class.
Adam Nash (00:54:45):
So started teaching at Stanford, open source material, right? It's on a blog cs007.blog. You can get all of the slides. And my hope was that other schools would take a clue from Stanford and say, "This is a topic worth teaching." Because actually it shouldn't be taught in college, it should be taught in junior high school.
Daniel Scrivner (00:55:05):
Adam Nash (00:55:05):
In high school. Right? It's wrong that we send people out in the world without understanding the basics of credit and of assets and how to build wealth. But it's a passion project of mine. I'm very excited about it. Always happy to see it move forward.
Daniel Scrivner (00:55:19):
Yeah. I mean, I love it. We will link to the slides. You can find that at outlieracademy.com in the show notes for this episode. But it's amazing that all of the slides for all of the different sessions that you teach as part of that course are open source and available online. And I, like you wish that yes, this should absolutely be taught earlier on in education along with a whole host of other things like the importance of sleep, how to take care of your body, what sorts of foods should you be eating. A whole host of just general all around good topics that people should learn more about earlier on.
Daniel Scrivner (00:55:52):
I wanted to ask because you are also a somewhat prolific angel investor. A little bit about how you approach investing. And I guess what I was curious there is one thing that I've observed that I found really interesting is a lot of the repeat founders or people who, before, they ever become an investor start out founding and building multiple companies.
Daniel Scrivner (00:56:13):
When they're making an investment, a lot of that runs through the lens of focusing on the founder, why they did this, the importance of doing it, why this idea matters. Is that an important ingredient in how you approach angel investing? And if not, what's the lens that you look when you're meeting with a founder, meeting with a team to decide whether to invest or not?
Adam Nash (00:56:34):
Well, listen, the two things you just brought up, I come from a product background. So for me, the product means a lot, right? So there are entrepreneurs out there who build successful businesses, just knowing there's a market need out there and they have an amazing strategy for just reaching that need and selling to it. I'm sure those are great businesses. I'm not sure I know how to invest or pick those businesses. And what's worse is I'm not sure how to help there.
Adam Nash (00:56:58):
So I think growing up in Silicon Valley, one of the things that I internalized early is that actually there's a lot of people out there, right? If you pursue angel investing as just an investor, the likelihood that the best founders, that the best opportunities will come to you to me is that's not even random luck.
Adam Nash (00:57:17):
It's adverse selection. You have to ask why. Why are they coming to you, right? There's so many other great investors out there. So I think as an operator, it's a little easier because you know where you think you add value, right? I've done product for years. I've built growth teams, go to market and raised money, right? So there's a lot of founders who want advice on those things. What I love about angel investing is that normally in most of the business world, if you want an advisor, you have to pay them to do it. It's only in tech with angel investing where someone will give you money to fund your company-
Daniel Scrivner (00:57:51):
And then time.
Adam Nash (00:57:52):
... and then give you advice. They're paying you to give you advice. So I know that when I am looking for advice, when I look for investors, I always tell founders it's a hiring decision. And I think about the people that I need help from and vice versa. I always try to think that other way. But what you mentioned is for me, I invest very early. So mostly seed stage, right? So usually they have a team. They've built a product, but it hasn't reached scale yet. And so for me I look a lot at... I do look at product itself in FinTech, in particular. Where does this really add value, right? Is it just a distribution play which I'm not a big fan of, or is there something economically valuable you're creating there?
Adam Nash (00:58:34):
So I care a lot about the product. I care a lot about the target market. Who is that product valuable for? Where does it create value for them? And then I look at product founder fit, right? Everyone talks about product market fit, but at early stages, you often don't have evidence of that.
Adam Nash (00:58:50):
But I do care about the founder story. Is it authentic? Are they doing it because they think they can make money here or are they doing it because they have a genuine passion for the customer problem, for the product itself, the technology. Because to me it's so difficult to build a new company and to be that contrarian, to have an idea of where you could create a lot of value that if you don't have that fit, you won't have the durability, the grit to get through all the hard times. So that generally tends to be how I invest. Like everyone, you've read Power Law. It turns out most startups don't work.
Daniel Scrivner (00:59:28):
Adam Nash (00:59:30):
But yeah the great thing about when you invest this way is first of all, if you know that, that's okay. That's part of the model, right? I've actually been very disappointed. I've been on the captive with a lot of other angel investors and unfortunately one of the features, or at least one of the benefits I give to founders I work with is sometimes how to deal with difficult angels that they let into around who maybe aren't familiar with and are trying to squeeze out every dollar. To me, if you're an angel investor and you don't realize that it's really hard to build a business and most of them don't work and you probably won't get the money back, you actually, aren't a great benefit to that founder, and in some ways, your liability in both the literal and emotional sense. So I think that's just part of it.
Adam Nash (01:00:12):
And then I love angel investing because I learned so much from it. I've had a good career, had some success, a number of companies with products and services made some mistakes as well. But it's almost breathtaking to work with some founders like watching Dylan build out Figma has just been unbelievable. You mentioned Gusto. Just unbelievable. We use all these services we're using to help build Daffy. So many of them are founders and folks that I had the great pleasure of working with and funding. Just amazing to see.
Adam Nash (01:00:46):
Usually they give you ideas about what's possible. Right? Whatever bar you have for yourself, there's something about working with great people and that includes investing in them and seeing what they can accomplish that makes you realize like no, could do more. Right? They're there. It's just unbelievable. So I love it. For me, it helps me learn continuously about all the new ways to build products, all the ways to build markets and just ways to lead, which everyone has a different style, but there's a lot of room for inspiration there as well.
Daniel Scrivner (01:01:18):
Yeah. No, it's so well said. I mean, I've often equated it to being an investor in multiple companies is being a scientist where you get to observe many different experiments and parallel and triangulate between them and learn from them, because everybody has a different approach. But to go back to the point you said earlier, one of the things that I love about venture and about investing as well is it goes back to that point of you're taking a bet on a company because you believe in a team and the product, and the vision, and the founder, or the founders.
Daniel Scrivner (01:01:48):
But then you're giving them money to then be able to give them time to help, and you're also giving them money because selfishly you're going to learn a lot by watching, by observing, by seeing what they do. And there's something really beautiful there because it feels like apprenticeship, and I don't know, comradery. There's always wonderful things that come out of that.
Daniel Scrivner (01:02:07):
I want to ask one final question and I didn't do any prep for this, but you brought it up earlier in the interview and I have to ask it, which is around Clayton Christensen. Obviously, titan, for many people, in terms of the ideas he's contributed, the books that he's written. What did you take away from getting to know him and getting to work with him a little bit? And what do you hope that people remember about Clayton Christensen as a human, as a person?
Adam Nash (01:02:34):
Well, I would probably be the first to say that I don't know if I got to work with him enough. He was wonderful. It was an incredibly eye-opening experience for me. Imagine going to business school, you've heard all these different things about the sharks and the sharp elbows and the ambition. And there you're faced with a class, with a guy who had started his career on the engineering side. Actually, materials, had gone back to school because he believed there was more of a science to business, wonderful human being, family man, religious, et cetera. And yet always this curiosity , this eagerness to learn.
Adam Nash (01:03:17):
And I got to do a couple projects with him in school, like I said, as an advisor and work on disruption theory. But to me, what was really eye-opening is that when I had begun my career in technology, what goes around Silicon Valley at least back in the day was very much like, "Well, all the big companies are slow and those people aren't very smart and they're not good with computers. That's the reason why we can disrupt them."
Adam Nash (01:03:38):
It just didn't match anyone's real world experience. The people I knew from school who went to these companies, very smart, very capable. And by way, these companies have immense resources. So when Clay said, "Actually I have a different theory. My theory is actually these companies are very good at what they do. And where disruption comes from is because, ironically, the better you get at knowing who your best customers are, the more you develop and overdevelop your product for them.
Adam Nash (01:04:05):
There is this large growing audience who didn't need all those things and actually might be happier with a simpler solution based on new technologies that most of the best customers would think is terrible. And so to me, that was eye-opening because I actually prefer to live in a world where I believe that actually most people are smart and earnest, and actually take what they do for a living seriously.
Adam Nash (01:04:30):
So a world where you're only taking advantage of people who are somehow doing the wrong things that make sense to me. So I just think that combination of personal attributes that Clay had and intellectual attributes were amazing. And every time I would go back to Harvard Business School, they teach cases now on LinkedIn and Wealthfront, et cetera, I would always make sure to visit even towards the end where he was a little bit more frail. And every time I spoke to him, learned something new. So definitely one of the titans in business thinking, in my life.
Daniel Scrivner (01:05:01):
Well, in your life, and I think for a lot of people, at least mentally in terms of how to think about business, how to think about companies, I love the way you framed that around the what's wrong about how most people perceive that problem and what's right, or true. Or what's closer to the truth about the way that Clayton saw it, it is incredible. Well, this has been so much fun, Adam. I really appreciate you taking the time to come on. Thank you so much for the time.
Adam Nash (01:05:24):
No, of course. It was wonderful to be here. Thanks for having me.
Daniel Scrivner (01:05:27):
And just a final note for everyone listening. If you're interested in trying Daffy, I highly recommend it. You can, again, download the app in the app store if you just search for Daffy. You can also go to daffy.org and sign up today.
Daniel Scrivner (01:05:39):
It's very, very easy. You can also follow Daffy giving on Twitter and you can also follow Adam Nash. Adam as I said to you when we were getting ready to record, I followed you for a long time. I really love the stuff that you share. So everyone listening, I highly encourage that to also follow Adam on Twitter @adamnash. Thank you so much, Adam.
Adam Nash (01:05:58):
No, thank you again.
Daniel Scrivner (01:06:00):
Thank you so much for listening. You can find the show notes and transcript for this episode at outlieracademy.com/114. That's 114. At outlieracademy.com, you can find all of our other founder interviews, profiling, incredible companies like Varda Space Industries, Eight Sleep, Superhuman, Primal Kitchen, and 1-800-GOT-JUNK? Among many, many others.
Daniel Scrivner (01:06:21):
In every interview, we deconstruct the ideas, frameworks, and strategies they used to build these incredible companies. You can also find videos of all of our interviews on YouTube at youtube.com/outlieracademy. On our channel, you'll find all of our full length interviews as well as our favorite short clips from every episode including this one.
Daniel Scrivner (01:06:40):
So make sure to subscribe. We post new videos and clips every single week. And if you haven't already, follow us on Twitter and LinkedIn under the handle, Outlier Academy. Thank you so much for listening. We'll see you right here with a brand new episode next Wednesday.
On Outlier Academy, Daniel Scrivner explores the tactics, routines, and habits of world-class performers working at the edge—in business, investing, entertainment, and more. In each episode, he decodes what they've mastered and what they've learned along the way. Start learning from the world’s best today.
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