Want to join the conversation? Connect with us on Tribe.
Find “Founders in Arms” on Apple Podcasts, Spotify, and YouTube.
Transcript of our conversation with Adam Nash:
00:00:00:00 - 00:00:07:10
Unknown
it turns out that for decades, there's been this account in the US called the donor Advised fund that most people have never heard of.
00:00:07:12 - 00:00:27:20
Unknown
But it's kind of the perfect account. If you care about giving to charity, right, you put money aside or you can put stock in it. Crypto, very tax efficient. The money is invested tax free. The problem is the market's mostly oriented that product towards the wealthy. And, and we have a number of large accounts of Daffy now six, seven, eight figure accounts.
00:00:27:22 - 00:00:40:21
Unknown
But a lot of the motivation for Daffy was this idea that, you know, about 50 to 60 million households in the US give to charity every year. Could we turn this into a product for everyone instead of just for the wealthy?
00:00:45:02 - 00:00:50:04
Unknown
Hey, everyone, welcome to Founders in Arms with me Immad Akhund Co-founder and CEO of Mercury
00:00:50:08 - 00:00:57:16
Unknown
And, Raj Suri, co-founder of Lima and Tribe. And today we have with us Adam Nash, founder CEO of Daffy. Welcome, Adam.
00:00:57:16 - 00:00:59:20
Unknown
Glad to be here, Immad, Raj. Thanks for having
00:01:00:11 - 00:01:06:06
Unknown
Adam was actually at Wealthfront as the CEO there for the two years or three years.
00:01:06:22 - 00:01:27:12
Unknown
Yeah. It was, I joined initially as the COO it was kind of a transition. I was, at LinkedIn. We, we did actually a very good CEO transition. Which is very rare, I think, for startups, etc.. Watching how Reed hand it off to, to Jeff Winer. And obviously that's, you know, fraught with, with problems.
00:01:27:12 - 00:01:37:07
Unknown
And so, and well, from we tried to do the same thing where I came in for a period of time as a COO and then was a CEO through 2016. So I was there about four years
00:01:38:14 - 00:01:40:18
Unknown
So that was just before you started. Daphne, right?
00:01:40:18 - 00:01:45:15
Unknown
Yeah. There's a gap in there. I spent some times in the er, Greylock.
00:01:46:04 - 00:01:47:06
Unknown
And Dropbox.
00:01:47:06 - 00:01:48:18
Unknown
a Dropbox too, of course.
00:01:48:18 - 00:02:06:05
Unknown
Yeah, yeah. It was the chief product officer of Dropbox. And, And before that, I mean, you've had a storied Silicon Valley career. I mean, you know, well, when I think about, you know, who's had, like, some, you know, some of the most illustrious career, I know it's you and people like Josh Altman and stuff, like you've done some really cool things.
00:02:06:05 - 00:02:07:18
Unknown
You started off at Apple, didn't you?
00:02:08:01 - 00:02:15:05
Unknown
Yeah. It's funny you say that. Things always look different going backwards. And then at the time, there was no master plan.
00:02:15:05 - 00:02:17:18
Unknown
that's a Steve Jobs quote right there.
00:02:17:18 - 00:02:19:18
Unknown
Yeah, we
00:02:19:18 - 00:02:21:06
Unknown
connected the dots right.
00:02:21:06 - 00:02:30:04
Unknown
Stanford graduation speech. But the, It's actually funny when I think about it. When I was at grad school at Stanford and looking at those first jobs, etc..
00:02:30:05 - 00:02:44:18
Unknown
I cannot tell you how negative folks were about Apple at the time. I mean, I literally had a bet with, a roommate that Apple was he beat me that Apple was going to be out of business within five years. But I actually didn't think I was joining Apple, and I was interviewing with next.
00:02:46:06 - 00:02:49:02
Unknown
a friend of mine who was a lecturer at Stanford had worked in next for some time.
00:02:49:02 - 00:03:00:15
Unknown
There was a lot of connections there. And I interviewed with Craig Federighi and, and the rest of the Web Objects team, and then I got this funny email in December that said, hey, we're going to go dark for a little bit. But don't worry, we still love you.
00:03:01:13 - 00:03:02:18
Unknown
The.
00:03:02:18 - 00:03:08:12
Unknown
middle of my interview process, of course, the, you know, the whole Steve coming back Apple by next year.
00:03:08:14 - 00:03:10:19
Unknown
I don't know if the next by Apple that Apple by next I
00:03:11:11 - 00:03:13:02
Unknown
Apple. But next.
00:03:13:02 - 00:03:30:06
Unknown
But that's how I ended up my first job at Apple. But yeah, I went through Apple. Went to a startup after that, in 98, 99 and went public in 99 business school. And then it was kind of eBay, LinkedIn, Greylock, Wealthfront, that sort of sort of run.
00:03:30:21 - 00:03:38:06
Unknown
Yeah. And. Daffy. Now, why don't you tell us, what Daphne does is a very interesting company. Relevant to a lot of founders. I think.
00:03:38:20 - 00:03:59:18
Unknown
Yeah. I mean, you can look at Dow for a number of different ways, but but the simple idea is it's a very simple app that makes it easy to put money aside for charity. Right. You get the tax deduction up front. The money is invested tax free. And then any time you want that money to go to any of the 1.7 million or more legal charities in the US, it's just a few taps on your phone.
00:03:59:20 - 00:04:19:03
Unknown
The name comes from, well, you know, there's always a liability letting an engineer name things, but, you know, I guess even very daffy is the donor advised fund for you. So the donor advised fund is actually the heart of this, which is that it turns out that for decades, there's been this account in the US called the donor Advised fund that most people have never heard of.
00:04:19:05 - 00:04:39:13
Unknown
But it's kind of the perfect account. If you care about giving to charity, right, you put money aside or you can put stock in it. Crypto, very tax efficient. The money is invested tax free. The problem is the market's mostly oriented that product towards the wealthy. And, and we have a number of large accounts of Daffy now six, seven, eight figure accounts.
00:04:39:15 - 00:04:52:14
Unknown
But a lot of the motivation for Daffy was this idea that, you know, about 50 to 60 million households in the US give to charity every year. Could we turn this into a product for everyone instead of just for the wealthy?
00:04:53:12 - 00:05:05:07
Unknown
Do you think about Daffy as like, a philanthropy business by itself? Or do you think about it as, like, a startup that's going to be like a huge $10 billion plus egg set at some point.
00:05:05:15 - 00:05:29:13
Unknown
No, I very much think of it as a startup. And actually, that's not, just a motivation for the team, etc., or to, you know, get investment. I actually think it's it's necessary, for what we want to do in the sector. Right? I mean, philanthropy is a huge sector. I mean, last year, I think 557 billion went to charity in the US.
00:05:29:13 - 00:05:50:11
Unknown
Just one year. That's about 2% of GDP. It's much bigger than a lot of other sectors that we talk about agriculture, etc.. But if you look at it, it's highly fragmented. And in this kind of state, because it isn't the primary focus for a lot of folks, and there's no really great technology platform company at the heart of it.
00:05:50:13 - 00:06:11:01
Unknown
And so I think there's role I'm I'm fairly optimistic about company formation organizations. I don't think venture backed companies are the only types of companies or the or the necessarily the best types of companies for different types of problems, but for giving, I just look at all the innovation that's been going on around better ways to spend, better ways to save, better ways to invest.
00:06:11:03 - 00:06:31:09
Unknown
And I really think that one of the reasons that we haven't seen that technology migrate into philanthropy is there hasn't been a company, an organization built from the ground up to really innovate and kind of drive that way. And so, actually, Daffy was really based on this idea that we could build a venture backed company in that space that made a meaningful difference to
00:06:32:09 - 00:06:51:23
Unknown
Do you also help people pick charities? I feel like it's actually kind of tricky to go, like, you know, like analyze a charity. Like, how much are they actually spending on, you know, giving versus marketing versus, like, CEO salaries, like, all of these kind of factors that like, actually make like, you know, giving money away, not necessarily like that.
00:06:51:23 - 00:06:52:19
Unknown
Easy.
00:06:53:06 - 00:07:17:03
Unknown
Yeah. So we do, although we're I think we're tiptoeing into it a bit because, as you mentioned, it's a hard problem. But but that problem is actually a very big one. One of the reasons it's such a big problem is that we actually don't talk about the organizations that we give to. Enough. You know, a lot of us don't know the organization, like, a lot of people actually struggle to even find the organizations locally.
00:07:17:05 - 00:07:33:18
Unknown
One of the fun features in Daffy is that, you know, we were mobile first. That makes it very easy to see the charities near you. Like, it opens up a map and it shows you color coded different organizations near you by cause, etc. but even simple things like, you know, around the holidays, people wanting to volunteer at a food bank.
00:07:33:20 - 00:07:51:06
Unknown
Most people don't even know where those are near them, etc.. And so, one of the things we built into Daffy from day one, which will sound so obvious to you too, because, you know, internet and that sort of thing is, just the ability that when you make a donation to a charity, we give you the option of leaving a public note about that charity.
00:07:51:07 - 00:08:09:18
Unknown
So every charity in the US has a page on Daffy. And when Daffy members make a donation, they can leave a note that explains why they give. And these notes are wonderful, right? They say things like, you know, this is the organization that took care of my father, you know, in the last years of his life, or this is the organization that I volunteered at for over 30 years.
00:08:09:18 - 00:08:28:12
Unknown
And what we do and, I think a lot of that content, frankly, is missing from the internet. It's a little bit too much about IRS data. And as you said, you know what? Percent of expenses go where when really, I think when people give, they're looking for also an emotional connection, to the cause and the organization and, and trust.
00:08:28:12 - 00:08:47:18
Unknown
And so, the biggest thing we've done in that space, believe it or not, is actually this is our our new feature. The last couple of years, it's really been taking off, campaigns. So we, you know, internet campaigns have been around for decades. Donor advised funds have been around for decades. But one of the our motivation andthey is, is how do we help people give.
00:08:48:00 - 00:09:16:19
Unknown
Right. Literally, our mission is to help people be more generous more often. And we said, hey, if you have a donor advised fund, instead of making a donation to a charity, why not run a matching campaign for that charity? Right? If you were going to give $1,000 to an organization, you could instead match $1,000 of other people's donations and a lot of nonprofits see that as a more, energized way to get more people involved with the organization and connected.
00:09:16:21 - 00:09:33:09
Unknown
And so, that's a lot of what we've been focused on is just kind of taking a lot of the pieces around the tech world and around the nonprofit sector and rethinking from the ground up, how can we help people inspire others to give and get the confidence, to actually give to organizations that they may not have supported before?
00:09:34:11 - 00:09:52:22
Unknown
I really like the idea of, local stuff. I feel like actually, smaller charities that the local things are, like, more effective. Right. They don't have like, these, like, must do international campaigns and weird places kind of thing. It's just like, hey, there's a small problem locally, and you can help. And I like the idea of having, like, your family involved.
00:09:52:22 - 00:10:06:19
Unknown
More like, I would love for my kids to go do, you know, give food away, to homeless people and things like that. But it's hard, like, it's, you know, there isn't, like, an easy way. You just go somewhere and say, like, how could my kids be involved in charity?
00:10:06:19 - 00:10:28:00
Unknown
Yeah, there's a huge gap. It's amazing. Despite decades of us building these applications and aggregating data, how many of these very real life problems are still done by word of mouth and almost ad hoc? And I agree with you. And it actually isn't hard. There are there usually are local organizations that are set up to take volunteers and have those experiences.
00:10:28:01 - 00:10:49:22
Unknown
It's funny, there's always that tension. I feel like there's, a seesaw built into the market, you know, almost. I don't wanna say it's faddish, but there's some times where people really want to focus on global problems because of the scale and the impact and how many millions of people need help and these giant problems. And then sometimes there's a recognition that, you know, actually that connection matters and time matters.
00:10:49:22 - 00:11:16:23
Unknown
And, you know, if you don't step up to help people locally who will riot. And so there's always this natural tension. But I think it's wonderful to teach these traditions about giving. It's been one of the great things about building a product in the space. I've always loved building products with deep emotional connection. Right? For me, you know, my background, even though, my undergrad is in, but was focused on engineering, my, I, I ended up going to human computer interaction.
00:11:16:23 - 00:11:39:07
Unknown
Right. So more a little bit design and design centric thinking. And so, for me, when you're in a product space where people actually deeply care about something, it's such a rich environment to design products and build products, and giving just has turned out to be a wonderful space, to build in, because people, it is a financial task, but it's so much more than that for most people.
00:11:39:07 - 00:11:46:19
Unknown
And that gives you the opportunity to connect with people. I think with a product and service in a way that's hard when it's just dollars and cents.
00:11:47:00 - 00:11:58:17
Unknown
A so cool. Adam. I can see how that would be super motivating. You know, like, I find also, like, my work in, like, immigration stuff is very motivating for that reason where you're helping underdogs win, right? So,
00:11:58:20 - 00:12:23:04
Unknown
Well, the truth is every I've been fortunate you talked about kind of the the career and different companies I work for. But I've always I mean, I, I've mostly been in product roles across the companies I've been at. And, if you dig on to the surface, anything that finds product market fit, any, any software product that really goes the distance to scale, it's the humanity under it that's driving it, right?
00:12:23:04 - 00:12:39:08
Unknown
Like the real needs. Right? Like I eBay, you could look at eBay as a marketplace and just be fascinated with the idea of like, wow, a marketplace for any good. And how do you price it and how do you match supply and demand, etc. you can do that, and that's valuable. And some of the best innovations eBay had back in the day were around that.
00:12:39:10 - 00:12:47:15
Unknown
But what motivated me was, I remember the first time I went to an eBay live, and met these sellers and you realize like, wow, for millions of people, an extra few hundred
00:12:48:02 - 00:12:51:07
Unknown
Well, eBay did like eBay live auctions. Like in person.
00:12:51:10 - 00:13:13:01
Unknown
Oh, they did, but that's not I mean, they actually ran these conferences, called eBay live, and they would do them in different cities around the country and thousands of sellers would make this pilgrimage, sometimes from around the world. Just to learn more about the platform and, and what you discovered. I remember I one of the first features I worked on was actually to help people sell in bulk on eBay.
00:13:13:03 - 00:13:32:02
Unknown
Lots. It was, you know, people would buy in bulk wholesale, like large amounts and then sell them piecemeal on eBay. And I remember meeting this woman who, saw me talk about the feature. She came up to me after and said, you know, I love eBay. And, you know, thanks to eBay, I'm making an extra, I forget what it was a 7 or $800 a month.
00:13:32:02 - 00:13:52:04
Unknown
It's enough to cover her kids, preschool. And she was talking about, like, I'm hoping, you know, my child. You know, it's a gifted school. Maybe they'll grow up and work for a company like eBay someday. And these are very meaningful things. And so, like, when I looked at eBay, I would see the small business owners and the people who are using eBay to find income where they didn't before.
00:13:52:04 - 00:14:11:09
Unknown
At LinkedIn of course. I mean, it's so easy to focus on high end careers, etc. but the truth is, the passion that LinkedIn was just always just. Most people don't even know what opportunities are available to them, and most companies don't even know what great talent is out there. And and that's a very human problem at the heart of the labor market.
00:14:11:11 - 00:14:35:23
Unknown
Well, front. Right. I mean, how many of us struggle with even defining or talking about our financial goals, let alone putting in place a strategy that hit them? And so, and then obviously Daphne's focus on giving. So for me, as a, as a, as a product leader, it's always been best for my personal kind of inspiration to go underneath and understand, really, who are the people using this and where are you creating value for them in fintech?
00:14:35:23 - 00:14:55:19
Unknown
I think there's too many people. I meet founders, obviously as an angel investor, too many founders to focus on. Can I sell this? Can I make money doing this versus are you actually creating economic value for people? And is it meaningful? And so for me, I love working on products, when I know the meaning behind them.
00:14:56:02 - 00:15:18:19
Unknown
You know, Wealthfront is kind of like an OG fintech company. A bit of, inspiration to, people like Mercury. You know, you haven't been there for 87 years. But they just filed for, private, S-1 filing. So I guess they didn't reveal the numbers, like, you know, what does it what did it feel to you as, like, being an ex-CEO that now, like.
00:15:18:19 - 00:15:25:20
Unknown
Yeah. I guess it's not the end of the journey, but, like, this big milestone, like, you know, what was your reaction?
00:15:25:20 - 00:15:49:14
Unknown
now, having been through two IPOs myself, it is not the end of the journey, let me tell you that. Hey, it's, And in many ways, it's just the beginning of, of, of scale, but, but no, it's obviously rewarding to see it happen. I mean, I mean, you guys know this as founders, but, there's just it's so hard in the early days, so many people that every.
00:15:49:15 - 00:16:05:09
Unknown
I can't tell you how many people. When I went to LinkedIn, obviously, I went to LinkedIn several years after I was founded. Matt Reed and and, you know, did some of the best work of my career, at LinkedIn. But I cannot tell you how many people at LinkedIn, those early days were like, yeah, but how are they going to make money?
00:16:05:11 - 00:16:10:15
Unknown
Like, will they ever make money? I mean, I think LinkedIn lastly, I don't want to get it wrong. I is somewhere between 15 and $20
00:16:11:03 - 00:16:13:05
Unknown
Yeah. It's insane.
00:16:13:05 - 00:16:21:07
Unknown
cannot tell you how many I was point on recruiting, etc. how many engineers like, yeah, but who's ever going to pay to post their resume online isn't it?
00:16:21:08 - 00:16:46:06
Unknown
Can't they just use a homepage? I mean, these things always sound ridiculous 20 years later, but you know, well, front. Oh my goodness. Just, the skepticism that anyone would trust a computer with their money, and or this idea that, you know, there's this ongoing fight or debate about whether, you know, a computer could give real financial advice versus a, human.
00:16:46:08 - 00:17:00:04
Unknown
It just seems ludicrous in retrospect. So it's so rewarding. Actually, it's it's more the scale of Wealthfront that really impresses me now. I mean, when I think about it now, like a million or more clients, you know, $80 billion. And the fact is, those numbers will get bigger.
00:17:03:06 - 00:17:16:20
Unknown
I guess when you were there, you know, I don't, I don't know if it's public or whatever, but presumably it was just a few billion. Is it just like this compounding thing or it just, like, grows and grows like. I mean, it's been going on for, like, almost 20 years, right?
00:17:16:20 - 00:17:34:08
Unknown
Well, you know, they pivoted early, but, you know, when I was first talking to Andy, and Dan in 2012, I mean, I think when I started, showed up in the office in December of 2012, I think, I don't wanna get the numbers wrong. I think it was about 80 million in assets and a little over a thousand clients.
00:17:34:08 - 00:17:36:07
Unknown
80 million. Wow. Okay.
00:17:36:07 - 00:17:55:10
Unknown
Yeah. And so, like, and our big race actually then was was to a billion. It was like, hey, this is a trust business. If Wealthfront manages $1 billion, then people will be willing to trust with 50,000 or 100,000, right? Like, no, no. You know, everyone looks at the scale, the platform kind of that trust thing.
00:17:55:10 - 00:18:16:00
Unknown
But, I can't tell you the skepticism. There were so many startups before Wealthfront that it set out to do similar things, and they had all plateaued at about 30 or 40 million and assets. Right. Like you got early adopters, people who are ready to try new tech. And so, the skepticism was really, really high. But yeah, it is a, you know, these type of businesses.
00:18:16:00 - 00:18:32:06
Unknown
The thing I love about businesses that are based on long term like that aren't transactional businesses. They're based on long term relationships, is they do compound over time, right. If you do a good job with your customers, trust them, etc., they grow with you,
00:18:34:08 - 00:18:42:19
Unknown
businesses tend to love this, right? Because you you support a lot of companies and companies grow and mature over time, and you tend to grow with them, like your services to them.
00:18:42:21 - 00:18:49:05
Unknown
It turns out that that's true in the consumer space too. But, you can lose that when you build a transactional business, right? When you're focused.
00:18:50:01 - 00:19:00:08
Unknown
The Groupon. Groupon is. Groupon is the example of that, right? It's like flash in the pan. They didn't really build long term relationships with their customers.
00:19:00:08 - 00:19:02:20
Unknown
It's still a $2 billion company. But. Yeah.
00:19:02:20 - 00:19:23:19
Unknown
be clear. There's some very, very big companies that are based on transactional businesses. But like even in retail, when I was at eBay, I was the guy who loved Costco and Price Club before it, before they merged, etc. I was like, wait, maybe there's another model. The reason I love it, I think, is, is a little bit of that product basis is that when you have a subscription business, a membership business, what what are the product managers?
00:19:23:19 - 00:19:42:10
Unknown
What does the team end up focusing on? Right. Three things. One like how do we acquire customers? Most people have never heard of us, you know, what do we tell them? Like what? What makes them take the leap to try this thing? Once they're customers, like, every month, how do we earn their business again? Like, why are they staying?
00:19:42:10 - 00:19:57:14
Unknown
You know, like, what are they using? Like, what's creating value for them? What are they willing to pay for? And then of course, our, you know, nemesis churn, right. Like what? What causes them to leave or give up, you know, etc.. And so I just think as a business like, forget product for a second, this is a business.
00:19:57:16 - 00:20:21:01
Unknown
What a healthy set of customer centric concerns is to orient your whole team around. Whereas in transactions you tend to get a little bit away from that humanity. It tends to be like, how do I close the sale? How do I get a bigger ticket size? How do I improve my take rate? What I love about subscription businesses, is that it orients the whole team on basically that ongoing relationship.
00:20:21:01 - 00:20:41:16
Unknown
Your ideal is to have customers that are with you for years or decades. And I, I brought that at LinkedIn. I always felt like what was great about LinkedIn is that this is something that people would use throughout their careers, which is measured in decades. Financial advice at Wealthfront, once again, decades, right? Like these goals, etc. people want to save for their retirement, their kids, college.
00:20:41:16 - 00:20:42:03
Unknown
All these things
00:20:42:03 - 00:21:12:21
Unknown
What do you think Wealthfront did right. In terms of, like, building that trust with customers? You know, with Mercury, that was always. And that I would say continues, even though we are much more mature, it continues to be like one of the hardest things. It's like, how do you get people to trust a fintech? And mostly a digital experience with like, all this money, often say the story we had, after we launched, we launched on a Tuesday on, on Friday, someone wired $1 million to a new mercury bank account that just created.
00:21:12:21 - 00:21:29:17
Unknown
And I'd never spoken to the person, which I thought was, like, completely insane. But obviously, like, people kind of, you know, we'll often think about, like, how do you build trust? But, you know, to some extent, we're doing on the back of people like Wealthfront that have like trained people to be and are happier by using fintech.
00:21:29:17 - 00:21:33:20
Unknown
So, you know, what do you think about funded right in terms of like getting people to trust it?
00:21:33:20 - 00:21:39:15
Unknown
And you just announced, mercury investing. Right? So you're like, you know, you do something in this space
00:21:40:13 - 00:21:49:08
Unknown
I guess there's a small bit of competition, but, you know, a long way to go. We have, you know, a passive investing thing as part of our personal banking product.
00:21:49:11 - 00:22:14:00
Unknown
Yeah, well, by the way, am I. I'll tell you, I have literally a text on my phone from yesterday. From a venture capitalist who is just effusively positive about the Mercury personal Bank is, I'll just say, like you guys are doing an amazing Mercury is is is one of my, well, it's one of those feelings where I feel like so impressed with what you've built and the product and the service and use it.
00:22:14:02 - 00:22:17:20
Unknown
And then there's that little part of me that says, like, yeah, but I'm not an angel when it
00:22:18:02 - 00:22:25:05
Unknown
Yeah. Yeah. Sorry. Out of you can to partake in our series D.
00:22:25:05 - 00:22:26:04
Unknown
It's never too late.
00:22:26:04 - 00:22:34:02
Unknown
but no, you asked a good question about Wealthfront. And I think it gets a little bit to my philosophy about building out products and that initial.
00:22:34:02 - 00:22:54:07
Unknown
I'm a little old fashioned that way. I think the biggest problem that startups have, especially, products and go to market, is they get confused by what big companies do, you know, in micro, I've worked at small companies, midsize, large public companies. The problems are different. The challenge for the business is different. If you're trying to build trust, you can't design for everyone, right?
00:22:54:07 - 00:23:19:10
Unknown
Like you can't go for the mass market from day one, right? Like you're not going to hit everyone. You're not going to make everyone happy. You have to actually go for a subset of the market that really is feeling some pain and will be effusively positive about the solution you're building. And so, you know, well, from the early days, I think the most brilliant thing they did, actually the pivot was, was brilliant, as it turned out, right.
00:23:19:10 - 00:23:40:18
Unknown
They originally were a little bit more about building portfolios of stock and competition. They were a Facebook game when they were catching, and Wealthfront came out of the idea of trust, which was, hey, the most trustworthy financial product is just going to be a low cost, diversified portfolio of index funds. It may not be sexy or exciting, but that actually is the most trustworthy thing.
00:23:40:18 - 00:24:05:00
Unknown
It's what all the academics recommend. It's it really has the most grounding. And so that was where I product and then this. But the biggest thing they did to build trust was in the early days, they focused very much on a subset of the market. Not even just millennials or young people making money. In the early days, it was very focused on like, hey, where is this sector where young people are finding success today?
00:24:05:00 - 00:24:31:12
Unknown
Oh, technology. Right. What do what if Facebook engineers or Google engineers want what do what do designers want right from a financial product and service. And what that let Wealthfront do is actually focus their design on really making that group, not just try the product, but actually love it and recommend it. I mean, to this day, well, fund gets a huge percentage of their customer acquisition from referrals.
00:24:31:12 - 00:24:35:01
Unknown
And so I think that, you know, as well, friends scaled. They broadened out
00:24:35:01 - 00:24:44:17
Unknown
They would also go to like Facebook and like tell the engineers about like this is how you do wealth management. Right. Like there was like this kind of things that don't scale element to to that as well.
00:24:44:17 - 00:24:57:21
Unknown
number of that. Although that was a little bit. Yeah a little bit brand building. The truth is when we would go to a company like I do a talk personal finance for engineers, I did it before Wealthfront. I've done it after, I even teach a class at Stanford now.
00:24:57:23 - 00:25:13:17
Unknown
But I would do that class for free, and I think I did it for at over 100 companies, both. It was a little bit of brand building. Right. Like there was that Business Insider post that went out, like, see the presentation that every Twitter employee got before the IPO. But that was me. That was that was us.
00:25:13:17 - 00:25:42:01
Unknown
That was well, front. And so there were a lot of people who said, hey, if this service is good enough for the smart people who work at Facebook, Google, Twitter and that sort of thing, then, it's good enough for me. And so, I do think that the way trust building works with stars, especially financial products, I don't know if you guys remember, the Geoffrey Moore series of books from the 90s, crossing the Chasm, Inside the Tornado, etc. but one of the takeaways there is that you start with a subsegment of the market, and then there's always adjacencies.
00:25:42:01 - 00:25:43:13
Unknown
They touch other people.
00:25:45:01 - 00:26:00:13
Unknown
this at LinkedIn when it came to kind of the network effects of kind of it spreading out. Right. Like people in different industries, different companies would adopt LinkedIn and would spread right virally. But it turns out a lot of financial products, due to people ask each other like trust is a hard thing to earn.
00:26:00:15 - 00:26:21:14
Unknown
And, and so if you build a product that has good word of mouth where people really like it, I was always very focused. Well, friend, you know, like if someone asked you about Wealthfront, right? Or about online services, would Wealthfront come up and what would they say? Not just the name, but what would they say? I think, and then you design that into the product, right?
00:26:21:14 - 00:26:41:23
Unknown
You can do all the marketing you want, you know, get the messaging. Right, but your product has to speak to what it is because most of what your, your users are doing must your customers is using the product. And so if you want them to refer well. And then the great news is, is it turns out, you know, engineers don't just know engineers and designers, right?
00:26:41:23 - 00:27:11:01
Unknown
They have friends, they have family lawyers. Right. Academics, consultants, bankers, it turns out like what happened to Wealthfront as we started with kind of engineers and designers. But it turns out we spread to a lot of young people in their 20s and 30s who were in higher earning, kind of careers, etc.. And the really counterintuitive thing to the whole industry, of course, is that that entire industry focuses on older people because it turns out older people have most of the money.
00:27:11:03 - 00:27:28:11
Unknown
And I think that were well founded, which is going to stand the test of time, or at least it has already for more than a decade. Is the fact that when you make customers happy, you grow with them? And I, I couldn't tell you at the time how happy I was to bet on the idea that, you know, everyone's very down on millennials at the
00:27:30:02 - 00:27:36:01
Unknown
Oh, yeah. It's like millennials have no money other like, the.
00:27:36:01 - 00:27:46:17
Unknown
you know, 15 years ago, everyone's talking about how they don't have any money or they're not find success. And, I loved building a business and a product that basically bet on their customer success.
00:27:46:17 - 00:28:00:01
Unknown
Right. I was very convinced that all these Wealthfront clients that were coming in that didn't have much money in their 20s, a lot of them would go on to success in their 30s and 40s and 50s. And you know what? They would remember the services that took care of them when.
00:28:00:05 - 00:28:18:12
Unknown
Yeah. I like the idea of making it so there's like, product features that, like, lead to referrals. I was talking to someone I wise and they they invested a bunch in this feature in the app which makes it so it, like, basically hides all your personal details. So, you know, if you're in person with someone, you're more likely to show the wise app.
00:28:18:14 - 00:28:32:13
Unknown
But it also actually make prompts people to think like, oh, there's a really prominent button here to hide all these details. Why is it here? Oh, I should tell my friends about this app. I think like, doing those kind of smart product features is a good way to, like, get, like, actual referrals going.
00:28:32:17 - 00:28:42:19
Unknown
Yeah, we had something like that or Wealthfront. It was kind of a fun thing, because there is a problem in fintech where anyone who wants to show someone their app doesn't want to show their money. And so, the Wealthfront app, when you shake
00:28:44:13 - 00:28:49:01
Unknown
Oh, well, front end, the shaking thing. Okay, cool. Yeah. I think a few people have copied their.
00:28:49:01 - 00:28:53:07
Unknown
actually, I personally prefer, I think those are all good and they're valuable features.
00:28:53:09 - 00:29:04:14
Unknown
But I think the real magic and I think people get this wrong about network effects and viral distribution, etc., you know, I think real, real spread and recommendations happen when it's really organic to the
00:29:07:01 - 00:29:09:14
Unknown
truly gets better the more people who use it.
00:29:10:06 - 00:29:16:08
Unknown
Is that true for Wealthfront though. Like that's that seems like relatively rare. Yeah.
00:29:16:08 - 00:29:34:15
Unknown
I don't think that that's really where well, from when. But like for example, Idfa, the reason campaigns is such a big feature for us is you have a member who wants to support an organization. You say, hey, you can run a matching campaign for them, right? And they say, great, that's going to make the nonprofit I'm supporting more successful.
00:29:34:17 - 00:29:36:01
Unknown
I want to do it.
00:29:37:13 - 00:29:45:13
Unknown
in a position where they want to go tell people about the campaign. And as part of telling people about the campaign, they're actually telling people that Daffy exists
00:29:45:18 - 00:29:50:02
Unknown
Yeah. Yeah. That's an amazing feature from that perspective.
00:29:50:02 - 00:29:58:11
Unknown
mean, like, you know, with daffy campaigns, every campaign that runs, you know, on average, a certain number of people discover Daffy for the first time.
00:29:58:13 - 00:30:21:01
Unknown
And so I think it's hard incentive. But I think that if you really push on it, you'll find this is why I like getting to the humanity underneath the product. If you find the natural things that in the real world where people want to connect with other people, where the value comes from connection, other people, usually brilliant designers, engineers can come up with ways to turn that into an online version.
00:30:21:03 - 00:30:46:19
Unknown
That actually does help build your brand and actually probably does better than any concerted marketing spend. I mean, I don't want to at scale. You can spend a lot of money on marketing of you. Apple spends billions on marketing. And let's be clear, it it does work. But fundamentally, I think in the early days as a startup, finding those features where your customers become more than your customers, they become basically a sales force for the company, right?
00:30:46:19 - 00:30:58:13
Unknown
They're out there and they're not doing it because they make money that they're doing it because they actually like sharing and getting the credit for having discovered the service first, for finding the
00:30:58:13 - 00:31:05:13
Unknown
Best to be, like, native to the idea as well. I feel like some people, like, try to gamify these things that like it doesn't work. Well.
00:31:05:13 - 00:31:12:23
Unknown
game mechanics I, I'm a big fan of of looking at video games and game mechanics for inspiration. I still do it today, right?
00:31:12:23 - 00:31:35:11
Unknown
There are features on Daffy that are very much inspired by what's working in mobile gaming today. But I think that, it, it it can help kind of in your design thinking, because really we are wired to like to play certain games and, and do certain things, but, the product feature itself, the problem you're solving has to be the core of it.
00:31:35:11 - 00:31:45:01
Unknown
You can't just graft game mechanics on something and suddenly make it viral or have it explode like that. Doesn't. It's like empty calories. It doesn't really work.
00:31:45:07 - 00:32:05:19
Unknown
It doesn't work long term. I think that makes sense. Yeah, I think, you know, to also, to your point on on, trust. I think that's a really important point, actually, on referrals. Mercury is a really good one. To invite recipients. I'm constantly inviting recipients, you know, until I fill out their own profiles. And I think that's a really great way to promote Mercury.
00:32:05:21 - 00:32:08:12
Unknown
Basically. So I don't have to put in the routing number. An account number.
00:32:09:05 - 00:32:28:18
Unknown
Yeah. Anything. Where, where there's like some level of B2B payments. There's like an inbuilt kind of virality. But it is hard to get a business there. You know, the, your recipient whatever. It's hard to get them to then sign up for a bank account. Like actually Yeah. That it does drives up signups, but it's not like our biggest kind of sales for sure.
00:32:28:20 - 00:32:31:22
Unknown
It would be good if it was. Yeah.
00:32:31:22 - 00:32:50:19
Unknown
But on on the trust piece, one thing I found with B2B and enterprise sales, I think this is a really key insight that I learned at running Presto. Was, was like, the key for a startup to sell to, like, big, you know, like, an industry like restaurant. Two years ago, we were sold to, I think it just replicates across different industries is getting that first brand.
00:32:50:21 - 00:33:06:07
Unknown
You know, you get one brand to like your product. And it's extremely difficult to get that first brand because no one wants to work with. To start off right, that, you know, like a big brand like Applebee's, which eventually bought a product like they they did a two year pilot, you know, which is, you know, later on you would do one month pilot.
00:33:06:12 - 00:33:23:11
Unknown
But in the beginning, they did a two year pilot to just, you know, make sure our product worked. Our company would stay alive and, and, and then after that, they had to roll out the, the product and it had to be successful for other companies to buy it in the space. And until that happened, which was many, many years, you know,
00:33:24:16 - 00:33:29:13
Unknown
Well, you could you can just use the pilot to cross-sell other people like you needed the full deployment.
00:33:29:13 - 00:34:00:05
Unknown
you need a full deployment because everyone's like you doubting the startup can execute on, like, a big enterprise rollout. And, and it wasn't until they were happy that we then the rest of the industry came, like, really quickly after that. So it was like, yeah, but but the first one is a big slog. And so my advice to founders selling into B2B is like, you know, the first logo, you got to do whatever it takes to get them, you know, give it to even give it to them for free or like very low price for the first one, you know, like do whatever it takes to get that first one and, and then
00:34:00:05 - 00:34:06:05
Unknown
you can increase your price actually for every marginal customer, because you're reducing the risk for every marginal customer.
00:34:08:13 - 00:34:27:05
Unknown
And I will defer to both of you on TV, but, you know, it turns out, you know, at LinkedIn, we started purely consumer and then layered the enterprise business over it. At Daffy, I had the same requirement because we started getting this pull for business features. And so I kind of challenged the team saying, like, listen.
00:34:27:05 - 00:34:44:18
Unknown
But like, you know, if you want to approach this, like, who's the lighthouse customer? Who are the design partners? How do we build this out? But you're right, you know, you know, Daffy for work, it's so much easier for companies to now adopt Daffy for work, knowing that OpenAI uses Daffy for work and a number of other companies.
00:34:44:18 - 00:35:06:15
Unknown
But you know that that signature name really matters. We launched private stock, so most people don't realize that you can donate private stock to charity. And so we came up with an innovative new feature, which said, hey, if you're doing a tender offer, right, if you're letting employees or a secondary if you're letting employees sell anyway, let them donate some shares.
00:35:06:17 - 00:35:23:12
Unknown
It's smart for them for their taxes. It doesn't cost the company anything. But, like, I don't think we'd have as much demand for that this year if we hadn't got a company like Sigma to do it last year. Right. You know, everyone looks at Sigma and goes like, hey, that's a great company, Dylan. Culture, the whole thing they're building.
00:35:23:14 - 00:35:34:13
Unknown
So I, I agree with you. I think that, you know, like when I look at Daffy for work and the private stock platform, it's, it's those initial customers that really make a big difference
00:35:34:22 - 00:35:45:01
Unknown
Actually, by the way, am I. You and I have not talked about this. I'm curious. What is your giving strategy like? What is your, like, philanthropy strategy? Happy to share mine. I looked for an too.
00:35:45:01 - 00:36:04:03
Unknown
I do some little stuff, so I. Yeah, I'm quite suspicious of big stuff. So I have, my, my family, like, my parents, still go back to Pakistan like 4 or 5 months of the year. And they have, like, a whole network of people they give to mostly kids to go through schooling because public schooling sucks there.
00:36:04:03 - 00:36:30:10
Unknown
So if you're poor, like. Yeah. I mean, even these private schools are not expensive. They're just like basic schooling. It just doesn't exist in public schooling. So, that's like a very easy ways. Like, we support, like, ten plus families, through that, And then I do some stuff in San Francisco. But in general, my main methodology is to get much, much richer and then my impact will be much better in the future.
00:36:30:12 - 00:36:39:18
Unknown
But it is interesting. It's I don't think it's, like, easy to give, which, you know, as part of the, part of the things that Daffy is trying to solve.
00:36:39:18 - 00:36:45:07
Unknown
Had. I'm curious to hear yours. What do you do? Yeah.
00:36:45:07 - 00:37:06:07
Unknown
Daffy does reflect a little bit of the way that I tend to think about things, which might be a little overly rational for the space, but. But, I mean, the behavioral finance is actually very clear. And actually, the academic research is clear that actually, the biggest step that you take with giving is actually just taking the step of putting some money aside
00:37:07:20 - 00:37:30:18
Unknown
Right. Like, it turns out that once you do that, yes, there's still a hard problem ahead of you of of which organizations to support and which causes speak to you and etc.. But it turns out how much money you can afford to give and then who to give the money to are both hard problems, and trying to do them at once is just how you get jammed up.
00:37:30:18 - 00:38:00:06
Unknown
And so that, you know, for me and my philosophy has actually been it's a little bit old fashioned, but it's true in almost every culture. It's one of the most universal things around the world is this idea that, like, not everything is for you, right? Just getting out of your own selfish needs and realizing whether it's the fact that there are people less fortunate than yourself, whether there's actually big causes and problems that that need help, whatever motivates you for me, the big decision is, is just that step.
00:38:00:06 - 00:38:19:16
Unknown
I remember when LinkedIn went public, right? I know a lot of companies do this, etc. but, you know, for me it was like putting some of the money aside. And by the way, I didn't just do it for charity. I also did it for financial goals. Whereas like for me personally, that were very resonant right there. All these theories, risk mitigation, etc., where I was like, oh, I'm going to put aside the money for my kid's college education.
00:38:19:18 - 00:38:35:23
Unknown
Like I know that I could probably pay for it anyway, but I was like, I don't. My wife and I didn't want that over our heads at all anymore. But believe it or not, I think giving the same. I've talked to a lot of founders, who've done this, you might imagine, with the private stock, etc..
00:38:36:00 - 00:38:50:10
Unknown
It turns out the tax benefit helps get people over the edge. It helps that the money can be invested tax free, so that I don't think that somehow the money is not compounding. But but this is kind of why we built Daffy was to make it very easy to make that decision to put money aside for charity.
00:38:50:12 - 00:39:09:14
Unknown
Right. A lot of our product is designed around getting rid of the objections that people have about not giving. Right, like, oh, I don't know who I would give this much money to. That's okay. You can figure it out later. Just put the money aside for charity. Oh, I'm I'm making a lot of money now. I want the money invested because it'll compound over time.
00:39:09:14 - 00:39:31:07
Unknown
I mean, that was Warren Buffett's famous reason, initially for not doing it. Oh. That's okay. Your money will be invested tax free. It will grow over time, right? Like everything we've built into our product has tried to reduce the objections to make it easier to put money aside with the confidence that once the money is put aside and all the research shows us it goes to charity, right?
00:39:31:07 - 00:39:55:19
Unknown
Like it might take you time to figure out which organizations. Maybe you'll start supporting organizations in a small way, and then they'll connect with you more deeply. You'll give more and more over time. Maybe it's just the time in life. Maybe you can't do it while you're building a company. Or when your kids are small, but you have more time when they're older, etc. from my perspective, giving philosophy is that, you know, all the problems we're talking about in the world, etc..
00:39:55:21 - 00:40:20:10
Unknown
I mean, this isn't a great thing. It's not a good thing, but it's a fact. You know, every year there are people in need and every year there are problems. So I think it's much more important for people to take that first step of just putting money aside. And that's what my wife and I do is we, we try to make sure that, I mean, we're like everyone in the valley, so there's like, you know, there's good years and then there's tight years and that sort of thing.
Share this post