Hi everyone, I'm Rex, founder at Cambrian, a community for founders and builders in Fintech.
Today on the program, we have someone very well known to the Fintech community, Adam Nash.
Adam's a veteran executive, having served as the CEO of Wealthfront, as a product leader at LinkedIn and Dropbox, and then also on the boards of Acorns and Shift.
As a bonus, he also teaches a course on personal finance for engineers at Stanford.
He drops the slides every quarter that he teaches on Twitter, so you should go ahead and find those and check those out.
Today, he's here to talk about his most recent venture, Daffy, which is reimagining what charitable giving looks like.
So we're super excited to have Adam here to do a deep dive on what he and the team have built.
And after just under a year of development, the product came out of stealth last month.
So you're some of the first folks to hear from Adam in depth.
So with that in mind, Adam, welcome to the program.
Yeah, Rex, thank you for having me.
Great to be here.
So first, just to get things started and orient folks on Daffy, tell me what is Daffy? Well, Daffy's fun, so it's a new app.
It's available in the App Store.
It's a really simple idea.
You know, when I went around talking to people about how they think about giving, I noticed that most people believe that they should be giving to people less fortunate than themselves.
They have a number in mind.
Now, no one agrees on what this number should be, but most people have a number based on their own personal circumstance and how much money they make and how much they feel like causes and charities need their support.
The problem is people are too busy.
And so Daffy is based on this really simple idea of what if everyone just puts something aside automatically for charity, right? Every week, every month, every quarter.
So basically, we took a lot of the innovation that's been happening in FinTech around saving and investing and said, why don't we build an app that does that for giving? And so yeah, if you download Daffy, you go through the onboarding, get set up, pick the charities, causes you support, decide how much money you want to give per year, link your bank account, and you're done.
And then behind the scenes, Daffy is a donor advised fund.
So tell me maybe a little bit about how a donor advised fund works and what that looks like.
Well, you probably noticed that my marketing is a little right on the nose.
So Daffy is an acronym.
It stands for the donor advised fund for you.
I had not actually put together that was the acronym, but for not realizing that.
Yeah, it's true.
I have more of an engineering background than a marketing background as it turns out.
But no, yeah, it's a donor advised fund.
So it turns out donor advised fund is a type of account that most people don't know exists.
It's a product that's mostly marketed to the wealthy.
And I mean, really wealthy, right? People who are not just the 1% who have millions of dollars.
But the truth is, it's a wonderful type of account, just like an IRA is an account for retirement or a 529 is for college.
A donor advised fund lets you put money aside for charity, take the deduction off your taxes when you put the money in the account, and then anytime you want to give money to a nonprofit, you just make a recommendation and just happens.
And so the wealthy have been using this for years.
It goes back decades.
There's over 800,000 donor advised fund accounts in the US, but most people aren't aware of them because most of the firms that offer donor advised funds make their money off really large accounts.
And so when we did Daffy, we tried to imagine how can we take this great financial product and reimagine it as a product for everyone rather than just for the wealthy.
And I think there's a bunch of opportunities just to build a better product that's more accessible to a broader swath of the population.
But one thing the structure itself does, which is great, and we talked a little bit about before is if you're thinking about giving, you have the mental load of how much am I going to give and to whom am I going to give it? And a donor advised funds allows you basically separate those two concerns, right? That's exactly right.
From a product perspective, a design perspective, giving is actually really hard.
One hypothesis that I have is that the reason it's so difficult is because it combines two really hard problems.
One is how much can I afford to give, which is a hard problem for most people who don't budget, et cetera.
And then second, is this the charity I want to give to? And so one of the things I'm hoping that Daffy does is by automating putting money aside for charity, turning it into a question you only answer once, that problem goes away.
If I open up my phone right now and look at my Daffy account, I can see how much money is in there.
There's no friction at all, right? So if I have a couple thousand dollars in my Daffy and the teacher's fund is raising money for art supplies for the school, I can just put that charity in, put $250, hit a button and boom, it's done.
And so what I'm hoping is that Daffy really helps people save more for giving and also makes it easier for people to give.
Yeah, I think there's a ton of opportunity to do both those things, which is really exciting.
Before we dive more into the product side of the story and how you built it and launched it and how that's all going, I do want to go a little bit back and dig into the founding story behind Daffy.
So folks may not realize this, but Adam, although he's had a ton of experience building product and has built some really important products in FinTech and outside of FinTech, this is actually the first time he's been a founder.
So Adam, I'd love to hear why you decided to become a founder and what that decision process looked like for you.
Obviously, I'm coming to founding a company later in my career.
For me, founding a company is something that in some ways it's a rare opportunity, right? The fact that I can start a company, the fact that I can build a team around, the fact that I could help bring a product into existence that wouldn't come into existence otherwise.
For me, I've always been fairly conservative about companies.
I actually think that good ideas, good companies are fairly hard to come by, which is why most startups don't make it.
But I love the journey and I love the idea and I've loved working with teams.
When it came to Daffy, this was one of those ideas where I just didn't have confidence it was going to happen any other way, right? Charity is a big space, philanthropy is huge in the US, it's like 470 billion.
But there have been a lot of startups that have tried to build something significant in this area and it's been really difficult.
And so for me, especially during COVID, I mean, I don't know about you and I don't know about the people listening, but from my point of view, this K-shaped economy thing is real, right? Like the inconvenient truth that happened during this pandemic is that some people, millions of people are actually doing really well, at least financially.
And at the same time, there's a huge number of people, millions of people who really aren't.
And so the idea of building a product that made it easier for the people who are doing well to put money aside for those who aren't, it wasn't just the product idea, it was also the timing.
It felt like the market was ready for something that would let you do something instead of just talking about it.
But I really didn't have any confidence that there would be a product or an effort like Daffy unless Alejandro and I kind of spend our time doing it.
I felt fortunate enough to be at a place in my career where I could take that leap and just do that.
No, I think for founders, having something you feel really compelled to do is obviously incredibly important.
But then doubly so if you feel like it's just not going to happen unless you're the one to do it.
And you have to be willing to do it for a long time.
So I had to look for a problem where I said, no, if I spent the next decade of my life dedicated to the problem of helping people be more generous, give more, I'd be happy with that.
Bringing it back to the product side of things, you could just build a better version of a donor advised fund, but ideally you don't just build a 10X better product, but a market expanding product.
So we'd love to hear how you think about Daffy in that context.
So you're making me smile because one of the unexpected delights of our launch was having Felix Simon write a piece where he highlighted, when is the startup 13 times better than Vanguard? And so I think we overshot the 10X by just a little bit.
But no, you're right.
I think it's not just about a better product.
I think you do have to think about markets.
I've always been a big believer in kind of disruption theory, the innovators dilemma.
Clay was one of my advisors in business school.
I rarely think it's enough to just build a great product and go toe to toe with the incumbents because the incumbents do know their best customers.
And so if you're going after their best customers, there's usually a problem.
So I always look for markets that are underserved where the business model of the industry is leading smart people with a lot of resources to go after different problems.
I mean, think about how different LinkedIn is than Monster, right? Both of them started with this idea of helping people with their careers and jobs.
But LinkedIn took a very different approach.
And that influenced me.
I mean, LinkedIn was a wonderful experience for me, except for the fact that we took a very sleepy and in some ways low engagement activity.
I mean, most people only look for a job every two to three years and turned it into a real professional and that is inspiring in a way.
And I see no reason why we can't do something like that around philanthropy.
I want to get to a little bit more of the kind of tactical things and talk about something a lot of founders have to think about when they're building it, especially consumer product about when to do a public launch.
So you've been building Daffy for the last year, curious to hear what it looked like to build in private and kind of what proof points you wanted to hit before taking it live.
Well, I mean, I think FinTech is harder than the average engagement product, et cetera.
I mean, no disrespect to the folks working on engagement products and entertainment.
That's hard for a whole host of reasons.
FinTech, when you're dealing with people's money, there's a different bar for errors, right? And also you operate in a regulated environment.
You know, the IRS has strong opinions about what's okay and not okay when you're dealing with nonprofits and donor advice funds.
And so my philosophy in FinTech is always to keep things simple, do not cut corners around regulatory requirements.
So we spend a lot of time with some of the better lawyers in the area to make sure that we got the company formed the right way, got the agreements formed, got the regulatory approvals to be a donor advice fund before we ever mentioned what we were doing.
Now the hard part about that is it means it's hard to get beta testers in early because you can't just wing it.
And so we had a fairly rigorous process.
I mean, we actually went very quickly because of the timing of the market.
We raised money, built the team, got the MVP together, got all the regulatory approvals and launched in under a year.
So it was a little bit of that hair on fire, crazy startup experience.
I'm fortunate though, my co-founder Alejandro is just such an amazing engineer and actually product thinker.
And he has so many great people around him who want to work with him.
He really did a phenomenal job putting that team together really quickly and figuring out how we could create something that had all the benefits of the donor advice fund, but actually was better suited for the market we were going after.
And then, so now that you've launched, curious what you've learned so far and how the launch has been going for you, understanding you're still picking people proactively off the waitlist as opposed to going fully public.
Well, the waitlist is always a useful thing because when you have a new product and you're dealing with money in some ways, it allows you to kind of throttle the onboarding a little bit to make sure that operationally you're making sure every customer has a good experience.
And we've been very excited about the demand that we've had.
Some things were been surprises, some things haven't.
I would say that the core functionality that we worked on, been pleasantly surprised, right? The app works.
The surprises were really what people wanted to do with it.
Like I said, we did not expect that one of the first things people would do is compare our pricing to the incumbent.
But it turned out that the fact that the incumbents have high prices because they're aiming at a higher end part of the market, people noticed.
And actually, the most common questions come in from people who have donor advised funds is I had no idea they were charging me money.
And then they finally looked it up and realized that they were paying more than $1,000 a year for a donor advised fund.
Not surprisingly though, we got a lot of attention for the crypto.
So the fact that, I mean, like obviously crypto has done well.
Donating crypto is obviously a big win from a tax perspective.
If for no other reason, then you don't have to think too hard about the taxes.
So there's a big win there.
I have donated crypto and part of the reason has been purely so I do not have to think about the taxes.
So there's been a lot of attention about giving crypto and actually surprisingly the fact that we have pure crypto portfolios turns out to be another differentiator.
Since if you go to Fidelity or Schwab or Vanguard, they won't let you do that.
They won't even let you do a simple Bitcoin, Ethereum mix if you want to.
But we're learning.
We're learning from customers about what they like, what they don't like, trying to do more of.
We've done some fast follow things.
We made it easier last week for people to find charities that are nearby because it turned out a lot of people had interest in how do they support local charities.
And so just every week we're trying to iterate and do a new build and make this thing better and better.
I know there are a lot of things to learn once you're out and live in public.
And yeah, if you use an existing donor advised fund platform, you can find any charity.
It's very easy.
You just look it up.
No saturation or just simple touches like searching for local charities doesn't really exist or recommending certain charities.
None of that has been built at all.
Oh yeah, for sure.
I think, listen, there's a lot of great ideas in the space.
I will tell you that one of the most inspiring things about working in philanthropy and around charities is there's really a huge number of people who've put thought into how to make this process better.
The problem is it really hasn't been a platform company in the area that could really take those ideas and run with it.
So you get a lot of one-off efforts, a lot of great feature ideas, but you don't really get that platform being built.
I mean, the dream for Daffy, you know, every startup has a dream, but the dream would be that we can actually build a great platform company in the space because there really are so many things we could do to make it easier to find charities, to give money to them.
And it's not just about money, to organize people around different causes, to kind of reward communities of people that organize around different nonprofits.
I mean, I've been on the board of a couple nonprofits.
It's a community as well, right? You know, all the people who volunteer, you know, the people who work for the nonprofit, you know, the donor, where does that all come together now? The social networks can't really do it because you have to compete there with news and shopping and dating and all the other things that people do.
And so I think a focused space for forgiving is going to turn out to be really valuable if we can get it to scale.
Yeah, I mean, we've seen in FinTech just how valuable like being a wallet can be in terms of becoming a super app and Daffy is in a way your wallet for charity.
Your point is an interesting insertion point for all sorts of platform type work you can do in and around charitable giving.
Yeah, I love that framing.
You could actually say that one of the core insights behind Daffy was what if there was a wallet for giving? What would that look like? How would you get money into it? What would it be used for? So that's not a bad way of looking at the platform.
And if you look at how like folks have raised money from charities for a long time, it hasn't really updated that much to like a digitally native realm.
No, you know, and it's true.
Look, my alma mater, Stanford still sends out mailings every year with the same cards asking for more alumni donations.
They sent out those cards when I graduated in the 90s.
And by the way, they do it because it works.
But also, like I said, because there hasn't been a company or a platform there to really take on that work.
And most nonprofits aren't set up to do that type of investment.
So you know, it's exciting for a product person.
It's an exciting area.
There are really we could be building features for the next 10 years and not, you know, run out of ideas.
No, it's super exciting.
And you already touched on this a little bit.
But since you launched, do you think there are just one or two product things that you've gained more conviction around something that should be built sooner rather than later? Actually a lot right now, the biggest surprise for us has been how many people want to move their existing donor advice funds over.
So right now, even in the app, if you want to move over an existing donor advice fund, we don't have a tab for that.
We didn't build that into the onboarding.
So we'll likely fast follow with it.
The biggest thing that we're finding is that people really do want a better way to find charities and actually highlight the ones that they support, not just by giving, but by volunteering and spending time or supporting.
And so we're going to keep investing in that front, I think, for a while.
I was going to ask you a little bit about your long-term vision.
I feel like we've covered that in talking through the product roadmap and some of the insights you've already had, but if there's anything else you'd like to add just to your long-term vision, we'd love to hear what you're thinking.
I think in the short term, it's pretty easy.
I mean, it's not, it's fairly transparent.
Part of the reason I have so much confidence that this might be possible is having been on the board at Acorns for the last four and a half years, I've seen how a very simple application helping millions of people can actually turn into be a really successful platform.
And Acorns has now reached over 10 million customers, I think over 5 million paying.
And so it gave me confidence about the scale.
So I've heard people describe us a little bit as an Acorns for charity, and that makes sense.
But the vision is definitely, like I said, to build a great platform company.
I think this is another side of people that deserves its own space and its own network.
And so expect to see us invest more in that as well.
I want to just ask you, Adam, a question we ask of all the founders who come under the program, which is what advice do you have for prospective founders folks who are thinking about setting out and doing something on their own? Well, it's a very interesting market to be thinking about building and launching some something.
In some ways, you know, it's never been better, but it's also chaotic out there.
I think it's good to understand where you are in terms of the market.
If for no other reason than it tells you what's easy to do, what's hard to do, what to build.
But the truth is, I'm not sure I've ever seen a better time to be building a company.
And I don't just mean because there are so many investors out there willing to take risk on new startups and new technology, but because actually we've done a better job understanding how to build startups that are successful.
We understand a lot more now about how to get that initial product out the door, how to figure out how to get it right with your customers, even the entire discussion about product market fit, which goes all over the place has turned out to be really valuable because it's captured this idea that was always elusive in the early days of it's not just the product.
It's not just the technology, it's your distribution.
It's the customer segment that you're going after.
And so I actually think there's a lot of great support for founders today.
That being said, my advice for founders is not to try and play someone else's game.
There's a lot of different ways to build companies.
There's a lot of different ways to build products.
And I think founders should be authentic to the products and services and the business concepts that are native to them, that they believe in.
So where I see people go sideways is where they think that the smart way to build a company or the smart way to raise money is something very unnatural for them.
And they end up playing someone else's game.
They end up not being very good at it.
This is one of the reasons I, as an angel investor.
I do look a lot at kind of founder market fit, founder product fit, right? Like it's not just do they have passion for it, but why are they uniquely suited to go after this? And I think the great thing is the market is huge.
Software really is eating the world.
There's almost nothing you can't go after.
So I think the hard part for founders is finding that thing that isn't just a dollars and cents smart thing to do.
Because by the way, startups are almost never the dollars and cents smart thing to do.
There's easier ways to make money in the world.
But I think my advice for founders is actually finding something where they think their unique skills and background come together to give them a different perspective of what that future could be.
For me, it's always been rewarding.
Even though this is my first time as a founder, I've always joined companies where I was just really excited about the idea of what if it worked eBay as a marketplace.
What if LinkedIn, you know, changing the way that people interacted with the workforce and the labor market well front, right? Changing the way that, you know, what if computers manage money for you? I mean, these are all ideas that to me were small ideas at some regard, but also the potential to change the way the world worked.
And so that's always the attraction for me.
You've got to get out of bed every morning and some days, you know, it's been a hard week and you need the core excitement to keep you going after it for a long, long time to prove it out.
Well, Adam, it's been an absolute delight, as always, to have you on the program.
We'll have to have you back in like, I don't know, two, three, I don't know, maybe 10 years to see if you've closed the gap between, you know, the 800,000 people who have donor advice funds today and the, you know, a hundred million plus Americans who want to be more philanthropic.
It'll be fun to see how the vision has evolved.
Yeah, I mean, well, whenever we talk again, the more people that we've been able to convince to put money aside, you know, for people less fortunate themselves, that's how we're going to judge our success.
So hopefully we'll have a big number, but you know, it's early days.
Well, it's been great having you on the program and we'll look forward to that conversation in the years to come.
Well, thanks again, Rex.
Thanks for having me.
Thanks for joining us.
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