WEBVTT - How Government Scrutiny Could Impact DAFs

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news.

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<v Speaker 2>This is Bloomberg BusinessWeek inside from the reporters and editors

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<v Speaker 2>who bring you America's most trusted business magazine, plus global business,

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<v Speaker 2>finance and tech news as it happens. Bloomberg Business Week

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<v Speaker 2>with Carol Messer and Tim Steneveek on Bloomberg Radio.

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<v Speaker 3>It is Bloomberg Business Week. That's Katie Graefeld in for

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<v Speaker 3>Carol Masser this afternoon. I'm Tim Steneveek.

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<v Speaker 4>Katy.

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<v Speaker 3>I don't know if you caught this story last week.

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<v Speaker 3>Jensen Wong, the president's CEO, co founder of Nvidia, one

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<v Speaker 3>of the wealthiest people in the world, and he's number

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<v Speaker 3>thirteen on the Bloomberg Billionaire's list for sure. He and

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<v Speaker 3>his wife Laurie have a foundation. They've got more than

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<v Speaker 3>eight billion dollars of Invidia shares in it, but even

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<v Speaker 3>that figure may underestimate the amount of charitable assets now

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<v Speaker 3>that the company has at the couple has at its disposal.

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<v Speaker 3>Documents show that a charity run by Charles Schwab controls

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<v Speaker 3>an additional four point four billion dollar dollars of Nvidia shares,

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<v Speaker 3>at least some of which are held in their donor

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<v Speaker 3>advised fund for the Wongs and their foundation. The reason

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<v Speaker 3>I'm talking about this is because of these DAFs donor

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<v Speaker 3>advised funds. The IRS back in the spring held hearings

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<v Speaker 3>on proposed changes to DAFs and for more. To get

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<v Speaker 3>an understanding of what exactly is going on, what could

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<v Speaker 3>be at risk, and just to explain it all, we

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<v Speaker 3>turned to Julia Healey, CEO over at United Charitable, which,

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<v Speaker 3>in their own words, is a quote nonprofit that works

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<v Speaker 3>closely with wealth advisors and their clients to increase a

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<v Speaker 3>donor's ability to do more with their contributions while minimizing

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<v Speaker 3>their tax liability through their donor advised funds. Julia joins

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<v Speaker 3>us from Washington, DC. Julia, how are you good?

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<v Speaker 5>How are you?

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<v Speaker 3>We're doing pretty well. Thanks. I think we got to

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<v Speaker 3>start at the just at the basics here with donor

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<v Speaker 3>advised funds, not everybody knows exactly what they are, so

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<v Speaker 3>explain for us.

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<v Speaker 5>Sure, a donor advice fund is a charitable giving account.

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<v Speaker 5>Think of that as simply a savings account that's already

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<v Speaker 5>geared towards charitable giving. The great thing about donor advice

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<v Speaker 5>funds is that once you donate into the account that

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<v Speaker 5>that's when you get your charitable tax deduction, and then

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<v Speaker 5>from there you can wait a year to distribute to charity,

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<v Speaker 5>or you can make distributions right away. But think of

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<v Speaker 5>it as a charitable savings account.

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<v Speaker 3>Okay, charitable savings account. Who are they good for?

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<v Speaker 5>They're good for people that are either building their wealth

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<v Speaker 5>or high networth individuals who already have their you know,

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<v Speaker 5>legacy in place and they really want to continue it.

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<v Speaker 5>They can replace private foundations in certain scenarios. I mean,

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<v Speaker 5>they're very it's such a flexible vehicle.

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<v Speaker 3>What are we talking about? Who does it make sense for?

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<v Speaker 5>So again, probably around the five million in undermark, right,

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<v Speaker 5>so we have clients that start with us at twenty

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<v Speaker 5>five thousand, we have clients at five million.

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<v Speaker 3>So how do the how does how does someone like

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<v Speaker 3>does someone like Jensen Wong, the founder of Nvidia find

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<v Speaker 3>four point four billion dollars in a donor advice fund?

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<v Speaker 5>And again, there are so many people out there that

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<v Speaker 5>are using the donor advice funds because nobody wants to

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<v Speaker 5>deal with the private foundation and having to file all

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<v Speaker 5>of your tax forms and having board of directors with

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<v Speaker 5>the donor advice funds. You just become a project or

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<v Speaker 5>an account of an existing charity. So I run about

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<v Speaker 5>six hundred and fifty different donor advice funds for all

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<v Speaker 5>different clients. And again there's no quarterly board reports we

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<v Speaker 5>vet the charities for us. For them, you just make

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<v Speaker 5>the recommendation and then we go out and do the work.

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<v Speaker 1>And ken for again, for our audience that might not

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<v Speaker 1>be familiar with donor advised funds, I mean, how do

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<v Speaker 1>they compare to other vehicles out there that do exist?

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<v Speaker 1>If you could just compare and contrast here for us.

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<v Speaker 5>Sure, a donor advice fund is really compared to a

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<v Speaker 5>lot of the times to a private foundation. And so

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<v Speaker 5>with a private foundation you do have to do reporting,

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<v Speaker 5>annual reporting, board reports, and you don't have the same

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<v Speaker 5>tax seductibility. Right, So private foundations have certain tax deductibility

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<v Speaker 5>compared to donor advice funds, which is a public charity,

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<v Speaker 5>so you get all your public tax station rates. So

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<v Speaker 5>the real advantages is you get up again a higher

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<v Speaker 5>tax seduction for the clients that choose to go with

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<v Speaker 5>the donor advice fund And the distributions though are only

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<v Speaker 5>to a five oh one C three religious or educational

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<v Speaker 5>institution in the United States. With a private foundation, you

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<v Speaker 5>have more flexibility into paying expenses and paying salaries. With

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<v Speaker 5>the donor advice funds, you do not have that capability.

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<v Speaker 3>So what's going on at the irs level here when

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<v Speaker 3>it comes to these the potential changes that we could see.

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<v Speaker 5>Yeah, so we're seeing that the regulations that could possibly

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<v Speaker 5>be proposed would not allow financial advisors to be compensated

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<v Speaker 5>for the management of the donor advice funds.

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<v Speaker 3>Why is that bad in your opinion?

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<v Speaker 5>Well, just because, well, in my opinion, if a financial

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<v Speaker 5>advisor is advising an account on how to create a legacy,

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<v Speaker 5>and we have a client, we have a family that's

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<v Speaker 5>coming in and has decided to put five hundred thousand

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<v Speaker 5>dollars away, and they want to do distributions each year.

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<v Speaker 5>But they only want to touch you know, the interests,

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<v Speaker 5>not the principal. Who a financial advisor then needs to

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<v Speaker 5>come up with the best investment strategy. Who with the

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<v Speaker 5>charity would be able to do that. We need investment

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<v Speaker 5>advisors in their professions to make sure that these accounts

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<v Speaker 5>are growing and taken care of just like any other investment.

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<v Speaker 3>How are they compensated right now?

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<v Speaker 5>Management fees.

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<v Speaker 3>How high are those fees like.

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<v Speaker 5>Seventy five basis points? I mean, we're not talking anything crazy.

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<v Speaker 1>And so the conversation that we're having now about potential

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<v Speaker 1>regulation potential changes, I mean, where did that originate from?

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<v Speaker 1>And I mean, what's the potential timeline on any potential changes?

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<v Speaker 4>You know?

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<v Speaker 5>That's great and I wish I had more information for

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<v Speaker 5>you for that. They have not given us any potential changes.

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<v Speaker 5>It took them quite quite a while to really come

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<v Speaker 5>up with these regulations. So I'm hoping we'll see something

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<v Speaker 5>just because we would like to know too. But we're

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<v Speaker 5>hoping we'll see something late this year, maybe next year.

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<v Speaker 5>They haven't given us any kind of information around that.

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<v Speaker 3>How are you thinking about the election and who wins

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<v Speaker 3>in November?

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<v Speaker 5>Oh? In election years, people whether your candidate wins or loses,

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<v Speaker 5>people really seem to care about charity and the charities

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<v Speaker 5>that they're giving to. So it's kind of an activation

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<v Speaker 5>year I call it for me because we can see

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<v Speaker 5>clients whether they're happy about who's you know, who's an

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<v Speaker 5>office or they're not. They'll really react to it and

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<v Speaker 5>they'll make their sure that their dollars talk just as

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<v Speaker 5>much right, they're charitable dollars will go to the organizations

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<v Speaker 5>that they think will help strength in America.

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<v Speaker 3>Do you think that it will change based on who

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<v Speaker 3>wins in terms of how much people donate, Like, does

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<v Speaker 3>that on your radar at all?

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<v Speaker 5>It's not so much how people donate. I think it

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<v Speaker 5>just depends what is on going to be on each

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<v Speaker 5>party's platform, whether they're going to go off tax regulations

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<v Speaker 5>or stuff like that. That will make a difference. But

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<v Speaker 5>in general, more people are activated in an election year.

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<v Speaker 5>They're more they care about the community that's around them,

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<v Speaker 5>and it makes them very aware of the issues that

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<v Speaker 5>are going on. So it makes people really activated and

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<v Speaker 5>wanting to make the world a better place.

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<v Speaker 1>And Julia, I'm curious about demographics here. I mean, when

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<v Speaker 1>we talk about philanthropic giving, etc. It sounds like a

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<v Speaker 1>much older sort of person who's doing that. But what

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<v Speaker 1>are we seeing among maybe folks who are less wealthy,

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<v Speaker 1>who are earlier in their careers and their investment journeys.

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<v Speaker 1>I'm talking about gen Z for example.

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<v Speaker 5>So probably my favorite generation thus far, which is because

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<v Speaker 5>they're really wanting to match their donation dollars with their time, talent,

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<v Speaker 5>and treasure they don't just want to give a big check.

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<v Speaker 5>They want to volunteer or if they have accounting skills

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<v Speaker 5>or social media skills, they want to help that nonprofit

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<v Speaker 5>in a very specific way. So we see philanthropy changing

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<v Speaker 5>a little bit in the sense that the next generations

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<v Speaker 5>they want to be much more involved. They really want

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<v Speaker 5>to help, they want to work with companies that are philanthropic.

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<v Speaker 5>So we're just incredibly excited to see the next generation.

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<v Speaker 3>What are the causes that they care about.

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<v Speaker 5>So we're seeing a lot of environmental education, but just

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<v Speaker 5>anything that really that they feel that they create a community.

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<v Speaker 5>And that's what I've noticed much more is that they

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<v Speaker 5>do care about the nonprofit social media accounts and what

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<v Speaker 5>they're doing and what there's community. They're looking into all

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<v Speaker 5>of that when they're making their donations.

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<v Speaker 3>I'm wondering about religious organizations. Is that something that falls

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<v Speaker 3>into the purview of donor advice funds?

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<v Speaker 4>It does?

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<v Speaker 3>Are you seeing a shift there because we hear a

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<v Speaker 3>lot about younger generations not being as interested in going

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<v Speaker 3>to church or being part of organized religious community, and

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<v Speaker 3>I know that does take up a significant portion of donations.

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<v Speaker 3>When you look at it net net what are you

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<v Speaker 3>seeing what are the patterns You're.

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<v Speaker 5>Seeing exactly what you said. We're seeing that becoming less

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<v Speaker 5>and less. We're seeing human services organization take up more

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<v Speaker 5>and more of the pie.

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<v Speaker 3>Really interesting stuff. Julia, thanks so much for joining us.

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<v Speaker 3>That's Julia Heay CEO over at United Charitable Works with

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<v Speaker 3>donor advised funds. She joins us from Washington, DC. We've

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<v Speaker 3>got back with us. Or Levine, the co founder of Ways.

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<v Speaker 3>Remember Google bought it more than a decade ago for

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<v Speaker 3>one point one billion dollars. Or also an investor in

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<v Speaker 3>the first board member over at move It. Intel A

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<v Speaker 3>bought that back in twenty twenty for a billion dollars.

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<v Speaker 3>He's also the author of fall in Love with the Problem,

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<v Speaker 3>Not the Solution, a handbook for entrepreneurs. Or he joins

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<v Speaker 3>us from Toronto. Or good to see you. How are you, Thanks, An,

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<v Speaker 3>how are you. We're doing well. It's good to have

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<v Speaker 3>you come back with us. Hey, before we get to

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<v Speaker 3>how you're thinking about entrepreneurship right now, I do want

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<v Speaker 3>to get an update from what you're hearing, what you're

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<v Speaker 3>hearing from your fellow members of the tech community in Israel,

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<v Speaker 3>because you were back on with you were in December

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<v Speaker 3>back on with US in December a few months ago.

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<v Speaker 3>And when you were last on with US then it

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<v Speaker 3>was about two months after the war started, and you

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<v Speaker 3>talked about how it affected the tech community there. Obviously

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<v Speaker 3>a lot has happened since then. Just give us an

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<v Speaker 3>update from what you're hearing, what you're seeing.

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<v Speaker 4>So to a certain extent, I would say that the

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<v Speaker 4>scary part is that we get history and we shouldn't have.

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<v Speaker 4>But the reality is that the tech nation is back

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<v Speaker 4>back to normal, and you know, startup scene is as

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<v Speaker 4>strong as it was before and maybe even stronger. And

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<v Speaker 4>so in that sense, I would say, all goodness, the

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<v Speaker 4>political situation is less.

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<v Speaker 3>Yeah, well, how is it back to normal? I mean,

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<v Speaker 3>how does that work when folks are having to fight

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<v Speaker 3>when there's certainly still the threat? How is that normal?

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<v Speaker 5>Right?

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<v Speaker 4>So to a certain extent, I would say most of

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<v Speaker 4>the scene is outside or further away from where the

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<v Speaker 4>combat actually happens, right, And so in Tel Aviv and

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<v Speaker 4>major cities there is nearly no impact of the war anymore.

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<v Speaker 4>And it's mainly up north and in the next to

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<v Speaker 4>the Gaza strip. In the number of people on military

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<v Speaker 4>is herb is way smaller now, So at the end

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<v Speaker 4>of the day, the impact on the startup scene is

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<v Speaker 4>minimal at this phase.

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<v Speaker 1>How about fundraising, Is that back to normal? When you

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<v Speaker 1>think about the appetite of foreign investors to invest.

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<v Speaker 4>In is probably the only thing that is not back

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<v Speaker 4>to normal.

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<v Speaker 3>Interesting, So, and.

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<v Speaker 4>The reason is that, Look, you know, we hear about

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<v Speaker 4>war and then we get scared, and then we basically say, Okay,

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<v Speaker 4>we don't know, let's wait. And the way is making

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<v Speaker 4>it a little bit more complex for startups to raise

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<v Speaker 4>new capital or for new funds to raise new capital

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<v Speaker 4>and so forth. But at the end of the day,

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<v Speaker 4>I think that and Israel always ended up to be

0:11:41.720 --> 0:11:45.920
<v Speaker 4>stronger than before, right, so the more challenges that we have,

0:11:46.000 --> 0:11:48.760
<v Speaker 4>we ended up to become even stronger and stronger and stronger.

0:11:48.800 --> 0:11:51.440
<v Speaker 4>And so to certain extent, I would say investing in

0:11:51.520 --> 0:11:53.720
<v Speaker 4>Israeli startups today is a good idea.

0:11:53.840 --> 0:11:56.720
<v Speaker 3>Do you see fundraising ever getting back to levels seen

0:11:56.840 --> 0:11:57.680
<v Speaker 3>before the war?

0:12:00.280 --> 0:12:05.520
<v Speaker 4>Definitely yes. So you know, we look at that twenty

0:12:05.600 --> 0:12:11.120
<v Speaker 4>one in terms of investing in startups worldwide, writing in

0:12:11.160 --> 0:12:14.120
<v Speaker 4>particular in the US and some we'll call that the

0:12:14.360 --> 0:12:18.560
<v Speaker 4>hyper inflation valuations. And you ask yourself, is that going

0:12:18.600 --> 0:12:20.440
<v Speaker 4>to come back? And then you look at the history

0:12:20.480 --> 0:12:22.440
<v Speaker 4>and you realize that, wait a minute, In two thousand

0:12:22.480 --> 0:12:25.280
<v Speaker 4>and seven we say the same thing, and just before

0:12:25.320 --> 0:12:28.240
<v Speaker 4>COVID we say the same thing, and you know, in

0:12:28.320 --> 0:12:30.880
<v Speaker 4>nineteen ninety nine we say the same thing, and everything

0:12:30.960 --> 0:12:32.160
<v Speaker 4>is coming back eventually.

0:12:32.960 --> 0:12:34.960
<v Speaker 3>Hey, I want to pivot a little bit and talk

0:12:35.000 --> 0:12:37.840
<v Speaker 3>about startups and sort of what's exciting to you out

0:12:37.840 --> 0:12:40.360
<v Speaker 3>there right now. So much of our attention has been

0:12:40.400 --> 0:12:45.520
<v Speaker 3>focused on AI and this seemingly new, although not really new,

0:12:45.600 --> 0:12:47.360
<v Speaker 3>but new of interest. I think for a lot of

0:12:47.360 --> 0:12:52.120
<v Speaker 3>people layer of technology, A lot of your focus has

0:12:52.200 --> 0:12:55.920
<v Speaker 3>been on the sort of maps and transportation logistics with

0:12:56.320 --> 0:12:58.880
<v Speaker 3>ways and then with move it. What's exciting to you

0:12:58.960 --> 0:13:00.240
<v Speaker 3>right now in startups?

0:13:01.600 --> 0:13:04.200
<v Speaker 4>So look, at the end of the day, this is

0:13:04.240 --> 0:13:06.960
<v Speaker 4>about solving problems, end of the day. If you think

0:13:07.040 --> 0:13:10.000
<v Speaker 4>of a journey for startup, then the purpose is only

0:13:10.040 --> 0:13:13.439
<v Speaker 4>one creating value, and the simplest way to create value

0:13:13.480 --> 0:13:15.960
<v Speaker 4>is solve a problem. So therefore, if the problem is

0:13:16.000 --> 0:13:19.040
<v Speaker 4>worth solving, then I would say this is probably something

0:13:19.080 --> 0:13:23.720
<v Speaker 4>that excites me. I have eight different active startups today

0:13:23.920 --> 0:13:25.640
<v Speaker 4>and each one of them is trying to solve a

0:13:25.679 --> 0:13:30.200
<v Speaker 4>single problem. And some of them are you know, I

0:13:30.200 --> 0:13:32.960
<v Speaker 4>would say, are going to be my third and fourth unquorns.

0:13:33.800 --> 0:13:37.959
<v Speaker 4>But they're making significant progress. But generally speaking, each one

0:13:38.000 --> 0:13:41.520
<v Speaker 4>of them is trying to follow the same philosophy of

0:13:41.679 --> 0:13:46.040
<v Speaker 4>doing good and doing well, which basically means that you know,

0:13:46.080 --> 0:13:48.120
<v Speaker 4>if they're successful, then the war will end up to

0:13:48.160 --> 0:13:49.079
<v Speaker 4>become a better place.

0:13:49.840 --> 0:13:52.240
<v Speaker 1>And of course you are the author of falling love

0:13:52.240 --> 0:13:54.679
<v Speaker 1>with the problem, not the solution. I also see that

0:13:54.760 --> 0:13:58.439
<v Speaker 1>on your shirt. That a nice plot there. Maybe you

0:13:58.480 --> 0:14:01.160
<v Speaker 1>could just elaborate a little bit more on what that

0:14:01.240 --> 0:14:05.079
<v Speaker 1>actually means in practice for some of these startup founders

0:14:05.120 --> 0:14:09.000
<v Speaker 1>and maybe startup investors as well. Since obviously falling in

0:14:09.040 --> 0:14:12.520
<v Speaker 1>love with a problem it's a little bit unintuitive.

0:14:13.200 --> 0:14:15.719
<v Speaker 4>It's actually very intuitive, right because at the end of

0:14:15.760 --> 0:14:18.280
<v Speaker 4>the day, the journey is about value creation. The simplest

0:14:18.280 --> 0:14:20.760
<v Speaker 4>way to create value is solve a problem. Right, So

0:14:20.800 --> 0:14:23.160
<v Speaker 4>you should start with the problem. Think of a problem,

0:14:23.200 --> 0:14:26.520
<v Speaker 4>a big problem, something that it's worth solving, and then

0:14:26.560 --> 0:14:28.760
<v Speaker 4>ask yourself, so who has this problem? Now? If you

0:14:28.800 --> 0:14:30.720
<v Speaker 4>happen to be the only person on the planet with

0:14:30.760 --> 0:14:36.040
<v Speaker 4>this problem, you know what I can recommend you a therapist.

0:14:34.960 --> 0:14:40.440
<v Speaker 4>But prob what you really want to do next is

0:14:40.480 --> 0:14:43.000
<v Speaker 4>go and speak with those people and understand their perception

0:14:43.080 --> 0:14:46.120
<v Speaker 4>of the problem, and only then go and build a solution.

0:14:46.240 --> 0:14:48.280
<v Speaker 4>And the result is that the problem is going to

0:14:48.320 --> 0:14:50.960
<v Speaker 4>serve as the north star of your journey. And when

0:14:51.000 --> 0:14:52.560
<v Speaker 4>you have a north star, you're going to make class

0:14:52.600 --> 0:14:55.400
<v Speaker 4>deviation from the courts and more likely to become successful.

0:14:55.640 --> 0:14:58.000
<v Speaker 3>So oh, go ahead.

0:14:59.200 --> 0:15:01.680
<v Speaker 4>In particular, the story that you're about to tell is

0:15:01.720 --> 0:15:04.640
<v Speaker 4>going to be way more compelling. Just imagine that we

0:15:04.720 --> 0:15:06.800
<v Speaker 4>will be here in two thousand and seven, just before

0:15:06.840 --> 0:15:09.200
<v Speaker 4>I started ways, and I will tell you I'm going

0:15:09.240 --> 0:15:13.160
<v Speaker 4>to build an AI crowdsource based navigation system. And you're

0:15:13.200 --> 0:15:16.400
<v Speaker 4>going to say, oh, yeah, very interesting, But you don't care.

0:15:17.080 --> 0:15:18.440
<v Speaker 4>If I will tell you I'm going to help you

0:15:18.480 --> 0:15:21.560
<v Speaker 4>to avoid traffic jams, then you do care. And when

0:15:21.560 --> 0:15:24.400
<v Speaker 4>your customer cares, they want you to be successful, and

0:15:24.440 --> 0:15:27.320
<v Speaker 4>if they want you to be successful, then they're going

0:15:27.360 --> 0:15:29.920
<v Speaker 4>to help you to become successful. Now you're right. I'm

0:15:29.920 --> 0:15:33.800
<v Speaker 4>getting one hundreds email a month from entrepreneurs, and in

0:15:33.840 --> 0:15:36.040
<v Speaker 4>the last year there was not even a single one

0:15:36.040 --> 0:15:39.360
<v Speaker 4>that did not say AI. But I would say in general,

0:15:39.520 --> 0:15:42.600
<v Speaker 4>ninety five percent of them will start with what they're doing.

0:15:42.720 --> 0:15:44.840
<v Speaker 4>And I don't really care what you're doing. What I

0:15:44.880 --> 0:15:47.800
<v Speaker 4>care is why you are doing that, What is the

0:15:47.920 --> 0:15:50.960
<v Speaker 4>value that you're going Why should I care as a

0:15:51.120 --> 0:15:54.120
<v Speaker 4>user or a customer? And when you start your customer

0:15:54.120 --> 0:15:58.000
<v Speaker 4>your story there, it's going to be way more successful.

0:15:58.040 --> 0:15:59.480
<v Speaker 3>Give us an example of a couple of the eight

0:15:59.520 --> 0:16:02.560
<v Speaker 3>startups you're involved with now that you say are finding

0:16:02.680 --> 0:16:05.040
<v Speaker 3>are finding solutions to problems? What are the problems that

0:16:05.080 --> 0:16:06.120
<v Speaker 3>are out there that they're solving?

0:16:07.360 --> 0:16:12.000
<v Speaker 4>So you know, Pontera is helping Americans to retire richer.

0:16:12.120 --> 0:16:13.480
<v Speaker 4>Right At the end of the day, if you think

0:16:13.520 --> 0:16:17.880
<v Speaker 4>about most of the Americans, their retirement saving is through

0:16:17.960 --> 0:16:20.480
<v Speaker 4>four one k plants, right. And if I would ask

0:16:20.520 --> 0:16:23.040
<v Speaker 4>a hundred people on the street, what do you invest

0:16:23.080 --> 0:16:26.520
<v Speaker 4>in your four one k? Probably they don't know. I

0:16:26.600 --> 0:16:29.800
<v Speaker 4>do know. By the way, in the default whatever was

0:16:29.840 --> 0:16:32.600
<v Speaker 4>the default when they joined, and the default is not

0:16:32.640 --> 0:16:36.120
<v Speaker 4>a good idea, right, And the biggest problem is that

0:16:36.160 --> 0:16:38.960
<v Speaker 4>your financial advisor is unable to help you with your

0:16:39.360 --> 0:16:43.200
<v Speaker 4>for one k. And so Pontera have created a platform

0:16:43.240 --> 0:16:46.440
<v Speaker 4>that a law was financial advisors to manage your four

0:16:46.560 --> 0:16:49.160
<v Speaker 4>one k and therefore brings way better results for you.

0:16:50.760 --> 0:16:54.200
<v Speaker 4>C three is helping three growers to increase the yield,

0:16:55.200 --> 0:16:58.440
<v Speaker 4>and this is pretty dramatic, right, And so in particular,

0:16:58.480 --> 0:17:04.440
<v Speaker 4>if you think of or sugarcane or ecalyptus or whatever,

0:17:05.520 --> 0:17:10.400
<v Speaker 4>the ability to increase the yield through through a system

0:17:10.480 --> 0:17:12.600
<v Speaker 4>is actually pretty dramatic for them.

0:17:13.760 --> 0:17:16.119
<v Speaker 1>So don't We don't have much time left, and I

0:17:16.240 --> 0:17:18.080
<v Speaker 1>have to talk to you. Talk to you about the

0:17:18.119 --> 0:17:22.760
<v Speaker 1>thirty day test, basically one of your ways for hiring employees.

0:17:22.920 --> 0:17:25.359
<v Speaker 1>Thirty days. Does it seem like a long time to

0:17:25.359 --> 0:17:27.720
<v Speaker 1>get a good sense of how someone will be as

0:17:27.800 --> 0:17:29.360
<v Speaker 1>a long term employee?

0:17:30.600 --> 0:17:35.720
<v Speaker 4>You are right in terms of the amount of feedback

0:17:35.760 --> 0:17:38.040
<v Speaker 4>that I got around that. But let me try the following, right.

0:17:38.080 --> 0:17:41.040
<v Speaker 4>I spoke with many entrepreneurs that their startup fail and

0:17:41.119 --> 0:17:44.040
<v Speaker 4>actually why what happened? And about half told me the

0:17:44.080 --> 0:17:46.800
<v Speaker 4>team was not right. And I kept asking, okay, what

0:17:46.880 --> 0:17:48.560
<v Speaker 4>I mean the team was not right? And I heard,

0:17:48.640 --> 0:17:50.320
<v Speaker 4>you know, we had this guy not good enough and

0:17:50.359 --> 0:17:52.480
<v Speaker 4>this guy not good enough, so that was the main reason.

0:17:53.119 --> 0:17:55.520
<v Speaker 4>And then ask them the most interesting question, when did

0:17:55.560 --> 0:17:58.399
<v Speaker 4>you know that the team is not right? All of

0:17:58.400 --> 0:18:03.040
<v Speaker 4>them told me within the first within the first month. Now,

0:18:03.080 --> 0:18:06.240
<v Speaker 4>in general, I would say this is always the same. Right.

0:18:06.320 --> 0:18:09.680
<v Speaker 4>So when you think of a small place and there

0:18:09.760 --> 0:18:13.200
<v Speaker 4>is someone that does not fit, right, and I don't

0:18:13.240 --> 0:18:15.440
<v Speaker 4>care if that someone does not fit because they're way

0:18:15.520 --> 0:18:18.840
<v Speaker 4>underperforming or because they're complete jerks, I don't really care.

0:18:19.280 --> 0:18:24.360
<v Speaker 4>Everyone knows. Everyone knows, and the CEO doesn't do anything.

0:18:24.480 --> 0:18:28.639
<v Speaker 4>That's the nature of the beast. Now, the realization is

0:18:28.640 --> 0:18:30.920
<v Speaker 4>that when I speak with people, I ask them when

0:18:30.960 --> 0:18:32.560
<v Speaker 4>do you know? All of them told me within the

0:18:32.600 --> 0:18:36.240
<v Speaker 4>first month, even peers, right, or team members and the

0:18:36.400 --> 0:18:39.520
<v Speaker 4>or team leaders or whatever it is. Then I set

0:18:39.560 --> 0:18:41.440
<v Speaker 4>the ruler, and I basically say, and the rule is

0:18:41.480 --> 0:18:44.760
<v Speaker 4>in order to force the decision. Right. So every time

0:18:44.880 --> 0:18:48.159
<v Speaker 4>that you hire someone new, what they want to do

0:18:48.840 --> 0:18:51.800
<v Speaker 4>is mark your calendars for thirty days down the road

0:18:52.480 --> 0:18:56.240
<v Speaker 4>and ask you said one question, knowing what I know today,

0:18:56.280 --> 0:19:00.120
<v Speaker 4>what I hired So forcing are the sea.

0:19:00.560 --> 0:19:02.680
<v Speaker 3>Or we're gonna have to leave it there. Unfortunately, it's

0:19:02.680 --> 0:19:04.440
<v Speaker 3>in chapter six in his book fall in Love with

0:19:04.480 --> 0:19:06.960
<v Speaker 3>the Problem, Not the Solution. Orie Levine, the co founder

0:19:07.000 --> 0:19:09.440
<v Speaker 3>of ways Here, on Bloomberg BusinessWeek,