Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is Bloomberg BusinessWeek inside from the reporters and editors
Speaker 2: who bring you America's most trusted business magazine, plus global business,
Speaker 2: finance and tech news as it happens. Bloomberg Business Week
Speaker 2: with Carol Messer and Tim Steneveek on Bloomberg Radio.
Speaker 3: It is Bloomberg Business Week. That's Katie Graefeld in for
Speaker 3: Carol Masser this afternoon. I'm Tim Steneveek.
Speaker 4: Katy.
Speaker 3: I don't know if you caught this story last week.
Speaker 3: Jensen Wong, the president's CEO, co founder of Nvidia, one
Speaker 3: of the wealthiest people in the world, and he's number
Speaker 3: thirteen on the Bloomberg Billionaire's list for sure. He and
Speaker 3: his wife Laurie have a foundation. They've got more than
Speaker 3: eight billion dollars of Invidia shares in it, but even
Speaker 3: that figure may underestimate the amount of charitable assets now
Speaker 3: that the company has at the couple has at its disposal.
Speaker 3: Documents show that a charity run by Charles Schwab controls
Speaker 3: an additional four point four billion dollar dollars of Nvidia shares,
Speaker 3: at least some of which are held in their donor
Speaker 3: advised fund for the Wongs and their foundation. The reason
Speaker 3: I'm talking about this is because of these DAFs donor
Speaker 3: advised funds. The IRS back in the spring held hearings
Speaker 3: on proposed changes to DAFs and for more. To get
Speaker 3: an understanding of what exactly is going on, what could
Speaker 3: be at risk, and just to explain it all, we
Speaker 3: turned to Julia Healey, CEO over at United Charitable, which,
Speaker 3: in their own words, is a quote nonprofit that works
Speaker 3: closely with wealth advisors and their clients to increase a
Speaker 3: donor's ability to do more with their contributions while minimizing
Speaker 3: their tax liability through their donor advised funds. Julia joins
Speaker 3: us from Washington, DC. Julia, how are you good?
Speaker 5: How are you?
Speaker 3: We're doing pretty well. Thanks. I think we got to
Speaker 3: start at the just at the basics here with donor
Speaker 3: advised funds, not everybody knows exactly what they are, so
Speaker 3: explain for us.
Speaker 5: Sure, a donor advice fund is a charitable giving account.
Speaker 5: Think of that as simply a savings account that's already
Speaker 5: geared towards charitable giving. The great thing about donor advice
Speaker 5: funds is that once you donate into the account that
Speaker 5: that's when you get your charitable tax deduction, and then
Speaker 5: from there you can wait a year to distribute to charity,
Speaker 5: or you can make distributions right away. But think of
Speaker 5: it as a charitable savings account.
Speaker 3: Okay, charitable savings account. Who are they good for?
Speaker 5: They're good for people that are either building their wealth
Speaker 5: or high networth individuals who already have their you know,
Speaker 5: legacy in place and they really want to continue it.
Speaker 5: They can replace private foundations in certain scenarios. I mean,
Speaker 5: they're very it's such a flexible vehicle.
Speaker 3: What are we talking about? Who does it make sense for?
Speaker 5: So again, probably around the five million in undermark, right,
Speaker 5: so we have clients that start with us at twenty
Speaker 5: five thousand, we have clients at five million.
Speaker 3: So how do the how does how does someone like
Speaker 3: does someone like Jensen Wong, the founder of Nvidia find
Speaker 3: four point four billion dollars in a donor advice fund?
Speaker 5: And again, there are so many people out there that
Speaker 5: are using the donor advice funds because nobody wants to
Speaker 5: deal with the private foundation and having to file all
Speaker 5: of your tax forms and having board of directors with
Speaker 5: the donor advice funds. You just become a project or
Speaker 5: an account of an existing charity. So I run about
Speaker 5: six hundred and fifty different donor advice funds for all
Speaker 5: different clients. And again there's no quarterly board reports we
Speaker 5: vet the charities for us. For them, you just make
Speaker 5: the recommendation and then we go out and do the work.
Speaker 1: And ken for again, for our audience that might not
Speaker 1: be familiar with donor advised funds, I mean, how do
Speaker 1: they compare to other vehicles out there that do exist?
Speaker 1: If you could just compare and contrast here for us.
Speaker 5: Sure, a donor advice fund is really compared to a
Speaker 5: lot of the times to a private foundation. And so
Speaker 5: with a private foundation you do have to do reporting,
Speaker 5: annual reporting, board reports, and you don't have the same
Speaker 5: tax seductibility. Right, So private foundations have certain tax deductibility
Speaker 5: compared to donor advice funds, which is a public charity,
Speaker 5: so you get all your public tax station rates. So
Speaker 5: the real advantages is you get up again a higher
Speaker 5: tax seduction for the clients that choose to go with
Speaker 5: the donor advice fund And the distributions though are only
Speaker 5: to a five oh one C three religious or educational
Speaker 5: institution in the United States. With a private foundation, you
Speaker 5: have more flexibility into paying expenses and paying salaries. With
Speaker 5: the donor advice funds, you do not have that capability.
Speaker 3: So what's going on at the irs level here when
Speaker 3: it comes to these the potential changes that we could see.
Speaker 5: Yeah, so we're seeing that the regulations that could possibly
Speaker 5: be proposed would not allow financial advisors to be compensated
Speaker 5: for the management of the donor advice funds.
Speaker 3: Why is that bad in your opinion?
Speaker 5: Well, just because, well, in my opinion, if a financial
Speaker 5: advisor is advising an account on how to create a legacy,
Speaker 5: and we have a client, we have a family that's
Speaker 5: coming in and has decided to put five hundred thousand
Speaker 5: dollars away, and they want to do distributions each year.
Speaker 5: But they only want to touch you know, the interests,
Speaker 5: not the principal. Who a financial advisor then needs to
Speaker 5: come up with the best investment strategy. Who with the
Speaker 5: charity would be able to do that. We need investment
Speaker 5: advisors in their professions to make sure that these accounts
Speaker 5: are growing and taken care of just like any other investment.
Speaker 3: How are they compensated right now?
Speaker 5: Management fees.
Speaker 3: How high are those fees like.
Speaker 5: Seventy five basis points? I mean, we're not talking anything crazy.
Speaker 1: And so the conversation that we're having now about potential
Speaker 1: regulation potential changes, I mean, where did that originate from?
Speaker 1: And I mean, what's the potential timeline on any potential changes?
Speaker 4: You know?
Speaker 5: That's great and I wish I had more information for
Speaker 5: you for that. They have not given us any potential changes.
Speaker 5: It took them quite quite a while to really come
Speaker 5: up with these regulations. So I'm hoping we'll see something
Speaker 5: just because we would like to know too. But we're
Speaker 5: hoping we'll see something late this year, maybe next year.
Speaker 5: They haven't given us any kind of information around that.
Speaker 3: How are you thinking about the election and who wins
Speaker 3: in November?
Speaker 5: Oh? In election years, people whether your candidate wins or loses,
Speaker 5: people really seem to care about charity and the charities
Speaker 5: that they're giving to. So it's kind of an activation
Speaker 5: year I call it for me because we can see
Speaker 5: clients whether they're happy about who's you know, who's an
Speaker 5: office or they're not. They'll really react to it and
Speaker 5: they'll make their sure that their dollars talk just as
Speaker 5: much right, they're charitable dollars will go to the organizations
Speaker 5: that they think will help strength in America.
Speaker 3: Do you think that it will change based on who
Speaker 3: wins in terms of how much people donate, Like, does
Speaker 3: that on your radar at all?
Speaker 5: It's not so much how people donate. I think it
Speaker 5: just depends what is on going to be on each
Speaker 5: party's platform, whether they're going to go off tax regulations
Speaker 5: or stuff like that. That will make a difference. But
Speaker 5: in general, more people are activated in an election year.
Speaker 5: They're more they care about the community that's around them,
Speaker 5: and it makes them very aware of the issues that
Speaker 5: are going on. So it makes people really activated and
Speaker 5: wanting to make the world a better place.
Speaker 1: And Julia, I'm curious about demographics here. I mean, when
Speaker 1: we talk about philanthropic giving, etc. It sounds like a
Speaker 1: much older sort of person who's doing that. But what
Speaker 1: are we seeing among maybe folks who are less wealthy,
Speaker 1: who are earlier in their careers and their investment journeys.
Speaker 1: I'm talking about gen Z for example.
Speaker 5: So probably my favorite generation thus far, which is because
Speaker 5: they're really wanting to match their donation dollars with their time, talent,
Speaker 5: and treasure they don't just want to give a big check.
Speaker 5: They want to volunteer or if they have accounting skills
Speaker 5: or social media skills, they want to help that nonprofit
Speaker 5: in a very specific way. So we see philanthropy changing
Speaker 5: a little bit in the sense that the next generations
Speaker 5: they want to be much more involved. They really want
Speaker 5: to help, they want to work with companies that are philanthropic.
Speaker 5: So we're just incredibly excited to see the next generation.
Speaker 3: What are the causes that they care about.
Speaker 5: So we're seeing a lot of environmental education, but just
Speaker 5: anything that really that they feel that they create a community.
Speaker 5: And that's what I've noticed much more is that they
Speaker 5: do care about the nonprofit social media accounts and what
Speaker 5: they're doing and what there's community. They're looking into all
Speaker 5: of that when they're making their donations.
Speaker 3: I'm wondering about religious organizations. Is that something that falls
Speaker 3: into the purview of donor advice funds?
Speaker 4: It does?
Speaker 3: Are you seeing a shift there because we hear a
Speaker 3: lot about younger generations not being as interested in going
Speaker 3: to church or being part of organized religious community, and
Speaker 3: I know that does take up a significant portion of donations.
Speaker 3: When you look at it net net what are you
Speaker 3: seeing what are the patterns You're.
Speaker 5: Seeing exactly what you said. We're seeing that becoming less
Speaker 5: and less. We're seeing human services organization take up more
Speaker 5: and more of the pie.
Speaker 3: Really interesting stuff. Julia, thanks so much for joining us.
Speaker 3: That's Julia Heay CEO over at United Charitable Works with
Speaker 3: donor advised funds. She joins us from Washington, DC. We've
Speaker 3: got back with us. Or Levine, the co founder of Ways.
Speaker 3: Remember Google bought it more than a decade ago for
Speaker 3: one point one billion dollars. Or also an investor in
Speaker 3: the first board member over at move It. Intel A
Speaker 3: bought that back in twenty twenty for a billion dollars.
Speaker 3: He's also the author of fall in Love with the Problem,
Speaker 3: Not the Solution, a handbook for entrepreneurs. Or he joins
Speaker 3: us from Toronto. Or good to see you. How are you, Thanks, An,
Speaker 3: how are you. We're doing well. It's good to have
Speaker 3: you come back with us. Hey, before we get to
Speaker 3: how you're thinking about entrepreneurship right now, I do want
Speaker 3: to get an update from what you're hearing, what you're
Speaker 3: hearing from your fellow members of the tech community in Israel,
Speaker 3: because you were back on with you were in December
Speaker 3: back on with US in December a few months ago.
Speaker 3: And when you were last on with US then it
Speaker 3: was about two months after the war started, and you
Speaker 3: talked about how it affected the tech community there. Obviously
Speaker 3: a lot has happened since then. Just give us an
Speaker 3: update from what you're hearing, what you're seeing.
Speaker 4: So to a certain extent, I would say that the
Speaker 4: scary part is that we get history and we shouldn't have.
Speaker 4: But the reality is that the tech nation is back
Speaker 4: back to normal, and you know, startup scene is as
Speaker 4: strong as it was before and maybe even stronger. And
Speaker 4: so in that sense, I would say, all goodness, the
Speaker 4: political situation is less.
Speaker 3: Yeah, well, how is it back to normal? I mean,
Speaker 3: how does that work when folks are having to fight
Speaker 3: when there's certainly still the threat? How is that normal?
Speaker 5: Right?
Speaker 4: So to a certain extent, I would say most of
Speaker 4: the scene is outside or further away from where the
Speaker 4: combat actually happens, right, And so in Tel Aviv and
Speaker 4: major cities there is nearly no impact of the war anymore.
Speaker 4: And it's mainly up north and in the next to
Speaker 4: the Gaza strip. In the number of people on military
Speaker 4: is herb is way smaller now, So at the end
Speaker 4: of the day, the impact on the startup scene is
Speaker 4: minimal at this phase.
Speaker 1: How about fundraising, Is that back to normal? When you
Speaker 1: think about the appetite of foreign investors to invest.
Speaker 4: In is probably the only thing that is not back
Speaker 4: to normal.
Speaker 3: Interesting, So, and.
Speaker 4: The reason is that, Look, you know, we hear about
Speaker 4: war and then we get scared, and then we basically say, Okay,
Speaker 4: we don't know, let's wait. And the way is making
Speaker 4: it a little bit more complex for startups to raise
Speaker 4: new capital or for new funds to raise new capital
Speaker 4: and so forth. But at the end of the day,
Speaker 4: I think that and Israel always ended up to be
Speaker 4: stronger than before, right, so the more challenges that we have,
Speaker 4: we ended up to become even stronger and stronger and stronger.
Speaker 4: And so to certain extent, I would say investing in
Speaker 4: Israeli startups today is a good idea.
Speaker 3: Do you see fundraising ever getting back to levels seen
Speaker 3: before the war?
Speaker 4: Definitely yes. So you know, we look at that twenty
Speaker 4: one in terms of investing in startups worldwide, writing in
Speaker 4: particular in the US and some we'll call that the
Speaker 4: hyper inflation valuations. And you ask yourself, is that going
Speaker 4: to come back? And then you look at the history
Speaker 4: and you realize that, wait a minute, In two thousand
Speaker 4: and seven we say the same thing, and just before
Speaker 4: COVID we say the same thing, and you know, in
Speaker 4: nineteen ninety nine we say the same thing, and everything
Speaker 4: is coming back eventually.
Speaker 3: Hey, I want to pivot a little bit and talk
Speaker 3: about startups and sort of what's exciting to you out
Speaker 3: there right now. So much of our attention has been
Speaker 3: focused on AI and this seemingly new, although not really new,
Speaker 3: but new of interest. I think for a lot of
Speaker 3: people layer of technology, A lot of your focus has
Speaker 3: been on the sort of maps and transportation logistics with
Speaker 3: ways and then with move it. What's exciting to you
Speaker 3: right now in startups?
Speaker 4: So look, at the end of the day, this is
Speaker 4: about solving problems, end of the day. If you think
Speaker 4: of a journey for startup, then the purpose is only
Speaker 4: one creating value, and the simplest way to create value
Speaker 4: is solve a problem. So therefore, if the problem is
Speaker 4: worth solving, then I would say this is probably something
Speaker 4: that excites me. I have eight different active startups today
Speaker 4: and each one of them is trying to solve a
Speaker 4: single problem. And some of them are you know, I
Speaker 4: would say, are going to be my third and fourth unquorns.
Speaker 4: But they're making significant progress. But generally speaking, each one
Speaker 4: of them is trying to follow the same philosophy of
Speaker 4: doing good and doing well, which basically means that you know,
Speaker 4: if they're successful, then the war will end up to
Speaker 4: become a better place.
Speaker 1: And of course you are the author of falling love
Speaker 1: with the problem, not the solution. I also see that
Speaker 1: on your shirt. That a nice plot there. Maybe you
Speaker 1: could just elaborate a little bit more on what that
Speaker 1: actually means in practice for some of these startup founders
Speaker 1: and maybe startup investors as well. Since obviously falling in
Speaker 1: love with a problem it's a little bit unintuitive.
Speaker 4: It's actually very intuitive, right because at the end of
Speaker 4: the day, the journey is about value creation. The simplest
Speaker 4: way to create value is solve a problem. Right, So
Speaker 4: you should start with the problem. Think of a problem,
Speaker 4: a big problem, something that it's worth solving, and then
Speaker 4: ask yourself, so who has this problem? Now? If you
Speaker 4: happen to be the only person on the planet with
Speaker 4: this problem, you know what I can recommend you a therapist.
Speaker 4: But prob what you really want to do next is
Speaker 4: go and speak with those people and understand their perception
Speaker 4: of the problem, and only then go and build a solution.
Speaker 4: And the result is that the problem is going to
Speaker 4: serve as the north star of your journey. And when
Speaker 4: you have a north star, you're going to make class
Speaker 4: deviation from the courts and more likely to become successful.
Speaker 3: So oh, go ahead.
Speaker 4: In particular, the story that you're about to tell is
Speaker 4: going to be way more compelling. Just imagine that we
Speaker 4: will be here in two thousand and seven, just before
Speaker 4: I started ways, and I will tell you I'm going
Speaker 4: to build an AI crowdsource based navigation system. And you're
Speaker 4: going to say, oh, yeah, very interesting, But you don't care.
Speaker 4: If I will tell you I'm going to help you
Speaker 4: to avoid traffic jams, then you do care. And when
Speaker 4: your customer cares, they want you to be successful, and
Speaker 4: if they want you to be successful, then they're going
Speaker 4: to help you to become successful. Now you're right. I'm
Speaker 4: getting one hundreds email a month from entrepreneurs, and in
Speaker 4: the last year there was not even a single one
Speaker 4: that did not say AI. But I would say in general,
Speaker 4: ninety five percent of them will start with what they're doing.
Speaker 4: And I don't really care what you're doing. What I
Speaker 4: care is why you are doing that, What is the
Speaker 4: value that you're going Why should I care as a
Speaker 4: user or a customer? And when you start your customer
Speaker 4: your story there, it's going to be way more successful.
Speaker 3: Give us an example of a couple of the eight
Speaker 3: startups you're involved with now that you say are finding
Speaker 3: are finding solutions to problems? What are the problems that
Speaker 3: are out there that they're solving?
Speaker 4: So you know, Pontera is helping Americans to retire richer.
Speaker 4: Right At the end of the day, if you think
Speaker 4: about most of the Americans, their retirement saving is through
Speaker 4: four one k plants, right. And if I would ask
Speaker 4: a hundred people on the street, what do you invest
Speaker 4: in your four one k? Probably they don't know. I
Speaker 4: do know. By the way, in the default whatever was
Speaker 4: the default when they joined, and the default is not
Speaker 4: a good idea, right, And the biggest problem is that
Speaker 4: your financial advisor is unable to help you with your
Speaker 4: for one k. And so Pontera have created a platform
Speaker 4: that a law was financial advisors to manage your four
Speaker 4: one k and therefore brings way better results for you.
Speaker 4: C three is helping three growers to increase the yield,
Speaker 4: and this is pretty dramatic, right, And so in particular,
Speaker 4: if you think of or sugarcane or ecalyptus or whatever,
Speaker 4: the ability to increase the yield through through a system
Speaker 4: is actually pretty dramatic for them.
Speaker 1: So don't We don't have much time left, and I
Speaker 1: have to talk to you. Talk to you about the
Speaker 1: thirty day test, basically one of your ways for hiring employees.
Speaker 1: Thirty days. Does it seem like a long time to
Speaker 1: get a good sense of how someone will be as
Speaker 1: a long term employee?
Speaker 4: You are right in terms of the amount of feedback
Speaker 4: that I got around that. But let me try the following, right.
Speaker 4: I spoke with many entrepreneurs that their startup fail and
Speaker 4: actually why what happened? And about half told me the
Speaker 4: team was not right. And I kept asking, okay, what
Speaker 4: I mean the team was not right? And I heard,
Speaker 4: you know, we had this guy not good enough and
Speaker 4: this guy not good enough, so that was the main reason.
Speaker 4: And then ask them the most interesting question, when did
Speaker 4: you know that the team is not right? All of
Speaker 4: them told me within the first within the first month. Now,
Speaker 4: in general, I would say this is always the same. Right.
Speaker 4: So when you think of a small place and there
Speaker 4: is someone that does not fit, right, and I don't
Speaker 4: care if that someone does not fit because they're way
Speaker 4: underperforming or because they're complete jerks, I don't really care.
Speaker 4: Everyone knows. Everyone knows, and the CEO doesn't do anything.
Speaker 4: That's the nature of the beast. Now, the realization is
Speaker 4: that when I speak with people, I ask them when
Speaker 4: do you know? All of them told me within the
Speaker 4: first month, even peers, right, or team members and the
Speaker 4: or team leaders or whatever it is. Then I set
Speaker 4: the ruler, and I basically say, and the rule is
Speaker 4: in order to force the decision. Right. So every time
Speaker 4: that you hire someone new, what they want to do
Speaker 4: is mark your calendars for thirty days down the road
Speaker 4: and ask you said one question, knowing what I know today,
Speaker 4: what I hired So forcing are the sea.
Speaker 3: Or we're gonna have to leave it there. Unfortunately, it's
Speaker 3: in chapter six in his book fall in Love with
Speaker 3: the Problem, Not the Solution. Orie Levine, the co founder
Speaker 3: of ways Here, on Bloomberg BusinessWeek,