The First Customer - The Path from Real Estate Mogul to Wealth Tech Innovator with CEO David Snider

[00:00:28] Jay: Hi everyone. Welcome to The First Customer podcast. My name's Jay Aigner. Today I am lucky enough to be joined by David Snider. He is the founder and CEO of Harness Wealth.

his little snippet said he started this company after making a seven figure. Tax error, which is always a fun little snippet to get into. I'm sure we'll learn about that, but David first. Hello, my friend. How are you?

[00:00:49] David: Delighted to be here. Thanks, Jay.

[00:00:50] Jay: you are in, New York city. Is that correct?

[00:00:54] David: I am, and we are, yeah.

[00:00:56] Jay: But you didn't grow up there. So tell me about where'd you grow up and did you have an impact on you being an entrepreneur?

[00:01:02] David: I grew up in the Boston area, in sort of Boston proper. Not many of us are actually like, you know, Back Bay originally raised. And then, moved out to the suburbs and loved growing up there. I think it was sort of a nice Suburban existence where I got to kind of dip my toes in some safe entrepreneurial, endeavors.

I helped organize a charity tennis tournament, you know, at a couple of courts that were down the street from us to raise a few thousand bucks for a program that helped, children that wouldn't have access to tennis, which is one of my sort of early sport passions, have access and get training. And, I think that sense that you don't need to overthink.

It can be sort of a thing you believe like if you do is going to create some value for someone else was definitely helpful. You know, the biggest entrepreneurial thing before actually launching, this business or helping launch the last business, whatever, wasn't writing a business book. And I think that, That was like a super precocious endeavor to take on as a, you know, undergraduate in college.

But I think I've been fortunate to meet a lot of people growing up in Boston in financial services. Boston's a more low key place than New York is. And so it's like, you don't really know, Oh, that guy you're talking to is Seth Klarman who's, you know, made billions of dollars and built one of the best hedge funds or, Those folks at Bain Capital have bought a bunch of iconic businesses, et cetera.

And so, that's sort of my approach. Like I'm not someone who feels like I need to run the show or I had the aspiration to manage, you know, huge teams of people. It's been more, you know, guys should look around and when something feels like it. Could be different, could be better. It's kind of fun to take a stab at actually creating something out of nothing.

[00:02:46] Jay: Love that. and was harnessed the first, but I know you kind of, like you mentioned, you, you worked with, was it, what was the other company that you helped grow before this?

[00:02:53] David: Compass was the large one. There was also a tiny business that Harvard business school gave us a few thousand dollars to start that we sold. I think we were one of only like two or three out of that. Not a person in class that actually built it into something, you know, with an ROI on someone else's capital, I guess, in that instance.

But, you know, there's some lessons in everything I think that you do where you're again, kind of starting from nothing where inertia is nothing happens and you've got to drive something forward to create value or not. but at least I'm going to make a shot at moving it forward, but yeah, the really substantive experience was in my second year of business school, reconnecting with a guy that I know well through a nonprofit who asked me to join the team he was putting together to build Compass, the now public real estate brokerage, which is the largest in that space in the U S today.

[00:03:47] Jay: So tell me about Harness Wealth. Tell me about your, your tax, problem or the reason, what was the catalyst for starting the company?

[00:03:55] David: Yeah. So what we do now is still related, but a little bit more both expansive and specific, perhaps than when we started. Harness is focused on, Doing two things, which work more symbiotically together than it may sound. The first is building a modern tax platform for advisors, CPAs, JDs, whatever, to create an exceptional tax experience for their clients.

a lot of thematic similarities to Compass where we were building a platform to help great real estate agents seamless and insightful experience for the. And folks looking to buy, sell, rent whatever home that they were they're working with. The other piece was really the more the founding component of what we're doing is the marketplace side of Harness, which is we are a platform for helping next generation business owners, builders, wealth creators, navigate tax and financial complexity.

And what that means tactically is understanding what to do, which advisors, where that makes sense to do it with, and then having some coordinating technology on the back end. And, you know, the mistake that you alluded to goes back to, you know, Harvard Business School again, where I got asked to take on this role leading finance and operations for.

Compass in the very early days when the stock is very low or notional, even in what value it, it may hold a couple early employees were like, Hey, we really should have an early exercise program. And the CEO who was starting his first business was like, Hey, you go figure this out and ask two entrepreneurial finance professors who both said.

No, why would you do that? The point of a stock option is it's an option and you should, you know, tell people to hold the option if it's worth something, like, good for them. And I think it, it missed two things. One, a few years before the tax change around the Great Recession introduced Section 1202.

Which allows folks that either invest in early stage businesses that meet certain criteria or get equity in them, but not options actually own stock in them and hold for forever. Five years. All those proceeds can be tax free up to 10, 000, 000 or a large multiple the cost basis and so. You know what I say is like, the advice was not bad in general, but it lacked the specificity for hyper growth business, venture backed, one of the two founders, very successful in the past, high likelihood of having some.

And economic value along that journey and like the general advice just often is not the right advice, especially when it comes to tax. And so, you know, our whole focus, unlike a lot of businesses, is not, Hey, there's one harness way and every advice is going to do it a certain way. And every client should have this experience and this is the price.

It's much more understanding what clients. have in place, what the needs are, the complexity and then figuring out the pathway to help them get what's going to be the most valuable. In that case, it would have been advice to early exercise. Maybe he's having fancier with an ad3 or a promiser exercise or any other thing, but like at a minimum.

It'd be like note early exercise, really valueable when you've got, A stock worth pennies, but you're expecting to do around, you know, at over a hundred million of value, not that in the future.

[00:07:11] Jay: right.well, who was your first customer then at harness?

[00:07:15] David: So I'm, I was excited to do this show because I think we've got a, I don't know if it's unique, but at least it's sort of a nice story around this, which is,

[00:07:22] Jay: Okay.

[00:07:24] David: customer in two directions. So when we first started, we were just a marketplace. I had to go out and convince top quartile financial and tax advisors that they should

[00:07:33] Jay: we're

[00:07:35] David: us, and, you know, a piece of the economics for clients that we originate to help bring to them.

And I had to go find some people that trusted me or us and what we were building to go there. And so, you know, the first 20 conversations was me interviewing prospective financial advisors for myself because they were willing to talk to me as someone who seemed legitimate and could actually have some money for them to invest and generate revenue from.

to curate enough supply in the marketplace to be able to go to friends and family and say, Hey, I've gone through this. These folks are really good. I vetted like, if, and when this makes sense, you know, you should give this a try kind of thing. And so that's how we got going. It was really important to me.

out of the gate to have Advisors across three of the most impactful protocols for personal financial management financial advisory Which includes financial planning and wealth management tax both personal and business and then trust and estate planning and so there's like a lot of Assembly of good providers trying to find some early folks and

[00:08:41] Jay: So,

[00:08:43] David: ran, you know for a while Before realizing that for a lot of this demographic Meaning kind of next generation people encountering some complexity, which is leading them to think about this, whether that's making principal or partner at an investment firm, getting equity in a venture backed business, creating their own company, having 10 to 9 income, having, you know, a meaningful state move or international exposure that,

[00:09:07] Jay: Silence.

[00:09:09] David: was the first advisory service that people needed to solve for great to have a marketplace with lots of demand and seemingly kind of mediocre existing options, but the supply was super limited when it came to finding advisors that had the right expertise, basic technology and professional enablement.

capacity in a price point under ten K that we thought would be compelling for you know, our emerging love client base and so that really drove the very significant investment from our team in the past, really three years into building this I think cutting edge and really differentiated tax platform for both clients and the advisers that work with them.

[00:09:54] Jay: I mean, it's gotta be tough to spin up a two sided marketplace. I've always thought about it's like the community thing, right? It's like, how do you build a community if there's no people? And it's like, you have to like, you have to create it and make it interesting and you know, somewhere people want to be, but also they have to find these people and then like kind of build this both sides of it.

So, I don't envy that position of having to build both sides, but it does feel like at least you had kind of. High value targets to go after, as opposed to like, you know, trying to get 10, 000 people in your marketplace. Right. So it's a much more targeted. So how did you figure out who you wanted to be on the platform?

Other than just going like these guys are in the top, you know, percentile, like what are the, who are the real, you know, candidates that, who's your customer for that side? Right. Cause you really have two customers. You have your people who are going to be using the platform, then your advisors talking about kind of like, how did you define that criteria?

[00:10:45] David: So I think we started with friends and family, you know, run some ads, test some stuff out. And I think it became evident to us that at least in the early days, people from the tech ecosystem gravitated towards a solution that was venture backed, seemingly, you know, built to understand some of those issues, et cetera, to support them.

And so we sort of leaned in from a client acquisition standpoint. I think that there were. Definitely some learnings around, there's a lot of economic value and wealth, but it's very cyclical. Obviously, you know, 2021, much better year than 22, 23 for that cohort. I think conveniently for us, we'd already realized that This tax need actually transcended just that ecosystem and that by actually bring tax advisors onto our platform with a solution that would help their existing clients as much as new ones that we might originate, we could expand the demographic of.

Folks who are bringing in. So we had to have value proposition for some clients. We want to value proposition that resonated with, some or a large section of the, you know, independent tax advisor community. That would be critical because if you could win them, winning the consumer side was almost secondary.

[00:12:03] Jay: having them helping provide them with more resources to create a more institutional solution and still a compelling price point is a win. and that is what we've been kind of leading with from, You know, reinforcing growth mechanism versus the early days when, like you're saying, you're sort of pushing rocks up multiple sides of a hill at one time.

And I mean, is the, what is the goal for this split of revenue? Are you trying to bring in more money from the advisor kind of referral funnel, or are you trying to build the platform up into kind of this traditional SaaS, you know, multiples, you know, whatever model.

[00:12:40] David: I think on a client count basis, the way the internet economics work, like it's definitely going to be a lot more clients that come from advisors, but from a revenue standpoint perspective, there's definitely more balance, you know, between those two things. I think what's also nice is because of the.

Genesis the business, we've got a marketplace of other resources. And so whether clients come in the door initially looking for tax, whether they come in the door with a tax advisor looking to enhance, upgrade his or her practice, there are opportunities to provide other services that may be value add, additive to both of those.

And so ultimately, again, a lot more clients coming in through the advisor side of things, but a more even balance in the revenue contribution over the time of those two areas.

[00:13:26] Jay: How did you find your first kind of advisor? Who was your first advisor? You don't have to name names, but like talk to me about past you, you know, past you kind of doing the initial customer thing. Like who, who were the first customers you brought in? Was it just outreach? You're just like outreaching these guys cold and saying like, Hey, I have a, you know, pretty good background in finance.

Here's a new platform. You should come check it out. Like what was the actual outreach like to these folks?

[00:13:49] David: Yeah, so I mean, we had practice starting with this marketplace offering, which was if you're a financial advisor, tax, trust, and estate, like you want at least some of your client base to be next generation wealth, they're going to get, you know, increasingly complex, increasingly valuable over time, like we're the only scale way to potentially do that. So that was some of the value prop, but it still, I think, took, especially early on, you know, a lot of convincing for practices that are not used to digital marketing or having any component other than referrals that drive their business across financial and tax. I think once we sort of said, Hey, there's an opportunity, not just to be.

A business development resource for advisors, but actually helped to power their practice. Then it also was like this very referral hand to hand combat, like someone, a lot of it was talking to peers or people that I knew and asking for. Referrals to the advisors that they worked with being them. and actually it was in one of those cases where it was an advisor, I was pitching to join the marketplace.

she was at a big firm and said, I'd love to do it. This makes a ton of sense. But like the bureaucracy of my existing tax firm is never going to like have the.

and then I sort of said, well, I've been thinking about this other idea, like how much are you really getting from this big firm, you know, that's paying you 25 cents in a dollar of what you're generating. And in the end, there was some stuff, but probably not a commensurate amount of stuff for the amount of revenue she was generating and, level of affinity that the clients she worked with had for her rather than, you know, the brand name that she was connected to.

So that was like, okay, maybe there is this opportunity to actually, you know, bring over. Some of these like breakaway advisors as existed in lots of other spaces, including Compass with eight and utilize that opportunity

[00:15:55] Jay: How have you kind of refined your sales skills as a finance guy? Not normally known for the most, you know, I'm trying to be nice. I'm just kidding. I love finance people. I thank God that there's people that do it. Cause I can't, but you know, like it's not the, the most extroverted community, I guess, typically have you had to.

Learn some skills that you didn't have before. Like, how did you do that? Did you train at all? Did you just kind of figure it out? Like, how did you go from being a finance guy to being a sales guy for a finance company? No,

[00:16:30] David: was definitely not my experience Or my persona at all. It's funny. I remember being in business school and I went to meet witha very successful founder, the guy who started ZocDoc and I was sort of, you know, soliciting advice.

And he's like, he's a very intense guy, very bright, but it's like, listen, David, you know, there are really only two roles that matter. You're either building or you're selling and you don't frigging know code. So you're selling. So, you know, you should come be part of our enterprise sales team, pitching, you know, hospital systems, et cetera, on the solution that we built.

You know, that stuck with me, but I realized at Compass that it was partly true, but a little too restrictive. I think the part that was true was to drive differential value, I think in most growth stage businesses, and maybe a lot of businesses in general at a senior enough level, you have to know how to sell, but what you are selling can be very different.

So, you know, at Compass. I led all of the capital raising from series A to series E, it was about 354 million. And that was a type of selling that actually lent itself to my slightly more cerebral calm, matter of fact, not overly salesy, because a lot of VCs don't respond really well to The super salesy approach and we were successful in raising a lot of capital through that.

And then the other area was, in hiring, I realized it also takes a set of sales skills to convince people that are at good jobs, you know, often, or most of the time jobs that paid more than we were willing to pay them, at least on a cash basis and come join. And so, that experience I think taught me.

I don't know my like inner sales voice or where I could be at least be, you know, marginally credible or effective at respect. So, I still don't think I have the world's greatest sales skills. Fortunate to have brought on some very good sales folks here that are much more natural at it in the ways that you would think about philosophies and follow up and, you know, understanding problems and getting to root causes and solutioning, but at least.

You know, I've got enough at that reps of trying to ask someone for something, whether it's capital, their job, or now to, you know, come test that our platform that, you know, it works enough of the time I'm still

[00:18:56] Jay: I think that's fair. I think, and he brought out some really good points. I mean, I think there's sales and I bring it up on this show all the time. Like I say, Sometimes people's first customer could be a sale of a company. Cause like you said, it's like, it's just, it's a pitch. It's a sell. It's the same thing with hiring.

I love the hiring example that people don't really name that very often, but it certainly is like selling yourself, selling your company, selling the role, selling the culture, selling the whatever. So there's lots of sales involved in that too. but no, and I also think. There's a big difference between a founder selling something and somebody else selling something.

It's just a different vibe. It's a different, like, you know, I mean, you know how it is. you have salespeople and they sell one way with all the stuff you just mentioned, the follow up and all, I was the same way I, until I got a. Sales leader in our organization. Like I thought oh, I'm doing fine.

And I'm like, oh wait, I'm not doing fine Like I don't know if I have 50 different spreadsheets with 50 different CRM's sales, you know And I'm not good at following up on stuff very much like the visionary in the EOS Framework and like that's about it but no, it's interesting because I think a lot of people you have to learn that shit as you start to be a You know, a successful founder is like, you have to be a salesman.

you have to sell yourself and your company. I love that. all right. I have one more question for you. Non business related. This is just David is David. So, if you do anything in the world and you knew you wouldn't fail, what would it be?

[00:20:28] David: It's a great question. I mean, I think professionally, like I, one of my earliest jobs working on Capitol Hill and doing something within politics, like if you could actually run for something, I know you're definitively going to win. And it's a role that you're excited about. That's sort of the nicest because it's.

grueling, you know, if it goes bad, maybe humiliating, you know, et cetera, it could do, but knowing that you would have a successful outcome, I think is worthwhile. I also think if success means not creating long term injury to your body, there are a whole bunch of things that people do physically that I'm in awe of, you know.

Iron Man or Super Iron Man races and I, you know, climbing the tallest peak on all seven continents, et cetera, that are definitely kind of cool to do if you're going to be successful and not end up with damage, but I think the, political answer is probably more genuine

[00:21:21] Jay: I

[00:21:21] David: and something I might imminently tackle it as I knock on the door of Forty.

[00:21:26] Jay: I love that. Beautiful. All right, man. Well, if people want to find more about you or harness wealth, how do they do that?

[00:21:32] David: Super active on LinkedIn, David Snider, S N I D E R and HarnessWealth. com is our platform, both with info for advisors that may see value, but most often for business owners, equity holders, individuals that are looking, especially as we get close to tax season here, to find the type of advisor and strategic advice and compliance that they feel like they should.

[00:21:55] Jay: So after April 15th, you just take off for the year, right? Your busy time is getting people on the platform before April 15th. And then you can just relax for the

[00:22:03] David: It never stops when you want to go on multiples of yourself. we've got financial service partners to sign up to get their clients on the platform and Actually when things get when you get past the deadline, that's when advisors will talk to You know, it's much harder to get an advisor on the phone

[00:22:17] Jay: That's, I guess that's a good point. Yeah.

or You should take off, I guess, around that time. That should be your vacation time. Cause then, yeah, when they come back, there you go. All right. Well, David was great meeting you, man. And I wish you the best of luck. Let's stay in touch and we'll talk again soon.

All right.

[00:22:30] David: Appreciate it. Thanks

[00:22:31] Jay: See you, man. 

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