David Snider Transcript
Clint Betts
David, thank you so much for coming on the show. Great to meet you. Great to see you. You're the founder and CEO of Harness Wealth. Tell us about Harness Wealth and how you became the founder and CEO.
David Snider
Thank you. Harness is on a mission to help make the tax process seamless and insightful and help folks get better comprehensive financial outcomes. For individuals, we're a modern tax practice. We built technology that we'll talk about to make the entire process more seamless but still relationship-based, single advisor-powered, et cetera. For financial partners, we're that but a solution for them nationally. And for the tax advisors, we've built software that makes every aspect of how they run their practice more efficient and more delightful for their clients. The genesis of it really was twofold. I was fortunate to be the COO and CFO for Compass, now the largest residential real estate company in the US, for its first half-decade. There, we started with a model that was initially meant to get rid of the traditional agent, and what we found a few months later was that it was not the advisor that needed to be replaced or improved.
It was the brokerage or the platform that they were using, associated with, and paying a third of their economics to. That led us to pivot, and the company's been pretty consistent since then in powering advisors and creating great experiences between advisors and clients. That theme, when I had the chance to go back to Bain Capital as an exec in residence, seemed like a nascent state where, yes, technology was going to get rid of a lot of service professionals, but there were also a bunch of places where we if I can speak for the broader group, do really want to talk through stuff with someone and feel like there's an expert thinking about it, weighing the options, explaining that to us, et cetera.
Tax and financial advice certainly are two of those areas. And so, I felt like there were a lot of themes from the Compass experience that we could apply to the tax and financial one and help people both discover the right advisor and advisors and then collaborate more effectively with them. And the second piece was despite having been a CFO and an investor and an MBA, every three to six months, I'd find stuff that I'd screwed up. Not that I'd missed some great investment, but I just hadn't known about some subtlety in the retirement account structure, the tax practice with equity comp, whatever it was. And so, really got excited by the opportunity to help build for this emerging demographic of business creators, successful professionals, et cetera that I thought were broadly underserved.
Clint Betts
Given your extensive experience here and working with obviously Compass and Bain Capital, these are huge, really well-known companies and brands, what do most entrepreneurs or CEOs or leaders miss when they think about taxes? Do they think about it at all if they're just starting out or trying to figure out even what the heck's going on inside of their company, if they have a company? What are they missing? What should they be looking at?
David Snider
Well, I think on the individual side, for most people, taxes are an unpleasant burden you have to deal with once a year. And there's this crunch around this time or this time and then a little bit in the fall if you're an extension filer, et cetera. And the best time to actually leverage good tax advice is outside of those peak seasons. That's when the advisors have more time to consult. And so thinking about it more like financial advisory where there's a quarterly check-in and what are the opportunities, what are you thinking about doing? The historical view of tax was that of a historian. You get materials in 2025 related to the calendar year 2024. There is not a lot you can do outside of optimizing certain approaches to a few different things. And the proactive approach is really where value gets unlocked.
I think the small or closely held business owner community is where there is the most flexibility, let's just say, in the way that people structure how they're paid, how they put money aside for retirement, how they potentially compensate fund members, which is a particularly popular thread on TikTok and Instagram of tax savings things, et cetera. And so the more flexibility that you have with your compensation, investment income, et cetera, the more opportunity there is to make sure that structures are set up to optimize those things for you. And then I think the other mistake that people make is not thinking about stuff until they're going to sell a business or they're having a liquidity event personally, et cetera.
Generally speaking, thinking about taxes last year in the next calendar year, there's a lot less than even the best advisors can do for you if you're doing all the thinking about it when the transaction is imminent or the cash has already hit your bank account. And so the more that you can do early, the more value that gets created.
Clint Betts
Yeah, that's interesting. Yeah, that makes a lot of sense. What does a typical day look like for you?
David Snider
I've got two young boys, one and a half and three, so there's definitely an adjustment of this era of life versus three and a half years ago. One of my board members gave me a book recommendation maybe a year ago, and of course, I forgot the name of the book, but it's really about why sleep is so important across all sorts of things. Aging, cognitive ability, et cetera. There is also an article that I was given in business school. I remember our decision-making capabilities and how they diminish throughout the day. It was a study of judges and parole, which is one of these very binary things, and the percent of inmates that got paroled was dramatically higher across a really long, large data set in the morning relative to the end of the day because it's much easier to go to the default decision, which is no, in the case of this.
There are a lot of things that we do, and it takes more mental capacity to think about, okay, yes, affirmatively doing something, and so number one, try really hard to be consistent in sleep and not feel like you're a better warrior, hero or business leader if you only sleep four hours a night. And then second is trying to structure my days, and I've gotten much better at this of late, part through an executive coach, part through a good EA, of blocking out time in the morning to do some of the most intellectually or open-ended thought exercises that are most important, and also having the toughest conversations first thing.
Going back to that same parole conversation, I think I was fortunate to have a guy who used to run human capital at Morgan Stanley as one of my business school professors, and there wasn't a ton I remember from that course but one thing that stuck very clearly with me is being very emphatic that tough conversations are ones you should have in the morning even though it may be tempting to wait, have a drink with someone at the end of the day or catch them as they're heading out.
And so again, try to think about that and plan for the day. But for me, there are a few different categories of tasks. I try to do my quarterly and annual planning. There are things that we're only a team of a few dozen. I am principally driving, and I need to think about it and do the work. If the result happens, it's going to be as a result of me doing it or not getting around to doing it and doing it well. The second is stuff where I am supporting but in a meaningful way, that there are key decisions throughout, and there's stuff that I may get presented to provide some input on, but really, I'm a little bit more passive. And so making sure that I'm aware of what is in each of those buckets and driving forward, especially category one, but not being a blocker in category two is really important in thinking about time allocation for the day, the week, and the quarter.
Clint Betts
At what point in the day do you check email or do email?
David Snider
I would say it's one of my biggest areas of improvement. I think it is definitely a mild addiction. I don't have much of an addictive personality, but that is certainly one. So I try as much as I can to clear out or look at everything before I get into the office so I can dive into stuff and not just focus on inbox clearing. I've gotten much better at the aggressive use of Gmail corporate users, the snooze button, and moving things out so that it can be as effective as the to-do list proxy that it sometimes is. And I've also gotten better at trying to block one time mid-afternoon when I'm probably not at my peak anyways to check personal Gmail and do things that are not as important or corporate-focused on trying to be as laser-focused on what I can and [inaudible 00:09:36] moving the needle on.
Clint Betts
Did you always want to do this? Did you always want to be in the finance, business, investing world?
David Snider
No. There are two different key hurdles to ending up somewhere I definitely wouldn't have expected. I think the first was I have always loved politics and public policy. That was my major in college and interest before that. And so I worked on Capitol Hill pretty early on, loved it, but looked around and was like, "Gosh, there are a lot of factors outside my control of whether I end up in a position of any influence and excitement relative to the objectives that I have." Maybe it's not the place to start. Too much is predicated upon which party's in power, whether someone retires, whether someone you work for has an affair with the wrong person at the wrong time, who knows. So, I moved towards wanting to work in business but didn't really have a clear view of whether that should be consulting, investment banking, working for a scale Fortune 500 enterprise, et cetera.
And so I ended up writing a business book that was largely a Trojan horse to interview people I thought I might want to work for or at least learn about, and I loved the experience. I would've made more money bartending than just doing this book, which, again, by the scheme of authors, was actually relatively successful. Macmillan published it. Ended up in a couple of foreign languages. It helped crystallize for me an interest in being in a professional service business to start, getting phenomenal training at Bain and Company, then moving over to Bain Capital on the private equity side and trying investing. I've always been a little impatient. Hence, I guess I wrote a business book before I was 25. And I felt like going back post-MBA to large-scale investing was probably not going to be the most entrepreneurial or the environment where I could have the most impact, good or bad, on the enterprise that I was part of.
So, I laid out six criteria that I thought would be the most defining of whether I ended up somewhere that I was excited about. Figured I would find something with four of six and be happy. Five of six if I was lucky. And when the Compass founder reached out to me as he was putting together the team and asked if I wanted to join, it felt like six of six. And I can go into those if they're interesting, but I don't have to. And so that set me on this path. And I would say that I'm a little bit more of an introverted person, so I assumed that that meant I wasn't going to be the manager of lots of people because that wasn't what I naturally gravitated towards.
I joined Compass, then called Urban Compass, as a senior title but an army of one, and then the first few months started getting people and teams thrown at me, and I realized that it's not about being the loudest personality. It really is around being able to articulate context, provide resources, help articulate constraints, give people guidance, be able to identify talent and needs and hire effectively that, at least in the view of the folks there, and I guess me post-then has shaped view of actually, you can be a super effective manager and then leader of people with a broader skill set than just raw sales skills or something else.
And so, even in that operating entrepreneurial startup role, I didn't necessarily appreciate the trajectory I would be on in terms of leadership until it organically happened that I ended up leading a huge swath of the organization at Compass. And then, in having the idea and deciding to become a founder, you're barring having a co-founder, a partner that's really going to drive the people side, going to be responsible for helping to shape the experience and the team that comes.
Clint Betts
Tell us about your six things. I'm super interested in that.
David Snider
So, in no particular order in part because I'm not sure I'm going to remember them in the order that I had, but number one, as I had referenced, was a role where I had confidence that I would have an impact on the trajectory of the organization. The second was being at a business that I thought had a positive growth trajectory. I joined Bain Capital, the private equity side, in 2009 at the tail end of the worst part of the Great Recession. And it was clear that those gigantic funds that they had raised, and their peers just previously, were probably going to be smaller, and in an organization with lots of super bright people, there's less opportunity when there isn't that growth. Third was I'd worked for some amazing managers, and I'd worked for some horrific ones, and so feeling like I had enough of a relationship or could develop a good enough sense of the people that I work with, work for that it was not going to be a huge limiting factor in my enjoyment of my day-to-day work, which would consume a huge amount of my time.
Fourth, I was hoping to end up in an industry where I had some natural interests because I thought that would, again, lead to better outcomes, better passion, et cetera. Fifth was geographically wanted to ideally be in New York. I was open to some other locations. Then, sixth, I was hoping that my compensation would be aligned with the performance of the enterprise, whether that was carried interest, equity, stock options, profit share, or whatever. Yeah. Again, I looked at a lot of stuff and felt like, okay, well, maybe I get all those things, but I got to live in Detroit, which is not one of the three places I was most excited for, or I get all those things, but it's a business in healthcare, which is a hugely important industry, but not one that I would put high on my list of areas of organic interest.
I was very fortunate that with Compass, it was six of six. And then, obviously, in starting a company, you hope that you're going to check the box in all those things, but even after Compass, I was not someone who felt like, oh, I have to go start something on my own. I was fortunate to have the opportunity to go back to Bain Capital in this executive-in-residence role. I very actively met with a lot of growth-stage companies I thought were doing phenomenal things with their opportunities to take on leadership roles, but there's just something unique about the excitement of unearthing what feels like an opportunity and stepping back and saying, "Well, if not me, then who? And if not now, then when?" I have been so lucky to have a great pedigree, great training, and then a great positive startup experience with Compass to give that a shot, and I certainly haven't regretted it since then.
Clint Betts
Did you ever cross paths with Mitt Romney? Obviously in 2009 he would've run for president and lost, actually. So he was obviously out of it, but did you ever cross paths? I ask that, I'm from Utah, so obviously...
David Snider
Yeah, not directly. Definitely someone I have a lot of respect for. I'm a Democrat, but I think that he's a particularly thoughtful person across all his pursuits. And then a lot of the very senior Bain Capital folks that were around spoke very highly and often of him. It's interesting that he obviously built the firm and created a ton of value. He made hundreds of millions of dollars, but if he had chosen to stick around, it would've probably been 30 times what he made. It would've been tens of billions of dollars, I might imagine, depending on the economic deal that he had. So one of those things about, again, what your priorities are and also just the timing of different things and how it ebbs and flows. Just because you're there at the beginning doesn't necessarily mean the person with the highest financial enumeration from what you create.
Clint Betts
I also wonder how AI is affecting your industry. Finance, investing, taxes. Particularly, it seems like taxes AI might be making, at some point, be able to do a lot of this, right? And just figure out the codes and things. But how are you thinking about AI within your company and just overall?
David Snider
Yeah, considerably. Speaking about the tax side of it first, well, I think across all service businesses, there are huge opportunities in the way that AI allows for faster communication, more insight to clients, the ability to have personalized guidance even if it's just a tier before the human in creating richer experiences in addition to obviously improving back office workflows and either driving more profitability for businesses or lower prices for the end consumer. As it relates to tax, it's certainly one of those areas where I think people in the space feel like, hey, this is a rule-based structure; it's got to work phenomenally well. And I think for the core rule, only unequivocally do something that is definitely the case. There are a couple of businesses, April Tax and Column Tax, that have basically built tax engines that can compete with really large organizations that have been investing these things for 20 years in a way they never could have without the AI efficiencies, just in writing the code, let alone the rule-based structures of what they're doing.
I think that similar to what Robo Advisory did in finance, it doesn't actually remove the need for advisors or the increasing demand for them. It just hopefully, if it's well applied, allows the stuff that wasn't value-creating and was rule-based and more administrative to get done automatically versus by the low man on the totem pole, or in many cases, offshoring, automatically getting better sets of information to the advisor. And then if the advisor is good and specialized, just like AI that can help read an x-ray or something else, is hugely out of the doctor, it doesn't mean that people don't want the doctor involved in weighing, "Yes, there's this issue, but you're 80 years old. I'm not sure you want to do an operation for that hairline fracture," in the same way that you might have a different conversation with an athlete, et cetera.
So, big investment. One that we've focused a lot on as it relates to both the consumer experience of how we cut down the time it takes you to provide the data that you need to give to your advisor to get the right outcomes, and we're investing as well in the advisor side of making it dramatically easier for the advisor to do the administrative data assembly work of tax so they can get freed up to be much more advisory and value-additive.
Clint Betts
I wonder, as you're thinking about it, we have a new administration here who thinks maybe we could get rid of all income tax and just do tariffs and things like that. Obviously, if you're a fan of Mitt Romney, you're a Democrat; I probably have a sense of how you feel about this, but what do you think about tariffs and current economic policy? In 2024, there was a lot of uncertainty not just because of politics and the election but also because of how things were going to shake out and what AI's future was. I would say there's a little bit more certainty now about who's in power and what the economic policies are going to be, at least in the United States. How do you feel about tariffs and the overall economic outlook?
David Snider
Yeah. I think there are a few threads of that. I think the first piece, just by the numbers, even 100% tariffs wouldn't fill even a fraction of what existing tax structures provide to the US government. So unless we abolish social security and the military and Medicare, I don't think that's particularly realistic. I think the most impactful piece for a segment of the population that we don't serve is that there's a lot of momentum in self-directed filings. The US is one of the few countries where the government has all the data to tell you what you owe for taxes but doesn't really tell you what that is, and so you have to provide information, hope it matches, and if not, run some risk of audit. Big investment in the self-directed file. Hugely existentially negative for Turbo Tax and some of the others.
Many Republicans feel adverse, I think, philosophically to the idea of the government being the one that you both pay taxes to and telling you what you owe. So that, I think, is frozen, but there is definitely, I think, good, well-intentioned momentum. How do we make paying taxes a lot easier for the vast majority of people? We don't need to have intermediaries where that's not necessary. As it relates to tax policies, it seems like the president isn't immensely focused on the policy piece outside of what was articulated in the campaign, and so I think you've got a relatively predictable band of what stuff is going to look like that the House and Senate, I think, are likely to pass. At its core, it is an extension of the tax cuts from 2017, potentially exemption of taxation on tips, likely some modification of the salt cap and some other pieces, but I would be highly surprised given where the focus has been and other stuff that you see a totally reimagined view of tax structures, tax policy, tax rates, et cetera.
I'm not a macroeconomist, but certainly, my view from whatever, a lot of CNBC watching and Wall Street Journal reading and other stuff, is that tariffs with a goal of raising revenue are going to negatively impact consumers. You know from college economics that 70% of US GDP is consumer consumption, and so things that decrease that by raising the price are not necessarily a net positive, and certainly inflationary, generally speaking. I think if it's used as a political tool to drive better structural outcomes, trade deals, and removal of impediments to US exports, that all can be positive. But yeah, I'm certainly wary of tariffs replacing core parts of taxation both because of the gaps they'd have to fill and just because it doesn't seem like anyone believes that's great economic policy for growth.
Clint Betts
Yeah. It's certainly Milton Friedman, isn't it? Which is like the godfather of Republican economics, which makes this time really interesting. I do wonder not to make this about what's happening in the government because this isn't. I want to learn more about you, but what do you think about DOGE? How do you think that's going? That's an interesting cross-section into our world and the political world, and the fact that maybe the greatest entrepreneur living here is heading up this really interesting new agency to cut waste, fraud, abuse, spending, and all that type of stuff. I don't know how they'd say it, but what are your thoughts on DOGE so far?
David Snider
In principle, the idea of taking a comprehensive and new look at where the government spends money and its relative efficiency is hard to argue with, whether you're a progressive or a conservative on that front. I go back, I think it was, I don't know, it was 15 years ago, 20 years ago, but there was an Erskine Bowles from North Carolina and Alan Simpson from Wyoming, two senators from different parties got together and had a commission of, how do we balance... The budget stuff is going off the rails, and obviously, it's gotten dramatically worse when you think about the accumulation of debt and the cost to service the interest.
The right way to do this, I think, is you take a bunch of time, you've got a combination of experts and new thinking, et cetera, and you comprehensively say, "Hey, entitlement is the biggest piece of the pie. What do we need to do with eligibility ages or benefit payouts or indexing..." The discretionary part of the budget is, I think, sub-20% or something. Definitely places to be efficient. There always are examples of the $35,000 screw in some aircraft carrier, et cetera that can get found out, et cetera. But the current approach, if we want a soundbite press release every few days, is really dangerous; I think in A, try to come up with a comprehensive view of how you actually drive efficiency and not freeze the ability for people doing mission-critical jobs to be doing those jobs rather than wondering, "Tomorrow, am I going to get fired, furloughed, et cetera?" This includes people dealing with nuclear safety, aviation safety, or anything else. There's no predictability, so you're rattling the entire system in a way that I think creates a lot of risk.
So yeah, I definitely... Twitter. But Twitter is an example of why this isn't necessarily always the best approach. Yes, I think, arguably battled back to its initial valuation, it's dramatically cut costs, but it's getting back to the same place with dramatically less revenue, and so that's analogous to, hey, at what cost are we cutting? I don't know the answer, but it certainly feels like if it's a press release-driven approach and one that at least the reporting suggests often is the wrong number, even the wrong number by a factor of 1,000, eight million versus eight billion or something on some of these pieces, probably not going to result in the most positive systemic changes relative to the opportunity.
I think it is maybe a generational opportunity with a non-traditional president and an entrepreneur and a lot of empowerment and a cooperative congress to do really big things, but I don't know. This is me speaking of my politics, but this does not feel like the approach that actually gets you to positive long-term systemic change that would probably be quite productive.
Clint Betts
It's definitely a private-sector approach, as you mentioned. This is what he did on Twitter. And this is, most private sector leaders, when they take over something, do say cut, and cut more than you think. You hear that all the time, just.
Cut, cut, cut, cut. And so he is going in there. What I love about it, and I think I'm hearing this from you as well, is that the fact that we are even talking about this is wild. Don't you think? This is crazy. I don't even remember this coming up in the election. They say that it did, but I honestly don't remember the topic of government efficiency and government cuts being talked about by either candidate. So the fact that we're even talking about it, its front page news, is really interesting, but yeah, how they go about it, it's going to be the whole ball game.
David Snider
I think going back to that, the private sector analog, I was always told by my board, by others, et cetera that it is much better to cut deeply, cut once, and message appropriately to those that you're not cutting that this may feel deeper than needs to be, here's why we're doing it. You're a valuable part of the enterprise. Here's where we're going. Dramatically better outcome from a motivation, efficiency disruption, then we're going to cut 2% every week for 30 weeks. Or even that's predictable.
Clint Betts
[inaudible 00:30:12].
David Snider
We're going to randomly cut people every few days, I think is generally not whatever, anything that I've ever been told is productive from a workforce efficiency perspective.
Clint Betts
Yeah. The uncertainty of that is costly and not being thought about, I don't think. Tell us about this. You recently raised a Series A around $15 million. You have $1.2 billion in assets on the platform. Give us a sense of why you raised money and any advice you'd have for those who are currently trying to raise money in this environment on whether they should, shouldn't, or what the advantages are right now.
David Snider
Yeah. I think there's a report I saw from Silicon Valley Bank, which still exists under new ownership, that started. The spigots are open, funding is happening, and valuations are up if you're in AI. For everyone else, it's still a very challenging environment. I think that's the case. If you look at the average revenue of companies that are raising ABC rounds, it's up. Relative to 2021, the amount of capital being deployed is down, et cetera. I think that there are still a good number of capital deployers. And when people feel like investments are moderately less risky, that they're still willing to deploy, and whether that's, hey, a marquee investor is putting in capital or just, hey, there's a bunch of capital being provided, and we think that's enough to get to a significantly further stage of the business, so we're bullish on it, et cetera, that's all positive.
But it made me feel really good. I went to a conference and heard, I think there were Robert's rules, so I can't associate who the person was, but one of the top 10 founder fundraisers in the US, and he said that he did 400 meetings for his last round of financing, and so that's a lot of discussions to raise capital. I'll grant that it was at a giant valuation for his business. He put in a lot of capital alongside it, but I think it speaks to an environment still where it takes a lot of work to raise capital. Expectations are higher, and processes are slower, but if you've got confidence in the business you're building and it's either clear what the market opportunity is or it fits into an existing narrative around AI or something else that's hot, you still obviously can get rounds done and capital raised.
Clint Betts
David, it's such an honor to meet you. We end every interview with the same question, and that is at CEO.com, we believe the chances one gives is just as important as the chances one takes. When you hear that, who gave you a chance to get you to where you are today?
David Snider
Several people. And I think they were very early on in my career, and so I always try myself, mentor to a Duke undergrad, other stuff of the... Even if it seems precocious, trying to be as available and accessible to folks early on. So, for me, a guy named Tom Seaman when I was an undergrad, I think my sophomore year, which is a tough year to find a real business internship because you're still far removed from being fully employable. He was an ex-McKinsey consultant, had been successful as an investor, ended up buying this small business, this shoe company called Atonic, and through a family friend was nice enough to hire me, and I was able, I think in some early, not very important tasks that he gave as a test to show that I really had drive and capabilities beyond what maybe most early undergrads would, and ended up helping to lead all the preparations for a civil trial when they were suing one of their former business partners for some bad behavior, et cetera.
I got a ton of insight both from the way that he operated the business and stuff he shared from other experiences, as well as in doing stuff that at first didn't matter, but I did them in ways, whether that was organizing the storage closet or going through and creating these one-page docs of dozens of patents that they own, but probably would never use, that that then translated into the opportunity to work on stuff that really did matter for the business.
Clint Betts
I love it. Hey, thank you so much, David. Seriously, what an honor to have you. We got to have you back on. Congrats on everything you're doing. What an impressive resume, again. Just to be at Bain Capital, Bain Capital Ventures, Bain itself, Compass, and what you're doing currently, which hopefully is bigger than all of those, my friend, it's really incredible. So, thank you so much for coming on.
David Snider
You're very kind. My pleasure.
Edited for readability.