Episode 443: Adam Dell, CEO of Domain Money

In this episode, Mike Townsend chats with Adam Dell, CEO of Domain Money, a stock and crypto investment platform to deliver serious control to our customers, making it easier to invest across asset classes. Adam is a serial entrepreneur, most recently a partner at Goldman Sachs where he served as Head of Product at Marcus by Goldman Sachs. There he built foundational products like Marcus Invest, Marcus Checking, and the market-leading mobile application Marcus Insights. Prior to Goldman, Adam founded four companies, including Clarity Money, acquired by Goldman Sachs (GS); MessageOne, acquired by Dell (DELL), Buzzsaw, acquired by Autodesk (ADSK) and Civitas Learning, acquired by Francisco Partners. Adam served as an adjunct professor at both the Business School at Columbia University and the University of Texas School of Law. He holds a B.A. in Political Economy from Tulane University and a law degree from the University of Texas School of Law.

Host: Mike Townsend

Guest: Adam Dell

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Episode Transcript

Mike Townsend: Today's interview is with AdamDell, the CEO of Domain Money. Adam is also the brother of Michael Dell whobuilt the famous computer company, Dell technologies previous to Domain Money.Adam built a company called message. One, sold it to Dell. Computers for 155million. He started clarity money, which was sold for a hundred million toGoldman Sachs and where he spent a few years at Goldman building the productknown as Marcus, which is their consumer facing product.

Mike Townsend: We talked a little bitabout the growth of Marcus and what their strategy is at Goldman. Obviouslyhe's no longer at Goldman. So we moved on to chat about Domain Money. Andspecifically how young people manage money, their portfolio strategy, how theylearn about managing money, the graduation from randomly managing your money towhen you're around 35 or 45, having a more systematic approach and domainsmoney's mission is to help people, particularly young people manage moneybetter.

Mike Townsend: So hope you enjoy thisconversation and you learn something as much as I did. We talked about higherlevel macroeconomics and market trends later in the conversation, but in thebeginning it was all about Domain Money. Hope you enjoy here is Adam Dell.

Mike Townsend: All right, Adamexcited to be chatting with you. I was really looking forward to thisconversation. You've done a lot in payments and I really appreciate yourbackground. Having both started a company and then worked at Goldman Sachs. Soyou get a vantage point of both building selling, and then working inside abigger company.

Mike Townsend: I'd love to just startwith Domain Money. What was the inspiration after you left Goldman to startdomain? I mean, I guess first off, did you, were you excited to jump in andstart another company or was this kind of a like a real big problem that youjust felt compelled? Like what was your emotional disposition after leavingGoldman to, to then jump back into it again?

Adam Dell: Well, I've startedfive companies over the course of my career. I guess I'm a little addicted toit. You know, when I left Goldman I had you know, a whole bunch of ideas in myhead about things that are still yet to be built in financial services. And. Istill believe that to be true. You have, you know, a huge monolithic group ofcompanies, fidelity, Vanguard, Schwab, Goldman Morgan Stanley B of a JP Morganchase that really have not meaningfully innovated.

Adam Dell: In the last 10 or 15years. And there's a very clear shift among millennials and younger people whodon't wanna sign up for their parents bank. And it's obviously broader thanbanking. It. Investing it's alternative investment assets. And so there's justa lot of opportunity in financial services.

Adam Dell: And that's reallywhat, what drove me to, to start another company. I should say that of all thelarge monolithic companies that I mentioned Goldman Sachs does stand alone inthe degree to which they've innovated with Marcus. And that's not just cuz I'mbiased having been there and built those products.

Adam Dell: It really is a veryunique situation where you have 150 year old well established financialinstitution. That's incredibly well respected that had no consumer businessmoving into consumer in a very meaningful and effective way. Purely digitalleveraging partnerships like the apple card.

Adam Dell: And so I reallyenjoyed my time at Goldman and walked away, highly impressed by the tenacityand speed with which Goldman has been able to enter the consumer market.  

Mike Townsend: What are theirinternal metrics for success on, on Marcus from, from the external, I, I sawsome press around them, just throwing, I think, at a loss of around 1.6 orsomewhere in that range billion dollars, which is more than any company I thinkcould sustain.

Mike Townsend: If they're operatingindependently, do they look at this as like a Trojan horse on acquisition forbigger deals or does this somehow make sense, given their holisticbusiness?  

Adam Dell: You know, Goldman hasa very long term view of the consumer opportunity. And so while that seems likea large number in aggregate, if you sort of parse that number out and you lookat the individual ingredients that have gone into building the Marcus ecosystemof services and offering.

Adam Dell: it's not as scary of anumber. But you know, fundamentally I think they view aggregating consumerdeposits as a very good business and strategically very valuable to theirbroader, broader business of deploying capital.

Mike Townsend: Mm. And the majority Iknow Goldman gets thrown around a lot, but people not working in banking.

Mike Townsend: How, what, what arethey primarily focused on doing? I mean, just from a simple perspective, what,what is Goldman better at everyone else? And what is their core business?  

Adam Dell: You're talking abouton the consumer side?

Mike Townsend: I guess just from a.Like Goldman Sachs. The thing that they, their bread and butter is, is what?

Adam Dell: Well, I mean, GoldmanSachs is a multinational company with many billions of dollars in revenue inyou know, investment banking and proprietary trading advisory.

Adam Dell: So, you know, theyhave many lines of business and are almost always number one in market share ineach one of those lines of business. The consumer opportunity is a holy newventure for them. And within that vertical, the offering is. To offer low costpersonal loans to offer high yield savings accounts, to offer credit cardsthrough partnerships like the apple card and their relationship with GM tooffer high yield deposits through their savings account to offer access to lowcost ETF investing through Marcus.

Adam Dell: So that, that makes upthe bulk of the, the consumer offering.  

Mike Townsend: Yeah, I think of, Imean, this, maybe I'm completely wrong in this or bias. I can only speak from aconsumer standpoint, having used Marcus, it felt like very simple experience,which is by design I'm. Sure. And it felt a little bit like what's new here.

Mike Townsend: You know, I can putmoney in, I can get interest rate. They are often great interest rates, which Ithink is obviously very attractive, although. Questionable, if there's a uniqueenough differentiation to sustain that, or whether there's just pump money togrow demand and then build on innovation or products later.

Mike Townsend: But it felt like alittle bit late to the game. I don't know. I mean, I, I don't wanna criticizethem without knowing, you know, what their long term strategy is for sure, butI, I, but this is where I was like, seeing what you're doing with Domain Moneyand just philosophically taking a stance. We're going to unlock new channels ofinformation by scraping, you know, Twitter with your signal, product, or socialin general, whether it's uncovering new information that traders can use tomake trades.

Mike Townsend: That's exciting.That's new. That's interesting that that reveals new market opportunity forliquidity and intelligent trading, but to just offer trading, to just offer asavings account with high interest and then loans with low interests. it kindof felt like we've already kind of crossed that milestones to some degree.

Mike Townsend: I dunno. Maybe that'simpartial. Why you jumped into this new thing. I dunno. If any of that resonates?  

Adam Dell: Well, I mean, I thinkthat Goldman's opportunity and consumer is enormous. It's hard to overstate thepower of that brand in engendering trust. Confidence and expertise in financialmatters. There are people who are proud to be a borrower from Goldman Sachs,really?

Mike Townsend: Yeah, a borrower.Yeah, I guess.  

Adam Dell: And, and so it givesyou a sense of how powerful that brand is, but

Mike Townsend: yeah, it must skew bygeneration  

Adam Dell: more. So I can'treally can't really speak to to their current thinking.  

Mike Townsend: Yeah. Yeah. So tell meif this is the, this is kind of the insight you have with Domain Money. I I'mcurious just the mirror. So you say let's create a platform where people canboth trade. Equities in the traditional markets and also trade crypto in oneplatform and then give them tools and insights to make to make trades and havejust insights on trading that they wouldn't have otherwise.

Mike Townsend: Cause even as, evenas, as new as it is to say one trading platform to access both crypto andequities, it is also a very clear bullseye for a lot of other companies. So Iwould imagine. That's gonna become fairly table stakes at a certain point. Idon't think we're there yet. It seems like a lot of companies I talk to are,are headed that direction and then it's gonna be so gimme your reflection onthis, but I, I sort of see we're moving to a place where.

Mike Townsend: All trading and accessto all markets are available 24, 7, or as close to it as possible. And the userexperiences are simple and easy to use and that's that's baseline. And then itbecomes a differentiation across companies based on the pipelines and access toinformation to make trades. So maybe you see other traders, you could see theirtrades or you could access unique pipelines of information.

Mike Townsend: Is this the kind ofevolution of productization? FinTech that you're seeing or is, or do you see itslightly differently?  

Adam Dell: Well, you know, what Iwould say is the, you know, our 1.0 product was very much about giving accessto multiple asset classes on a single platform where we're heading from avision standpoint is to really offer a more holistic financial services platformto consumers.

Adam Dell: You know, as I look atthe investment landscape you know, you are as a consumer inundated by fidelity,Schwab, etra, Coinbase, Robin hood, acorn stash, personal capital, Wellfrontbetterment. There's an enormous number of competitors out there. And yet, ifyou really dive into the specifics of. the value proposition that is availableto let's just take, for example, a 29 year old who makes a hundred thousanddollars a year.

Adam Dell: Okay. What does thatindividual do with their money? Do they try to navigate Robinhood? Do they tryto navigate Coinbase? Do they call up somebody at fidelity and ask them what todo? Do they talk to their friends? Do they go on YouTube? Do they go onTwitter? Do. Do they ask their parents? Well, the answer to that question isyes, they do all of those things.

Adam Dell: And what they end upwith is sort of a cluey system for navigating and managing their money. Andwe've done a bunch of consumer research 20, 25, 25 30 all the way up tobasically 50. And what's really interesting about that research is that whenyou're 35, you have a plan, you've come to some system that you've cobbledtogether through those sources of inquiry and questions.

Adam Dell: You've asked to yourparents and your friends and your fidelity guy and your Coinbase buddies orwhatever, and you've formulated a, a system and it's actually pretty. it's notwell constructed or conceived. It's really very ad hoc by the time you're 45,you've actually evolved that system to work pretty well.

Adam Dell: Cuz you've sort oflearned from all the mistakes that you've made along the way.

Adam Dell: So it strikes me thatthere's a real opportunity for a holistic financial plan for that 27 year old,that 29 year old. , who's not drowning in student debt who has you know moneyto save each month and has that fundamental question. What should I do with it?And rather than cobble together a bunch of different inputs that yield asuboptimal plan.

Adam Dell: We think there's anopportunity to, to help that customer in a more holistic way. And so that'skind of where we're headed.  

Mike Townsend: I have two thoughts onthis that, that I wanna hear your reaction to. One is that I have thisintuitive sense, which is just picked up from my anecdotal experience. That ifthere's a playbook that says, this is how you should manage, and this is whereyou should put it and that's advertised to everyone, then it's probably not.

Mike Townsend: It's it's. If everyonewere to do the same thing with their money, then there'd be a lot ofopportunities missed. And so I, on some level, I think there's like, if you, Ialmost picture this from a high level market perspective, what would be thebest allocation of capital for the market? It would probably be peoplespecializing in investments that they have some domain expertise, right?

Mike Townsend: They can do diligenceon these investments. They can make the correct investment decisions. Socompanies and projects and people. Deserve capital and can return value end upgetting funded. Then there's people who are completely passive and they're likewealth, front betterment. I don't wanna think about it.

Mike Townsend: And that just kind of,kind of algorithmically, at least branding wise distributes that in the marketin the best way possible, according to historical returns and maybe otherthings is there other, are there other buckets, like I think of activemanagement where I'm putting in. Five hours maybe, maybe up to full time.

Mike Townsend: Full time is probablya different story, but maybe five hours is kind of the middle ground per weekof active management versus I'm not putting in anything. And I just want this,I just wanna save my money and make good solid returns, risk free. I mean, doyou, do you see, do you see consumers falling into these general buckets oflike one to a couple hours per week versus no time versus actively.

Adam Dell: Yeah. Yeah. I thinkthat's a good way to think about it. You know, the rise of the active investorsort of ebbs and flows with the free time and free money that's and so, youknow, most, most people don't have the time or the inclination to be activeinvestors. I think it's a very small subset.

Adam Dell: People who are activeinvestors across the population. And, you know, in addition you know, onlyabout 1% of active investors outperform the market. So, you know, the math ofthe odds are kind of against you in the active versus passive. You know,matrix. Now, I'm not saying that some people who are into active investing andstudying the market, studying companies shouldn't do that.

Adam Dell: They absolutelyshould, but there are a lot of people for whom that's an overwhelmingproposition and they would rather rely on an algorithmic approach or a, youknow, market market based approach to investing where they just, they don't tryto beat the market. They buy the market, but that's just one piece of.

Adam Dell: A financial picturethat a individual has to contend with. Right? They have cash, they have theirretirement planning, they have their goals around their home, their car, theirtheir tax opportunities. And they've gotta figure all that out. And, you know,I, I would venture to guess that most betterment customers don't get that from.

Adam Dell: And certainly youdon't get it from well front or stash or acorns or some of those other places.Now personal capital does a pretty good job of providing a plan, but they'rereally focused on 45 year olds who have $200,000 to put into the market.They're not focused on 27 year olds who are just starting out on their journey.

Adam Dell: And so, you know, Ithink there's an opportunity there.

Mike Townsend: When you say plan.When I think of plan that the first thing that comes to mind is what's beenjust taught in school you know, from a basic perspective, which is portfolioallocation, distribution, you know, think of high risk, capital, medium, low,and then you put that in accordance with where, you know, high risk socks, lowrisk socks, bonds, that sort of thing.

Mike Townsend: Is that how you'rethinking of plan or, or do you have a different definition?  

Adam Dell: Well, I think of planholistically, which is okay, you know, very few people wake up in the morningand say, I want to you know, have a well diversified portfolio across multipleasset classes. They wake up and they say, I really wanna buy a house.

Adam Dell: I really want to planfor a baby. I really want to make sure that I'm set up for retirement, right?Those are the things that motivate people, you know, asset allocations andoptimal risk. You know, sharp ratios are not the things that people wake upevery morning and think about. And so when I think about plan, I think aboutthose life goals You know, you're sitting in front of a Bloomberg terminal,you're trading all day you're, you're an active investor, you know, you know,average, highly intelligent individual working in Cincinnati, making $128,000 ayear who is 31 years old, engaged to be married, excited about having childrenin the next couple of years of years. Their mindset and their attention iselsewhere. Mm. And so how do we serve that person well?

Mike Townsend: I wanna take a, a, abrief aside, Adam. I'm really curious. My intuition is that you're the type ofperson that does a lot of homework upfront before diving in. And when you didthis research, Consumer base is not straightforward.

Mike Townsend: You know, you're notbuilding a simple SAS product or a simple widget that you're selling to solve asimple problem. As you alluded to or said, explicitly people. Go through awhole variety of knowledge, acquisition sources. When you did your research,how did you go about it? Tactically. Did you do a grassroot style askingfriends and family?

Mike Townsend: Did you hire a companybuy industry reports? Like what did you how did you actually go about gatheringall the research that you used to form the business model?  

Adam Dell: Yeah. Well, I mean,You know, the most fundamental thing we've done is just talk to customers andlisten. And you know, we heard over and over again that question, which is whatdo I do with my money?

Adam Dell: You know, and I'veheard that question and been asked that question more times than. I can, cancount. Yeah. Yeah. Because people don't know and

Adam Dell: you know, that's areal problem, right. That people need solved. But you know, to answer yourquestion, we've done many hundreds of customer interviews. We. Sat down withdifferent cohorts of, of people based on age income risk appetite. Are theyinterested in crypto? Are they interested in real estate?

Adam Dell: Are they interested in,you know, other kinds of alternative assets, art, et cetera. You know, we've,we've done a lot of research and, you know, you alluded to something. This sortof interesting point, which is if everybody's doing the same thing, then how doyou get any, any, any yield or that sort of outperforms others?

Adam Dell: And, you know, the,the reality is that I think most people are under the impression that they'renot doing it right. right. That whatever it is that they've cobbled togetheraround their money, the one thing they do know is that they're not optimizingtheir financial situation.  

Mike Townsend: Yeah. Yeah.  

Adam Dell: They just they'relike, you know, I'm I'm I, I went on YouTube.

Adam Dell: I went on Reddit, Iread some stuff. I talked to my friends, but I just know I'm not doing this.Right. And. You know that that's a real, that's a real problem that, that Ithink we, we can try to solve for people. Now it's not gonna be easy, cuz youknow, it's a complex and emotionally raw problem. Money is extremely emotional.

Adam Dell: People are highlyirrational about it. And their cognitive load is quickly reached and mostpeople would rather drink a beer than think about their money. And so we'vegotta try to solve. For consumers, that problem in a way that allows them todigest bits of it, such that it is understandable and make progress along theway, rather than like, okay, well here's everything, you gotta figure this out.

Adam Dell: You do that tosomebody and their, their brain taps out and they just check out and inertiatakes over.  

Mike Townsend: So how do you answerthe question? So people ask you all the time, how do you answer?

Adam Dell: Well, it, it, itrequires some information. What are your goals? What is your current financialsituation and what is your risk appetite?

Adam Dell: Those are sort of thethree fundamental inputs, right? So an individual who has debt and hasinsecurity around their income is a very D. set of answers. Then if you have nodebt, you have a consistent paycheck and you are willing to take risk at astage in your life where risk makes sets. So it really depends on the inputs,but you know, let's just take a prototypical example of you're 32, you make$128,000 a year.

Adam Dell: You know, we'll go backto our example. You're engaged. You have no children, but you're gonna getmarried. You know, what should you do? Well, the first thing you should do ismake sure that you have a foundation, right? Which is if I lose my job, I'vegot enough runway to sort of withstand any interruption in my income stream.

Adam Dell: The next thing youshould do is you should make sure that you're taking advantage of all. Taxopportunities available to you in your 401k, your IRA, backdoor Roth, if you'reeligible or not eligible and max all that out. The third thing you should do isyou should consistently invest 20% of your paycheck each month.

Adam Dell: Invest, save on sortof using those synonymously. But you know, if you're gonna save it, put in ahigh yield savings account, if you're gonna invest. Invested in a, you know,very safe market neutral kind of portfolio. And then with a small percentage ofyour investible assets, whether it's 2% or 5%, you know, that sort of up toyou, go nuts, buy a race horse.

Adam Dell: Mm-hmm invest incrypto, invest in real estate, whatever the hell you wanna do, knock yourself.Have. Do things that are interesting and compelling to you from an investmentstandpoint, that is the highest probability outcome path to financial freedom.Right? Most people aren't gonna be entrepreneurs who make hundreds of millionsof dollars.

Adam Dell: Most people are gonnahave very nice, successful careers, where they work at a company and then gowork at another company and they retire and they have grandchildren and theyhave a perfectly nice life. And that's great, right. For a lot of people,that's kind of, you know, a fantastic American dream realize the highestprobability outcome to achieve that is to do a version of what I justdescribed.

Adam Dell: Hmm. So that's whatyou should do with your money.  

Mike Townsend: Yeah. Yeah. That's areally good answer, honestly. Do you think of any particular, do any particularrules of thumb come to mind when you, I think of like a home purchasing, forexample there's often the debt to income ratio that gets thrown around peoplesay, how much of a house can I afford?

Mike Townsend: It's like, well, Ithink I forget there's something like three debts, income ratio, I think is.Recognize as kind of an average or higher high amount. Are there certain ratiosor rules of thumb that people would keep in mind as, as it correlates the debtincome savings purchasing of a large either property or a, a car or something?

Adam Dell: Yeah. So a very goodrule of thumb is the 50, 30, 20 rule, which is you should spend. 50% of yourpaycheck on things you need, like rent and bills, you should spend 30% of it onstuff you want, like entertainment and travel and you should save and invest 20%of it each month. And that 20% should go into the kind of market neutralportfolio I described.

Adam Dell: And then of that 20%,you know, 5% of that, or 3% of that, depending on the risk to. You can put intoriskier things. And so the question of when you buy a house is really afunction of how much you're able to save toward that goal relative to your,your other priorities. Right? And so if having a baby is more important to anindividual than buying a home and having a baby comes with some expenses thatyou need to prepare for.

Adam Dell: Then, you know, yousort of need to think about those priorities. But you know, each one of thosegoals is really what dictates, how you define the priorities and where you putyour money each month. There's a really smart guy. That named Joe Durant, that,that runs a company called United capital that Goldman Sachs bought.

Adam Dell: And it really was avery strategic acquisition for Goldman and Joe rolled up a bunch of RIAs. Youfollow me?  

Mike Townsend: Just give a RA's aretirement investment account.  

Adam Dell: Well, it's a, it's an,it's a financial advisor. That helps, you know, wealthier people figure outwhat to do with their money. Mm-hmm right.

Adam Dell: It's people who have acouple million dollars in assets. They're usually in their forties and fiftiesand they, you know, they own a business. They they're a doctor and a largepractice, whatever it is, they've unasked real assets. And they need somebodyto really sit down with them and think through trusts in the states and 5 29plans.

Adam Dell: You know, all thethings that come with a much more complicated financial picture for somebodywho's further along in their life, wills and estates, all, all that sort ofstuff. And what Joe figured out, which is really an, a brilliant insight. Andit sort of goes back to what I said earlier, which is that when you sit downwith somebody, what Joe trained his advisors to do.

Adam Dell: is to communicate tothe client in life terms, not financial terms. What do you, what do you wannado when you retire? You wanna travel? Do you wanna buy a second home? Do youwant to sell your primary residence and move to a smaller place? And you know,the ad, what are your goals? Mm-hmm what are your life goals?

Adam Dell: And what he figuredout was that when you talk to a. In those terms, what happens when you leave isthat the, the non-financial spouse, there's usually a financial spouse and anon-financial spouse in a couple, right? Mm-hmm , there's one person, you know,the man's like, I just wanna live and have fun. And the, and the wife is like,no, we, we need to be responsible or vice versa, whatever the gender rules are,doesn't matter.

Adam Dell: But you get my point.One of those people is more financially focused than the other, but what he figuredout was that when you talk to people about life terms, Life goals. They're muchmore open and clear about what their priorities are, you know, should you havea 5 29 plan or should you max out your 401k or should you do both or acombination to most people that's gobbly go, but I want to be able to travelwhen I retire is a concept that no one is unable.

Adam Dell: To conceptualize andinternalize and decide for themselves is that one of my goals and priorities.And so what he built was a mechanism that forced people to stack rank theirpriorities and in doing so, it defined how their savings and assets should beallocated and spent as they retire. And to me, that insight is very powerfulbecause what it makes clear is that you need to meet people at their emotionallevel.

Adam Dell: And I'm not talkingabout talking down to people or dumbing it down or making it simplistic. I'mtalking about addressing the fundamental things they actually care aboutbecause nobody cares about the mechanics of a four. what people care about isthat I can pay less taxes, which means I get to keep more money, which meansI'm gonna have more money when I retire.

Adam Dell: Right. Mm-hmm you careabout that you don't care about the mechanics of 401k. And so those kinds ofapproaches I think are critical to ensuring that we do a good job of.Communicating to consumers in ways that they, they understand and, and, andwill respond to. Mm.  

Mike Townsend: So what do, what doyou do differently?

Mike Townsend: So if I, if you'rethinking about it from, we, we've kind of talked about folks that are, youknow, running a, a practice or have a business and they wanna retire by vote,et cetera. What about folks who are. More curious they're they wanna take it upto the next level. They're like, say in your shoes, right.

Mike Townsend: They're running acompany. They're maybe FinTech company. They're not thinking about their ownportfolio day to day, but they're in the world of business, maybe even finance.And, and so they're not scared or even. They, they want to know, like tell mewhat the 5 29 is exactly. They they'll go right in read the fine text.

Mike Townsend: They're they'reinterested to know the mechanics of portfolio allocation and they're they'requantitatively minded, intelligent, curious people. What, what did they, whatare maybe you use you for an example or. Folks in your shoes, how would theyapproach this in contrast to what you just described?

Adam Dell: Yeah. Well, there,there are offerings out there that focus on that demographic. Compound is a, astartup out there that really focuses on entrepreneurs. And people who have hadmeaningful liquidity events by being at a startup and are facing the question.What do I do now? Right. I, I have a large nest egg that I've I've earned, it'ssitting somewhere.

Adam Dell: How do I allocate it?What do I do with it? How do I do that in a thoughtful way? And so that's avery specific problem set. That is quite real. And, and, and Very addressable.And there are companies, like I mentioned out there who are focused on that.That's not the problem we're trying to solve.

Adam Dell: The problem we'retrying to solve is I live in Cincinnati. I'm 29 years old. I make $128,000 ayear. I want to do the smart thing around my money and I want to do itholistically. What do I. And, you know, I think that individual recognizestapping around on Coinbase or Robinhood or E-Trade is not gonna get them there.

Adam Dell: And similarlyBetterment's not gonna get them there because it's fundamentally What you'regetting is a robo and your life is more complex and more interesting than arobo. And so we're trying to, trying to address that, how we do that. you'llhave to wait and  

Mike Townsend: see . Yeah, yeah.Okay. What do you, what's your thoughts on the influence of the market?

Mike Townsend: So we've just gonethrough kind of a vicious particularly crypto and NFT world like wild up anddown where there was a period of time, maybe six months or so where the marketwas crazy. The us is printing tons of money. It was, it felt very volatilethings. Dropped a lot in, in value. You could say the market crashed.

Mike Townsend: There's some, somepeople I listened to that would say, oh, this is just another bubble. You know,this has happened before. This is very predictable humans go through this, thisprocess over and over. My intuition is that's. It's, it's correctdirectionally, but it's missing. The point that it's not ideal, that we justkind of accept these explosive bubbles and crashes as like, oh, that's just howmarkets work.

Mike Townsend: And to me it feelsvery inefficient in, in a simple sense, but also like kind of unnecessarilydestructive. And, and I wonder, you know, as, as good as you can allocate moneyin your portfolio, it, it seems like you have to at least become aware of. Itwould behoove people to become aware of market conditions, look for like clearsignals in the market.

Mike Townsend: Maybe follow somepeople who are you. Broadcasting ideas that communicate simple ideas on realestate, on overall liquidity in the market. Like when the federal governmentprints trillions and trillions of dollars, there's simple math to show thatprices are going to go up because there's more currency in the system.

Mike Townsend: We talk aboutinflation, so on and so forth, but there's a, just like the frustration that wewere talking about on people's cluelessness as to where to put their. There,there also is kind of a, an urgency that I'm sensing across, particularly theyounger generation, maybe. 20 to 40 ish that they're trying to parse out.

Mike Townsend: Like, what are thesignals here? Like if the us government just prints all this money and thenthey say, oh, it's gonna be fine. There's an increasing sense. Thatinstitutions, particularly state institutions, the federal reserve, the whitehouse, all the speakers there. They're not they're, they're covering the.

Mike Townsend: They're they're andthey're in a sense, they're, they're trying to create a narrative that likeit's all good and people intuitively sense. It's not all good. And, and a lotof people are scrambling trying to figure out macroeconomics. And so I thinkyou see a lot of increase in popularity of people on YouTube and Twitter andelsewhere talking heads that are, you know, smart people, but they're the onesthat people are kind of beaming to, to say, let's figure this out, let'sunderstand the economics of the system.

Mike Townsend: So I, you know,people. At the end of the day, feel like th they are responsible, whether theyuse Domain Money, manage it themselves, whatever they do. Like it's ultimatelytheir decision and to be asleep at the wheel is to be just trusting whatever theinstitution say. And then you go down with the ship.

Mike Townsend: So I, I'm curious yourreaction to that. If, if you. I disagree with anything I said, or see it assomething important that people pay attention to understanding high leveleconomics as part of a investment strategy and thinking about managing wealth,regardless of how much they are managing.

Adam Dell: Yeah. Well there's alot in that mm-hmm so I could try to unpack it for you.

Adam Dell: You know, what I wouldsay is that, you know, the way our economy works is that. We have these boomand bust cycles. That's just the nature of how our economic system works in theUnited States. The you know, the, the fed tries to mitigate those boom andbusts by introducing policies that, you know, attempt to tamper down theobservance.

Adam Dell: And then, and thenbuoy the the despair when busts occur. And they often overshoot in eitherdirection by a meaningful margin. You know, the best guesstimate are that theyou know, the, the PPP money was three times more than it needed to be. Andthat they could've pumped in far less into the economy and still allowed the,you know, disruption caused by the pandemic to not have.

Adam Dell: Long term lastingimpact on our GDP mm-hmm or our growth prospects, but that's kinda a goodrecent example of the lack of precision that exists in economic modeling in ahighly complex, highly volatile system. called the us economy. Mm-hmm , whichis obviously tied to the global economy and right.

Adam Dell: So it's even morecomplex. So, so it's hard to get it right. But that inherent nature of boom andbusts while difficult to ride on any given day, especially when it's going downis actually quite efficient at allocating capital. Right. There is no bettersystem in the world for Return on investment, then the chaotic scramble of youknow, operating margin

Adam Dell: And so as everyindividual company and enterprise seeks to carve out some niche for themselvesin the ecosystem of our, of our, our economy, the search for operating margin.And the investment required to enter a new market or launch a new product ortry a new service that will ultimately yield some operating margin isincredibly efficient.

Adam Dell: And the reward systemof you know, investing capital, being an investor, owning equity and havingsome enterprise you know, profit and, and, and, and grow and reaping therewards of that investment. Is incredibly efficient. And so, you know, I takethe boom and bust nature of our economy, the lack of precision that exists inmitigating those ups and downs and, you know, sort of conclude like, you know,what do you want from me?

Adam Dell: Like, this is the bestwe can do. There's, there's no better system in the world for. Growth than theus market economy. And while it is imperfect and frustrating it's still thebest one ever devised by man.  

Mike Townsend: Do you think there'san analogy, an accurate analogy to say that 99% of people who try to manage anactive fund do worse than the market?

Mike Townsend: I think you, you threwthat set out earlier, which sounds right to me. Is there, is there a trueanalogy to say. 99% of the time when the government tries to manage themonetary policies, that it would be that it's going to do worse 99% of the timethan if it were just to do nothing at all. So in a sense, like, could that, andcould you carry out this example by saying if, if maybe if, and when we move toa cryptocurrency.

Mike Townsend: Monetary system thatis like cryptographically secure and mathematically predetermined with aprotocol that no one can control that, that, that like rooted monetary systemwill outperform the one where humans tinker at the wheel.

Adam Dell: Yeah. That's a fairquestion. And I, I can't answer it cuz it's an unknowable yet.

Adam Dell: Untested hypothesis.You know, I will say that you know, strong central banks have played animportant role in economic development for centuries. And I would not wannalive in a world where there were not strong central banks. You know, and, andI'm a proponent of crypto. and so, you know, letting economies spin out ofcontrol without some government oversight I think is probably not a great idea.

Adam Dell: And if you think aboutthe role of a central bank in providing credit. And being a lender of lastresort to fuel the financial system, which, you know requires access to thefederal funds rate that the government offers large institutions without thatyou'd have a very different.

Adam Dell: Kind of financialsystem, which I don't think would be a better one now, the promise of cryptoand having, you know, completely decentralized control Around a economic systemthat is an alternative to the Fiat systems in various countries around theworld. I'm a huge proponent of, and believe in completely, particularly becausethere are many economies in the world where there are not strong central banksand their economic policies are incredibly poorly constructed. Hmm. So if Ilived in Venezuela or if I lived in Mexico or if I lived in Guatemala or if Ilived in Sudan, I, I would want to have access to an alternative monetarysystem. And so, you know, I think the, the, the promise of crypto to bringstability. Predictability to their monetary systems is enormously powerful.

Adam Dell: And, and really thepromise of crypto.

Mike Townsend: Yeah. It's almost likewhat you're saying is there's a hierarchy of preferred systems you have on thebottom, you have probably the, the system of Venezuela, right. Where you'rejust completely corrupt in the monetary system and massive hyperinflation. Thenyou have above that a like poorly operated cap capitalistic system.

Mike Townsend: And then you have ahighly functional, efficient, intelligent, honest capitalistic system withcentral banks. And the question is like, which I think is a, is an intelligentresponse is we don't know whether a highly efficient, honest. Intelligentcapitalistic central bank system outperforms a decentralized protocol basedcryptocurrency based system.

Mike Townsend: We'll we'll figurethat out, but it also seems like if I'm charting the trends here, there's,there's an interesting website. You should check out. It's called WTF happenedin 1971. So 1971, the us Fiat currency detaches from the. Goal base goal back dollars.And it's like, you can see these graphs.

Mike Townsend: It's just, it's, it'samazing how many graphs there are everything from real estate to child childrenper household. It's like, everything's just cruising along 1971 happens and itjust shoots up in a different direction, up or down. But it's, it's certainlyhad a major impact. And my suspicion is that when we detached from.

Mike Townsend: Physical reality ofthe monetary supply. And it's now just up to the politicians at the printingmachine, how much they want in, in, in circulation. We're we're, we'reinevitably moving towards a system where we're, we're deep. We're going down onthe hierarchy. Is that's my intuitive sense that if it's not backed byanything, then we have the, the same emotional biases that happen to all thepeople that create boom bus cycles that make all these mistakes in theirportfolio management.

Mike Townsend: They're the same.People human beings that are operating at the highest level of money printing.And it doesn't take, it's hard to get out those systems. It's like a, it's likea black hole or a quick sand. Like once you kind of sink into hyperinflation,you know, Argentina, Venezuela, there's many countries that have gone in thereand it's hard to get out.

Mike Townsend: So it's like, I don'tknow.  

Adam Dell: Yeah, well you know,most most economists that I, that I know that are intellectually honest, whichreally requires that they have a level of intellectual humility that manyeconomists don't have . But the ones that do have it recognize that we're inkind of unchartered territory.

Adam Dell: Yeah. Particularlyaround the crypto. But also as it relates to the us dollar, because the centralrole of the dollar in the global economy is so singular. And as long as we arefrom a monetary standpoint, just slightly better than a lot of other countries,we get non-linear mm-hmm benefit. that exceed what we should get for our badpolicies.

Adam Dell: Yeah. In other words,we don't get the same level of inflation. We don't get the same you know,spikes and interest rates. We don't get the same flight of capital. We don'tget the same market jitteryness that you would get in other countries thataren't the foundation of the global economy, which the dollar is.

Adam Dell: And because. Of thatposition and because the United States has continued to be the source ofenormous economic value creation, you know, intellectual property, Disney,apple, Marvel, you know, whatever, pick your, pick your thing crypto Siliconvalley. And because there has been such a enormous growth in global wealth.

Adam Dell: Which has emerged tothe benefit of the dollar, because where else you're gonna put money. You know,if you have a hundred million or 50 million or 5 million and you live in, youknow, pick a country, some percentage of that money is gonna end up in a usmarket. And so that those three things have all fundamentally changed thedynamics of how the us economy is punished for poor.

Adam Dell: Monetary policy and,and, and there's really no honest answer to that because it hasn't played outyet. Now, 50 years from now a hundred years from now, if those dynamics are nolonger in place, yes, there will be more of the rationalization of punishment.Against the dollar for bad policy. But right now the strength of the dollar ispretty undeniable.

Mike Townsend: If someone were toforce you to make a decision here 20 years from now, what is the centralglobal, central currency that people are using the dollar? How about 50, 50years?

Adam Dell: I mean, I'm a. Big fanof the United States. I think that we have a pretty good system here. So youknow, I, I don't, I, I, I don't, I think that, you know, our hegemony hascertainly peaked, but it's not over. And our, our, our political power, ourmilitary power. While they may not be where they were. They're still at thetop.

Adam Dell: And our economic poweris, is, is, is undeniable. Even in the face of, you know, an emerging you know,let let's forgive China for all its sort of current growth problems. And it'sthe problems with its, its demographics and having not having enough youngpeople and you know, all the, you know, sort fits and starts in.

Adam Dell: India's had. Those twoeconomies are just enormous and will continue to March forward and grow. Butthe United States will still have an incredibly important role because when wasthe last time China invented something that you were like, Ooh, I really gottahave that. Yeah,  

Mike Townsend: yeah, yeah, no, Ithink you're right now the concept zero to one.

Mike Townsend: Are you familiar withRay Dalio's book and, and YouTube series of The Rise and Fall of Empire? Yeah,sure. It's an interesting perspective. I think it's probably directionallyaccurate and like there is an excitement level. It kind of swells up. You havepeak performance decreases over time. Yeah. It's, it's, it's interesting tosee.

Mike Townsend: I certainly would. Icertainly more apt to say that it becomes U S D BTC versus China. Like each ofthem pulling in different directions, like kind of a three-way battle. Globalglobal currency recognition, maybe at a time it's like there's multiplesimultaneously recognized.  

Adam Dell: Well, I think it'smuch more likely that there's a digital us dollar and a, a a digital Chinesecurrency, which there, there already is.

Adam Dell: I mean the, the UnitedStates is working on a digital dollar. They've been working on it for some timethere. A very robust set of research and policy discussions going on inWashington about that. It is going to happen. It will probably take five years.It will not have maybe 10 years. It will not have all the bells and whistlesthat everybody wants.

Adam Dell: But it is a nobrainer. Couple of trillion free dollars for the us government. if they issueda digital dollar, because there are so many people in the world who would wantto own the dollar and can't get meaningful access to it, including a number ofthe countries we mentioned. So you know, if the us issued a digital dollar and youcould buy anywhere on, in any market it would, it would inure a couple oftrillion dollars of value to the us economy.

Adam Dell: Almost instant.  

Mike Townsend: Yeah. I've heard thetwo biggest exports that America has is currency and culture, which strike meas being true.  

Adam Dell: Think our biggestexport is intellectual property, but, but but maybe the dollar bigger.  

Mike Townsend: Yeah. You could arguelike currency, culture and company. Probably true.

Mike Townsend: Yeah. Yeah. Yeah. Adam,who, who have you learned the most about on these topics? Either economists or.Just public intellectuals, people writing books, YouTube, Twitter, anyparticular people stand out to you?  

Adam Dell: Well, I'm a hugebehavioral economics fan. So conman and Thaler and Dan Arielli, who was on oneof our advisors at clarity money.

Adam Dell: And. You know, I'm a,I'm a huge student of all of that work and constantly fascinated by theirrational nature of how people behave particularly around their money. Those,those are, are, are, are very influential people in my life you know billGurley is one of the brightest people I've ever met and.

Adam Dell: Fortunate to get, tocall him a friend and, and get to spend time with him. And he always pushes mybrain to places that I wouldn't normally go and, and find him to be you know,just a, a great sounding board and a really, really powerful thinker.  

Mike Townsend: Those would probablybe on the top of my, yeah, I like bill.

Mike Townsend: I like, I likeeveryone. You mentioned particularly Dana Riley has some really good casestudies on experiments. He's run particularly on cheating. You know, I foundthat one, one was like, if they gave people a test and then they said at theend of the test, they said, rate your own answers. And when they took the testsand they threw 'em away and they like scanned them on the way down.

Mike Townsend: On average tee about15% of the time, which is kind kind of interesting. Yeah, he's a, he's afascinating guy. And of course, bill Gurley, I wish bill girly would write anddo more talks. He just has such a unique vantage point from seeing all thesedeals being on all these boards. I love the stuff that he puts out there.

Mike Townsend: I just wish you'd domore of it. So next time you talk to him,

Adam Dell: Stay, stay tuned.  

Mike Townsend: All right. All right.I'll hold you to it. Awesome. Adam, congrats on progress, man. This is a lot offun. I really appreciate your time.

Adam Dell: Thanks for havingme.  

Mike Townsend: Cheers.