Here’s a question: who walked into work recently and said, “I hope I suck at my job today?” I’m hoping the answer is NONE of our Stacker community. And yet, many of us underperform every day. Why? There are so many ways that we can make ourselves smarter, faster, better at our jobs. We shouldn’t leave whether we’re excellent at our jobs to our boss, and yet, there ARE some things that we and our boss can both do to transform our workplace and make our company better. Today we’re joined by the guy who the world’s wisest bosses turn to when they’re wondering how to get their workforce to work better — Andrew McAfee. Andrew has picked the lock on why some companies stink when it comes to empowering their team to rock at their goals and others wallow in mediocrity. He tells us the meaningful stories of how some leaders have transformed their workplace on today’s show.
But of course, that’s not all. In our headline segment, there’s good news for people saving for college. The rules have gotten easier? Unfortunately, we don’t mean “easier to understand,” but just “you can now save more money that helps you also not screw yourself over for financial aid.” We’ll discuss the secrets you need to know on today’s show. You think transforming the workplace is all you need? Now you can also save money on your college costs? Double-whammy!
And yet, we still bring you more. We also throw out the Haven Life Line to a guy wanting to “learn something” from the show (he must not know that Andrew McAfee is bringing it this episode!)…and asks us about putting money into a “donor advised fund.” What is that exactly, how does it work, and will it transform your workplace? The answers are: “It’s complicated, so you should listen,” “It helps you avoid LOTS of taxes,” and “No.”
There’s still SO MUCH MORE! Come join the fun.
Deeper dives with curated links, topics, and discussions are in our newsletter, The 201, available at https://www.stackingbenjamins.com/201
- How 401(k)s, 529s factor into the new FAFSA (InvestmentNews)
Our TikTok Minute
- Which group protested the filming of ‘Revenge of the Nerds’ at the University of Arizona?
Need life insurance? You could be insured in 20 minutes or less and build your family’s safety net for the future. Use StackingBenjamins.com/HavenLife to calculate how much you need and apply.
- Mark wants to know if he can transfer shares of stock from his brokerage account to a donor-advised fund and avoid paying taxes on the stock appreciation.
Have a question for the show?
Want more than just the show notes? How about our newsletter with STACKS of related, deeper links?
- Check out The 201, our email that comes with every Monday and Wednesday episode, PLUS a list of more than 19 of the top money lessons Joe’s learned over his own life about money. From credit to cash reserves, and insurance to investing, we’ll tackle all of these. Head to StackingBenjamins.com/the201 to sign up (it’s free and we will never give away your email to others).
Tune in on TUESDAY for a special episode of Stacking Benjamins. We dive into how to invest when heading into an election year.
Written by: Kevin Bailey
Miss our last show? Listen here: What If The Market Collapses? (REWIND SB1433)
Monday morning in America. Boy, guys, it is a cold one. Even in Texas. It’s a cold one. I love it. You know, I want to get the fireplace burning, but, uh, Cheryl and mom can’t stand that first, like how smoky the house gets when you first fire up the fireplace for the first time. It’s not, not
great. I think you’re doing it wrong.
You know what helps that? Joe has opened the flu. That’s just a little trick I’ve learned.
Maybe use dry wood instead of wet wood. I mean, there’s so many different options here. So
many things to remember. Oh gee, so many things. You know something we never forget? We had men and women protecting us all weekend long while we were having a great time.
Well, and all last week! Well, people heard our Greatest Hits episode, so let’s raise our mugs to the men and women in our armed forces. What the hell is that, Doug? I know,
right? It’s so bad. Is that a badger? I wish it were a badger, OG. I wish it were. That is a grumpy Christmas cat. Of course it is. On brand.
I don’t like cats and we’re going to get flamed for that. No,
you’re going to get flamed. Cooper runs the house here. You’re getting flamed.
Not us. Well, that’s an issue. I mostly don’t like cats because of how allergic I am to them, but I think they’re allergic to you. That would be fine, but they’re not.
When I go to your house, I go to OG’s house. The cat comes to me like Velcro. They just, they’re like, Oh, that’s somebody I’m going to make him like. We call that OG well
trained. Well, get this guy out of
here. It worked in both cases. It worked. But so for some reason, my mom gives me this grumpy Christmas cat mug for Christmas, like four or five years ago.
She knows all of these things about me. I have two Dobermans. Why she would give me cats. I have no idea, but it’s the dishwasher is full and hasn’t been run. And this is the last good size coffee mug I’ve got. So even mom’s
poking, poking Doug.
Poking the bear. Let’s, let’s get ’em a, uh, og. Can we just
salute the troops?
Yeah. What was your, what was your mug? I, I’ve got my Zion National Park mug with the map of Zion inside. Uh,
this is, uh, this is courtesy of the Cayman Islands. Oh,
beautiful. Very nice
ship on the side there. And does it come with syphilis?
Uh, scurry, scurvy. Scurvy, scur,
scur, scurry’s the thing you scurry from the scurvy
to hope you don’t get it.
Yes. On behalf of the men and women in the Navy on those ships without scurvy and the men and women in all of our armed forces. Big salute to our troops on behalf of the men and women at Navy Federal Credit Union and the people making podcast in Mom’s Basement. Time for us to all go stack Benjamins together.
Here’s the song that we’d like
to do for all the younger set of people, the teenagers and what have you. This
one’s called Vacation’s Over. Vacation’s
over. It’s over. It’s
Live from Joe’s mom’s basement, it’s the Stacking
show! I’m Joe’s mom’s neighbor Doug, and today you’ll learn how to see bigger opportunities in the world of work with the principal research scientist at MIT’s School of Management, Andrew McAfee. In our headline segment, big changes to how 401k and 529 plans count when filling out financial aid forms.
We’ll share all the latest details. For our TikTok Minute, you’ll learn the secret value of adding… Family members to the board of your LLC. Plus, we’ll throw out the Haven Lifeline to Stacker Mark, who wants to know if he can avoid paying capital gains taxes by transferring his appreciated stocks into a donor advised fund.
And then, I’ll share some nerdy trivia! And now, Two guys who think the best revenge is to live a rich life. It’s Joe and O J J
J J G.
Welcome back stackers. We missed you so much last week. So pull up a chair, sit down, relax, because we have an hour of financial fun on tap and it all starts with a man across the card table from me today. It’s Mr. O. G. How are you, my friend? Uh,
I think, I feel like I need more vacation.
We just never
like it. Yeah, it was a long week and a short week altogether.
Well, the good news is you only got a couple weeks till you have a short week. So
that’s good. This is the best time of year. It’s like, what do we have, like, two full work weeks left from here on out? You
do, you get, and all the turkey you want,
But it’s basically the same for me the whole year, so it’s no different.
There’s OG endearing himself to all of our listeners again. That’s
right, spending time with us. Never, never work, I’m sure, OG. And, uh, we’ve got a fantastic mentor teaching our stacker community today, MIT’s… Andrew McAfee joining us talking about, uh, embracing technology and the new world of work.
Yeah. Making things, making things happen. But before that we have a headline, but OG, what happened to you over the last week that made you so in love with vacation?
All right. Well, let me, let me start by saying this.
It was that big. It was that big.
Well, that’s how big it got. But the thing is, yeah. But over the years we just had to cap it at eight for our trip.
So. I mean, it started smaller and then got bigger. Always,
always kept it at eight. Totally agree. We’ve got a great show. We got Andrew McAfee coming up next, but before that big headline, especially if you’re thinking about college. Hello, darlings. And now it’s time for your favorite part of the show. Our Stacking Benjamins headlines.
Our headline today comes to us from Investment News. This is written by Emile Hallez. Amil’s headline is how 401ks and 529s factor into the new FAFSA. Turns out, O. G., change is here when it comes to filling out financial aid forms. Amil writes, this fall could be an unusually stressful time for families with children planning to start college next year.
The cause, many will be guessing… about how much they’ll have to pay or borrow for tuition. Not only are they awaiting acceptance letters, but there’s a two month delay in the federal student aid applications as a result of a major overhaul. That’s nice.
The government’s here to help. We’re from the government.
We’re here to
help. Are we going to have any money? Or is Junior going to get to go to college? We’ll let you know later. We’ll let you know. Yeah. Major overhaul on how the government’s assessing eligibility. When the free application for federal student aid, the FAFSA, as it’s called, is typically published in October for the coming academic year.
This year they’re delaying it till, wait for it, December. So this is all OG because of legislation that was passed back in 2021. Let’s go over some of the rules. There’s a shorter set of questions. They took the questions down from 108 to 40 questions you have to answer when you do the FAFSA. So that part is good.
And the way they are measuring assets works. And historically, when I’ve looked at the FAFSA, when you go through it, you just think, okay, what the government is trying to do is they’re trying to Encourage a couple of things. Number one, make sure that for the student, this is priority number one. So you get into school, you get it done.
So most of a child’s assets are always going to count against them getting financial aid. That’s number one. Number two is the parent. needs to have an emergency fund. So a parent has some money that doesn’t count before money starts counting against them. So it can have a little bit of an emergency fund, a cash reserve, but traditionally they’ve said that, you know what, college should be a little bit of a hardship.
So they did count money that was going into a 401k as money that was eligible for college. You could redirect it toward juniors college. Well that, that part’s all changed. One, Change, Emile talks about, is that pre tax contributions to employer sponsored retirement plans will no longer count as income when they’re judging you for financial aid eligibility.
That could be huge, that’s, there’s tons of reasons OG why that’s good news. Yeah,
I mean obviously if you were contributing to your workplace plan and you’re Contributing the maximum or you’re married and you and your spouse or partner are contributing. I mean you could be contributing 40, 000 a year Uh, or more that is, that was considered income for that kind of top of the line calculation of here’s how much resources you have available every year to pay for college.
When in reality, of course you’re saying, well, no, I don’t have that money. I’m, I’m putting 40 grand in my 401k so I can retire someday. So I don’t have to have the government help me with that. I guess maybe their thinking is, is that it’s better to help you with college one time than help you with retirement forever.
Forever. Yeah. Is that kind of the, uh, the
calculation? I don’t know. This may help some of the social security conundrum or when, future legislation around social security maybe comes down the road. They’re like, look, we tried to help you before this.
Well, and you know, the other question that I was thinking about this, uh, so we have a junior in high school and of course FAFSAs look backward two years.
So, so we’re in the year that will be calculated for Alex’s first college year, even though he’s a junior. Now, this is sucky because it is November. It’s right at the end of the year, so it’s kind of hard to make these changes to adjust for it. But in subsequent years, it’ll be top of mind. But I was thinking about our own financial planning and the contributions between pre tax and after tax.
And, you know, we get a lot of questions of, hey, is it better to do the Roth 401k? Is it better to do the traditional 401k? Should I split it? How should I create this? This might be a deciding factor for a four or five year period. While you have a child or children in college that you go and I’m going to put this and build the pretext because that’s going to help lower our
A couple other things come to mind. Number one is I know for some families, if it’s going to be really tough, they’ll shut off the 401k completely. And at least OG, you won’t feel guilty about putting in enough to get the match during these years. Maybe it is duct tape, but at least you can feel good about getting the match.
Yeah, I mean, really, when it comes down to the cash flow component of this for paying for college, you’ve got to figure out the way that you want to exit stage left, right? It’s like, you know, the time to start thinking about planning for college is when your kid is born. But if you’re, if you’ve got a junior like me, and you’re going, well, things were different when he was born.
I just, I wasn’t doing the 500 a month in the 529 plan 15 years ago. It just wasn’t there. Then you have to decide, like, what’s the strategy for the exit, you know, are we going to fund this as we go and kind of, uh, forgo some savings and contributions and lifestyle to your point, college should be a little bit of a burden, you know, that thinking.
And so we’re going to kind of pare back and cashflow as much as we can. Do we continue our savings and maybe use debt financing to help pay for it? Who’s debt are we going to do this under? Is it going to be under the kids? Is it going to be under ours? Are we going to do an education loan, a home equity loan?
Like, You want to think about those things, you know, kind of now for us, because Alex is a junior, right? This is this is the time for us to start putting the plan together. Not, hey, we just I just got accepted to insert school here. Can I go? What do I do now? It’s like, oh, crap, that’s 50 grand a year. Like mom and I haven’t talked about it.
Well, they got to know by Monday, Dad. It’s like, really? They only gave you a few days. No, I got the letter six weeks ago. Like that’s, it’s on brand.
Every teenager ever.
What was the TikTok minute we did with a woman? What’d she say? It wasn’t, nobody got time for that. It’s, it wasn’t, nobody got time for that or, or that’s not how it’s going to work.
yeah, that’s, that’s right. That’s not how it’s going
to be. That’s not how it’s
going to be. I think. I don’t know. That was
pretty funny. Something, something like that. That’s pretty funny. A classic TikTok minute we ran back in August. This is not that. The second issue this brings up. You know, that 108 question FAFSA was so onerous that a lot of people would fill it out once.
They get the discouraging letter. By the way, 99. 9 percent of people are discouraged when they, when they get the FAFSA results. Because they get what’s called the expected family contribution. And for most families, it was a laughable number. It’s like, really? You’ve, uh, where’s that money going to come from?
How am I going to get that? And then they never apply for financial aid again. Huge mistake. Absolutely huge mistake. So hopefully, and this is the second thing it brings up. So my daughter didn’t get any financial aid her first year, but starting with her sophomore year, she got some financial aid. Now it was merit based aid.
It wasn’t FAFSA based aid, but you’ve got to fill out the FAFSA first. You still have to do the FAFSA anyway. Every school says you got to do the FAFSA first and apply there before everything else. And the reason is the school wants you to ask the federal government for money first. before the state then pitches in before.
So the, the, the school wants to be the last person to give you money. If anybody else will give you money, please God. So nearly every school starts with a FAFSA. So my daughter filled that out and then she got merit based aid starting her sophomore year. And the more OG, her as a
recruitment tool. Companies don’t throw money at freshmen. They throw money at juniors and seniors. So. Hopefully, taking that from 108 questions to 40 is going to, uh, kind of help families
keep borderline inappropriate with your daughter, but close enough that I thought it was funny.
What’s that show and show money, money go people not watching us on YouTube.
People were throwing money at your daughter.
Back away from that. Let’s uh, awkwardly transition then into 529 plans and how this has changed. One of the key changes, Emile writes, that we should all know is that 529 assets in grandparents or other family members accounts will no longer be reported on the FAFSA.
Andrew Mastro, yeah, president of Rod Advisors, said, This is a big change and has planning implications. A parent of a child. can gift their 529 account to a grandparent. You can gift your 529 account to somebody else gifted to a grandparent. And now that 529 doesn’t count at all against financial aid.
This just seems like they created OG, the world’s biggest fricking loophole and pain in the ass for families at the same time. Well,
yeah, I mean, and it sounds really great and wonderful to just go, I’ll just gift it to grandma. But remember there’s downstream effects to giving other people money, right?
Like you can’t just show up at somebody’s house and play publisher’s clearing house and be like, Hey, here’s some money. You know, there’s potential estate planning ramifications, potential tax ramifications in terms of that gifting type thing. And then the other thing to really be aware of is Once you give it away, you are not in control of it anymore.
And it sounds like, Oh, mom would never do that to me. But for as many times as you hear that part, you hear just as many times of, I can’t believe mom did that to me. That was my money, you know, or whatever. And you read about these things in money magazine, or you read about it in. Reddit or something like that or on you know, those very true places called Facebook or something But you have to be really concerned with the fact that you’re literally giving it away There’s no assurances that that person is gonna stick with it.
And here’s the downside What happens if something happens to that person, right? So you give the money to grandma and now Something happens to her, you know now you have other people who are involved in that decision, right? It could be your siblings, could be your other parent, it could be Anson, it could be other people going, well, wait, hold on, there was a mess, you know, yeah, so be careful with that, you know, if you’re going to…
It’s not really gaming the system, I guess. That’s not really fair to call it that if they kind of specifically say it. But you know what I’m talking about. Yeah, save the money for college, use it for college, for crying out loud. That’s what your plan was. Just do it that way. If you are,
though, thinking about putting yourself through school, there might be some planning opportunities there, there as well, that you might might want to look into.
Time for our TikTok minute. This is the part of the show where we shine a light on a TikTok creator who’s either making some brilliance or in the case of a few TikTok people, you know, every once in a while they make some air quotes, brilliance. So Doug, which one we got today? We got a brilliance or air quotes, brilliance.
you know, I always, with the exception of one time when I got hosed on this, I always go the opposite direction of what OG is going to do. And I’m going to do it again. I’m going to roll the dice. I’m going to do it again. So I’m going to say this is air quotes Brill, which is his normal answer. No, that’s not.
But I’m going to go that
way. This is the holiday season. it’s about
giving. So I’m giving, I’m, I’m potentially just handing you one here. Oh gee.
Well, and this is one that on face value sounds brilliant. So let’s give it a listen and Doug, see if it really is.
your LLC, I want your spouse on your board, your teenagers on your board, your mom and dad on your board.
Why do you want that? Because now I can unlock paying my family members, sometimes tax deduction for you, tax free to them and build. My wealth more because my family’s involved so many millions of Americans pay taxes and then support the family We’re gonna put them on the payroll. We’re gonna make them 10.
- We’re gonna make them outside labor I’m gonna go to new york or cayman islands or Down to cabo and i’m gonna have a board meeting I just did a board meeting last week in california wrote off the trip because we’ve got to be thinking business when we travel so travel dining Kids, electronics, spouse, we got to remember this is a family business.
Chris Cronin is the epitome of a family business and you guys need to be modeling and you
unlock it with the board of directors. Mark J Kohler on TikTok had that one. Oh gee, this sounds like really cool. Slimy. I go to Cabo with the family. They’re all on my board right off the entire trip. Bada boom, bada
Warning, terrain, terrain,
pull up. Looks even better if you enjoy wearing orange, I think. Yeah. I mean,
this is all great. I mean, again, here we are back to what we were talking about with the 529 probably factually correct. However, if the IRS auditor shows up at your office or at your CPA’s office and says, I would like to know how you came up with this, right?
Like what story do you tell? You know what I mean? Like you, it has to be a legitimate business purpose. You can’t be like, we were having a board meeting in Cabo. It’s like, no, that doesn’t count. Now, if Disney has a board meeting Cabo, it counts, right? That’s like literally they’re flying. People all over the place, you know, and his argument in this video here is like, Well, why should it count any different for Disney having a board meeting in Cabo versus us having a meeting in Cabo?
Because you probably didn’t have a meeting in Cabo. Disney had a conference space. They had Agendas, they were there in meetings from 8 till 5. They had Presentations, you know, they had all of the accoutrements that go with the meeting They didn’t just go on vacation to Cabo and
write it off. If you’re hiring the family The family has to work.
They have to work. Yeah, they don’t
have to work. As opposed to your 11 year old PlayStation 5. How are you going to justify that?
I mean, they, some people, I’ve, I’ve read people say things like, um, You know, I’m going to pay my kid to be a model for my business. So I’m going to take their picture, put it on the website as kind of one of the stock photos.
And now I’m paying my kid to be a model. And it’s like, uh, uh, okay. Okay. You know, I get it, but let’s compare that. to what it would cost to pull up image from Shutterstock and put it on your website. What does that cost? Ah, 99 cents,
you know. And I think there’s a material difference in your kid modeling just for you.
Yeah. And your kid being a professional model, totally different modeling for a bunch of other people
literally be their business, right? Like if your kid is the Gerber baby, your kid’s the Gerber baby and is doing Gerber baby stuff for everybody. Just not just, I heard that.
I heard that Gerber kid’s a diva by the way.
a latte after every shooting of Gerber baby, it’s completely unrelated. There was a commercial for guaranteed life insurance, guaranteed issue life insurance from Gerber baby life, Gerber life, whatever you want to call it, that little baby.
people. Wow. I guess they’re doing the barbell strategy.
get them both sides. Yeah. So many pitfalls. We will be careful. Yeah. We will dive deeper into these and into college planning in the two Oh one, our newsletter that Kevin Bailey so brilliantly writes every Tuesday, Thursday with links to things that we’ve curated. uh, sources we’ve curated that can go deeper into all these topics that we talk about on the show.
Coming up next, today’s mentor for the Stacking Benjamins show. Welcome to the most inspiring part of the show. If you are new to Stacking Benjamins, uh, we have a different teacher on most episodes and today it’s Andrew McAfee. He’s the principal research scientist at MIT Sloan. co founder, co director of the MIT initiative on the digital economy.
And, uh, he is here today talking about embracing change and, uh, embracing your inner geek. So super excited that he is coming down to the basement, but before Andrew. says hello to all of us and, uh, teaches us about better work. Uh, Doug, you better work us some trivia, man. I
got you, Joe. Hey there, stackers!
I’m Joe’s mom’s neighbor, Doug, and in honor of MIT lead research scientist Andrew McAfee’s appearance today, we need to talk about geeks! This may be surprising to you, since I’m so fit and charismatic, but like any self respecting geek, I was actually a pretty good student at Southwest Bahamas State Technical Institute and Beauty School.
I was on the speech and debate team for two years in a row, and I only cried one time after competition. I was actually so gifted that the school let me be in the French club after I told everyone I’d Frenched several times. And even though I was so strong, still am, I was never one of those guys that picked on the nerds like the dickhead character Ogre from the movie Revenge of the Nerds.
That guy was a jerk. Today’s trivia question is, The movie Revenge of the Nerds was filmed at the University of Arizona, and one group protested the movie happening on their campus. So riddle me this, stackers! which group led the protest against the filming of Revenge of the Nerds on campus. I’ll be back right after I find my Letterman jacket.
Yeah, it still fits.
Hey there, stackers! I’m cherry stem not champion and very smart, totally geeky guy, Joe’s mom’s neighbor, Doug. If you think I’m good with the ladies now, you should have seen me back in the day. It’s a wonder what a Letterman jacket can do for ya. I still wear mine sometimes, but you know, only to formal events.
Today’s trivia question is, Which group protested the filming of Revenge of the Nerds at the University of Arizona? The answer? Fearing the film would be another overly raunchy depiction of college life like Animal House. That was weird, I thought that was a documentary. Anyway, the University of Arizona’s Greek Council threatened to shut down production of the movie.
And now, here to help you prepare for the next economy instead of the last one, Today’s mentor for the show, MIT Research Scientist, Andrew McAfee.
And I’m super happy we have him across mom’s card table. Our mentor for the day, Andrew McAfee’s here. How are you, man?
I am happy to be here. Thank you for
having me. Well, I’m so happy that you would be here helping us get more enlightened through work, but I want to start with your personal story. And it’s actually the same place you start in this project.
You are, I think, 11 years old and you’re, you’re giving your mom the third degree about punch cards. There are a number of people here. who have no idea what a punch card even is. No
idea. It boggles my mind. Punch cards were the way you programmed computers back in the era when memory and storage were unbelievably expensive, just unaffordable for normal people.
And that’s a distant era, except it wasn’t too long ago. My mom was going to night school to get an accounting degree and computer programming was a course she had to take, including punch cards. You brought them home in a… box. They were these, they were bigger than a dollar bill and you brought them home in a box and that was literally your program for the computer unless you dropped it and the punch card spilled.
And everybody has a story about that. You, you probably remember
those days. Well, Cheryl, my wife’s uncle was the head of civil engineering at Michigan state. And so he’s got, he still has, cause he’s, he’s very neat, but he’s a hoarder and he’s got these piles of old punch cards with old programs.
See, I’m a big enough geek that I find that super cool, and I realized I was a geek at the age of 11 when my mom brought these things home, and I couldn’t stop looking at them, trying to figure out what they were, and like you point out, I cross examined her about what these things were, and then by extension, what is, mom, what are you talking about?
What’s a computer? What is this strange new beast? And I just, I remember it super clearly because that was when I got the idea that whatever this thing was, I needed to Figure this out. And I got, I got kind of obsessed with it. That was my realization that, you know, the geeks journey, that was where I kind of started it, I think.
found your thing, which is really cool because what figures largely into this project and I think into your work as a whole is you went to a different type of elementary school to a different type of school than a lot of people that listening to this went to talk about how your education factors into the geek way.
lied, right? I said my geek journey started when I was cross examining my mom about punch cards. I think it started earlier when she and my dad gave me the great gift of sending me to a Montessori preschool which was this style of education pioneered by Maria Montessori, who I think is the patron saint of geeks, because she was a complete obsessive radical about how do small children learn?
What’s the right environment for small children to learn in? And the dominant method was this industrial style of education where you sit at a grid of desks and you have subjects inflicted. on you and maybe you learn reading and writing and rhythmic, but what you really learn is to hate learning is you learn to hate school.
And Maria said, screw all that basically. And she went deep on it and realized that what young human beings want to learn, that’s what we’re wired by evolution to do. And she built these classrooms and that’s, I don’t even love that word. She built these rooms full of cool things that you could play with as a young child and they would actually get across the basic concepts.
Montessori kids are at least as good. on standardized tests at reading, writing, and arithmetic as their peers who went through the factory system. But there is a Montessori mafia in tech, a weird percentage of people who have started companies that you and I know of, including Google, including Amazon, including Wikipedia, uh, maybe not Wikipedia, um, Google and Amazon for sure were started by Montessori kids.
And what Larry and Sergei said in an interview was that it, taught them to question things and that the world is interesting. You should go poke at it. And I’m just, I’m grateful that I had that spirit for my earliest education.
I went back after I was a financial planner to get a post secondary teaching certificate.
I thought I was going to teach high schoolers. And what was cool was we had these enlightened educators that I think you’d be on board with who said, there’s no crappier way to teach people than to have you just get into a subject for about 45 minutes and you ring it. And then you ring a bell like Pavlov’s dog, which teaches you, I can’t get too interested.
We got to go do something else before I get passionate, right? Yeah, it’s just
a mess. And let’s not talk about education and educational reform, but we like Maria Montessori and some other geeks in education realized you can do it better. And I think the, the insight and the bridge is that she said, look, we have over engineered, over built, over structured our educational.
Experience for children. I think what the business geeks have realized and the reason I wrote the geek way is that they said, wait a minute, we’ve overbuilt these things called companies with good intentions. You know, you want to succeed in your marketplace. We have, without noticing it, we have way overbuilt these things.
And our job as business leaders is to rethink the best way to do this thing called a company and what they wound up with it. would make Maria Montessori very happy, I
think. Well, and I think just as a customer of many of these companies that you point to, like Microsoft, if, if the people making the product are excited about it, if, if you can feel the passion, right, this is the whole Apple thing, right?
If I can feel the passion in the product, I’m more likely to get excited about the product.
And you point out Microsoft Satya Nadella will go down in history as having accomplished one of the great corporate comebacks of. all time. We forget that Microsoft was dead in the water for the first decade of the 21st century and Nadella came in and as you point out, one of the things he did was to say, wait a minute, I’ve got a company full of people who are here because they’re passionate about digital technology and its ability to improve people’s lives and help them get their stuff done, which I just need to like rekindle that passion.
And he did these brilliant things. He didn’t just make a fiery speech. He did these really tangible, pragmatic things to. Unlock and get out of the way and let people go pursue their passion. If you look at what people who work at these companies that I call geek companies report, they finally report that they feel empowerment.
They feel like they have an, a sense of agency and, um, and autonomy in their jobs to an extent that we do not see in most other parts of the economy. This tells us something. You
have four pillars of the Geekway and these are greatly embodied by four stories that you tell right at the beginning of this work.
And I think for our purpose today to really lead our stackers in the right direction, maybe just telling these stories would be a great use of our time. So let’s start off with, there’s a gentleman working for NASA. And he sees all this spillage, Andrew, all this money that seems to be going to waste.
Tell us this story.
This was a guy I learned a ton from. I’d become a friend of mine. His name is Will Marshall, and he’s the CEO of Planet. And Planet makes these little bitty CubeSats, lots of them, that Orbit the earth and they scan the earth every day. They give us daily visual scans of the earth It’s a really it’s a super cool company Will was a NASA engineer for the first years of his career and he’s super grateful for it because he said look NASA teaches you to do systems engineering.
You can’t just wing it You can’t put a satellite up and just kind of see what happens You have to do a lot of other things first and he said this is probably the most complicated kind of engineering that there is and you have to do a lot of it up front and you know, on a computer, on a whiteboard with a bunch of other people, you got to pre plan stuff.
But then he said, I came to the conclusion that we had become too fond of all of this upfront planning at NASA. And the organization had gone way beyond, let’s call it the minimum viable plan. And they were just too upfront heavy, too planning heavy. And we all kind of had this philosophy of once you get the minimum viable plan done, let’s go try stuff.
And in particular, in this world that we live in now, you don’t have to spend hundreds of thousands or millions of dollars for A GPS sensor or for a camera or for a decent quality transmitter because of the smartphone revolution. Those things are actually dirt cheap and they work really well. And so Will started to do these heretical things.
He and his colleagues started these heretical things like experiment on the cheap, which is. Kind of not the NASA school of thought. And they built, they got some cover and they got some permission from the NASA director at that time. And they built a hover test facility. Look at, you know, was this satellite going to land successfully on the moon?
They built it for like 300, 000. You cannot find that. Uh, as a line item on NASA’s budget, that’s a rounding error. That’s like their eraser budget for the year. Right. But they got this thing building and the NASA brass said, good on you. Uh, here’s, here’s 80 million. See if you can get a satellite to land on, on the moon.
And they did for that price point, but they weren’t done. And Will held up when I was talking to him, he held up his phone. He said, this thing is a communication satellite. He said, the bill of material for this versus a communication satellite has about 90 percent overlap. It’s got everything you need.
And he said, let’s put a smartphone in space and see if we can get an image down from it. And NASA
blew me away, by the way, when I’m like, he’s just going to launch a smartphone into space,
blew me away, literally just probably super glued it to the inside of a satellite and they put it up in space and NASA was.
freaking out about this, but they did it, and they activated this community of NASA geeks all around the world to go out in their back with antenna and see if they could sniff the packets and get them down, and they did, and they stitched an image together, which was the first image taken from space by a smartphone, and then Will had this great quote when I was talking to him, he said, look, Let’s say this costs about 500 bucks.
Communication satellite costs about 500 million dollars. What are those extra six zeros doing for us? We don’t need to have all those extra zeros involved. And so now planet builds these fast, cheap, and out of control kinds of satellites. They, they scan the earth every day and they do it at a cost advantage of something like a thousand fold.
That this to me is an example of the great geek norm of speed, which is all based around. Let’s iterate. Let’s try things. Let’s experiment. Let’s learn that way. Let’s not be so fond of all the upfront planning that, that so many companies do.
You talked about getting cover, right? Because, you know, I think about Joe middle manager hanging out with us, Jane middle manager hanging out with us.
And they’re like, if I decide to go too fast, I could lose my job. Like, how do I. How do I begin putting this into play to make my organization go faster? If I’m not the person in control
and join Jane are right, right. And a lot of companies, if you go too fast and they think you’re too far out over your skis, you’re in trouble.
But there, there are two things you can do. One is go find a company that embraces this philosophy, right? Go find a place where if you want to go fast and you want to iterate and experiment and try stuff, but that’s part of the culture instead of very much. Not part of the culture. That’s what the geeks have pulled off.
Go work for a geek company. Failing that, you can, at least in the area of the company that you have responsibility for, with your people, with your team, you can let them know, you can signal and then verify that it is okay if they try stuff. It is okay if some of that stuff doesn’t work. Many experiments fail.
That’s how science progresses, right? As long as you’re learning, as long as you make a sincere effort, Go try stuff. That archetypal middle manager has that freedom to do that for their team.
Yeah. And then hopefully your boss notices that this is working and then you get
the… Amen. It’s better if, if the folk at the top get it and work hard to maintain that throughout the organization.
I fully admit that’s better, right? You want a Will Marshall type as your CEO. If you’re fond of experimentation, you can do it on your own. You can start to be geekier than you are today. On your own with your own team.
What I love is that you, you’re teaching us through these case studies and I think we all learn better with case studies, but a case study of mine, uh, when I was at American express, we had a guy who was very geeky, who led the area of American express that I was in.
And he was able to manage up by showing, uh, his superiors just how well it was working by being more collaborative with us that were, quote, under him. I never felt like I was under him, by the way, I always felt like he was using all of our stuff and we’re going to get to that with, with some other stories.
But I think the power in that, maybe it’s a. A little bit long term, more long term approach, but, uh, start with what the real estate you’ve got. It’s completely
a longer term approach and getting to the place where you and your team and your organization can iterate quickly is not easy. You got to build a foundation to do that.
You can’t just start this, you know, this agile approach tomorrow. I appreciate all that, man. If you are iterating faster, you are learning faster and you are going to blow by the competition. Eventually you’re going to blow by.
I was laughing as he’s building a moon lander out of off the shelf parts. Like I can imagine him going into Lowe’s looking for stuff to land on
the impression they just about literally went into Lowe’s.
Like, I grabbed some 2x4s and some cardboard and they’re like, you know, like your high school project, but they worked at NASA. And luckily they had some NASA brass who were like, Well, all righty then. We need more bosses like
that. That’s fabulous. Speaking of speed, I think speed plays a big part in this next story, but your overarching pillar we’re talking about is not speed, but this woman, uh, has a job that she likes, and she gets this call, what, from a headhunter, I think?
So this guy, this is another person who became a friend of mine as a result of researching the book. I met, um, Ardeen Williams, who got brought out of retirement. She had had a, a, really good career in tech, making the, the internals of big companies like HP and Intel run better primarily in human resources.
And she’d retired. She was, I think, out in near Palm Springs, like looking at mountains and enjoying the weather. And she got a call from a headhunter and our Dean said, look, I’m it’s, and the headhunter said, it’s about Amazon. She’s like, look, I’m interested, but I’m retired. I’m not coming off the bench.
And the headhunter said, yeah, but it’s Amazon web services. And our Dean said, Oh, Oh, that’s interesting because she knew she was enough of a tech insider to know that this idea of cloud computing, which was still pretty new back then, this was going to change the business world. This was going to completely change how much money you need to spend to start trying stuff and experimenting.
It was going to just change the balance sheet of companies all over the world. She said, okay, I’m listening. And she eventually took a job as a VP, a very senior person, I think inside Amazon web services to help them get their internal house in order, especially with, with talent and hiring.
But the big lesson, I think, from her was, what was it, her first…
Her first day or first week or first project, like she’s ready to go. And she wants somebody to sign off on it. I mean, Amazon, even at that time, Andrew is a big company. Like clearly she’s the new woman in charge of this project. They’re not going to let her push the button. She, she walks
into a couple hundred thousand person.
I forget if Amazon at that time was two or 300, 000 people. This is a big company. This is already a world changing company. And our Dean walks in and she’s like, where are the. Adults in this company. Everyone is running around. There is not a whole lot of what I would call processor structure going on here to the point that she found it frustrating.
But, but she did say, if you found people you could work with, you could go get stuff done. You could, you could build cool things. You could get stuff done. It was just a little more. Chaotic and a little less structured than she was used to and the event that you’re talking about happened after she’d been on her job for about 90 days and she got a call from a lawyer.
This is not what you want. There are very few good calls from lawyers, right? This was from a lawyer inside Amazon and I think it was he said, um, our dean, we have a problem. She said, what? She said, right now. We’re hiring a bunch of people who used to work for the federal government for Amazon Web Services and other parts of Amazon.
Argentina says, yeah, we absolutely are. The person said, here’s the problem. Federal regulations stipulate that if you are hiring such a person and you have federal government contracts, which Amazon did, but AWS did at that time, then you have to ask each person who used to be a Fed, have you checked this with your ethics compliance officer or not?
We’re in violation of some federal regulation. Like that, this is a, this is a problem. You know, it’s like, this is a problem. And so how are we going to fix this? Right. And then the first interesting part of the, of the solution to me was that they just brainstormed for a while and they came to the idea, like, wait a minute, what if you just put a check box on the hiring page at Amazon and said, by checking this box, I certify that I am a federal employee and I have consulted my ethics compliance officer.
Click here to certify that. Great solution. Very lightweight way to solve the problem, maybe until they investigate it more deeply and come up with if they needed more involved or not, but this is a very lightweight way to go about it and Ardine and the lawyer were like, yeah, okay, like at least for now, that seems like a decent solution.
And then things got weird because Ardine said, yeah. I went looking around for the committee that was going to buy off on this change and give me the blessing to go change the hiring site at Amazon to be in compliance with federal regulation. She’s in my, in my entire career, that involved a committee that involved a whole lot of documentation.
We’re going to talk about it. There’s a review process. We’ll get back to you. And she said, I couldn’t find that person. I was getting a little bit frightened. And she said a senior mentor of hers called her up and he said, Ardeen, why haven’t we, why haven’t we made this change? And she said, I can’t find, I can’t find the approval.
And he said, you are the approval. He said, you’re telling me that legal has signed off on this. That was the other person on the call. We also need business approval. Ardeen, that is you, that’s your job. You’re going to push the button now. And she said it was the hardest thing she ever did in her career because she was so used to all that communication and coordination and process and structure and hierarchy.
And, and her mentor said to her, no, no, we hired you because we trust you to do the right thing there. And he had this great phrase. He said, bringing more people along is not going to change the decision. So why we don’t do that at Amazon? We hire people we trust. We give them authority to push buttons like you’re doing.
He said, push the button. And she did. And she, I think she kind of waited for the, the ceiling to fall on her or whatever. And then, and nothing happened. And so it just gets to the second great geek norm. The first one is speed. The second one is ownership. Like here, devolve authority downward to an uncomfortable degree.
Have a decentralized organization to a, to an uncomfortable degree. The geeks believe, hire the right, they believe this thing that we hear all the time. We hire the best people and we let them go do their jobs. They actually do that. And it’s uncomfortable. It can be super uncomfortable, but once you get in that mode, man, people love ownership.
You activate their enthusiasm in a deep way. I’m
not inside of the Generals, General Motors, General Electric, but I just couldn’t imagine this new person being able to push the button without six sign offs from every other associated
department. I tell a story in the book about a woman who was working as a manager inside Hewlett Packard, which we, Think of a fairly well managed company for a long time.
She was working there in 2005 and she wanted to spend a quarter of a million dollars on consultants to accomplish an important project. You said five or six signatures. She said there were 20 approvals she needed to spend that money. So we built up this unreal. bureaucratic overhead in the, to get in the way of people trying to get their jobs done.
And in general, we do it because there seem like good reasons to do it. Well, somebody overspent in the past or somebody went rogue. We have to put another approval layer in or a loop. And what the geeks have said is people, we are going to have problems. People are going to do the wrong thing deliberately or inadvertently.
That is a small price to pay for not encrusting our organization with all of this junk, all this bureaucracy, all this overhead that gets in the way of people trying to do their jobs. And so the geeks have tried to deeply embrace this norm of ownership and some of the stuff that I read. Uh, you know, Bezos talked about how his main job at Amazon was preserving the culture.
And I’ve read that he had to keep beating back against the forces of encroaching bureaucracy, even at a high ownership culture like Amazon, that, that encroachment, that bureaucracy is the natural tendency. You have to fight back against it.
Reed Hoffman wrote the wonderful forward to your book. We interviewed Mark Randolph here.
And talking about those early days and going to that second layer of people you bring in, you know, you got the first people that are excited about the company when you get to that second layer, Andrew, those people all come from these big companies and they, but they also come with that leadership quote, uh, style of, we need sign offs on everything.
Totally. One of the most interesting things I heard about Amazon during the pandemic was, you know, in the first phase of the pandemic, they grew so quickly because we were all just ordering everything from Amazon. There was a worry that they were adding so many people who, like you say, came from very different cultures, that that strong norm of ownership was going to be under some threat.
And I think maybe that has happened. You mentioned Mark Randolph, the Netflix co founder, Reed Hastings in his book, No Rules Rules, tells this fantastic story about how they with via an. audit found out that one of their employees had treated himself to about 100, 000 in luxury vacations and then passed it off as travel expenses.
So, okay, fine. You fire that person right away. Now here’s where it gets interesting because there’s a very natural tendency to go, well, you know, managers have to sign off on any spending, travel spending over 400 bucks. And Hastings said, No, we’re not doing that. Maybe we need to beef up our audit capability.
Great. Let’s think about that. But what we’re not going to do is start encrusting our people with all these layers of double checking and make sure nothing can ever go wrong and all that, that that is the road to perdition.
There is a side lesson that you, I think, inadvertently teach here, which is to everybody out there who’s a parent, teaching your kids that way is really effective too.
I know I was never trusted with any money until I got to college, which is also the reason why I got in huge credit card debt. with the company I end up working for later, American Express. When they hired me, by the way, I was like, I don’t think you guys did you due diligence because I really messed up your credit card when I was younger.
Trusting your kids with these hundred dollar decisions when they don’t deserve a hundred dollar decision, they have no need for a hundred dollars. Make sure they don’t make a thousand dollar mistake later, like letting her push this button this one time and maybe mess it up. Gives her the confidence and authority to do bigger things later on.
I completely agree. I found myself a few years back at a cocktail party next to Bezos. And I’m like, I’m not going to pass this opportunity up. So I said, Jeff, when you
look at other people, I still couldn’t imagine, by the way, I still, it was amazing. I still just going, Hey Jeff,
Hey Jeff. And he’s like, okay.
And I said, when you see other people running great big companies, what’s the most common mistake you see them make? And he didn’t even hesitate. He said, they just get too conservative. They just get too risk averse. For, for all the reasons that we’ve been talking about, it’s natural to try to make sure that the bad thing that happened before can’t ever happen again.
We’re going to layer some stuff on top of it. And Bezos said that you look, no, like go, go do your thing, man. I don’t know if he used that phrase, but that was the impression I
got. Yeah. Yeah. This isn’t all just about winging it though. Our third story is about a guy named Doug Bowman who says, uh, I’m quitting Google.
This is actually a turn in the other direction. So where’s our risk management? Maybe it’s right here. Yeah,
it’s fascinating because there are rules for the winging it inside geek companies. I love your phrasing. One of the most important rules. is we are not going to argue based on seniority, charisma, fancy resume, hourly billing rate, beauty of PowerPoint, all these things.
Uh, the fact that you were right last time, all these things that people Use to justify their arguments and that win debates and internal arguments that a lot of companies what they, what the geeks try very hard to do is say, uh, you know, we’re going to have a freewheeling discussion, but we’re going to go where the evidence takes us.
We are going to follow the evidence and an evidence based argument or debate is a beautifully tight definition of science. That’s actually what the scientific method is. It’s an argument, right? It’s a constant argument. among people who are trying to get closer to the nature of reality with a ground rule about how you’re going to settle the argument.
If you and I disagree, if I believe A and you believe B, we’re going to get together and say, Okay, what test do we both agree would say whether reality is more like B or more like A? And then we’re going to go run that test. The evidence is going to settle things here. I opened the chapter about the Feynman.
He said, look, first of all, you guess. We all do. Scientists guess all the time. But then. It doesn’t matter how good your guess is, how beautiful it is, how elegant it is, how smart you are, none of that matters. Does your guess hold up to experiment in reality? If so, great, we think that’s the right answer for now.
If not, we’re going back to the drawing board. Science is just, you know, we, we, when I was trying to learn to do science, you take a lot of statistics courses, you can get very, very deep, and it can get very difficult. The ground rule is simple. Argue and let evidence carry the day.
I’ve been a longtime fan of, uh, you know, Disney going from in the early 1980s to nothing and pretty much a company nobody paid attention to, to Michael Eisner bringing in Jeffrey Katzenberg and the team.
And really bringing that company alive in so many ways. You talk about though Katzenberg, a lot of people have heard of his quibby. And maybe this is what he got wrong, was that he was so cocky about his approach and there was not a lot of science applied to how this was going to
work. And you bring up something fundamental, which is that Katzenberg, by the point in his career, where he launched Quibi, he had every reason to be very fond of his own judgment, right?
He had revolutionized Hollywood. He had brought Disney back from the brink. He had shepherded TV shows and movies and won the first Oscar for an animated movie with Beauty and the Beast. This guy had Crushed it, his entire career in Hollywood. And now he says, okay, I, I, my judgment about what, how people want to be entertained is fantastically good.
I think the next chapter is that they want to be entertained by these short form videos that they get to watch on their phones. And he launched Which wasn’t
wrong. Look at TikTok. Right, which wasn’t wrong. He just kind of, he
didn’t go about it in a very geeky way. He just said, okay, here’s, here’s, I know exactly how this is going to go.
We’re going to unfold it exactly according to my plans. And it was a disastrous failure. They raised, I think, about 1. 75 billion with a B dollars from people. They didn’t even launch a beta, they launched the app. The service was alive and streaming for, I believe, less than, fewer than 200 days. This was an epic fail.
And when I tried to read the accounts and learn about Quibi, They were doing the opposite of the geek way. Their decisions were not made by science or evidence. They were not iterating. They were just following a vision. And in one of the accounts that I read, there’s this great quote from an insider, probably somebody who worked at the company.
She said, and I think this person said, look, your job here is just to execute. Katzenberg’s vision on content. Meg Whitman was the CEO, uh, Whitman’s vision on, on marketing. If you don’t, you’re just a troublemaker and you don’t fit in there. And she just said, you just wind up in a job where you’re there to execute a vision nobody believes in.
Like that, that describes the working lives of way too many people, way too many people.
Well, and I think that’s a great way to emphasize what the fourth, uh, pillar is, which is openness, right? Yeah. I mean, you tell a great story and, and we’re not going to get into too much here, Andrew, but about, uh, geek companies really much flatter and the CEO doesn’t have that.
Hey, that’s Jeffrey Katzenberg you’re talking to, you know, the ego kind of goes away.
People have ego, human beings have ego, and to say that you need to be an egoless leader doesn’t work. What I think the geeks have pulled off is that they pulled this really neat switcheroo, and I think their ego is bound up in getting it right as opposed to being right.
Those are not the same thing. Those are not the same thing. And so you mentioned, uh, the, the story that I tell about Brian Halligan, the seat founder, co founder and CEO of HubSpot for a long time and, and a dear, dear friend of mine. And I’ve watched him over the years as he grew the company and just had this massive success with it.
And I’m like, Oh, I’m like, you know, what’s interesting about you? It’s not that you don’t have ego. Of course you do. You, what you want to do, you want to get it right. You want your company to get it right. That involves you being wrong a lot of the time and building a company that gets it right. Even when you yourself are wrong, man, that’s neat.
That’s a good trick.
It is difficult. You know, even when you have this open culture where you tell people, Hey, you know, let’s protect the customer. Let’s make sure the customer gets what they want. So tell me where I’m wrong. You know, Andrew, most people aren’t used to that. How do you, how did he foster this community?
I mean, and this is obviously a long, long discussion, but just a basic thing on how do you begin this?
It’s a huge, long discussion for exactly the reason you point out. We humans are not wired to speak truth to power. You can think about, like, our nearest evolutionary neighbors. Chimpanzee number three does not challenge chimpanzee number one very much.
It’s just a really terrible strategy for not getting whooped, for really, you just winding up in a bad place. Now, we’re wired that same way. Upward challenges are not natural to us. And so the geek leaders that I’ve learned from, they work on it really hard over a long period of time, and they signal that it’s okay all day, every day, in big ways and small ways.
We humans, we pick up very, very Quickly and subconsciously on the cues that we get from the dominant from the prestigious people around us and we react to them So when Halligan looks at somebody and says, oh, that’s a good point I hadn’t thought of that man that sends a signal to the other human beings in the room and if you do that consistently and if people know that you Mean it then you’ve got a chance at actually having getting people to the point where they’re willing to push back on you Even though you’re the person at the top of the org chart and the founder of the company It’s hard, but it’s doable.
Well, and I love the underlying message that if the customer wins, then we all win, no matter where it, where it comes from. Right. There’s this, there’s this vibe then. And then my ego is we make bad ass products and I can be very egotistical all day long about that. I was thinking, I mentioned. We’re growing
We make bad ass projects. I was part of this effort that succeeded. I was also part of three that failed and that didn’t tank my career at this company. Yay.
The other thing I found out about my friend Chris that I mentioned earlier, wherever Chris goes, people want to be around him. It doesn’t matter what company he’s at.
He always, Andrew, attracts
talent. Now see, this is really important because human beings have two kinds of status. One is dominance. I’m higher on the org chart than you are. We are the only species on the planet. Maybe close to, that has prestige as well. Doesn’t matter where you are on the org chart, you are really good at what you do, and you’re actually kind of a pro social, like a, like a cooperative person.
I will follow you anywhere. You’re just some jerk who’s four levels above me. I, I’d rather not work for you. You’re at, but I consider you a prestigious person. I will follow you to the next thing.
Thank you for mentoring our stackers today on these four geeky principles of speed, ownership, science, and openness.
This is, of course, a much longer discussion and people want to dig in. The good news is you wrote a book on this that goes even deeper called The Geek Way, The Radical Mindset That Drives Extraordinary Results. And if this goes out the day I think it’s going out, it was available yesterday. So right
Yeah. November 14 and the book, I just, I do what we’re talking about here and I just lay the argument out at greater detail, but just, I became convinced that a bunch of geeks had figured out a better way to run a company and that’s what the book is about.
Fantastic. Thank you so much. And actually I, I got that wrong.
It is tomorrow that it comes out. So either do the pre order today or grab it tomorrow. Indra McAfee, thank you so much for helping us out. I really appreciate it. It’s been a real
pleasure. Thank you for having me. Hey, this is Pete the Planner, USA Today money columnist
host of the Ask Pete the Planner podcast.
When I’m not fixing the weirdest financial situations
you’ve ever heard of, I’m stacking Benjamins.
Big thanks to Andrew McAfee for joining us. Man, so much, so much there, guys. And of course, as always, we’ll unpack it even further in our 201 newsletter tomorrow. Hey, let’s throw out the Haven Lifeline, tackle some of life’s most important questions.
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All policies issued by the parent company, MassMutual more than 160 years old. You don’t have to wait for a coverage decision. And of course, affordable prices get this done. Now, everybody’s stacking benjamins. com slash get her to Haven life. Uh, today we’re throwing out the lifeline to our stacker of the day, Mark.
Hey guys, this is Mark from Illinois. I’ve been listening to this show for years and love the mix of entertainment and finance you provide. I haven’t learned anything yet, but today’s a new day, so let’s give it a try. I was wondering if you could help explain how donor advised funds work, and if it is possible to transfer appreciated stocks from a Vanguard brokerage account to a donor advised fund.
The purpose would be to avoid paying capital gains taxes on existing investments since we file using the standard deduction. Would a donor advised fund help us regain some tax benefits from our giving? Any opinion on services like DAFI to assist in executing a donor advised fund? Appreciate all that you do.
I have a ton of t shirts already, so you can give my shirt to Doug. Ah, just kidding. I need some new threads. Sorry, Doug.
Okay, he puts it out there. Now I don’t like this question for two reasons. It was only going to be one, and then he came in with the gut punch at the end. But here, here’s before we dive, and this is actually a great question, uh, but before we dive into that, I think I’d like to address something, Joe, which is This sort of wink wink joke we hear a lot that came from something I probably said, because I’m always running my mouth off like 30 years ago at the, when the podcast first started, when it was, I, I don’t learn anything.
I never learned anything from this show. I don’t know where people are getting that unless these are the longest time listeners we’ve ever had. Cause we haven’t said that. in forever. And I think what we want to do is have people not realize they’re learning things because they’re laughing so much, which
is I think what this guy, hopefully what Mark was implying.
I think that’s what Mark was implying. But I was also going to say, if you didn’t learn anything from Mr. McAfee there just a few minutes ago, man, you’re doing it wrong.
Yeah. Yeah. Good stuff. Okay. So give him the damn t shirt and let’s just answer his
question. Let’s go donor advised funds. OG, what’s a donor advised
Basically, these came up as a way to pool your contributions and save contributions for a longer period of time. You know, a lot of us give a little bit throughout the year to different things that are important to us, whether it’s a charity, charity organization, you know, religious organization, you know, the kid that shows up at the door and says, will you buy some popcorn?
for the Boy Scouts, you know, or whatever, right? And a donor advice fund is a way to kind of pool all that together and then decide how you want to distribute that. And there’s no timeline on that distribution. So you could say, well, I’m, I’m not committed to anything in particular right now, but I still want to give a portion of my income to charity in the future.
So I will put it in this account. It counts as a donation today. And, uh, in the future, someday, I will figure out what to do with it. And meanwhile, it can be invested and grow and do its thing. A lot of people ask the question of, like, Well, should I put the money in the donor advice fund if I’m gonna take the money right back out?
You know, I give 500 a month to church, should I put it in a donor advice fund first? No, you shouldn’t. It’s a pain in the butt. If you haven’t committed to what you think you want to, uh, support, a donor advice fund’s great because you can put money there, it sits there, it grows, it does its thing for a long period of time, and then you decide later.
If all you’re doing is moving money from your bank account to a charity’s bank account, you don’t need to pass through a donor advised fund first. What Mark’s asking about is, can you donate? Other things other than cash. So yeah, you can donate cars and stock and houses and boats and you can donate anything You want to donate that has value to a charity, right?
They’ll take it. Well, mostly they’ll be able to take it So he’s got some appreciated positions in his brokerage account and wonders Hey, can I take this money and transfer it to a donor advice fund? absolutely, you can and it will lower your taxes because because it’s assuming that your your contribution amount is above the standard deduction You know, you’re going to donate 50, 000 or something like that to a donor advised fund.
It will affect your taxes in the current year. Plus if you’d use the appreciated stock, there’s not going to be any capital gains taxes like he was talking about because. you’re donating it to the charity. Now, if all you’re going to do is just turn around and donate that money right back to the charity, I would say, why don’t you just donate the stock to the charity and be done with it?
The only exception to this is if the charity itself is not able to accept that. So there is some circumstances, a small organization or something are not set up to receive, you know, 52 shares of Apple. Like they don’t know how to do it. They don’t have the systems. They don’t have the technology to be able to do that.
And they’re like, yeah, we can’t do that. The county library, you know, the arboretum, the alumni association at school, they know how to do that stuff because this is how they, this is how they raise capital. So donor advice fund great if you’re going to park it there for a while, you haven’t made a commitment yet in terms of what you want to do with it.
It’s great if the charity doesn’t have the facility to accept other things like highly appreciated stock or whatever. But if all you’re doing is just put money in the alumni association, I’d just call the alumni association and just ask them, Hey, I’ve got a hundred shares of Apple. I want to donate to you guys.
How do I do it? And they’ll walk you through how
to do it. Yeah. Good stuff. And specifically to his question again, Oh, gee, for anybody out there with appreciated stock, it is a. If you’re going to give cash versus appreciated stock, appreciated stock might be a great way to go.
A hundred percent. Yeah. I mean, if you have a system to your giving, and this is a way that a donor advice fund can help, right?
Is you give the same 500 every month to whatever, right? And you look at the beginning of the year and you say, I’m going to budget 6, 000 to do this. And you look at your brokerage account and you go, I’ve got this stock, I’ve got this asset. you know, worth 6, 000 you could just transfer that 6, 000 bucks into your donor advised fund and then set up a systematic payment from your donor advised fund to your charity that you want to do.
Bing bong, you’re done, right? Like it’s kind of the same transaction, but to your point, you’re donating a highly appreciated stock as opposed to the cash. And
some people might be, but I like this stock and I want to hold it. This is a way to get rid of the capital gains tax. So I take the stock of the company I really like and I want to hold on to and I gift it to get rid of all this capital gains overhead.
Can I then go and rebuy
it? Yeah, absolutely. You can. There’s, you know, nothing to prevent you from rebuying it. You have to check and make sure that it’s not subject to any tax issues. You know, when we sell stock, you can’t turn around and rebuy it. If you sell it for a loss, it’s called a wash sale. But since you’re gifting it a highly appreciated stock, I can’t see that there’s a wash sale tax benefit.
You’re just, be no different than just rebuying it that minute. A
great time. I know Doug is going to say this later on in the show, but of course, this is where you check with your own tax advisor, right?
Yes, please do. Absolutely. There’s a lot of strategies here. I mean, basically Mark’s onto something. And all of this, it sounds really cliche, but it really boils down to, well, what are you trying to do?
Like what’s, you know, we, we get really wrapped up in product and we get wrapped up in the cool new shiny thing like, Oh, I heard about DoRevive, this is so cool, how do I, it’s like, well, hold on, what are you trying to do? Well, I give 500 every month to church. It’s like, okay, that’s what we’re trying to accomplish.
Now let’s look at your total portfolio and figure out a way to do that in a tax efficient manner.
It’s funny how we looked at two different tech strategies today. We looked at one of the TikTok minute and we went, uh, I don’t know. And we looked at this one of Mark’s and went, yeah, great idea. Yeah. Mark, thanks a ton for that question.
If you’ve got questions for the show, head to stackingbenjamins. com slash voicemail. And you too can, uh, put the bait of a shirt in front of Doug and then jerk it away at the last second like Mark did. Just some
super brilliance. Like a Charlie Brown move. Time for maybe a mistake after we just poked the bear, but let’s go to Doug now.
Doug, time for the Back Porch segment, which always begins with a community calendar. What we got coming up, my friend? Oh, I’ll tell you later
this week, Joe. You should know this because you’re going to have to be there for a great discussion on Instagram Live with Andy Hill. You should start prepping now because that dude is a mental giant.
That’s going to be on Thursday at 5 p. m. Eastern, coming up. Do you even know what you’re talking about yet?
I don’t know what we’re talking about, but Andy sure does. Luckily somebody’s got it going on. No, Andy’s Andy is for anybody that follows Andy knows in his great kids, marriage, kids, and money knows that Andy is all about teaching his kids about wealth at a young age.
And so he’s going to walk through the program he’s used very successfully with his two children to, uh, to teach them about money. So if you’ve got kids, uh, great, great, uh, Instagram live, take out and different than the show where you can yell at the device. You can, you can write to us at the Haven Lifeline and ask questions, Instagram live.
We’re taking questions on the fly. So come join us and Andy. And if you can’t be there live, you can still watch the replay over on Instagram. What else we got going on?
You know, one of the things I love about the basement is not only the fun we have down there, but some of the serious questions that people use our community to get responses from.
That was a horribly constructed sentence, but they’ll go there and ask real serious questions. And Dave, uh, back at the beginning of the month, a couple of weeks ago, Dave asked, about a great credit card for his daughter who just turned 18. It’s time to start building her credit. And he asked the basement for their thoughts on that and, uh, is getting a lot of great responses.
So we want, if you’re not part of the basement yet in, in Facebook, go there, join, and, you know, use it to have fun, just like you do on the show and learn something just like you do on the show. And, you know, Dave got a lot of great, great responses and thoughts on credit cards for, um, his daughter. So that was great.
What are some of the answers people gave? Cause I can talk to mine. Cause my kids got two different credit cards. So, gee, my daughter went with the Discover card. Discover’s sponsored the show here, but they’re great. Uh, Discover is a great first credit card for kids to build some credit. She had a very low credit line.
began there. And, uh, my son actually got a Fidelity’s 2 percent cashback credit card and, uh, worked with Self, the company, to build his credit quicker so that he was able to get that Fidelity card almost immediately. I mean, just a great cashback card. OG, you’ve got this coming either, well, probably in the next couple of years, I would think.
Well, we added the boys at 13 to the family Amex card and the family Apple card. So, I mean, with, you know, phone paying with, you know, Apple pay being the main choice of payment from now on, like kids don’t have to carry, you know, wallets and all that stuff with them. Um, so it’s on their phones and then, you know, they, Have
you run into issues with that yet about, oops, I accidentally dad bought something I shouldn’t have bought.
absolutely. Yeah. I mean, like we go through it with them. We go through the, we go through the bill with them, you know, their section and when they turn 13 and they have this freedom, there aren’t very many limits. So they’re just like, but ding, but ding, but ding, but ding, you know, and one of the kids, I remember after they turned 13 going through the bill and going, Hey, uh, so I don’t mind you buying some snacks at the vending machine, but do you think you needed to buy 32 worth in one day?
Uh, is that how
much that was? Yeah. And by the way, to, you know, to parents going, Oh, I would never let my kid have that money. I would much rather, OG, have a kid make a 32 mistake and be able to coach them on it than have kids go to college like I did. And this isn’t stank against my parents. I think this is most parents.
Uh, I went to college, got my credit card, rued my credit right away. Didn’t have anybody. Rued it for 10 years. Nobody cared. Did it the right way. Yeah, just, just absolutely wrecked it. So man, making a 32 mistake versus 1, 000 mistake, you know, later on.
Well, and I mean, really what we talked about there was you should own vending machines.
Cause it was like, well, what did you buy? I bought a bag of chips. It’s like, well, let’s go to Costco and see how many chips you can buy for 32. Oh, look, you can buy 600 bags of Doritos for 30 bucks. Like, why don’t you talk
to toilet paper
at the same time? Exactly. Like turn this into an opportunity, right?
Why don’t you go to the school store and go, Hey, why are, why are we allowing somebody to vending machine this for two bucks to the kids? I’ll do it for a dollar. You know, it didn’t go anywhere, but you know, cause there’s a contract, but Hey, you know, it was an opportunity. Talk
about a good mentor. Ron Sheik, who was just here from Panera Bread.
Remember he told that story about him with the school store in his college, just went, why don’t we have this thing? And he created it. And that led to a Panera. So maybe your kid’s an ex Panera founder, OG. Doug, what kind of advice did, uh, did the stacker get?
You know, uh, actually, so he asked for two things.
Dave asked for two things in the basement, a recommendation on a card and also a way to track spending. And so far, you know, as we record this, I’m sure he’s going to get more responses because he just posted this, uh, recently, but so far a bunch of people are responding saying don’t YNAB.
as a tracking device. So that’s, those are most of the responses I see so far, but this is a hot topic. Just like you guys just talked on and on and on just now, but I’m kidding, but just like you guys did, I’m sure he’s going to get a ton of
responses. I like fam zoo. I like a green light. Uh, some of these programs develop specifically for kids.
I think YNAB for a kid OG might be a little, I feel like sometimes we answer the thing. That’s right for us. Right for the adult, right? Oh, why not work for me? Why wouldn’t it work for your 14 year old? Hey, two quick things, Doug, before we say goodbye. I mentioned a couple weeks ago at Halloween that I watched the movie The Blackening.
Which had the subtitle, which had the subtitle, We can’t all be the first to die. It was this hilarious story with all African American cast. This, this movie got a 6 on IMDb, which I also said, for a horror movie is a fantastic rating. This movie was not even a horror movie, guys. Very little horror. It was hilarious.
Wow. Well, yeah, that subtitle tells you really what you’re in for. And it is, there is the most racist board game I’ve ever seen. And they, and they call it out on the movie. They’re like, yeah, I’m not playing that board game. That’s a pretty racist board game. And, uh, And everything that happens is so comical.
You got to like horror mixed with your humor. And as long as you’re okay, there is almost nothing scary about this movie. I was with a group of about 12 people and we’d laugh the entire time. So the blackening big, big thumbs up for people that want to see a quote horror movie, but would rather see comic.
I’m picturing that
commercial ran for a couple of years and now I’m drawing a blank on the company. So it must not have been an effective commercial, but. The kids are running around and they’re like, let’s hide in that shed behind all the chainsaws.
I think that was Geico. How about we get into the running car?
Are you crazy? Exactly. Oh, it’s so funny when they start to go in the basement. It they’re like, and I think a guy calls it out. He’s like, you know, that’s where the people go to die. It’s in the basement. Like, yeah, but we gotta, he’s like, I know. So I wanted to just report back on that
before we went. That sounds fun.
That sounds good. We’ve actually gotten a ton of great reviews that this back porch is going a little bit long today, but keep them coming folks. Just in the last few days, we’ve gotten like four or five really great reviews. The really best, the best ones of the ones that have come in recently. I’ll mention how great the trivia segment is.
So, um, you know, keep those coming folks. But a lot of
great reviews. We created a
monster may or may not have had something to do with you giving away books. I don’t, I don’t know if there’s a correlation there. Let’s wrap up.
We can talk about the books later. Cause we do have to wrap this up. Let’s talk about this.
If you’re not here for books, you’re not here for to just teach your kid about a credit card or about great movie recommendations. You’re here because you need to make better financial decisions. You know what? OG and his team are taking clients. So step one is to put a better team in your corner to help you make better decisions.
And as we get ready to roll into 2024 already, my goodness, StackyBenjamins. com slash OG is the link to OG’s team’s calendar. And that’s the first step you take on the road to better decisions. All right, that’s, uh, that’s gonna do it for today. Uh, Doug, take it from here, man. What should we have learned today?
should we have learned today? First, take some advice from Andrew McAfee and learn to embrace unconventional solutions. Second, hiring family members? You can hire family, but remember, if you get this wrong, you could all learn how to make license plates together. Well, that’s great family time, though, isn’t it?
But the big lesson? Make sure to brush up on your French before you try to ask a French woman out to dinner. Apparently, I, uh, I just asked her if she’d ever eaten a squirrel. Thanks to Andrew McAfee for joining us today. You can find his book, The Geek Way, wherever books are sold. We’ll also include links in our show notes at stackingbenjamins.
com. This show is the property of SB Podcasts LLC, copyright 2023, and is created by Joe Saul Sehy. Our producer is Karen Repine. This show was written by Lisa Curry, who’s also the host of the Long Story Long podcast, with help from me, Joe, and Doc G from the Earn Invest podcast. Kevin Bailey helps us take a deeper dive into all the topics covered on each episode in our newsletter called the 201.
You’ll find the 411 on all things money at the 201. Just visit stackingbenjamins. com slash 201. Wonder how beautiful we all are? Of course you’ll never know if you don’t check out our YouTube version of this show, engineered by Tina Ikenberg. Then you’ll see once and for all that I’m the best thing going for this podcast.
Once we bottle up all this goodness, we ship it to our engineer, the amazing Steve Stewart. Steve helps the rest of our team sound nearly as good as I do right now. Want to chat with friends about the show later? Mom’s friend Gertrude and Kate Youngkin are our social media coordinators. and Gertrude is the room mother in our Facebook group called The Basement.
Say hello when you see us posting online. To join all the basement fun with other stackers, type stackingbenjamins. com slash basement. Not only should you not take advice from these nerds, don’t take advice from people you don’t know. This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor.
I’m Joe’s mom’s neighbor, Doug, and we’ll see you next time back here at the Stacking Benjamin Show.
Okay, here we go, Steve. Hope you’re sitting down. Live from Joe’s mom’s basement, it’s The Stacking Benjamins Show. I’m Joe’s mom’s neighbor, Doug, and today you’ll learn how to see bigger opportu Ahem. Ahem. That’s the cat fur.