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North Star Leaders Podcast

Jenny Xia Spradling

Season 2 Episode 12 9 Jul 2024

Transcript

Jenny Xia Spradling:

At the end all team, for example, we usually spend the last 10 minutes doing shout-outs for anyone on the team. That is very expensive time. This is every person at the company for 10 minutes, just to express gratitudes. I think a perfectly rational, good actor or business owner could say, "That doesn't sound worth it," but it is for us. That's one of our values. Expressing for the other folks who might be listening that there's a good and bad to every value and it should be that way.

Lindsay Pedersen:

The world needs what only your business can bring. As a leader, it's your job to deliver. But where do you focus? Where do you direct your time, your team, your budget and your emotional energy? We're learning this together on the North Star Leaders Podcast. I'll be talking to purpose driven leaders about the choices they make to create audacious economic value while also realizing their distinctive purpose. I'm Lindsay Pedersen, brand strategist, author of Forging an Ironclad Brand, and host of the North Star Leaders Podcast. Let's get to it.

Today, I am really happy to be joined by Jenny Xia Spradling. Jenny is co-CEO of FreeWill, an online software company that helps people with estate planning and giving.

Jenny, welcome to the show!

Jenny Xia Spradling:

Excited to be here.

Lindsay Pedersen:

I'm so excited to have you here. Jenny, to start us off, what is your favorite thing about what you do?

Jenny Xia Spradling:

I have two, so I think I'm cheating. I love the people who I work with. It is truly an honor to get to work with them and I would work for most of them in another world, another life. My second thing is it is really fun to actually feel like the decisions I make on a day-to-day basis make a difference for what happens in the world, how much money goes to charity, how quickly climate change is solved, things like that. It's very-

Lindsay Pedersen:

Yeah. For our listeners who don't know FreeWill, can you give a little snapshot of it beyond what I shared, which is that it's an online software company that helps people with estate planning and giving?

Jenny Xia Spradling:

We started FreeWill seven years ago. By we, myself and my co-founder and co-CEO, Patrick Schmidt. We were really looking for, at the time, how do we move as much money as possible into charity? That was the headline statement. We were like, "We will do basically anything, look in every single industry to find an opportunity." Where we landed was in estate planning, which was not intuitive to us and probably not intuitive to many of the people listening.

The way that we got there is there was really one chart we saw where my eyes opened really wide, and that was the Great Wealth Transfer. What this is, is $70 trillion that's going to get passed as Baby Boomers pass away over the next two decades or so, to mostly family but also maybe friends and maybe charity. This is the biggest wealth transfer ever in human history, and it's also potentially the biggest opportunity for money to go to charities ever. We saw that and went, "Wow. There must be a lot of folks doing a lot of stuff around this." When we started looking into it, the short answer was no, there was basically no technology around this.

When we started talking to folks about whether or not they were interested in leaving money to charity in their estate plans and things like that, they said, "Yes, absolutely. But my barrier is that estate planning is too hard." We just heard that, again and again. "It's complicated, it's expensive, it's scary. I don't want to think about it. I would much rather, on a typical Saturday afternoon, play with my kids than do estate planning. It's been on my list for about five, to 10 or 20 years." What we learned is that, in order to move a lot of money into charity, we had to create really simple warm and intuitive tools to do estate planning. All we had to do is make it really easy to give to charity in those estate plans and people would do it. Folks gave their plans more in estate plans on FreeWill than if they go see a lawyer, if they go to LegalZoom, or another platform to do their estate plans, just because we make it so easy.

That was the big insight. Since then, we've helped nearly one million Americans at this point complete their estate planning. We're the fastest growing platform for estate planning, and I think the biggest at this point. They've committed almost $10 billion to charity, which is great.

Lindsay Pedersen:

Wow. That's the unlock. It's not a lack of interest in charity, it's a lack of engagement with estate planning. By bridging that, it becomes so intuitive.

Jenny Xia Spradling:

Exactly. And the thing that we learned that got us that six times conversion rate is that the average lawyer just wasn't mentioning charity as an option. Make estate planning and mention it as an option, and folks are incredibly generous.

Lindsay Pedersen:

Wow. I know that when you and Patrick started FreeWill, you chose, or at some point earlier in the journey chose the public benefit corporation setup. Of all of the North Star Leaders that I've talked to on this podcast, you're the first person I've talked to who has made that choice. What is it and what went into the choice? What's been the utility of having made that choice, now that you're years in?

Jenny Xia Spradling:

A public benefit corporation is a legal designation, so from the state of Delaware. Just like being a C corp, or an S corp, or LLC, you can decide to incorporate as a public benefit corporation in Delaware. When we started FreeWill, we were debating whether or not to do this or not, just incorporate as a normal C corp. We wanted to grow this as a VC funded startup. The common wisdom that we were getting, and we were at Stanford Graduate School of Business at the time, getting advice from a lot of really famous VCs who were like, "You absolutely have to incorporate as a C corp." But, Patrick and I both have this belief that there really is a place in our capitalist society for social enterprises. That public benefit corporation, as a legal designation, can help you achieve that in a way that some of these other designations can't. I'll explain why that is in a second.

But first, what does it really mean to be a public benefit corporation? It's honestly very similar to being a C corporation. You're taxed like a C corp, you can distribute equity like a C corp, all of that thing. But you have a dual mandate and fiduciary duty to your shareholders. One is to maximize profit, but the other one is to maximize your mission, which is something you put in your bylaws at the very beginning of an incorporation. The way that that has been used in the US so far, which there's not a long history of public benefit corporations in the US, is mainly in that if, at the end of the day when you're thinking about exit, you're given two offers and one offer is from someone who is giving you a really big dollar amount but might not the best steward of your mission, and someone who is giving you a smaller dollar amount but you think is going to a better fit for carrying out that mission, you can take that smaller dollar amount without being sued by other shareholders for doing the maximizing thing. There are other decisions as well, but that is the biggest one that's actually played out.

We wanted to be able to enshrine not just this company that was growing and producing profit for our shareholders, but also why we started it in the first place, which for us was to move as much money as possible to charity and in the process, make it easy for the average American to access law and estate planning for their families. That's what we put in place. Everyone told us it would be a silly thing to do because we wouldn't get any funding. "No one would believe that we were Capitalists at heart. Bleeding hearts would never maximize profit. You're going to make every decision in favor of only the mission and not build a scalable, sustainable business." That just ended up not being true at all.

We went out to fundraise, and I think I got maybe one or two questions on it. I gave the answer, which is like, "Look, for me and Patrick, at our heart of hearts, we believe that by building a sustainable, scalable business, that's how we're going to get as much impact as possible. That's what we believe, and that's what we're asking our investors to sign up for by backing us in this venture." They were fine with that answer, which I was surprised by, but it was a great problem for us. Had basically no pushback throughout our multiple fundraising rounds being a public benefit corporation from our very first day.

Then you also asked the question of what's the business impact our team had? Well, from an overhead or costs perspective, it's not that much. Like I said, the biggest potential risk there was around fundraising, and our investors have always been really aligned in our do well by doing good, do good by doing well plan. The one place where I think it's had the most benefit is that we can be really transparent and straightforward with both our investors and our constituents, our team, and honestly our customers about why we're doing this. It is a combination of things for us. I think it's useful in the legal structures that we have to be very black-and-white about why certain entities should exist. But in our case, it truly is, we're here for both of these reasons. We have almost 180 team members who are here for both of these reasons, and our investors are here for both of these reasons. I think that's okay.

Lindsay Pedersen:

Yeah. You're a believer and it sounds like it's been another source of differentiation. From a fundraising standpoint, from a customer standpoint, from a clarity of communication with all of your constituents standpoint. Is there a scenario when a purpose driven company that's at the juncture of setting themselves up ... They're purpose driven and they're economically driven. Is there a scenario where it would not be a good idea to do that? What's the edge when it no longer would be the right choice for a purpose driven company that's also seeking to become huge economically? Or are there any?

Jenny Xia Spradling:

In my mind, there aren't really. We have advised many, many peers to go from C corp to public benefit corporation because it's been a no lose situation for us.

I think that if there is any ambiguity among let's say the founders, for why they're starting it, and maybe folks are starting it for different reasons ... I think that you need to be straightforward and have those really deep conversations with your founders. Is this more about money for you? Is this more that this is the mechanisms for change that you see in the world and it happens to be a for-profit company to get there? Or are you just in it for the mission? Those are all different answers and it's totally fine. No moral judgement for folks to be optimizing.

I would say that that's probably the one, if the founders aren't on the same page. Or if you're changing over to it and your other big constituents, whether it's your early employees or your investors, aren't in it for the same reason, yeah that could be a reason.

Lindsay Pedersen:

That could. I remember hearing you and Patrick once talk about one of your earliest conversations, probably even before this one, was around creating values. "What are the values that we as a company want to stand for?" That was super early in your collaboration. Looking back, what was so important about having such a conversation so early in the process of building this thing that became FreeWill?

Jenny Xia Spradling:

You're totally right. The very first meeting we had about FreeWill was, "What are the values that matter to you? Can we get enough overlap in the values that matter that we can start this thing together?" I honestly was quite skeptical around this exercise. I was like, "I'm pretty sure we should talk about the business model."

Lindsay Pedersen:

Yeah.

Jenny Xia Spradling:

I think he was right. It is the thing that has been the exact same since when we started, which is not many things besides the company and this. We've had to make lots of micro-pivots along the way, but not on our values.

I think the reason why it matters is folks talk about the number one reason why a startup fails is that founders leave, they give up. There are many good reasons to give up, so there's no moral judgement on doing so. The market isn't there, your financially constrained, all of those sorts of things. But what we didn't want to do was get into a situation where we're like, "Oh, we're going to end up breaking up as founders because we fundamentally don't believe in the same values." If that is in the case, we certainly won't be aligned when we're making hard decisions together, or independently but advising each other on decisions, we're going to come to loggerheads again, and again, and again. Let's make sure that we're aligned on the things that we can't change about ourselves, which is the values. Then let's also be really clear about that, so that when people are joining the journey, they understand what they're getting themselves into.

Because honestly, we tell this to folks who are applying to FreeWill all the time, that it truly is a two-way interview. If we love the candidate, but they ultimately don't like this culture, or these values, or this mission, or whatever else, they're going to end up leaving in six months or a year anyway. Which is a waste of both of our times. The more that I think we can be clear, not just about what you're signing up to do, but how that experience is going to feel along the way, is that what you want? I think the better for everyone involved.

Yeah, those values are courage, joy, kindness and focus. They sound fluffy, but they're really the things that we optimize for.

Lindsay Pedersen:

Courage, joy, kindness and focus. When would one of those values, I don't know, it bumps up against something that's a value for somebody else but it's not one of those four values? What's an instance where it actually really does adjudicate what happens next in the conversation or in the business?

Jenny Xia Spradling:

Yeah. I think a good example of this is kindness and courage. I think sometimes, folks can interpret kindness as being really nice to people, but that's not how we interpret kindness. Kindness, for us, is truly having another person's interests at your heart. Do unto others as you would want them to do unto you. Combining that with courage, it means we do a lot of radical candor conversations. We give a lot of critical feedback. If you don't like that kind of environment and would prefer a more conflict averse environment, this isn't going to be a good fit for you. But we genuinely think that is what gets people to grow more, that's what's going to get us all to achieve the mission better. That's an area where maybe someone is a fit, maybe they're not a good fit.

The other thing I would say about values is I think it's really common to be, "All of our values are good and there's only a good side to all of these values." Every value, if it really means something, has an edge that could be used for good, and also an edge that, when taken to an extreme, can be problematic. I think being really clear about what are the benefits and costs of each of the values that you pick is really important.

I'll give a concrete example. Joy. It sounds great, everyone wants joy. But what that means, for us, is spending time in gratitude and spending time celebrating along the way, because frankly building a startup is a really hard thing to do and it's exhausting, and there are lots of challenges. There's a real cost there. We slow down for moments, we create moments, we put money against moments of joy and appreciation, and all of that. At the end of every all team, for example, we usually spend the last 10 minutes doing shout-outs for anyone on the team. That is very expensive time. This is every person at the company for 10 minutes, just to express gratitudes. I think a perfectly, rational good actor or business owner could say, "That doesn't sound worth it," but it is for us. That's one of our values. Just expressing for the other folks who might be listening, there is a good and bad to every value and it should be that way.

Lindsay Pedersen:

Ah, I love that. I think that our mutual friend Shao called it there are the poster values, the ones that have no downside or have no edge to them, and they don't win enemies but they also don't have any decision making utility. What you're describing is, and encouraging others to really embrace, is that that sharpness, or the fact that there is an edge, is its very power. Of course, it has trade-offs, that's what makes it a value as opposed to some, I don't know, bumper sticker.

Jenny Xia Spradling:

Yes, exactly.

Lindsay Pedersen:

Something I also heard you say is the explicitness of the North Star, in this case the values, there's all of these layers that benefit from that explicitness. There's the being explicit with each other as co-founders, if you're on the same page. How do you know you're on the same page? Well, you overtly described what success is or what your optimizing for. There's the employees, there's future employees. There's also yourself. As a leader and you're making decisions, having those holding your feet to the fire with something that is explicit, four words, is another way to pull you back. Not that you would have trouble in most circumstances, I imagine, staying in those because you yourself came up with those values. But at the same time, when push comes to shove and there is a trade-off to make, "Oh, I committed to this value even though it has another side to it. Even though it means that we're going to spend a lot of time as a company." Am I projecting or is there something to just your own accountability to the values as well?

Jenny Xia Spradling:

I think the answer is yes. One thing that you highlighted, for us in those very early days, we worked on mission, vision and values. We worked on it, actually with a really good friend of ours, Danae, who does this for a lot of other startups that are out there. What those three things are for us are the mission is that driving $1 trillion to charity. The vision is how are we going to do that? For us, it's by creating access to estate planning, making it really easy to give and driving that as far as it can go. Then the values are the four words that we just talked about.

That set of three pillars of things really is something that Patrick and I refer back to often in our decision making. I can think of an example, actually. Earlier this year, we were thinking about different partnerships that we were pursuing. Core business is doing well, trying to figure out different ways to expand. The partnerships were pulling us in a couple different directions. One thing that we used in order to prioritize where we were going to spend our time is, "Okay, let's go back to mission, vision, values. On paper, these both seem like really good business opportunities, but which of us is going to get us to these things, these words the most," and use that as a little bit of a litmus test.

Lindsay Pedersen:

I love the litmus test visual for this, too. Does it turn pink? Does this test prove positive or negative? It becomes explicit, instead of abstract.

I've heard that you were a math undergraduate, you're a numbers person. You've described yourself as a numbers person. With respect to building a business that's both a social value business as well as a economic value business, it's not just one or the other, it's both, how does math rigor help with this intersection?

Jenny Xia Spradling:

I would say sometimes it helps and sometimes it hurts. I do love numbers. I grew up doing math competitions, which is literally the nerdiest thing that you can imagine. It's Scripps Spelling Bee but with math.

Lindsay Pedersen:

Wow.

Jenny Xia Spradling:

As a teenager. There are times when I find myself going a little bit into a thought spiral, where I'm really trying to quantify, "Okay, what does this mean in terms of our financials?" But also, what does this mean in terms of achieving our mission? How do we trade these things off? What if the answer is a little bit more of this or that?" At the end of the day, it's not like I can say, "Oh, one unit of dollar is equal to .05 units of dollars to charity," and I'm just going to remove these things interchangeably. It's not like that, even though I would like it to be like that because I like when there's a clear, straightforward answer. I like when there's a right answer.

But I think there's so many times in running FreeWill, and I've learned over time, that it's okay to have these moments where it just isn't that straightforward. I think in those moments, you have to go with your gut. It's okay to try to be intellectually rigorous to the extent that you can, and I think that has helped us in many ways. But then, the last mile is just being like, "Does this feel right?"

Lindsay Pedersen:

Numbers will take you so far. What do customers love about FreeWill?

Jenny Xia Spradling:

I would say the people, back to one of the two things of what I like most about FreeWill. We hear this again and again. I think we're really fortunate. Super high Net Promoter score, CSAT, name your metric of things. Clearly, I like math. We solicit feedback from customers all the time. I of course think that's super important to creating a great business. But the thing that comes up the most is just the people. They will literally, in their responses, name individual people at the company who have made a big difference in their career, their progression, their learning, that they've just really enjoy interacting with. This will happen a lot. I would say, in our feedback, it is not unusual for one out of three, one out of five responses to include an individual's name.

I think that a lot of the magic comes down to the people. Again, like I said about the mission and values, I think you can quality control for that over time by being really clear with folks what they're getting into. Also, our interview process is really rigorous, you meet a lot of people on the way. I think that folks can get a sense of, "Is this something I really want to sign up for or not?" If yes, one thing that we found is culture is far more sticky than I think most businesses anticipate, for better or worse. Even though Patrick and I are not part of most hiring processes at this point, the folks that get hired are to the T, our values and the mission, which is really, really amazing.

I would say as long as you're prioritizing the right things up front, that gets felt way down the road. I think that's ultimately why customers feel like they don't want to leave FreeWill at any point, because we have their back and these are the people they want to work with every day.

Lindsay Pedersen:

That human-to-human connection and sense of trust. It's another argument for being very early in defining what kind of business you want this to be because in order to scale, given that culture is sticky, what are the structures that are going to help other people to build the kind of future that you want for this company. It's hard to do that without those explicit artifacts or sentences, words, phrases that you and Patrick did so early.

Jenny Xia Spradling:

Yeah, totally. Another one of these, which I think we got mostly right and also a little bit wrong, could have been better about, is D&I. I know it's such a hot topic, hot word to talk about right now. But we were really adamant in the early days that we wanted 50% female engineers. We're still 50% female engineers today, for example. We were really adamant that things that were conventionally drawn along gender lines like, "Oh, women do a lot of the administrative tasks." Very first meeting, I remember our first employee told me that the thing she remembered most from the first meeting, which I don't know if this is a compliment or not, was that I said, "Oh, it's Patrick's turn to take the notes for the meeting. I want to make sure it's not the case that women fall into the role of administrative." Seeing the co-CEO taking the rotation, doing the notes, whatever else. I think that culture percolates as well.

Relatably, another big thing we've solved for in order to create that inclusivity is hiring low UO people. We actually have questions that vet, "Are you someone who can take feedback? How do you deal with a tough situation? Are you blaming other people or are you taking ownership for yourself? Are you a good listener? How much are you actually taking in information that someone else is giving you?" Those things are really, really important to actually create an inclusive environment. I think, had we not done that in the early days of FreeWill, it would not be the case now.

Lindsay Pedersen:

Wow. I love the anecdote of you expressing that, "It's his turn to take notes," and how much that meant to this candidate. There's so mundane moments where you just can't fake it. That must have been genuine, or it wouldn't have come up. I can see how moved she was by that gesture.

Well, this has been amazing. I have five rapid fire questions for you to finish this off, if you're game?

Jenny Xia Spradling:

Do it.

Lindsay Pedersen:

All right. What is your favorite ice cream brand and flavor?

Jenny Xia Spradling:

Whoa! You know what, right now I think it's Frankie and Joe strawberry. The reason is because it's my son's favorite flavor.

Lindsay Pedersen:

Aw, I love that and I love that that's why. Okay. Your favorite trait in a person?

Jenny Xia Spradling:

Humility.

Lindsay Pedersen:

What is the most recent song that you've had stuck in your head?

Jenny Xia Spradling:

Vampire, Olivia Rodrigo.

Lindsay Pedersen:

Oh, yeah. Yes, yes. Olivia, all the way. What was your last Netflix binge?

Jenny Xia Spradling:

Ah, Love on the Spectrum.

Lindsay Pedersen:

Oh, yes.

Jenny Xia Spradling:

So good.

Lindsay Pedersen:

So good. Okay. Finally, what is your favorite season of the year?

Jenny Xia Spradling:

Fall. I'm a nerd, I couldn't wait for school to start.

Lindsay Pedersen:

Oh, that's why! I was picturing gorgeous trees and colors, or maybe putting your kids back in school.

Jenny Xia Spradling:

It just makes me nostalgic for new beginnings. New beginning.

Lindsay Pedersen:

I love that. Jenny, this has been so great. Thanks for joining me. Where can listeners learn more about you, about FreeWill if they want to?

Jenny Xia Spradling:

Yeah, www.freewill.com. Get your estate planning done, it's really free.

Lindsay Pedersen:

Woo-hoo. Thank you so much.

Thanks for listening to this episode of North Star Leaders. Make sure you don't miss an episode by subscribing on your favorite podcast app. For show notes, transcripts and newsletter sign up, visit ironcladbrandstrategy.com. Please join us again for another episode of North Star Leaders.

Lindsay speaking

About Lindsay

Lindsay Pedersen is a bestselling author and brand strategist with a scientific, growth-oriented approach to brand building. She has advised companies from burgeoning startups to national corporations, including Zulily, Starbucks, T-Mobile, Coinstar, and IMDb.

Her background as a P&L owner at Clorox fostered in Lindsay a deep appreciation for the executive’s charge: increasing the company’s value. There, she led mature, billion-dollar businesses and newly-launched categories, from Clorox Bleach to Armor All to Brita. In each case, she was solely responsible for increasing the business’s value.

Thanks to this executive perspective, Lindsay demands that brands be hard-working, disciplined and rigorous in growing a business. Her brand strategies are tested in the crucible of her proprietary Ironclad Method. Lindsay arms leaders with an empowering understanding of brand, and an ironclad brand strategy to guide choices as they grow.