SaaS Interviews with CEOs, Startups, Founders
How I competed with $1M at TaxTaker vs. $100M in competitor funding
18 Nov 2022
Chapter 1: What is the main topic discussed in this episode?
Hey folks, hope your Q3 and Q4 is off to a good start. We just wrapped up Founder 500 in Austin, Texas. Hundreds of bootstrap founders showed up. It was an amazing time. I loved meeting so many of you.
This interview today is a recording from that session, which you're gonna love because now we have visuals, we have the founder teaching, and I made every single speaker include their revenue graphs and real artifacts in their presentations. Without further ado, let's jump in.
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
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So please welcome to the stage Ari Salafia. Thank you so much. It's a pleasure to be with you all today. What a great event so far. It's my hope for you today that you're going to hear my story. I'm going to keep it really real with you, and I hope that you find me afterwards.
We talk about what's working in your business, what's not maybe, and we all just make some really great connections here going forward. Thanks for your time. We're going to jump right in. I'm going to share with you the story of Tax Taker, how we have been competing with $1 million in funding versus my competitors, $100 million in funding. And how, I don't know, it's kind of wild, right?
And how that hasn't scared us away. And we're still doing tons of business. We're collecting amazing client logos. Our clients love us. We love our clients. And we're excited about the opportunity that's in our market. And I think there's probably a lot of shared overlap with some of the things that you all are working on being at the Founder 500. So with that, let's jump right in.
So over the next 20 minutes, I'm going to be talking about our customer machine, how we've identified our customers, how we've acquired customers cheaply, and how we've nurtured our network. Because with a million dollars, we don't have that big ad spend, right? Like the other guys. Our product machine, how we've invested in process, how white glove customer service has been key to our success.
And really having to be disciplined in kind of doing one thing first, we'll dive into what that means. And then we'll end with our company machine, how we're competing, being extremely intentional, both with our culture, not having any big egos, and how authenticity we think wins, so. Tax taker revenue growth.
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Chapter 2: What inspired the creation of TaxTaker?
So typical SaaS revenue shares around 5%. We're paying our affiliates 10, 15, even 20% on a first year deal and sometimes on multi-year. So we want to incentivize them to continue to be thinking about us, to be spreading the word, because if we can influence the influencers, that can have a huge, huge effect. So our competitors, you know, they raised a ton more money than us.
They're also compelled to spend a lot more than us. Right. So where they might think of they need to get to 1,000 customers or 10,000 customers, like blitz scale, we think about how can we get to 100 to influence 1,000 or 10,000. So just kind of a little bit of a different approach. So this is an agreement that we send like a binded kind of practitioners or channels.
So I think this one is Forecaster. So financial planning software. And we like to go in and create pretty steady partnerships with folks that are already selling to our ICP. So our ICP is a lot of the folks in this room. Precede through kind of series A venture backed or bootstrapped startup technology companies. So why not hang around folks that also sell into those companies?
They're looking for value add services. We're looking for value add services. We don't always want to just be talking about. to our clients. They don't want to just be talking about what they're selling to their clients. Let's team up. We're chasing the same clients and share resources. So this is just one example.
Our core channel partners at TaxTaker, being a tax credit space, naturally accountants, fractional CFOs, accelerators, and VCs. Folks that have a stake in a vested interest, either because they're already working with these companies Or they want to see these companies be capital efficient.
So I would really encourage you to kind of think about as you're growing out your referral partnership agreements or your partner or just kind of your growth plan from an acquisition standpoint, there's going to be a lot of folks out there that are like,
This is the winning recipe through this one marketing lead funnel and this like sometimes going just back to basics and just thinking, who else is selling to these folks? Like, who do I need to be talking to? Who can help me build the megaphone? It can do wonders and it can it's kind of it's kind of a have to have when you're being really scrappy. So nurturing your network.
This is something that our competitors drop the ball on. And one of the biggest things of feedback that we get from clients that move over to us that have worked with a competitor or have evaluated one of our competitors, they're like, wow, it was so awesome that I talked to someone. Or like, you were a real human. And we're like, what?
When we think about building a referral engine, we like to use this tree analogy. Basically, you want to plant the seeds. A lot of the things we're going to say here are super obvious, but we forget that simple things in execution can be phenomenal. we'll send this out afterwards to anyone that wants to email me, but you want to plant the seeds, right?
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Chapter 3: How does TaxTaker compete with larger funded competitors?
Yeah. So, but educating the referrer pays off and then incentivizing them. So we do rev share agreements at TaxTaker. We pay, you know, a bit more than others might in traditional kind of SaaS businesses. But sometimes our affiliates and partners, they don't want any money. And so that's also awesome because then we get more margin for that.
They just want to see a great provider, you know, give value to their customer. So this is kind of a loop, you know, continuing to say, okay, am I, have I identified the right partners, the right seeds? Am I building an engaging relationship? Am I educating them? Am I giving them the resources that they actually need to help, you know, build my message and what I'm trying to get across?
Um, and then rewarding them along the way. It's fun when people get paid, like our affiliates are stoked when all of a sudden they get $2,000 that just hits our account or $5,000 depending on the size of the client. It's, it's, it's really awesome.
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So next, we're going to go into investing in process, overall customer experience, and doing one thing that I think a lot of founders, it's really for us to do, right? We want to say yes to everything. So. This is our customer journey map. We start with awareness of tax credits. That's been actually the best thing about our competition. When you have $100 million out there in competitor funding.
By the way, when I went on my investment tour, everyone said this was not a big enough market. And now we have $100 million in competitors. competitor funding. So that's, that's always kind of funny. So this is really is kind of the David and, and Goliath story, but use that as just validation that you're doing something right.
And there's a market, like there are many horses that are winning in our space and your competitors might actually be paying for the education and buyers to come your way. So we look at this as an amazing thing. So building awareness, educating customers is super expensive. Like when people find out what we do, they're like, oh, tax taker, you help startups get money. That's a no brainer, right?
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Chapter 4: What strategies does TaxTaker use for customer acquisition?
There's a lot of, there's a lot of things where we can kind of just kind of slip to the wayside because of that. Well now, because we have competitors that are super active on Google ads, they're active on campaigns and LinkedIn and Twitter. Like by the time we show up, they've seen, the impressions 5, 10, 15 times and they're like, cool, yeah, I know I need to do this and how do I get started?
That's been awesome. But our customer journey map is really this one loop of where we make them aware, then we go through a discovery and qualification process. This is one of the biggest differentiators between us and our competitors and where we win all the time is this discovery and qualification.
Our competitors, they go off and say, we're going to qualify you and get your bunny in 20 minutes. It's not true. And most of them under qualify or over qualify clients. They make big claims and they lack the follow through. We get a lot of a lot of leads that come over from our competitors.
um, that after speaking with our team for five minutes, 10 minutes, I go, wow, I actually know what this is and how it works and what I'm going to get back. Like I was working with them for six months and I never really knew. So we invest human capital upfront to get better results for the longterm. And that's been really key for our business. So where we've pulled back tech, um,
uh has actually made our uh retention a lot stronger with our clients and where we've seen a lot less drop off because we're doing a little bit of the heavy lifting up front by just having a phone call with our clients to make sure that they are eligible for the service that we're actually offering so they don't spend any more amount of time and then not get money at the end of the the day.
So that's been huge for us. And then just the way our business model runs, we have to collect data, financial data and project data about the team and what the company does annually and build out calculations and a report for their annual tax filing. Again, I over engineered the heck out of this at first, especially working with accountants because they're so detail oriented.
And we started talking to our customers and they're like, hey, you know, you actually have a really pretty product for tax. And but like, we don't care. We just want the money. Just tell me what I have to do to give you the money and like, I'll do it, right? So we pulled back in certain areas with our engineering.
So we have integrations that pull into payroll, HR data, ways for clients to quickly upload things. But we scrapped our surveying process completely. And that actually sped up our project turnaround times by weeks, months, right? because again, they could just talk to a human quickly.
We could get more robust information on a 20 to 40 minute project interview call than we could having them go through surveys inside of the product. So that was a big wake up call for us. And then they go through tax filing and report. And then we ask them if they're happy about the money they got back. And most times everyone is happy about money that comes back to them.
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Chapter 5: How does TaxTaker ensure customer satisfaction and retention?
And without fail, like during our fundraise and after, what else, what else, what else? And we knew we wanted to continue to help clients do more, but we knew that we needed to get this right and we needed to get a really good process around this offering right first before we extended ourselves too much.
But as a founder, it's super painful when you have all these people saying, hey, what else do you do? Like, I want to give you more money and you don't have anything to give to them. So over the last year, we've been building out a couple of different offerings. One has been an additional tax credit that came out of the CARES Act kind of PPP. So this is my cell.
If you have employees and you experienced either a revenue reduction in the last couple of years, or if you're a brand new startup and you started in 2020, you could get up to $7,000 per employee per quarter. It's pretty huge. It's a big refund check from the IRS. So we launched ERC in addition to R&D, and we're really excited.
Actually, this week, we just made the announcement that we are offering tax credit financing. So typically, you have to wait for your tax credit until you file a check.
every year and we now can actually front a majority of that so that you can get your sooner and use that to grow your business but we want we wanted to do this for the last two years but we just weren't ready we needed to get the credit process down we needed to get customers that were wildly happy with what we were providing and being advocates
Until we were able to open up business lines two and three. So I know it's really exciting when you want to open up a whole lot of service offerings. But again, when you're competing, you know, and you don't have much bandwidth, it's just really important that you do that one thing first. And that's been extremely successful for kind of a successful strategy for us.
We had to slow down to now go kind of faster. So last, talking really kind of quickly about building your company machine. This is really about organizational health, culture, and how your internal culture really can really affect you positively with your external customer base. So you really always want to be intentional.
For us, remembering the vision and what our why is and where we started, where we are, where we're headed, and getting that continual buy-in from the team, that's really important to us as an organization. Everyone has egos, but we like to say that we have kind of a no-asshole policy. We are not... I was in a sorority. I loved frat parties. We are not a frat party.
That's just not the way we do business. It's not... Just do it at any cost, any ethic, whatever. Our competition is a lot like that. And that's the feedback we get. It's grow at all costs, hustle, just sign anyone up, even if they don't qualify, whatever, we'll get to it later. We are not like that. We know that we have something valuable to offer.
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