Build Your SaaS

This week Jon and Justin are joined by Marcella Chamorro. Previously, she worked in startup marketing but has recently transitioned to coaching founders and teams. We discussed how startup founders and their team members can realize their full potential.

Here are some highlights:

• (00:24) - Introducing Marcella

Links:

• Subscribe to Marcella's newsletter
• Marcella’s coaching website
• Check out Marcella's articles
• Marcella on LinkedIn
• Marcella on Twitter

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In this podcast episode, Michele Hansen (Geocodio) gives us an update on Section 174 and provides her take on "bootstrapping with kids."

Michele explains you can be a part of the Small Software Business Alliance, and fight Section 174. If you're in the USA, please contact Congress!

In the second half of the episode, Justin and Michele talk about the challenges of balancing starting a business while you have young kids. For more on this topic, check out the last episode with Aaron Francis.

For more context on Section 174, check out our previous episode with Michele.

• (00:12) - Welcome

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In this episode, Justin speaks with Aaron Francis about being a new parent and trying to bootstrap a startup. Aaron argued the other side of Justin's tweet thread: "Wait until your kids are older to start a company." Aaron is well-positioned to talk about this because he has twins and is also bootstrapping Hammerstone with his co-founder Colleen. The whole conversation is a nuanced take on the topic and full of important insights, especially on:

• the risks involved (especially if you're not working a full-time job)
• the kind of foundation (mentally, financially, emotionally, relationally) you need to be able to take the risk

Highlights from this episode:

• (00:12) - Welcome Aaron

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Jon and Justin welcome Joshua Anderton to the Transistor team! Josh is an amazingly talented full-stack web developer (Laravel, Rails, Tailwind CSS, Alpine, and more!) He's been helping us as a part-time contractor since Oct 2022, and we're excited to have him on board full-time! In this episode, we discuss why we hired another person and how we think about hiring at Transistor.

• (00:28) - 150!

• Joshua's personal site
• Joshua's podcast: Getting to Ramen
• Jason Cohen's article
• Acquired.fm is now on Transistor!

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Michele Hansen (co-founder of Geocodio) is raising the alarm about Section 174. This legislation could dramatically increase your tax bill this year if you're a small software company in the USA. Michele is organizing a response through the Small Software Business Alliance.

👉 ACT NOW:

1. Sign up for Michele's list
2. US citizens: tweet and call your Senators today. They need to know that this is a small business issue and that small businesses in their state are hurt by Section 174.
3. Share the ssballiance.org URL with your founder friends.

In this episode:

• (01:37) - What is section 174?

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Jon's back from his first real vacation in years. In this episode, we discuss how we've been removing inactive accounts on Transistor, SVB, Section 174, Revin is shutting down their Merchant of Record service, SaaS sales tax compliance:

• (00:37) - Jon in vacation mode

• Matt Levin's excellent summary of the Silicon Valley Bank run
• Ian Landsman: "This is why I don't use startup-friendly banks (Mercury, etc)"
• Section 174: join ssballiance.org
• Revin has shut down its Merchant of Record service
• Flurly (another Merchant of Record) was shut down by Stripe

From the Revin email:

Furthermore, it became increasingly clear that the Merchant of Record model primarily appeals to small-scale sellers or businesses with questionable and high-risk business models. This presents a significant challenge as we strive to move up the market.

The recent change in Stripe's risk behavior has caused us to experience issues with keeping Stripe accounts live.”

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"I don't get it: if that money is for the government, how come the pizza place put it in their cash register?!?"

(Jon is on vacation - our next real episode is coming soon!)

Listen to our past episodes on the headache that is SaaS sales tax compliance:

• Part 1
• Part 2

Last week's episode hit a nerve! "The idea that every small software company in the world will be able to be in perfect compliance will every foreign federal, provincial, state, and municipal government that imposes a sales tax is ridiculous. It's an impossible task.

• (00:11) - Follow up to previous episode

1. North American SaaS companies who have been using Stripe:  "Yes! Sales tax compliance for SaaS is brutal."
2. European SaaS companies that have had to deal with VAT for a long time (many of whom use a Merchant of Record).
3. Smaller North American solopreneurs and companies who had no idea they needed to collect and remit sales tax internationally.
4. North American companies who have one-time sales and use Merchant of Record services.

Responses from indie hackers:

• European: “Once again, I notice that the indie hacking community has a somewhat naïve approach to what running a business actually entails. As a European, not having a plan for sales tax is... mindboggling.”
• Cooper: “I think it might be a European perspective; we are dealing with VAT from day 1, so it's just one of the parts of running a business from the start, it can't really be neglected.”
• Edwin Saraccini: “To clarify, [for Canadians] this is absolutely new territory (Debated in parliament for years) and recently put to legislation in 2021.”
• Daniel Vassallo: “It's impossible to be compliant everywhere. The Kingdom of Tonga could tomorrow come up with an internet tax and require you to remit 25% of your sales to the tax office in person in their local currency. And they won't tell you about it. It's just a cost/benefit analysis.”
• Derrick Grigg: “How can they enforce tax collection on a business they have no jurisdiction over? Governments are shaking businesses down. I’m all for collecting and paying properly where you physically operate but collecting and remitting outside your province never mind nation is a stretch.”
• Derrick Reimer: “Dear Stripe: We SaaS founders are desperate for a full-stack global tax compliance solution without having to leave you for a merchant-of-record. Are you planning to solve this?”

Did you know...

(Source)

New thoughts on Sales tax compliance

• I still haven’t heard from anyone who has successfully migrated a “mature” SaaS from Stripe to Paddle or LemonSqueezy. These are no-gos:
  • Can’t cause more churn.
  • Can’t require customers to re-enter information.
  • Can’t change our checkout experience.
• We might consider Paddle / LemonSqueezy if:
  • Their fees were more affordable (compared to our existing fees it would be ~$63K year more, $5,250 per month more)
  • Their dev experience had a better rating from the folks we know.
  • I had heard from anybody who was at our stage and had actually migrated successfully.
• A few folks suggested Revin, which promises “simple global sales tax compliance for Stripe for only $499/month,”  but:
  • They have to “create a new Stripe account for your brand.”
  • Do they own your Stripe account?
  • You’ll lose your historical stats and revenue analytics
• The current solution we’re considering is Stripe Tax + TaxJar (and start with US and Canadian tax remittance)

Thanks to our monthly supporters

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Sales tax compliance: nobody in SaaS wants to talk about it. Jon and Justin tried to do something about it and it turned into a nightmare. According to Stripe Tax, there are about 90 different regions that software companies may have to register in, and then calculate, collect, and remit sales tax on their behalf. But in North America, many SaaS companies don't seem to care: many that we looked at weren't collecting sales tax at all, while a few had just started collecting in the US states.

• (00:13) - Welcome

Thanks to our monthly supporters

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The whole Transistor team got together for a retreat in Montréal. Jon, Justin, Helen, and Jason chat about the experience. 

What should we talk about next? 

• Twitter: @buildyoursaas, @mijustin, @jonbuda, @jsonpearl, and @helenryles
• Leave a review/comment on Podchaser; it's like Reddit, but for podcasts.
• Email us: [email protected]

Thanks to our monthly supporters:

1. Jason Charnes
2. Mitchell Davis from RecruitKit.com.au
3. Marcel Fahle, ​​wearebold.af
4. Alex Payne
5. Bill Condo
6. Anton Zorin from ProdCamp.com
7. Harris Kenny, Intro CRM podcast
8. Oleg Kulyk
9. Ethan Gunderson
10. Ward Sandler, Memberspace
11. Russell Brown, Photivo.com
12. Noah Prail
13. Colin Gray
14. Austin Loveless
15. Michael Sitver
16. Paul Jarvis and Jack Ellis, Fathom
17. Dan Buda
18. Darby Frey
19. Adam DuVander
20. Dave Giunta (JOOnta)
21. Kyle Fox GetRewardful.com
22. Check out Simon and Volkan’s new bootstrappers podcast: https://shipsaasfaster.com/ 

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