How we decided to build a digital tax accountant as our next startup
In 2015, we were clearly at a crossroads as a founder team. Lino and I had been friends since we were 10 years old. In our teenage days, we had done everything together, from organizing parties to recording rap music to doing professional film projects travelling 12 countries. A few years later, together with our co-founder Manuel, we built our startup Smallpdf up to more than 10 million monthly users and had just started to turn a profit in that year of 2015.
Despite the success, it was a difficult time. I just had moved back to Europe after living in South Korea and Hong Kong for seven years, and it was unexpectedly hard to readapt to European culture in Berlin. I felt depressed and had started to question a lot in my life. I clearly needed some time off and I told my co-founders how I felt. They both were true friends and reacted very understanding and supportive. So, I decided to take the Siberian railway all the way from Helsinki to Beijing to think about what I really wanted to do, my role in the company — and where I wanted to live in the years ahead.
Railway revelations
The 50+ hour train rides through Siberia on old Russian trains were quite a meditative experience; I must have counted millions of birch trees along the way looking through the window at the Siberian landscapes passing by. It was during this time that I thought about the adventures I have had, the things I had achieved and the people worked with and why I do what I do.
It was those long moments of reflection that made me come to a realization: I cared much more about creating something meaningful than where I live in the world.
A few weeks later, I returned to Berlin and shared my revelations with Lino and we started a long conversation — how we can together continue working together and also find a new project that can have an even bigger impact.
Also, Manuel supported our change in focus — and so we began the long process of evaluating next steps, while simultaneously continuing to scale Smallpdf.
It was clear from the start:
1. We build another truly innovative software solution but not in e-commerce or services
2. We wanted to build something that solved a real-world problem and have a real impact
3. Our solution must have the potential to scale and become a really big company
Of course, our ideas were endless but we needed to focus.
To help us narrow it down, we worked out a structured process to ensure we are building something that is close to the market and the customer. We came up with the following four stages:
Size of the problem instead of the size of the market
After excluding a lot of ideas in the initial stages, we started to increasingly focus on a problem we found the most exciting: income tax filing.
To understand the opportunities, we had conducted a detailed analysis of the market, risks, numbers, international potentials, the competition and current revenues. However, we struggled to truly make a decision on the basis of this abstract information. We were blocked in the first stage.
At some point, all the market analysis was reduced to a very simple realization: For most people, filing taxes is one of the worst experiences they face every year. It takes them hours to complete and they often do it incorrectly or don’t complete it. Many don’t even manage to file at all, forgoing their refund altogether.
What really made us understand the market opportunity was the simple equation:
Millions of people * extent of the pain = size of the opportunity
And there was no doubt we had a problem worth solving. And that we can have a real impact on people’s lives by solving this problem.
Despite not being passionate about taxes, in particular, we found something that we are truly passionate about: fixing a big problem for a lot of people.
After understanding the opportunity, we move to the second stage and started to think about a product vision. And after that moved to the next stage to start a blog, find a name and kick off the project by getting closer to market. A few weeks later, we then did the last step of launching a prototype to gather feedback from test users to validate our solution approach.
After gathering a few thousand test users and receiving feedback, we decided in the summer of 2016 officially found a company with the name Taxfix. Although it meant putting all our savings from our profitable venture of Smallpdf into the company. The chance to solve a problem of this magnitude and to create a product to solve this ugly problem for possibly many millions of people was simply too good to pass up.
Today, this was the best decision we ever made and we see the impact we have every week.
Interested in joining the Taxfix team? See our open positions here.
