Michele Hansen update: Section 174 and bootstrapping with kids

Speaker A: This podcast is hosted by Transistor fm.

Speaker B: Hello and welcome to build you'd SaaS. This is the behind the scenes story of building web apps in 2023. Hi, I'm Justin and I've got Michelle Hanson, co founder of geocodio, back on the show today. Michelle's been fighting the good fight with this rotten section 174 tax legislation in the USA. How's it going, Michelle?

Speaker A: It's going, it's going.

Speaker B: What time? Uh, right now it's noon Pacific time for me because I'm in North America. You are originally from the States, but where are you right now?

Speaker A: Ah, so I live in the Danish countryside now.

Speaker B: The Danish countryside.

Speaker A: It is 9:06pm 9:06.

Speaker B: That's about the time when I'm thinking, how old are your kids by the way?

Speaker A: We have one daughter and she is nine.

Speaker B: Nine years old. Okay. See, I always thought that once they got a little bit older, I would be uh, around like 8, 9 o' clock. Used to be just I was dead tired and that's like, you know, when they're younger, story time, bedtime, all that stuff. And I was just so exhausted. I still get exhausted at 9pm Nothing's changed. So you're making it happen here, uh, with the time zones and uh, yeah, you've got an update for us, I think, on section 174. We've done an episode on this already. Folks can go back. Um, do you want to maybe briefly again Describe what Section 174 is? And then, yeah, just give us an update on what's happened since the last time you were on the show.

Speaker A: Yeah, so the TLDR is, um, in 2017, Congress passed a bunch of tax cuts and one of the ways they sort of quote unquote paid for these tax cuts according to the Congressional Budget Office, which sort of does an estimate of how much any, um, bill might cost. Um, was that they said starting five years after the bill was passed, um, companies would no longer be able to expense what is called research and experimental, um, activities and instead would have to amortize them. And so I'm going to unpack that jargon for a second. Basically, research and experimental is actually a huge category of things that businesses do. Um, and for us it specifically calls out software development as a research and experimental activity. This is different than research and development, um, because they couldn't make it easy for us. And there's some R and D tax credits and people can get that, but unfortunately that's a much, much, much smaller group of things that qualify for that. So research and experimentals, everything from software development, uh, to market research. It's basically anything that goes into building a new product or making improvements to an existing one, which is, uh, I think one of the biggest surprises about this. And then normally we used to be able to expense all of that. Okay, so you're, you know, your staging server, that's just an expense. The developer who spends, let's say, 100% of their time building new products or improving existing ones, that used to be an expense. Now, that has to be spread out over at a minimum of five years. If that's happening in the US or for people who, um, are working abroad, that's 15 years. So this has created a huge problem for a lot of companies, but really most acutely, small software companies like ours, um, who normally just, you know, a huge percentage of our expenses were things we could just expense. And now instead, you can only take a small percentage of them every year as an expense, and then the rest of that is added to your profits, and then you get taxed on it. And so you end up getting taxed on this profit that doesn't actually exist because you already spent. Spent that to run the business. So it's a huge problem. Congress never actually intended for this to take effect. I mentioned it was kind of a sleight of hand to pay for the tax cuts. The plan all along was for them to repeal this before it took effect because they knew it wasn't good tax policy. Um, and so despite the fact that they know it isn't good tax policy and they intended to repeal it before it took effect, um, they didn't repeal it before it took effect because Congress, um. And so now we're all in this situation where we're in this sort of, um, difficult situation because of limbo, really unintentional tax policy. Um, and so, I mean, people have seen their taxes go up, like, 400%. Like, people are talking about shutting down their businesses, freezing, hiring, laying people off. It's serious out there.

Speaker B: Mm. It's a real thing. And so, uh, you put together the SSB alliance, smallsoftwarebusinessalliance.org and, um, you've been doing some work behind the scenes. Can you give us an update on what's happened, uh, since the last time we talked? It was like, April 14th was your date. Um. Cause that was, uh, what was happening around that time and what's happened since then?

Speaker A: Tax day. What was happening around that time?

Speaker B: Tax day. Of course.

Speaker A: Yes. And so the reason why you heard from me last time was because, um, we were sending a letter to Congress from small software businesses, um, about these Section 174 changes and describing the impact they have had on businesses like ours. Um, and so we sent that letter on tax day, which was April 18th this year, um, to, um, the leadership of both the House and Senate, the Senate Finance Committee, um, the Ways and Means Committee, um, and also the leaders of the Small Business committees.

Speaker B: Yeah.

Speaker A: And, um, so we had 597 small software businesses from all 50 states, plus D.C. sign this letter, which I am awesome, hugely proud. Like, I just, like, beam with pride, um, thinking about how we came together to do this. And coalition letters like this, um, they're not the kind of thing that really makes the news, but they're an important step in the legislative process, um, for companies who normally like us, don't have any political power or any involvement, really m To come together and say, hey, this is an issue. Here's how it's impacting us, by the way, it's impacting every state. Um, and not only to send it to those legislators, then to have the people who signed the letter and even people who didn't sign the letter to send it to their Congress, people saying, this is happening. We're in your district, we're in your state. We're impacted by this. Please see below for the letter. But also legislators, um, who support this, who are already co sponsors of the bills. They can go to their colleagues and say, hey, this is an issue. Like, here's an example. Here's a letter from small software businesses. Here's a letter from small manufacturers. Here's a letter from small biotech companies. Right. And so this is sort of part of that docket, um, that they can use, um, in their negotiations to encourage other legislators to support this and understand that this is an urgent issue.

Speaker B: Yeah, and kudos for you for galvanizing all of the support. Because the story that I saw play out was somebody in Twitter, uh, sorry, somebody on Twitter or in a Slack group or something would wake up to this. They would learn about it somehow. And they go, oh, my gosh, how come nobody's talking about this? And I could say, oh, people are talking about this. There's already a movement underway. Don't start another change.org thing. Just go to SSB and sign up there. And then we could galvanize all the support in one place. So well done, I think, for you to get ahead of this and then to create, uh, the container for people to, like, when they did wake up and realize it was a big deal. It gave us a place to go and then put our efforts all kind of in one spot. And I'm guessing that there's going to be more and more people kind of waking up to this still, and they're going to be looking for, where do I go? Well, you can still go to ssballiance.org, put your name and email in and then get updates on what's happening.

Speaker A: Yes. And sorry, even people who didn't sign the letter, it's still incredibly impactful. If you contact your congresspeople, so your representative and your senators, um, about this, if you run a small business, include a couple of lines about how it's impacting you and include a letter of the copy because we want to make sure that a copy of this letter gets to every single legislator because it is having an impact. Um, I heard from contacts in D.C. this week that emphasizing the impact of this on small businesses is a salient message both for Republicans and Democrats and for Independents. Um, and offices are hearing from small business owners in their states and districts who are caught off guard by this. And that is making an impact. People are having really good, productive meetings, um, with, with their legislators on this. I've heard from people who've, you know, they use the contact form. They ended up having, um, a phone call or even a meeting with their senators. Um, the guys from Demergent Labs, they met with their representative and said that, you know, they were very receptive to it and that going with the letter in hand really gave them a level of, uh, of sort of legitimacy that they might not have otherwise had going in just as, or felt like they had going in as small business owners themselves. So even if you didn't get a chance to sign the letter before, um, tax day, you can still get involved. You know, we actively need more people reaching out as well, because just as of today, There are now 30 co sponsors on the Senate bill to fix this. And last Congress when there was also a bill, there was 36. So there's still another six we need to get to. At a minimum, 30 is not 100. So we need to make sure this is getting in front of every senator and every representative and that they understand that small businesses, um, are impacted by this. Um, and so on the SSB alliance website, um, I actually have templates and links for contacting Congress. So there's a tool you can go to it. You put in your zip code, it gives you a link to their contact form, and then there's a template for describing the impact and including the letter and all of that, honestly, should take you less than 10 minutes to do. And it really is impactful because their staff have to keep tallies on every single contact about specific bills. Um, and the key thing there is that you have to customize it a little bit. So if you simply just send them a copy of the letter, everybody who just sends, say, a copy of the same letter, that gets counted as one, but if they're unique, they get counted as separate contacts about this. And that is something that offices really pay attention to. Yeah.

Speaker B: Ah, this is great. I'm just looking at your. You've got a letter to Congress as a PDF, and then contact Congress, uh, and then you can go to congress.gov and search for your Congress members. If you're in the U.S. if folks follow those instructions and then customize the letter a little bit, um, that creates more momentum. That has a bigger impact than them just copying the same thing over and over again.

Speaker A: Yes, exactly. And unfortunately, this is something that only, uh, U.S. citizens and permanent residents can do. Um, I recognize that there are a ton of people who have US LLCs, US C Corps who are impacted by this but don't live in the U.S. um, aren't U.S. citizens. Unfortunately, there isn't a whole lot, um, that folks in your position, quite frankly, um, can do. But raising awareness about this and encouraging all of the US Founders, you do know, regardless of whether they are in the country or not, because US Citizens have the right to vote, regardless of where we live in the world, which is not all countries have, using whatever platform and network and connections you have, to encourage, um, the US Citizen or resident founders, you know, um, to contact Congress, um, that is hugely impactful.

Speaker B: Yeah, yeah. And then talk about it on Twitter. I was just looking at this one from Demergent Labs, and them talking about it on Twitter creates more momentum. Uh, so if you share your experience and, um, yeah, they felt empowered bringing that printed letter that you had and all the people who signed it when they went and, um, met with their House representatives, do something about it, then talk about it. And we gotta keep this thing going.

Speaker A: Create social proof.

Speaker B: Yeah. And so, uh, what's happening next? What are the next steps in this? Is there other dates we need to be thinking about? Are we just waiting for it to hit a critical mass? What are the other things to be considering?

Speaker A: So right now, as far as my read on the political situation, which is to say what I'm reading and reading between the lines, um, in Politico and whatnot is DC is focused on the debt limit. Right now the US federal government's, um, spending level and that is proving to be just a tad contentious. There's different ways that could shake out. Um, it could be that they just try to just do the debt limit alone and just only pass a bill that does that and then leave everything else to the side. Or there could be some sort of compromise package in there, um, as part of the debt limit. But that is sort of the soonest opportunity for anything to happen because not every piece of legislation has a tax section in it that is possible but not likely. And that I believe that has to be sorted out before they go on recess in August.

Speaker B: Okay.

Speaker A: Now it's also possible there, you know, that we go into recession and this sort of, you know, bubbling, you know, mini bank crisis turns into a bigger bank crisis and there needs to be some sort of economic recovery bill. It could go in there. But you know, I mean, predicting recessions, I mean, um, that's not my department. So the House Republicans are also expected to release a budget or, sorry, an economic package bill that will include this. But from what I have been reading, that's not really considered a sort of a serious proposal. Yeah, uh, that's sort of their wish list of everything, but not really, um, something that's gonna happen. There's been a lot of talk basically about the negotiating side of this. So because this was part of paying for those tax cuts which were Republican led effort, there is a sense among Democrats that Republicans need to give them something in order for them to give them this thing. Our role in this is to be like, hey guys, that's great, you've got these feuds you wanna settle. This is an urgent problem for businesses that are gonna go out of business because this. So can we try to put that aside? Yeah, now, but I actually was reading something earlier this week saying that uh, there's talk about child tax credit or low income housing and actually, or whether that trade is expensive enough. I mean it's a kind of thing as it looks like right now. Basically the soonest opportunity for this to get fixed is at the end of September. There's a continuing resolution at the end of September where tax historically has been part of it from my understanding. And so that, from what I'm reading, that looks like the soonest opportunity. What that means is if you actually like us, extended your filing to September 15th, this is highly unlikely to be solved before September 15th.

Speaker B: Yeah.

Speaker A: Because uh, that is September 30th. So it is highly unlikely this is going to be solved by then. We still don't know if the IRS is going to actually have the regulations out yet that define what software development versus maintenance versus all of these things are. I know they're working on it. From what I've read. No idea when that's coming out. Um, if it doesn't happen in September, unfortunately, it would be at the end of the year.

Speaker B: I'm assuming if the IRS hasn't released guidance yet, it would be hard to know for your accountant to know what guidance to follow. Right. Like how this will actually be taxed or amortized. And so is that kind of for small businesses that are, you know, they're doing the advocacy work, they're contacting their congressperson, all that stuff on the accounting side, um, until there's guidance, I'm guessing that, like, is it just a waiting game?

Speaker A: Well, from my understanding, um, and what, you know, if you look at like the filings of public companies, they are proceeding under the assumption that the definition will be that it is new feature development and new improvements on existing products, um, but not sort of straight maintenance VMware, for example, they talk about in their filings going back, um, over a year. A lot of companies talked about on their earnings calls. And so most of us don't have the expensive accountants that they have. Most of us also use accountants who are also small businesses themselves. Um, but that is the guidance, um, that they are proceeding under. Um, and so there was partial guidance issued at the beginning of this year, basically warning accountants, uh, not to wait it out and just file as if nothing had changed. Um, so accountants have already been put on, literally on, um, notice about this, but we will have to see how it shakes out. I mean, I do know some people who said, well, maybe we're just going to pay it as if it was the same as last year, because our accountant told us that D.C. is going to figure this out and we're just going to trust that it's going to happen. And then what their, what their gamble is, basically, that is, if it isn't fixed, then they're going to end up paying. They're still going to owe 400% more in taxes and then they're going to go owe penalties and interest on top of that. And so for some people that, uh, you know, non compliance is ostensibly always an option. Right? Yeah, that's, you know, that's up to them and their accountant. Uh, um, but I think it's also important, I think, as you've mentioned, when you did your first mention of this on the podcast, um, to not fall into magical thinking that, um, our community loves to fall into that. Oh, you know, sales tax. That doesn't apply to us. Gdpr. That doesn't apply to us. Like, ah, it does, right? It does. That's part of building asaas is complying with government regulations, um, even when they are unclear.

Speaker B: Yeah, this is wild. Yeah, it's just every time we talk about it, it just feels like this is just, uh, so unnecessary. But really here. Is there anything else that you want folks to know about right now at this stage, other than that reminder to go to ssballiance.org, contact Congress, get the letter, customize it, send it. Anything else folks should be knowing about,

Speaker A: send the letter if you haven't done so already. That is the most important thing to do right now.

Speaker B: Okay.

Speaker A: It doesn't matter if you didn't sign the letter originally, that's fine. You can simply say, I'm a small business and, you know, like, I support this letter that was sent. Right. Um, I'll give you a link to include in the show notes, but that is the most impactful thing that you can do. And everything I have just talked about, if you were not aware of this, probably sounds an awful combination of scary and confusing. There is an effort going on to try to fix this. What is in your control is to send the letter to Congress to tell the other founders, you know, to send the letter to Congress. Just send them the link, use the templates. You don't have to think about it too much, but it really does make an impact. Like, the letter was mentioned in a, uh, House Small Business Committee hearing. Um, it was officially entered into the Congressional Record. It's getting mentioned in other hearings and whatnot. It's these sort of small procedural things that don't make the news, but they actually really make a difference. And so the more legislators are receiving this letter, the more who are receiving it continually. Um, that has an impact in the sort of, you know, how the sausage gets made kind of a way, um, that usually isn't quite so public.

Speaker B: All right, folks, so, yeah, make sure you do that. The link will be in the show notes, but it's also@ssballiance.org and then you click the Contact Congress link at the top and it'll take you. Michelle's got it really nicely laid out here. Thanks for doing all this fun.

Speaker A: That's me and Tailwind.

Speaker B: Yeah, you and Tailwind. That's Perfect.

Speaker A: Buddies and GitHub Desktop.

Speaker B: Yeah. That's good. It's awesome.

Speaker A: I think it's also Laravel Vapor, too. Yeah, we got the whole gang.

Speaker B: You got the whole stack behind you. That's great. Um, if you have time, I'd love to get your thoughts on. I just had Aaron Frances on, and we were talking about bootstrapping and, uh, starting a family or bootstrapping while you have young kids and life balance and everything. And we, uh, had done an interview, um, about the story of you and Matthias building geocodio, which is your company. You don't do tax policy for a living. That's just a hobby. God, no.

Speaker A: No. Between this and having just gone through sales tax compliance, um, I don't ever want to talk about taxes again in my life.

Speaker B: I will have to.

Speaker A: But I am extremely done with the topic.

Speaker B: Hey, how come your team doesn't have their own podcast? Head over to Transistor and use my coupon, Transistor FM. Justin, you'll get 15% off your first year of podcast hosting. I'd be curious, because I know one of my memories of speaking to you was, uh, you had this line of when you'd started geocodio, you were like, if this could pay for, uh, diapers, I think it was, or childcare or, like, each win you had, there was, like, this related milestone that related to family life. And I'm wondering what your perspective is on some of that. So, yeah, what do you think when you advise people, friends who are thinking about starting, uh, SaaS, and they also have young kids? What kinds of things are you saying to them?

Speaker A: Ooh, I mean, it's tough. I should say that I have not listened to the episode with Aaron yet, but it is queued up, um, because I think it sparked a good conversation about this. Um, I've noticed. Conversation. You and Aaron and Matt Wensing has been jumping in on that, and I think it's a good one to have. Right. Um, you know, because, yeah, when we started dokodio, the original idea was the thing that sort of, you know, got us off the couch because we would just. Yeah, we spent our weekends catching up on Game of Thrones or whatever. Right. And then, you know, no kids like the world. You know, the weekends were our oyster. Right.

Speaker B: Yeah.

Speaker A: Um, and then, you know, kind of things got real when we truly understood, you know, how much the cost of daycare would be, which, for context, in the US In a majority of states, is more expensive than state college tuition. Um, and so where we lived, um, in a major city, it was $25,000 a year for infant daycare.

Speaker B: Wow.

Speaker A: And at the time, we both had good professional jobs, uh, working in web development. But that was a lot of money. And we were like, okay, so we can either kill it at work and try to get raises of $25,000 this year, or we can start something on our own. And so we can just keep the same level of living. And so that was sort of. The initial goal was to try to pay for that. I didn't even think about going full time on it for a long time because it was like, okay, well, now we're at least making the same amount of money if you're taking, um, daycare into account. And it was like, oh, well, okay, maybe, you know, we got to fix, uh, our broken air conditioner. You know, that was $8,000 without having to take out a loan. That is amazing. Or I got to pay off my student loans. Like, it wasn't. Yeah, it was. It was very focused on things that kind of made our family budget better initially.

Speaker B: So you were working as a product manager, I believe, or something like that?

Speaker A: Yeah, yeah. So I started out as, like, I actually transitioned from being a technical project manager, like, at an agency managing web development builds, um, to then being a product manager.

Speaker B: Okay. And Matthias, was he working as a W2 as well?

Speaker A: Yeah. Yes, we were both W2.

Speaker B: So you're both W2. You have a baby in that time, and then, uh, you folks made the decision you're both going to continue working full time, but that means daycare, and daycare is $25,000 a year. And then you were like, okay, we got to figure out how we can do this. One option is we could try to get raises. Another option is we could try to build something on the side. Um, did you try a few things to build on the side? Like, how long did it take?

Speaker A: Yeah, we did try a few things. Most of them didn't work. I remember going to a hackathon, um, like, I don't know, six or seven months pregnant.

Speaker B: Okay.

Speaker A: Um, trying to wear baggy clothing so I didn't look pregnant. Which makes me incredibly sad to think that was only 10 years ago. And that was just like. It was.

Speaker B: Sorry, sorry. You were trying to not look pregnant just because you didn't want the. Sorry. Explain that part to you.

Speaker A: Yeah. To lose legitimacy to the judges and investors present.

Speaker B: Got it.

Speaker A: Because it was also like, it was, you know, it was a, ah, 24 hour all night, like pizza and beer at 2:00am um, kind of. It was a. I mean, yes, this Sounds like very 2012, when I say it. Um, but ah, I don't even know if these kinds of things still happen anymore. Cause it seems like as a community we've kind of moved beyond that and now recognize it's like really terrible for work life balance. But you know, like that was what we did back then, I guess.

Speaker B: Yeah.

Speaker A: And no one told me that it would be bad to be pitching pregnant, but that was just something I had internalized.

Speaker B: Yeah. I mean, and if you think about everything else kind of associated with that event, like pizza and beer and stay up all night is not exactly welcoming to, you know, to uh, well, to an expectant parent, a new parent or you know, you can keep going down the list.

Speaker A: People who need sleep. Right. Yeah, I mean it's, I think there's a lot of downsides of that. But yeah, we built an app for that thing that didn't go anywhere. Built, I don't know, a couple of other things that. Maybe one other thing before that. Then we built this mobile app and that actually ended up getting somewhere in the range of like 3, $400 a month in ad revenue, which was amazing. And then we launched something else after that and that one like totally failed. And so. But then by that point we kind of had that one going. But then we actually needed Geocoding for it. And I've told the story a million times. But anyway, so Geocodio comes sort of out of that app actually in order to keep that running. Because then it was like, oh, ok, this is making like three or four hundred dollars a month. Like, this is amazing. Um, let's just keep this going. Like, let's just ride this gravy train as long as we can.

Speaker B: Yeah.

Speaker A: And intentionally actually not spending too much time on geocodio, um, at the beginning. And then it um, completely blew, um, away our expectations. I remember my, I remember I had this like spreadsheet that I can't find, but I remember making it of what our definitions of success were. And a wild success was we earn more than our server costs, which were $20 a month. Um, so yeah, and all of that is happening meanwhile. You know, I think when Geocodio launched, our daughter was. Yeah, she would have just turned four months old. Like we incorporated a week after she was born.

Speaker B: Wow. So you got some of that started before, before she was born. You were like ramping up and you were like, okay, we're gonna build some of this. And then she was born. And then was the app launch after she was born or before she was born.

Speaker A: So the App that had the ad revenue that was launched I think October of 2013. So she was about two months old at that point. And then at that point we. So our evening hours, um, um, at least you know, thankfully babies kind of go to bed to sleep early. So like, you know, come 7, 7:30 we could actually work on it for a couple of hours a day. And we probably should have been sleeping because she would, you know, wake up at 1 or 2am but uh, so it is and started working on Geocodio more. There's a great picture of Matthias actually going down to um, this like incubator co working space while he was on paternity leave, I think with her in the, like, you know, in the car seat, carrying her in like geocodio, like a very preliminary version of geocodio is running on a laptop. He's testing it with his friends and she's just like sitting there hanging out, you know, in the car seat.

Speaker B: That is an interesting perspective. Is that um, talking about balance? Um, I mean this really depends on a lot of factors like post maternal care, uh, how well you're sleeping, if there's any health complications for mom and baby. Um, you know, there's all these other factors, but if baby is healthy and sleeping those first and if you're on parental leave that could actually give some space to work on things because newborns often do sleep and you can put them in a seat and they just kind of hang out. Was that your experience? How hard was baby managing, all of that? And would you recommend it to others?

Speaker A: Yeah, I think this is one of those times where it's like, this is what I did and if I was doing it again, I don't know if I would do it the same way. And I don't know if I would recommend someone else do it either. As you said, it's very contingent uh, upon personal factors. Um, like my own recovery was actually quite rocky. So m. But like you know, Matthias was able to, you know, put her in the Moby Wrap, which is like a wrap that you sort of. Yeah, you wrap around you and it holds the baby to your chest very tightly and like they love it and will sleep. She would sleep for hours in that and so he would just have the wrap on and be coating like with his arms kind of outside and you know, it worked. I think it was highly dependent on situation. Um, but I knew actually I do know other people who launched something on maternity leave. Um, do you know Anna Master?

Speaker B: Yeah.

Speaker A: So she, I believe launched her business that she then Ended up, ah, she sold that, I think last year or the year before. Um, she launched that while she was on maternity leave.

Speaker B: Yeah.

Speaker A: Um, and so I think, you know, for me it's not just about the parental leave aspect. It's that I found the early stages of parenting, um, to be just really exhausting and depleting and the lack of sleep and the kind of, you know, you're just on call 247 and have no social life. And, you know, if you are going to work, that's your only adult interaction of the day. There's not really a whole lot of sources of dopamine unless you're someone who just absolutely, like, loves childrearing. Which. Yeah, I, uh, mean, like, I have a lot of other interests in life. Um, and so, like, for me, it was actually quite motivating to be like, okay, I only have one hour a day. Yeah, to work on whatever I wanna work on. And so, like, I would think about that all day. And then when I actually got time to do it, I would sit down and I was very motivated. And maybe this is because I have ADHD and like, I need a deadline and I, like, things have to be a crisis. Right.

Speaker B: Yeah.

Speaker A: And so. But Matias doesn't have adhd and he also kind of felt the same way that it was actually really good because otherwise it was like, ah, uh, we don't have to work on the app now. Like, what? You know, time just kind of without kids, I felt like time just kind of stretched in front of me forever. And, uh, it was so, um, procrastinating was so much easier for me versus when kind of, you know, family life comes into play. Um, you don't have control or influence even over your own schedule in many cases. And so those rare times you do have. For me, I got a lot of dopamine out of working on our projects for other people. They, you know, they might use that time differently and I think that's equally valuable. I probably shouldn't have been working all the time. I was probably a workaholic for many years there. Um, it's not really healthy to have, like, work, I think, be such a core source of dopamine. Um, but that's only something I have, you know, learned in the past four or five years.

Speaker B: Yeah, the struggle I have is. And now I'm hearing it in your story as well. Even hearing you tell that story, I'm like, uh, it's bringing up old feelings for me. Like, yeah, I remember how motivating that was to feel like I Have this baby now we have this child and it's us. Like, we're responsible for this child and how are we going to do this? And such a big portion of that ends up being money. Like, we're gonna need money for all these things. And it was motivating to feel like, okay, well, what can we do? You know, what can I start on the side? What can I do on the side? And, um, I feel that. I feel like, okay. And it does feel like there's probably, um, ah, a relatively healthy way to do that. But there's also this part of me now that I can see it can go both ways. Like, it happens to have played out for you and I. Meaning, uh, we're the survivors in the survivorship bias. Right. But I have also talked to lots of people who really kind of destroyed themselves, um, pushing themselves to be like, I'm going to start a bit. I'm a new parent and now I'm going to start a business. And, uh, for them, it ended up being the wrong decision. Which leaves me in this awkward place of, in retrospect, just the same way you were saying. I don't know if I would necessarily advise people to do that. It's difficult to know what advice to give to folks because on one hand it worked out, uh, for us it seems like it would be terrible to rob somebody of that opportunity. But on the other hand, I just feel like business is a real crapshoot. Like, it just, it can't happen for the majority of people who try it. It's going to be like, if you get a person who doesn't have kids and they have every, you know, they've got lots of financial margin and lots of time margin and lots of energy margin. Even for them, the chances of success are low. And then you add in this idea of, like, you're also going to be, you know, in the top, I don't know, top 1% of parents who can have the energy to do this and be a good parent. And you're going to be in the top 1% of couples who can, uh, manage the emotional stuff of being new parents and still have a relationship. And you're going to be in the, you know, there's all these other factors. Do you think there's any guardrails or advice we could give to folks who are considering it? Like, what are the considerations if you have a new child and you're thinking, okay, well, I got to do something, um, when should you pursue that dream and when should you not? And is there Any sort of wisdom that can come from the folks who have gone through it to say, well, here's the things to consider. Here's when maybe I would pull the plug or here's where the guardrails would be, I guess. Do you have any thoughts on that?

Speaker A: Uh, it's a tough question, right? Because, you know, the both of us, we're only speaking from our personal experience. You know, this isn't something that we have studied. This isn't something that we have, I don't know, applied. Right. In hundreds of companies. And we can say, okay, here are the things that worked in here. We don't have any sort of empirical evidence. We just have our own experiences. And that makes me not want to give any advice, um, on the topic because I only have my personal experience. I remember when. This will be so interesting to listen back to. I remember when we were talking a couple years ago, and I don't even know when that was, but it was before COVID So this was a while ago. I mean, that was like, what, like at least a decade ago. Um, and I remember we were talking about this and you asked me about this family balance and whatnot, and you said, well, so what about somebody who has a W2 job, they're a developer, they come home, they eat dinner with their family and then they go into the basement to work on the side project right after dinner. They're doing it for their family. They have a financial need for it. Right. Necessity breeds invention. And I remember thinking very clearly, no, they can't, they shouldn't do that. Right. Because their spouse, who I think in your scenario was a stay at home spouse. Right. They are clearly putting work in all of its forms, whether it's sort of self directed or employer directed, like above family and above their relationship with their spouse and sort of like social interaction and support like that. Right. Um, and so, and I think this is where I think, like Matt Wenson, you know, tweeted this the other day of like, you know, you have four buckets, right? You have family, you have social, you have. What were the other ones like health, hobbies and. Oh yeah, hobbies and business.

Speaker B: Startup.

Speaker A: Startup, right. And in order for the startup successful, you have to be putting nine, at least nine of your 20 tokens in that bucket.

Speaker B: Uh, and Jason Cohen, uh, he even separates out kids and spouse. So he says you can do two things, two big things. Well, and then he lists everything, but he puts family into two buckets. Spousal relationship. And then just being a parent and child rearing so yeah, there's all sorts of ways to separate it out.

Speaker A: But yeah, and so there's kind of this conversation going on about it and, and I thought that was a really interesting way of looking at that. That like, I remember, you know, I had to do this, an activity like that at Founder Summit a couple years ago, from a burner's perspective, right, um, is that you can't be running on full steam in every area of your life. Like something is going to suffer. And I guess I wish I had known about that concept and way of framing it beforehand because I think that would have given me some perspective earlier that it took me years to get and am, um, still in the process of attempting to apply and like, you can't do everything 100% and it's worth it to kind of sit down and sort of audit where you're spending your time and whether those are the things that are most valuable in the long term. Like I actually, I saw something on what was on Twitter, but it was from Reddit the other day about um, you know, the only person who is going to remember in 20 years that you worked late is your kids. And I was like, ooh, ooh, that hurts. Especially like as ah, somebody who has to do a lot of late night calls because of time zones and you know, like, did an evening MBA program like as a parent and like, you know, was working at night, you know, like, like that really, like that's like still, that's like still just hitting and sort of uh, living, you know, rent free in my heart right now. But uh, then it's a question of like, well, but if I'm working, what if I'm doing that work for my own business, for something that's building an asset, you know, for our family, right? Like doing that like, like I think I look back on those early years and like, you know, the times I regret working, they're, you know, when they're regretting doing W2 work on the weekend when it didn't really matter, right. Like, and I wasn't really getting all that much out of it, right. Versus like opening my laptop at 9pm when she's already asleep and I'm building it with my spouse and we genuinely enjoy working together. I don't, I don't. I think that's very positive. And so it really, really depends on the situation. But like, I think talking about being like, you know, somebody was saying, you know, they wish they had been more present, right? And I'm like, I look back and yeah, I wish I had been less distracted by nighttime and weekend slack drama from my W2s because that distracted me. Like, just corporate drama, like, was very, very distracting. Like, but there was never really a time when like, you know, uh, for me, I guess that, like, sure, there were times when we were talking about Giocodio, like at dinner time or whatnot, but like, I don't know, I hope she absorbed something from that. Right. You know, so like it wasn't like, yeah, those are the work related. But I didn't have very good boundaries at the time. And so I guess it kind of all, it kind of all blurred and it took me some years to really separate those things.

Speaker B: Yeah.

Speaker A: And that's a journey that I can't, I don't know how to. I don't know, I wouldn't wish it on anybody. And I also don't know how to give you advice on. Here's how you expedite your own journey through workaholism and recovering from it. Like, I don't know how to give advice on that.

Speaker B: Yeah. And this is the thing, right, is the. In some ways I do have some empirical evidence because I have this inbox that I've had since 2012 when I started podcasting and blogging filled with people's journeys.

Speaker A: Oh, you've got the mega maker people

Speaker B: and I've got the mega maker community and podcast listeners. And I have, you know, I started off with this kind of very, uh, maybe some bravado of like, this is what folks need to do. The best life you could ever attain is, you know, starting your own independent business. And now I have these real life case studies of folks and again, there's this realization that it just, there is a risk in all of this. And the gauges are, you know, the gauges for your life are sometimes hard to self assess. Nobody else, well, not nobody else, but um, often we don't get them assessed by, uh, some outside professional. And everybody's experience is different, the context is different, et cetera. And so on one hand I want to encourage folks and say, well, look, it really has. Starting this business has had a tremendous positive impact on my family, there's no doubt about it. But I want to have some caveats to that to say so on one hand I want to encourage people that are doing it, go, yeah, go after it. But on the other hand I want to say, you do need something, you need some guardrails. Because again, this is where magical thinking can get us in trouble. This thought of like, well, I could never get divorced or I could never, uh, alienate my children or I could never cause us financial ruin. Well, you could. Those are all possibilities. Like, those are all things that could happen that we need to take a, uh, ah, responsibility for in the same way we take responsibility for GDPR and sales tax compliance and all these other things. So, yeah, it's a tricky. I'm glad that the conversation is happening because I think a binary answer of just like, rah, rah, go for it isn't enough. It doesn't cover enough of the material. And my hope, I guess, is that a deeper, nuanced discussion, um, where we kind of consider some of these things and say, well, this is what it cost, and these were the risks. And. And I'm speaking as someone who made it through, but not everyone makes it through. So those are things to consider. And ultimately what your kids really need are love and care and, uh, presence, you know, and, um, not presents with

Speaker A: a C, not with a T. Yeah, not gifts, though if you ask them, they would say they definitely need presents

Speaker B: with a T. Did you see Venny's tweet? This is a side. But Venny, uh, who runs Diversified Tech, she had this awesome tweet where her child goes to her and goes, mom, I'm scared of dying. And her mom goes, oh. Venny goes, oh, dear. Why are you scared of dying? Well, that means I won't have any more screen time.

Speaker A: Oh, dear.

Speaker B: Yeah, there's the priority right there.

Speaker A: There's a real conflict here, right? Like a very, very strong two sides pulling, uh, with force at one another conflict. And I think also within us about this, right? Because on the one hand, it's like, wow, this has been life changing for my family, for me personally, for my professional satisfaction, like, for the kinds of opportunities that my family can have, feeling enormously grateful and lucky to be in this position and feeling. And going beyond that to feeling a responsibility to help others recognize that as an option they have available to them and to help them, um, pursue that and achieve that if they want that. Right. Like, there is just this kind of. And I see this in you as well, that it's like this sort of, um, this compulsion that if one has been fortunate in their life, that they have an obligation to help other people recognize that in their own lives as well. Right? There's a responsibility, um, duty. Right. It's not an option. But then at the same time also realizing that it's not for everybody. And there are people who are very happy to. Even just having a stable 9 to 5 job for 40 years is a dream come true for them and they want that. And they genuinely, genuinely want that or that, you know, their situation in life has not set them up in the way to be able to succeed on their own entrepreneurially or so whatever their context is, right. That it's like people want different things in life and that's okay. And there might be somebody who in my situation says, okay, well, daycare is going to be $25,000 a year and I'm going to try to kill it at work between the hours of 9 and 5.

Speaker B: Mhm.

Speaker A: And if I make an extra $25,000 a year, that's great. And if I don't, you know what? We'll cut back and we'll do free and don't have to take plane trips, you know? Right. Like we'll make it work because love is free and it doesn't matter. And like there's. And that's true as well. Like, uh, everybody's experience is true and their context matters. And no single human being, no single family has the same context as another family. And so I feel this very deep confliction about this between m wanting people to know that they can do this if they want to, but it's also completely fine if they don't. And that, that's valid too. And it's just, it's tough, um, to balance that and not want to get. Also for me, I mean, I try to only give advice about the areas where I am sort of genuinely have an expertise in like customer research stuff. Ask me about it. I will claim to be an expert in that, but that's kind of the only area, really. A lot of other stuff is just my own personal understanding and education and reading and so.

Speaker B: But there is another.

Speaker A: Where is that line?

Speaker B: Yeah, it is really hard, but there is this other thing which is to bring awareness to something. Um, the receiver still needs to do the work, they need to process it, they need to decide if it's right for them. They need to decide if the timing right, all those things. But sometimes people just don't know. They just haven't thought about it. So for example, one thing that came up in the Twitter threads quite a bit was folks said, well, uh, I don't see how you could do this. I don't see how you could have one spouse building something on the side on top of a W2 unless their spouse was a superhero and doing 90 to 100% of the childcare and the housework. And there are some old cultural ideas in there that might need to be challenged. And sometimes even just you might have never even thought of it. Like you may have grown up a certain way where your mom and dad, one of them went to work and the other one stayed home. And it was like that was just how life was. But there's this other consideration that some people just have never thought about, which is, uh, if you're thinking about doing this, and I think it did come up in our first conversation because the title of the episode is should you start a startup with your spouse? Um, the other consideration is, uh, okay, Frank, Eileen, whoever you are that wants to do this, the other party in this is your spouse. And um, you may be bringing some assumptions to the table that you haven't even actually thought of. Like, you haven't explicitly said, well, my spouse is going to do 90% of the child care and the housework. Um, but that's actually something you need to explicitly bring up to your partner and say, hey, this is what we're thinking about doing, or I'm thinking about doing and it could have this benefit. But I guess we should think, you know, we have to think through what's this going to mean for you and are you okay with that? And we have to be okay with the idea that your partner might say, actually, I'm not okay with that. I don't want that. I want you to be helping more with the kids, I want you to be helping more with the chores, et cetera.

Speaker A: I mean, I think that's kind of setting it up for failure, right? To say, all right, I'm gonna start a business and you're gonna do 90% of the housework.

Speaker B: Mhm.

Speaker A: That, you know, maybe that flew in like, you know, the 1930s and not anymore. And you know, speaking to what I have seen in people I know, like, I know someone who's getting a company going, um, has already had a side project for a long time, but is now going full time. Um, I believe their spouse either works very part time or stay at home. And they're like, oh yeah, and my wife is gonna be doing customer support on this too. And so it's not just like it's like doing it with your spouse. Right. Like there's a long tradition of mom and pop businesses. Right. And I mean, talking to Congress, I think part of this has been, hey, so mom and pop software businesses, like they exist. Like it's not just grocers and you know, other things like that. Right. Like there are mom and pop software companies where, you know, the Wife is a developer and the husband's a business person or vice versa, or they're both, you know, doing things or like they've got, you know, like they're like. So that are real collaborations. That is definitely not for every couple. Um, for some people, you know, could still be a family member they're co founding with. Uh, for some people, you know what other I'd say definitely not. Right. Um, it really comes down to context. But yeah, I mean, making things stated up front I think is important and making sure that your goals align and your expectations align and then if they don't, having the kind of relationship where you can continually renegotiate those kinds of things in a, in the same way that you would in the office and be just kind of sort of clear headed about it, um, and be willing to say, hey, this actually isn't working right now. Or okay, option A, you're doing all the housework. Option B, oh, you're actually using your accounting degree and then we hire a housekeeper. There's many different options. But if you're both aligned on it being something you want to do, then I think that's kind of, you know, I mean, if you're not aligned with your spouse on anything going on in your household, whether that's work or parenting. Right. Like that has to be talked about. And so the relationship has to be able to have those communication channels already open anyway before you introduce a business, which in many ways is like another child, um, into the picture.

Speaker B: I like that. I mean, I think that's a. Even what you just mentioned. Again, people need tools that we don't come to anything really intuitively knowing any of these things. And the idea of, okay, let's try this, but let's have a regular review meeting where we do sit down and say, okay, how is this working for you? Uh, is this okay? Um, for you? How, you know, um, I've had times where the people in my family have come to me and said, dad, when you are on Twitter all the time, you are just more aggravated. So let's have a review meeting on that because maybe, uh, some of your Twitter usage is causing you some distress, which then in turn is affecting all of us. So let's just have a review on that, dad. You know, like, maybe we can scale that down or whatever. And um, yeah, I think you're going to need stuff like that in your relationship and your family.

Speaker A: And it's okay if people, you know, don't want to be co founders with their spouse. Right. There's I know plenty of people who have great relationship with their spouses who could not run a business together. Um, that doesn't necessarily, like, Right. Like that. It's just a very particular type, um, of relationship. And I mean, that point of, you know, spouse, children, startup Pick two, um, that's something I'm going to be thinking about too. Um, because, you know, there were definitely a lot of times when my husband and I were talking about geocodio at the table and we thought it was a perfectly fun conversation, but our daughter, when she was three, like, probably did not think it was so thrilling to talk about, um, the multitude of issues that come when you allow people to upload spreadsheets.

Speaker B: Yeah.

Speaker A: Um, you know, like, or, you know, like me. Like, you know, I remember there was one day, like, Sunday breakfast and I started like, wireframing something on the, like, uh, and like, I was literally, like, had printer paper and was like, taping it to, like, the living room wall. And we were like, having so much fun, like, while eating bites of pancakes. And it's like, maybe, like, should we have been engaging and having a conversation with her about what was going on in her world? Right. Like, that's also the kind of thing that I look back on. It's like, I didn't really think about that much at the time, but maybe I should have. Right. Um, and I guess. And also in terms of life, it's like, you know, everyone is going to have regrets in life. Which regrets do you want? It's not a matter of not having regrets. It's a matter of which ones and how bad they are and whether you can live with them and whether they are also things you can recover from. Right. And I think that's the beautiful thing about a relationship that has a solid foundation is that the relationship can grow and it can evolve and it can be mended. And I like to believe that's with spouses or with children or anyone else. Right.

Speaker B: Yeah.

Speaker A: Um, and so it's never like, if you look back and say, oh, I really wasn't present during the first five years, you can be like, great. You can fix that starting now.

Speaker B: Yeah, what am I going to do now? Right, exactly.

Speaker A: You always have that opportunity to change. Um, and that's something I guess I find myself saying even when I don't take my own course, uh, of action. And, um, I'm podcasting at 10 o' clock on a Thursday night.

Speaker B: Well, thank you so much, Michelle, for your time. This was great. It's always great to talk to you. Thanks. Uh, for all you're doing with the SSB alliance. And folks can check out geocodio online, geocodio.com, right?

Speaker A: Geocode IO I say geocod like the fish IO geocode IO we don't have geocode IO. We didn't get that.

Speaker B: And uh, I'll also put links to Michelle's Twitter, to the links to everything else going on. Check those out in the show notes. Thanks again, Michelle.

Speaker A: Thank you.

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