Buying books, sharing photos, hailing cabs and doing your taxes. Before everyone had Internet access and smartphones at all times, if you had to put those things in order from the one that sucks the most to the one that sucks the least there might be some debate on which activities would occupy spots 2, 3 and 4. But there’s no question just about everyone would say that doing your taxes clearly sucked the most.
But the advent of the Internet doesn’t seem to have done quite as much to alleviate the pain of tax season as it has for other tasks. That’s where the guys at Taxfyle hope to change things. Rather than simply use software to create forms so you can do your taxes yourself, they’re using a mobile app to connect taxpayers with professional tax preparers. Mario Ariza headed to their offices for an interview with the founders of the Miami-based startup, which is in the thick of its second tax season.
DADE: Tell me who you are, what you do, and what the company you own is.
Michael Mouriz: My name is Michael Mouriz. I’m the COO and cofounder of Taxfyle. We basically bring on-demand tax and accounting services to the masses.
Richard Laviña: I’m Richard Laviña, the CEO and cofounder of Taxfyle. The elevator pitch for Taxfyle is that it’s Uber for your taxes, so it’s currently the fastest and easiest way to get them done, because what’s easier than having someone else do your taxes for you?
How accurate is that description?
MM: I would say that’s accurate in that all of our pros are independent contractors and they take on jobs in a similar way that Uber drivers do. And in a similar way that [Uber drivers are] able to use their own car to get people around and provide the service, [our pros are] able to use their own tax and accounting software — whatever they feel comfortable with.
How did you guys come up with the idea for this company?
RL: The idea came to me in 2014 or 2015 while I was working at Price Waterhouse Coopers. I’m a CPA. PWC was the second firm I’d worked for — third firm if you count my internship. I loved it. I thought I was going to stay there for the rest of my career. I’m really risk averse, if you can believe it, by nature. It’s funny saying that now when you don’t have anything in the bank and you left a good paying job and convinced your wife to move back in with your parents for a couple of months while you’re trying to get a startup off the ground. If I didn’t strongly believe that this thing was going to happen, that someone was going to do it and it might as well be us, then I wouldn’t be here.
There are so many inefficiencies in professional service firms in general that can be tackled. While I was at Price, I started jotting down some ideas, just thinking about it, and I came to the realization, “How does this not exist?”
I think there could be a way with the power of software now that you could create so much efficiency that you could provide the same level of quality of service — the gold standard being big-four quality of service, that’s KPMG, Ernst & Young, Deloitte, and Price Waterhouse Coopers — at cheaper than H&R Block prices, which doesn’t even use accountants, let alone licensed professionals.
I’m going to use Airbnb as an example. When you want to stay at an Airbnb abroad or something, you’re like, “Well, comparing prices at the Mariott or the Hilton, yeah it’s nice, but me and my wife are paying $500 a night to stay in a place that’s just a single room with a bed and a TV and they all look the same. Or I could pay $200 a night and get a kitchen, a bathroom, a living room…”
So had you guys started other companies before or was this the first company you two started? And if you started other companies before, why did they fail and what did you learn from their failure?
MM: I have started other companies before. One of them was just a real estate company. It failed because the entire real estate industry failed at that time, so… I hope that wasn’t too much my fault there. I think things were a little bit out of my control. I also started Mas Greek. We own Clove Mediterranean Kitchen, a restaurant downtown. That one’s actually still ongoing.
RL: I have a crazy startup. Mine I actually started in college with another Belen grad, Robert Colon. We both went to UM and the entrepreneurship bug, which I’m sure you guys have felt… when it bites it bites. It consumes your life and you’re like, “Oh my God! We can do this!” Ideas start flowing…
So Robert and I both did accounting at UM. We were in a room and we were like, “Hey, let’s sell memory foam.” I don’t know how much caffeine was in our system or if amphetamines were keeping us up for the CPA exam or what. But we were like, “Let’s figure this out.” We called it Florida Trade group. I don’t know why, but it was called Florida Trade Group. We found some Chinese and Indian manufacturers of memory foam. The whole idea was to sell toppers because dorms don’t have cushions. They’re really uncomfortable. So we figured out that if we could buy this little amount of memory foam measured to certain bed sizes, we could sell it to the bookstore. So you’d go and get your books, and you’d be like, “OK, I got my books. I need a place to sleep. Oh!”
So that was the idea. We didn’t make any sales to bookstores, but we weren’t going to go out without a fight. Apparently all the bookstores in the U.S. — side note — are owned by the same company. So it’s like, alright, if they say no, you’re done. We found out quick. Failed forward fast.
So we were at one of these trade shows looking for another supplier and we overheard someone behind us talking about how their vending machines at Walmart were breaking their soups. So it was a vending machine company that sold soups, and what would happen is the soup would fall and it would crack.
Editor's note: DADE editor Nicolás Jiménez had tagged along for this interview. This is the part where he obnoxiously sticks his nose in it.
NJ: So they were selling containers full of soup from vending machines. It wasn’t like you could put a cup or a bowl up to the machine and it would pour hot soup into it.
RL: Yes. They were selling soup at Walmart via vending machine. And their vending machine had some critical engineering error in it, so when it fell, the soup would crack and the person would be like, “What the hell? This is terrible.”
NJ: I wonder how many people just kept putting money into this machine and watching soup after soup break and spill.
RL: Let your imagination go wild. I mean, what are you doing buying soup at a vending machine at a Walmart in the first place? But whatever! They were a vending machine company and they did other vending machines. We were like, “Hey, guess what. Don’t replace your line of vending machines. We could cut our memory foam to your specifications because it’s hypoallergenic, so it doesn’t grow mold or any bacteria on it.
MM: Was that real or did you make that up?
RL: It is! It really is hypoallergenic. We would use that in our pamphlets to sell to the bookstores.
NJ: I like the subtle accusation, like “I know you’re a fucking sheister.”
RL: Completely hypoallergenic memory foam, for the record. So we’re like, “OK, it’s hypoallergenic, we can cut pieces and put it here.” And they were like, “Let’s test it now.” So we brought a piece, cut the bed apart, put it in there, and it worked. We ended up selling a few thousand dollars to these guys. We were up late at night cutting pieces of memory foam, because it was coming to us in the bed size specifications we had ordered. And the company failed because that’s a terrible company. Like, what is that? It was terrible. But it was fun.
So those were your failures. Walk us through the startup process for Taxfyle. When did the idea coalesce? Who were the original backers? What risks did you take? What sacrifices did you guys make to get this company off the ground?
MM: Man, that’s a loaded question. We started in… Was it March 2015 we got together?
RL: Yeah, Mike sort of ran the company. I came to him with a business plan and he started running the company with our other cofounder, Will. He’s not here, but he’s our CTO. In March. I quickly found out you couldn’t… If you’re going to have a successful startup, rule number one is you have to jump in headfirst. So Mike did that, you know, sacrificing along the way, like his legal career.
MM: Unlike Ricky, I’m not that risk averse, so…
What were you doing before?
MM: I was at a litigation firm; I was pretty much seeing a lot of the same efficiency issues that Ricky was seeing in the accounting profession, but in the legal profession.
The only problem was that the legal profession is barred by certain rules of ethics that you couldn’t really do anything properly or the way that I wanted to do it from a tech standpoint. I met with Ricky, he told me this great idea, and I was like “This could be awesome.”
I checked out our rules of ethics, and the CPA’s code of ethics is like a little pamphlet.
So you were attracted because there were less ethical requirements.
MM: Yeah, because, specifically, with attorneys you couldn’t do referral fees and things like that. And, on top of that, pricing would be an issue. But here, with the CPAs, you’re allowed to make referrals and you can have non-CPAs refer to CPAs and vice versa, as long as it’s outside of audits. And pricing wasn’t an issue because at the end of the day you have certain forms that need to be completed, so you can base the pricing on the work that’s being done. Attorneys, though, you ask 10 attorneys about an issue and you’re going to get back 10 ways of handling it and 10 different prices. So it makes it a little harder. We started talking about this and I just said, “This makes sense from every angle. I don’t see why I wouldn’t do this.”
How much cash did it take to start this company?
MM: Well, we were working for about five to six months with zero cash, just putting everything together…
MM: No, actually, getting Will, because Will was involved with his prior startup. That was winding down. We were putting things together, taking meetings, refining the business plan, setting up marketing, you name it. Trying to get the cash and trying to raise…
In August we raised $225,000.
Who did you get that money from?
MM: Friends and family. We got friends and family, my partners from Clove, the restaurant, came in. One of my uncles, my father, Ricky’s family.
Had you moved in with your parents at this point?
RL: Yeah, because I wrote a check to the company, too. I can’t code, I have to pay someone to code. It was everything we could scrape together, which is why it’s $225,000, not 250 of 300. That’s just what we could get.
MM: It’s pretty cool, because by December we’d raised another million. Once we got going we started putting it together, we had the mockups and started showing people how it would work and it was just so much easier because they were like, “Wow, you’ve done this in a few weeks.”
Talk to me about that initial excitement. You jump in, you gather the 225,000, you start doing the mockups, the programming starts, and then it seems like there’s something on the line. There’s a fish on the hook. People start offering you more money?
MM: Yes and no. We definitely reached out to all our contacts. What ended up happening was that honestly we raised the $225,000 with the expectation of bringing something to market with the expectation to see if there’s a demand for it. Proof of product. We started learning more about marketing, SEO, and all these campaigns, and we started to see that there were people searching for this already and it wasn’t even provided. So we said, you know what? Might as well raise a little bit of money, throw some marketing dollars at this, build out a few more features and build up the team a little bit. We started reaching out to additional people and contacts. I would say in 20 to 30 days, we had all the money committed. So…
So when did you guys unveil the first version of the software?
MM: February 28th.
What did that feel like?
MM: That felt amazing. We got expedited by Apple right away. They pushed us. We knew we had a month. We just wanted to see if it would work and, I mean, we were all ecstatic.
What was the first major fuck up?
MM: The first major fuck up was that documents weren’t uploading correctly, but thankfully our team is great. Man, we had that fixed in a day or two. By March 2, it was perfect.
Talk to me a little bit about Miami as a place to do a startup, because this is not the easiest place to start a tech company by any measure. So talk to me about some of the problems and the decision that went into making Miami the place where you did that startup.
MM: I think we have differing view on that. From Miami tech startup standpoint, there’s not that much talent down here. It’s budding and there are a lot of startups being created, but you don’t see anything major coming out of Miami right now. That’s changing, though. Magic Leap just got funded down here in South Florida.
RL: Kairos. Live Ninja was just bought out. There are a lot of startups, but when you compare anything to the west coast…
MM: The thing with the west coast is that all the money, all the talent, all the schools out there. It’s hard to compete out there. But I think Miami has taken a lot of steps in the right direction. You have schools like Wyncode, where they’re starting to teach people programming.
Have you hired anybody from Wyncode?
MM: We actually have two interns here right now from Wyncode. One of our investors came in with us, loved it, and he just started a private equity company now. He’s focusing on South Florida companies. He partnered with Rokkr Labs, and it’s an important step for the startup community.
Miami has been kind to you startup-wise.
MM: Yes and no.
Tell me the no.
MM: It was very hard to get publicity down here. It was hard. We couldn’t get a story published that we raised $1.2 million.
NJ: Well if you’d used that 1.2 (million) to put a bar in here, maybe then.
RL: Damn it. Hey you want a job?
NJ: I’d start by putting shots in a vending machine.
Talk to us about your hiring process. You got some press about that and how you play ping pong with your potential hires. ¿A quién se le ocurre eso?
MM: Well, I mean, we try to hire people with the right attitude. We use ping pong because it’s a natural setting and you can see the type of person that they are. We hire people based on work ethic and attitude and we find that the type of person who is agile enough to learn the job and learn on the go can fit in anywhere. You can get anybody here and put them in marketing or customer support or sales. They’re going to get the job done. They can adapt. We find that’s the best type of individual here.
That said, tech wise, Ricky’s done an amazing job going out there and finding some of the best guys out there for tech. We go to where the talent is. We have tech pretty much… the guys are dispersed. One guy lives in Copenhagen, another guy we got from Austin moved down here.
Last couple of questions. You just finished your second round of funding. How much did you guys get?
MM: We raised another million.
How did that feel?
MM: It felt great.
Was it really hard to raise that other million?
MM: Yes and no.
RL: I think I can answer that with a little bit into the whole Miami-west coast dynamic. So Miami has a lot of wealth, but it’s a different type of wealth. It goes into real estate and it goes into health care. It doesn’t really find its way, at least right now, into startups. Particularly South Florida startups. Obviously, if you’ve made a bunch of money — and you have to have money to invest money — you did it a certain way, and your investing profile and your business appetite is already set. Why would you deviate from that and take a risk that’s… You know, “I don’t know anything about this, so why would I put money in it?”
So you know how they say it takes money to make money? Well, it takes startups being successful in order for them to kind of be like, “OK, I could do this.” So, out west, Palo Alto was nothing. They didn’t even have legitimate computer stores until Steve Jobs put some motherboards and chips together with Wozniak and said, “Hey, why don’t you sell this?” So it kind of takes a cultural change, and the only way that happens is by someone doing it first.
It was very important for us to stay in Miami. My family’s down here, I think we value our families more than anything. We’ve had meetings with Jason Horowitz, Google Ventures, Sequoia, these are the biggest names in the VC world. We’ve had meetings with them and others, and I think we could have maybe gotten funded if we had moved over there, because they tend to invest in their backyard, especially in this volatile early stage, so that they have a little bit more control and you can utilize their network a little bit better, right? Which is, as a startup you need all the help you can get.
So, going into the raise, we’re faced with that question. We’re up to 16 employees now. Are we really going to just move everyone over for the middle of tax season, or right after we feel like we have the right product-market fit, you know… If we were going to do that, we would have done it in the first round. You know? When we had nothing and there was so much uncertainty. There still is, we’re still young, but there’s less. So it was just logical for us, at this point, at this stage, to continue raising money. Now when tax season’s over, we go for an A round, it’s a little bit different because you have two seasons under your belt, you have product-market fit, you have a little bit more money, and you have a little bit more leverage.
What has been the shittiest moment in starting this company? What is the moment where you really doubt things?
RL: Let me caveat this by saying one day you wake up and think you’re going to be a billionaire and the next day you think you’re going to be on the street.
MM: There’s a lot of ups and downs.
RL: You can’t get too high, you can’t get too low. Ben Horowitz (Andreessen Horowitz cofounder) wrote a book called “The Hard Things About The Hard Things.” He kind of combines his past experiences at Netscape, all his failures and successes, and ties them into his investment strategy. They look for one thing in a startup. It’s not like all these other banks that look for, you know, hard numbers and there’s no face to it. They look for one thing, which is completely intangible. It’s courage. No matter… If you have the best idea in the world like a Facebook or whatever, you’re going to be up against it and everything’s going to be kind of pivoted against you. It’s going to be extremely tough. You have to be able to go against the numbers, and when your instincts tell you, “Bail out now,” continue to plow through and have the courage that your initial idea and the people around you who have bought into that idea… that it’s going to work out even if you don’t see the solution in front of you.
So with that said, last year when we launched this app, we launched February 28 of last year, which was in the middle of tax season, we couldn’t upload documents. The chat’s not working. People are losing history. And it’s like, “It’s a chat. What application doesn’t have chat? If we can’t figure this out, how are we going to create the future of the CPA firm?” We’re just three guys in a room at this point. We didn’t have any of the staff we have now. I think at that time, you’re like, well maybe Mike could get a job. PWC isn’t too far away. But you have to find resolve. You have to be like, let’s fix these bugs, even though we’re in the middle of tax season. We have to make some money, right? Because you can’t just launch and say it’s a great product even though no one uses it. That was extremely tough. You start saying, “Are we competent enough to do this? Maybe it’s the software of the business model. Maybe they’re not compatible with each other.”
But we got through it. We got through it because our CTO is amazing and we believed as a team in the idea so strongly that it didn’t matter if it didn’t work the first time. We know what this company can become, so we’re going to fix it and move on to the next issue. Because that’s all it is: putting out fires.
This morning, we were launching a partnership with Microsoft’s MileIQ. It has 3.5 million users. They’re the the world’s largest… fact check this… world’s largest mile tracking app. You put it in your pocket you take a drive, and it calculates your tax deduction for the mileage. Even working on deals like that with huge companies, you still have bugs. But that initial bug at the beginning is like, holy crap. Is this thing going to work? It takes courage.
Final question. Next steps. Where do you guys see this company in six months? What do you have planned for next season?
MM: We’ve built a pretty solid product for taxes and there are a lot of features we want to integrate before next tax season and possibly look into new income streams.
RL: So we did personal only in year one. Now it’s personal and business, right? The goal of the company was always to be the future of the CPA firm. Jeff Bezos didn’t say, “I want to sell books.” He started with the book niche because that solved the most problems. Once they got books down, they did more stuff, and now you can get anything delivered to you on Amazon. So we take the same approach here. We start with taxes because that’s the biggest pain point, people can relate to it.
MM: It was a low hanging fruit. It was easy to get to, easy to price out, easy to get going right away, and it validates the model.
Interesting. So you would apply this model to other professional services.
RL: We’d stay within the accounting and tax realm. So we started with personal taxes, then business taxes. Are there quarterly taxes we could file? What other pain points are there? Financial statements…
Partnerships are going to be a huge initiative for us. We know our product is great and that it’s unique. The ecosystem we created between customer, real time connecting to the supply, could service so many needs that couldn’t be service before because the only thing you had before in software format was do it yourself.
MM: This is like mechanics. You can fix your car yourself, but you’re probably not going to do a very good job.
Mario is a Dominican immigrant and a Michener Fellow in poetry at the University of Miami’s Master in Fine Arts program. He holds a Master’s degree in Hispanic Cultural Studies from Columbia University. His poetry can be found in places like The Cincinnati Review, Gulf Coast, and The Raleigh Review, and his journalism appears in The Atlantic and The Miami New Times. His current project focuses on sea level rise and Miami.