Michele Hansen update: Section 174 and bootstrapping with kids


Justin: Hello and welcome to Build Your SaaS. This is the behind the scenes story of building web apps in 2023. I'm Justin Jackson and I've got Michele Hansen, co-founder of Geocodio back on the show today. Michele's been fighting the good fight with this rotten section 1 74 tax legislation in the usa. How's it going, Michele?

Michele: It's going. It's going.

Justin: What time is right now? It's noon Pacific time for me cuz I'm in North America. You are originally from the States, but where, where are you

Michele: right now? Uh, so I live in the Danish countryside

Justin: now, and the Danish

Michele: countryside. It is 9:06 PM 9

Justin: 0 6. That's about the time when I'm thinking how, how old are your kids,

Michele: by the way?

We have one daughter and she is nine, nine years

Justin: old. Okay. See, I always thought that once they got a little bit older, I would be, you know, around. Like eight, nine o'clock used to be just, I was dead tired. And that's like sto, you know, when they're younger, story time, bedtime, all that stuff. And I was just so exhausted.

I still get exhausted at 9:00 PM Nothing's changed. So, so you're, you're in, you're making it happen here, uh, with the time zones and, uh, yeah. You've, you've got an update for us I think on section 1 74. We've done an episode on this already. Folks can go back. Um, do you wanna maybe briefly again describe what Section 1 74 is and then Yeah.

Just give us an update on. What's happened since the last time you were on

Michele: the show? Yeah, so the T L D R 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, um, any bill might cost, um, was that they said starting five years after the bill was, 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.

Mm-hmm. And so I'm gonna 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, cuz they couldn't make it easy for us. And, you know, and there, 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. Mm-hmm. So research and experimental is 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. Yeah. Which is, uh, I think the, the biggest, the 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.

Mm-hmm. The developer who spends, let's say a hundred percent 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. Yeah. 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 profit and then you get taxed on on it, and so you end up getting taxed on this profit that doesn't actually exist because you already spent that to run the business.

Mm-hmm. So it's a huge problem. Congress never actually intended for this to take effect. I mentioned it was kind of a slight of hand to pay for the tax cuts. Yeah. 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, 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, we're in this sort of, um, difficult situation because Yeah.

Of this Linda limbo really unintentional tax policy. Um, and so I mean, people have seen their taxes go up like 400%. Like it's, it's people are talking about shutting down their businesses, freezing hiring. Laying people off. It's, it's serious out

Justin: there. Mm-hmm. It's a real thing. And so, uh, you put together the s sb alliance sa small software business alliance.org and, um, you've been doing some work behind the scenes.

Can you give us an update on Yeah. What's happened, uh, since. We, you, you had, uh, the last time we talked it was like April 14th was your date, um, cuz that was, uh, what, what was happening around that time and what's happened since then?

Michele: Tax day, what was happening around that time tax day. Of course. So, 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 1 74 changes and describing the impact they have had on businesses like ours. Mm-hmm. 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 these small business committees.

Yep. And, um, so we had 597. Small software businesses from all 50 states plus DC 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, you know, let, like coalition letters like this, um, they're not the kind of thing that really makes the news.

Mm-hmm. Um, 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. Mm-hmm. Um, 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. Yeah. 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 are in your district, we're in your state. We are impacted by this. Please see below for the letter, but also legislators who, um, you know, who, who support this, who are, you know, already co-sponsor the bills. They can go to their colleagues and say, Hey, this is an issue.

Like, like, here's an example. Here's a letter from small software businesses. Here's a letter from small man manufacturers. Here's a letter from small biotech companies, right? Mm-hmm. 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.

Justin: Yeah. And, and kudos for you for galvanizing all of this support cuz the, 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'd 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 alliance.org 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 the, uh, the container for people to, like, when they did wake up and realize it was a big deal for the, 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 gonna be more and more people kind of waking up to this still. And they're gonna be looking for, where do I go? Well, you can still go to ssb alliance.org, put your name and email in, and then get updates on what's happening.

Michele: Yes. And, and sorry, even people who didn't sign the letter, it's still incredibly impactful if you contact your congress people, so your representative and your senators, um, about this.

You know, if, if you run a small business, include a couple of lines about, about how it's impacting you and include a letter of the copy, cuz we wanna 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 DC 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 then is making an impact. People are having really good, productive meetings, um, with their, with their legislators on this.

I've heard from people who've, you know, they used the contact form. They ended up having, um, a phone call or even a meeting with their senators. Um, the guys from Divergent Labs, they met with their representative and said that, you know, they, they were very receptive to it, and, and, and that that going with the letter in hand really gave them a.

A level of, of sort of, of legitimacy Yeah. 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 a hundred. 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 S S B Alliance website, um, I actually have templates and links for contacting Congress. So there's a tool you can go to it. You know, you put in your zip code, it gives you a link to their contact form, and then there's a template for, you know, describing the impact and including the letter.

Like, and all of that honestly should take you less than 10 minutes to do. Yeah. And, and it, and it really is impactful because their staff have to keep tallies on every single contact about specific bills. And so, um, and, and the key thing there is that, 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, they're unique, they get counted as separate contacts about this, and that is something that offices really pay attention to.

Justin: Yeah. This is great. I'm just looking at your, you've got, yeah. Letter to Congress as a PDF and then contact. Uh, Congress and then you can go to congress.gov and search for your Congress members if you're in the us if folks follow those instructions and then customize the letter a little bit, um, that even that, that creates more.

Momentum that, that, that has a bigger impact than them just copying the same thing over

Michele: and over again. Yes, exactly. And unfortunately, this is something that only, uh, US citizens and permanent residents can do. Um, I recognize that there are a ton of people who have US LLCs, USC Corpse, who are impacted by this, but don't live in the US Yeah.

Um, aren't US citizens. Unfortunately, there, there isn't a whole lot, um, that you, that, that, you know, folks in your position, quite frankly. Mm-hmm. Um, can do. But raising awareness about this and encouraging all of the US founders you do know, regardless of whether they're in the country or not, because US citizens have the right to vote regardless of what, where we live in the world.

Mm-hmm. Which, Not all countries have, using whatever platform and network and, and connections you have to encourage, um, the US citizen or resident founders, you know, um, to contact Congress. Um, that is hugely

Justin: impactful. Yeah. Yeah. And then talk about it on Twitter. Uh, I was just, yeah. Looking at this one from Divergent Labs and them talking about it on Twitter creates more momentum.

Uh, so if you share your experience and um, yeah. Uh, 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, their house representatives. Do something about it, then talk about it, and we gotta keep this thing going. Create social proof.

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

Michele: So, Right now, you know, as, as far as, so my read on the political situation, which is to say, you know, what I'm reading and reading between the lines, um, in, you know, Politico and whatnot, is DC is focused on the debt limit right now, like the US federal government's, um, spending level.

And that is proving to be just a tad contentious. There's a, 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 do only pass a bill that does that, and then leave everything else to the side. Mm-hmm. 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, like piece of legislation has a, has a tax section in it. Mm. That is possible, but not likely. And that I, I believe that has to be sorted out before they go on recess in August. Okay. Now it's, Also possible there, you know, that, 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. Yeah. So the. House Republicans are also expected to release a budget, or, 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.

That's that's okay. It's, it's the, yeah. Uh, they're gonna, that's sort of their wishlist of everything. Yeah. But not really, um, something is 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 to, for them to give them this thing.

Mm-hmm. Our role in this is be like, Hey guys, that's, that's great. You, you've got these like fds, you wanna settle, this is an urgent problem for businesses that are gonna go out of business because this, so like, can we try to put that aside? Yeah. No. But I actually was reading something earlier this week saying, you know, that, uh, you know, there, there's, there's talk about child tax credit or low income housing and, you know, actually, or whether that trade is expensive enough.

I mean, it's a whole 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, yeah, 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. Yeah, because that is u that is September 30th, so it is highly unlikely this is going to be solved by then. We still don't know if the i r s is going to actually have the regulations out yet that, 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. I'm

Justin: assuming if the IRS hasn't released guidance yet, it would, it would be hard to know for your accountant to know what guidance to follow, right.

Like how, how this actually, 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, is it just a waiting game?

Michele: Well, From my understanding, um, and what, you know, if you look at like the, 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. Yeah.

VMware, for example, they talk about in the, in their high 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. Yeah. Most of us, you know, also use. Accountants who were also small businesses themselves.

Yeah. Um, but that is the guidance, um, that they are proceeding under. Um, and so there, 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. Hmm. Um, so accountants have already been put on, literally on notice about this.

But yeah, we, we will have to see how it shakes out. I mean, I do know some people who said, well, maybe we're just gonna pay it as if it was the same as last year. Cuz our accountant told us that DC's gonna figure this out and we're just gonna trust that it's gonna happen. And then what their, what their gamble is basically that is, if it isn't fixed, then they're gonna end up paying, they're still gonna owe 400% more in taxes and then they're gonna go owe penalties and interest on top of that.

Mm-hmm. And so for some people that. Right. You know, non-compliance is ostensibly always an option, right? Yeah. That's, you know, that, that that's up to them and their accountant. Uh, um, but I think it's also important, I think as you've, you've mentioned when you did your first mention of this on the podcast, um, to not follow, fall into magical thinking that, um, our community loves to fall into that.

Oh yeah, this, you know, sales, sales tax, that doesn't apply to us. Gdpr, that doesn't apply to us. Like it does. It does that, that's part of building ASAs is complying with government regulations. Um, even when they are unclear.

Justin: 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 ssb alliance.org, contact congress, get the letter, customize it, send it. Anything else folks should be knowing about


Michele: the letter. If you haven't done so already, that is the most important thing to do right now.

Okay. It doesn't matter if you didn't sign the letter originally, that's fine. You can simply say, I'm, 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, the letter was mentioned in a s uh, house, small business committee hearing.

Hmm. Um, it was officially entered into the congressional record. It's getting, it's getting mentioned in other hearings and whatnot. It's these sort of small procedural things that, 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.

Mm-hmm. Um, that has an impact in the sort of, you know, how the sausage gets made kind of a way. Um, yeah. That, that usually isn't, isn't quite so public.

Justin: 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. She Michele's Got it. Really nicely laid out here. Thanks for

Michele: doing all this work. It's me and, and Tailwind.

Justin: Yeah, you, you and Tailwind. That's perfect. This is

Michele: Buddies and GitHub desktop. Yeah,

Justin: that's good. It's, it's awesome. I I think

Michele: it's also Laville Vapor too. Yeah. We got, we got the whole, the whole gang.

Justin: You, you got the whole stack behind you. That's great. Um, I, if you have time, I'd, I'd love to get your thoughts on, I just had Aaron Francis 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, uh, we had done an interview, um, about the story of you and Mattias building Gio.

Which is your company. You're, you don't do tax policy for a living. That's just a hobby. God,

Michele: no. No. After between this and having gone just gone through sales tax compliance, um, I don't ever wanna talk about taxes again in my life. I will have to, but I am extremely done with the topic.

Justin: It'd be, I'd be curious, cuz I, I know one of my memories of speaking to you was, uh, you had this line of, when you had started geocode, 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, what do you think when you advise people, friends who are thinking about starting, uh, sass and they also have young kids, what, what kinds of things are you saying to them? Ooh.

Michele: I mean, it's, you know, it's tough.

Um, I should say that I have not listened to the episode with Erin yet, but it is queued up. Um, because I think, I think it sparked a good conversation about this, um, you know, I've noticed conversation, you and Erin and, and Matt wining has been jumping in on that. And I think it's a good one to have. Right.

Um, you know, cause yeah, when we started Ju Koo, the, the original idea was the thing that sort of, you know, got us off the couch cuz we would just. Yeah, we spent our weekends catching up on Game of Thrones or whatever. Mm-hmm. Right. And then, you know, no kids, like just the world, you know, the weekends were our oyster.

Right? Yeah. 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, in a majority of states is more expensive than state college tuition. Hmm. Um, and so where we lived, um, in a major city, it was $25,000 a year for infant daycare.

Wow. And at the time, I mean, you know, we both had, you know, good professional jobs, uh, you know, working in web development, but that was a lot of money. Mm-hmm. And we were like, okay, so we can either kill it at work and try to get raises of $25,000 this year. Mm-hmm. 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, 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, you know, uh, daycare into account. And it was like, oh, well, okay, maybe, you know, we got to, uh, fix our broken air conditioner, you know, that was $8,000 without having to take out a loan.

That is amazing. Mm-hmm. 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

Justin: initially. So you, you were working as a product manager, I believe, or

Michele: something like that? Yeah. What were, yeah. Yeah. So I started out as, as, like, I, I actually transitioned from being a technical project manager, like at an, at an agency managing web development builds, um, to then being a product manager.


Justin: And, and Mattias was, was he working a developer as a W2 as well? Yeah.

Michele: Yes. We were both

Justin: W two. So you're both W two, you have a baby in, in, in that time. And then, uh, you folks made the decision you're both gonna ke continue working full-time, but that means daycare and daycare is $25,000 a year. And then you're like, okay, how we gotta 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? Yeah, we did

Michele: try a few things. You know, most of them didn't, didn't work. Yeah. I remember, I remember going to a hackathon, um, like, I don't know, six or seven months pregnant.

Okay. 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, I like it was what,

Justin: sorry, sorry. You, you were, you were trying to not look pregnant just because you didn't want the. Sorry, explain that part For me.

Michele: To lose legitimacy to the judges and investors present.

Got it. Because it was also like, it was, you know, it was a 24 hour all night, like pizza and beer at 2:00 AM kind of, it was a, I mean, it, yes. This, this sounds like very 2012 when I say it. Um, but yeah, 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 like, that was what we did back then, I guess. Yeah. And no one told me that it would be bad to be pitching pregnant, but that was just something I had internalized.

Justin: Yeah, I mean, and if you think about the, everything else kind of associated with that event, like pizza and beer and stay up all night is not exactly welcoming No.

To, to, you know, to, uh, well to an expectant parent, a new parent, or. You know, you can keep going down the list, the

Michele: people who need sleep, right? Yes. I mean, it's, I think there, there's a lot of downsides of that. But yeah, we, 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 three, $400 a month in ad revenue. Mm. 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 Geocoded comes sort of out of that app actually in order to keep that running. Cause then it was like, oh, okay, this is making like three or $400 a month. Like this is amazing. Mm-hmm. Um, let's just keep this going. Like let's just ride this gravy train as long as we can.

Yes. And intentionally actually not spending too much time on Geo Koo, 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. Mm-hmm. 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 Gio Koyo launched our, our daughter was, yeah. She would've just turned four months old. Okay. Like, we incorporated a week after she was born.

Justin: Wow. So, so you got some of that started before, before she was born. You, you were like ramping up and you were like, okay, we're going to build some of this.

And then she was born, and then the, what was, was the app launch after she was born or before she was born?

Michele: So that the, 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. Mm-hmm. And then at that point we, so, you know, our evening hours, um, you know, um, at least, you know, thankfully babies kind of go to bed to sleep early.

So like Yeah. 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 cuz she would, you know, wake up at one or 2:00 AM But, uh, so it is and started working on Geocoded more. There's a great picture of Mattias actually going down to, um, this like incubator coworking space while, while he was on paternity leave, I think with her in the, like, you know, in the car seat carrying her in, like, like Geocodio, like 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.

Justin: 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, maternal care, uh, how well you're sleeping, if there's any health complications for, 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 cuz you, newborns often do sleep and you can put 'em in a seat and they just kind of hang out.

Was, was that your experience? How hard was. Managing all of that. And would you recommend it to others?

Michele: 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 upon personal factors. Um, like my own recovery, w w w was actually quite rocky, so, um, but like, you know, Mattias 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 and 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, on situation. Um, but I knew, actually I do know other people who launched something on maternity leave. Um, do you know Anna Mast?

Yeah. She, yeah. So she, I believe, launched her business that the, she then ended up, uh, she sold that I think last year or the year before. Um, she launched that while she was on maternity leave. Yeah. Um, and so I, 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, I.

Just really exhausting and depleting. Mm-hmm. And the lack of sleep and the kind of, you know, you're, you're, you're just on call 24 7 mm-hmm. 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 child rearing, which, yeah.

I mean, on it, like, I, I, 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 ne like, things have to be a crisis, right? Yeah. And so, but Mattias 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, we don't have to work on the app now. Like, what?

You know, time just kind of without kids, like, I felt like time just kind of stretched in front of me forever. And yeah, 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 mm-hmm. 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.

Mm-hmm. 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. Yeah.

Justin: Well, the, the struggle I have is, and, and now I'm hearing it in your story as well, even hearing you, you tell that story, I'm like, I re it.

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 gonna do this? And such a big portion of that ends up being money. Like, we're gonna need money for all, all these things.

And it's, 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, I feel that, I feel like, okay, and, and it does feel like, you know, there, there's probably, um, uh, a relatively healthy way to do that. And, 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've also talked to lots of people who. Really kind of destroyed themselves. Um, pushing themselves to be like, I'm gonna start a bi, I'm a new parent, and now I'm gonna start a business. And, uh, for them it ended up being the wrong decision.

And which leaves me in, in this awkward place of, in retrospect, just hit 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, it, it can't happen For the majority of people who try it, it, it's gonna 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 gonna 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 gonna 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 gotta 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, you know, maybe I would pull the plug, or here's where the guardrails would be, I guess. Do you have any thoughts

Michele: on that? Uh, it's a, it's a tough question, right?

Because, you know, the both of us we're, 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, in, you know, hundreds of companies. And we can say, okay, here are the things that worked in here.

Like, like we don't have any sort of like empirical evidence. We, we just have our own experiences. And, and that makes me not wanna give any advice, um, on the topic. Because, because I, I only have my personal experience, you know, I remember when. This, 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.

Mm-hmm. I mean that, that was like what? Like at least a decade ago. Um, and I remember we were talking about this and you asked me, you know, you know about this like family balance and whatnot, and you said, well, so what about somebody who has a W2 job? You know, 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 projects right after dinner. They're doing it for their family. They have a financial need for it, right? Necessity breeds invention. And I, and, and I remember thinking like very clearly, like, no, they can't, like they shouldn't do that, right? Because like their spouse, you know, who I think in your scenario, like was a stay-at-home spouse, right?

Mm-hmm. Like 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, and sort of like social interaction and support like that, right? Mm-hmm. Um, and so, and I think this is where I think like Matt Wenton, 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, what were the other ones? Like health, hobbies, and ho Oh yeah. Hobbies and, and, and business startup. Yeah. Startup, right? And in order for the start of successful, you have to be putting nine, at least nine of your 20 tokens in that bucket. Mm-hmm.

Justin: Um, and, and Jason Cohen, uh, he even separates out kids and spouse.

So he says You can do two things, two big things. Well, and, and then he lists everything, but he separate, 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.

Michele: But yeah. And, 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 of, from a burner's perspective, right.

Um, is that you can't be running on full steam and every air area of your life, like something is going to suffer. Mm-hmm. And I guess I wish I had known about that concept and way of framing it beforehand because I think that would've given me some perspective earlier that it took me years to get and am still in the process of attempting to apply.

And like, you can't do everything a hundred percent 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, 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 are your kids.

Mm-hmm. And I was like, Ooh, ooh, that hurts. Especially like, as 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, that 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 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? Mm-hmm. 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 the, the, they're regretting doing W2 work on the weekend when it didn't really matter.

Mm-hmm. Right. Like, and I wasn't really getting all that much out of it. Right. Versus like opening my laptop at 9:00 PM 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. Yeah. And so it really, really depends on the situation.

But like, I think talking about being like, you know, some, somebody was saying, you know, they wish they had been more present. Right. And I'm like, mm-hmm. I look back and yeah, I wish I had been less distracted by nighttime and weekend slack drama from my W two s. Mm-hmm. Because that distracted me. Like, like just corporate drama, like was very, very distracting.

Like Yeah. But there was never really a time when like, You know, for me, I guess that like, sure, there were times when we were talking about geo koyo, like at dinnertime or whatnot, but like, I don't know, I hope she absorbed something from that. Right. You know? Yeah. So like, it wasn't like, yeah, tho those are the work related, but I, 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.

Yeah. Yeah. And that's a journey that I can't, I don'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, you know, expedite your own journey through workaholism and recovering from it. Like, I don't know how to give advice on that.


Justin: Well, and, 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 and Oh, you've got the mega Maker people and I've got the mega Maker community and podcast listeners, and.

And I have, you know, I started off with this kind of very, this, this, so, you know, 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've, I have these real life case studies of folks, and again, there's this realization that it just, the, 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 some outside professional. And the everybody's experience is different, the context is different, et cetera. And so I, on one hand I want to.

Encourage folks and say, well, look like it really has starting this business has had a tremendous positive impact on my family. There's no doubt about it, but I wanna have some, some caveats, caveats to that to say, so on one hand, I want to encourage people that are doing it. Go, yeah, like, go after it. But on the other hand, I wanna say, you, you do need something, you need some guardrails.

And because the, the, 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 become, uh, you know, 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 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, it's a tricky, I'm glad that the conversation is happening because I think a, 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 costs 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 presence

Michele: with a c, not with a tea. Yeah. Not gifts though. If you ask them, they would say, they definitely need presence with a tea. Did you,

Justin: did you see Vinny's tweet? This is a side, but Vinny, Vinny, uh, who runs Diversified Tack, she had this ATU tweet where she, her, her child, go, goes to her and goes, mom, I'm scared of dying.

And her mom goes, oh, Vinny goes, what? Oh dear. Why are you scared of dying? Well, that means I won't have any more screen time.

Oh, dear. Yeah. Oh, there's the priority right

Michele: there. 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. Mm-hmm. Right. Because on the one hand it's like, wow, this has been life changing for my family, for me personally, for, for my professional satisfaction.

Like, for the kinds of opportunities that, that, that my family can have feeling enormously grateful and lucky to be mm-hmm. 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. Mm-hmm. And to help them pursue that and achieve that if they want that.

Right? Mm-hmm. Like there is just this kind of, and, and, and I see this in you as well, that it's like this sort of, um, this, the, this compulsion that mm-hmm. If, if one has been. Fortunate in their life that they have a, an obligation to help other people recognize that like, like in their own lives as well, right?

Mm-hmm. Like there's a responsibility, totally a 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 e even just having a stable nine to five job for 40 years is a dream come true for them. Mm-hmm. 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 preneur. Mm-hmm. Or what, you know, so whatever their context is, right. That it's like people want different things in life. Mm-hmm. And that's okay. And there might be somebody who, you know, in my situation says, okay, well daycare's gonna be $25,000 a year and I'm, you know, I'm gonna try to kill it at work between the hours of nine and five.

Mm-hmm. And if I make an extra $25,000 a year, that's great. And if I don't, you know what, we'll, we'll cut back and we'll do free activities and don't have to take plane trips, you know? Right. Like, we'll, we'll make it work because love is free and it doesn't matter. Yeah. And like, there's, and that's true as well.

Like that like, like everybody's experience. Is true and their context is matters. And no single human being, no single family has the same context as another family. And so I, I feel very, very, like this, very deep con confliction about this between mm-hmm. Wanting people to know that they, they can do this mm-hmm.

If they want to. Mm-hmm. But it's also completely fine if they don't Yeah. And that, that's valid too. And it's just, it's tough, um, to balance that and, and not want to get Also, you know, for me, I mean like, you know, I try to only give advice about the areas where I am sort of. Genuinely have an expertise in mm-hmm.

Customer research stuff, ask me about it. I will, I will claim to be an expert in that, but that's kind of the only area really. Yeah. You know, a lot of other stuff is just my own personal understanding and education and reading and so, and

Justin: but there is another, where is that line? Yeah, yeah. Where's 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, 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 a hundred percent of the childcare and the housework.

And you know, 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 or 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, cuz it, the title of the episode is, should you Start a startup with your Spouse? Um, the, i the, 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, you haven't explicitly said, well my spouse is gonna do 90% of the childcare and the housework. Um, but that's actually something you need, 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 ha could have this benefit, but I guess we should think, you know, we have to think through what, 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

Michele: cetera. 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. Mm-hmm. That, you know, may, may maybe that, that flew in, like, you know, the 1930s, but mm-hmm. And not anymore. And, you know, speaking to what I have seen in people I know, like I know someone who, who's getting a company going, um, has already had a side project for a long time, but is now going full-time.

Mm-hmm. Um, their's supposed, I, I believe their spouse either works. Very part-time or stay at home. Mm-hmm. And they're like, oh yeah. And my wife is gonna be doing like, customer support on this too. Like, and so it's not just like, it's like, you know, doing it with your spouse. Right. Like there's a long tradition of mom and pop businesses.

Mm-hmm. Right. Right. And I mean, even, you know, talking to Congress, like, 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 mm-hmm.

They're both, you know, doing things or like they've got, you know, like, they're like, so there that are real collaborations. Yeah. That is definitely not for every couple. Mm-hmm. Um, for some people, you know, c could still be a family member. They're, 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 and, and, but yeah, I mean, I mean, making things stated upfront I think is important, and making sure that your, 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, in the same way that you would in the office and, and, and be just kind of, sort of clearheaded about it.

Um, and, and be willing to say, Hey, like, this actually isn't working right now. Or like, you know, okay, like option A, like you're doing all the housework, option B, like, oh, you're actually using your accounting degree, and then we hire a housekeeper. Like mm-hmm. You know, like, right. Like there's many different options, but if you're both aligned on it being something you want to do mm-hmm.

Then. I, I, I think that's kind of, you know, I mean, I, I mean, if you're not aligned with your spouse on anything, you know, going on in your household, whether that's work or parenting, right? Like that has to be talked about, like, yeah. 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, into the picture.

Justin: I like that. I mean, I think that's a, even what you just mentioned, it's, again, people need tools that we're, we're not, we don't come to anything really intuitively knowing any of these things and the idea of, okay, like, 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, you know, is this okay, um, for you? And how is it how, you know? Um, I've had times where the people in my family have come to me and said, dad, you. When you are on Twitter all the time, you are just more aggravated. So let's have a review meeting on that cuz maybe, uh, some of your Twitter usage is, 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 gonna need stuff like that in your relationship and your

Michele: family and it's, it's, it's okay if people, you know, don't wanna be co-founders with their spouse, right. There's, I know plenty of people who have great relat with their spouses who could not run a business together.

Mm-hmm. Um, that doesn't necessarily like Right. Like that, that it's just a very particular type, um, of relationship. And, and I mean that point of, you know, spouse, children, Startup pick two. Mm-hmm. Um, that, that's, that's something I'm gonna be thinking about too. Um, because, you know, there were definitely a lot of times when my husband and I were talking about Geocoded 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.

Yeah. 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 wire framing something on the like, 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?

Mm. 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, maybe I should have. Right. Um, And, and I guess, and also in terms of life, it's like, you know, everyone is gonna 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 yes. Whether you can live with them and whether they're 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 bended and mm-hmm. And, and I like to believe that's, you know, with spouses or with children or, or anyone else.

Right. Yeah. Um, and so it's never like, you know, if you look back and say, oh, I really wasn't present, you know, during the first five years, you can be like, well, great, like, you can fix that starting out. Yeah. What am I gonna do now? Right. Exactly. Like, you know, you always have that opportunity to change.

Totally. Um, and that's, that's, that's something I guess I, I, I find myself saying even when I don't take my own, uh, course of action and, um, Podcasting at 10 o'clock on a Thursday night.

Justin: Um, well thank you so much, Michele, for your time. This was great. It's always great to talk to you. Uh, thanks for all you're doing for with the SSB Alliance and folks can check out Geocodio online.

Michele: right https://www.geocod.io/

I say geo cod, like the fish io geo code. I we don't have, we don't have geo code.io. We, we didn't get that.

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

Michele: you.

Michele Hansen update: Section 174 and bootstrapping with kids
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