Somehow, despite a tumultuous week, Michele and Colleen still get things done. Michele talks about figuring out business incorporation from abroad, and Colleen talks through finding the "villain."
Can I ask you an honest question?
Colleen Schnettler 0:03
Of course, I love honest questions.
Michele Hansen 0:05
Did you actually get any work done this week?
Colleen Schnettler 0:09
Oh, my goodness. So it has been very challenging. For me to focus this week, I've really struggled with it. How about you?
Michele Hansen 0:19
Between, you know, all of the checking Twitter and phone banking and everything else that has consumed this week. I have gotten some things done, though. Weirdly enough, things that require deep thinking and are complicated and less so tasks, which is really surprising because for me, as an ADD person, I tend to find that it's easier for me to churn out tasks when I'm having trouble focusing rather than thinking through something complicated, but instead, my brain is doing the opposite. And everything is just crazy this week.
Colleen Schnettler 1:01
Yeah, I have found that I did better this week, like a deep work as well. I mean, I ended up working almost every night this week. And it was partially because I felt like it, but I think a lot of that too, was just like to give me something to focus on, so I didn't have to worry about everything else going on.
Michele Hansen 1:21
I admit I've been spending more time on hobbies this week too. On Tuesday afternoon, I ended up spending a couple of hours sewing masks with my daughter because I just I couldn't be anywhere near a computer. Like I knew that if I was at my computer, ostensively replying to emails and everything else I would be looking at the news constantly.
But so that thinking I did do, is was working through this big, complicated thing that we're dealing with right now that some listeners have asked us about, which is this whole moving to Denmark thing.
Colleen Schnettler 1:56
That's big. Yeah, it's a big deal.
Michele Hansen 1:58
Yes. And a big deal of that is how it relates to the business, both how it relates to our US business, and then setting up a business here. So one of the big things to figure out is like, obviously, our business address needs to change, right. So before it was our house, it can't be our house anymore. So one of the tools we're going to use, which seems like a lot of people who are running remote companies who are US citizens, but outside the country, or even non US citizens running from outside the country, a tool called Earth Class Mail, which I hadn't heard of until six months ago and has been so awesome. And you basically just get a mailbox, you can send things to. Some of them are PO boxes, some of them look more like a real address, you know, like a suite number instead. But the big thing we're trying to figure out, which relates to the mail, too, is our incorporation in the US and whether we have to change that.
Colleen Schnettler 3:00
Yeah, this seems like a really complicated topic. So your mail, your Earth Mail, is that a PO box in Denmark that you physically access? Or is it just like a fake address to use on business documents?
Michele Hansen 3:12
So it's a virtual address that we use to receive mail both personally and business in the US. So we're having...
Colleen Schnettler 3:20
But where does the actual mail go? Where does the physical mail do it?
Michele Hansen 3:24
So it goes to a PO box in DC, and then it actually gets shipped to Earth Class Mail's facility in Beaverton, Oregon, and then they scan it. So we basically get all of our mail as email. So whenever someone sends us a letter, or even like, we can even deposit checks like that, like it'll scan the contents of an envelope and tell us when there's a check in it. And then we can deposit it. And it you know, I mean, it takes like a week or two, but it's like, other than that, what would we do? So currently, that's going to DC, but our business is registered in Virginia. And so what I've been trying to figure out is do we need to stay incorporated in Virginia? Or do we need to go through the process of dissolving our Virginia Corporation and then reincorporating in another state that is more friendly for remote businesses?
Colleen Schnettler 4:19
Okay, first question, do you have to be incorporated in the United States at all?
Michele Hansen 4:24
Yeah, I think for a lot of the services we use, like in our insurance and everything else, like it makes sense to probably -- what we're going to do is have a US company, and then just have a Danish subsidiary, but basically only for payroll purposes. That is at least according to our Danish accountants, though, our conversations with them have been somewhat delayed because our accountant and her entire family got COVID.
Colleen Schnettler 4:45
Michele Hansen 4:46
She's doing better now. Thank God. Yeah, it's been. Yeah. Yeah. We didn't hear from her for a couple of weeks. And we're like, why? And then, oh, my gosh, and we felt like absolutely terrible for wondering why she hadn't followed up with us.
Colleen Schnettler 5:00
So my first question not knowing a lot about taxes or business and corporations, why wouldn't you incorporate in a state like Florida that doesn't have state taxes? So that's income tax, isn't it?
Michele Hansen 5:10
Yeah. So that's, that's personal income tax. I mean, so so this, this decision matters. What you decide to do is different based on your situation, because we're in Denmark, and we're going to be end up paying so much in taxes here that we're not going to have any US tax liability, it doesn't really matter a lot, we still have to file taxes, but you know, that the tax rate here is, you know, starts at 42%, basically. So, um, so actually was the way I looked into this, right. So, so in Virginia...Virginia has two really annoying taxes for businesses. So the first one is the business tangible property tax, where they will tax every piece of equipment that you use for the business. For us, that meant desk chairs, and desks and computers and everything else, and you have to pay sales tax on those every year. However, we won't have any physical presence in Virginia. So that won't be a problem. The other one we've been trying to figure out is, do we have to pay the what is called the B Paul tax or the business professional, an occupational licensing tax, which was instituted to pay for the war of 1812. And is still here?
Yes, yeah. It's actually it's really funny. Like, looking into the into all of the rules for that tax. It lists out all the possible Aki occupations. And town crier is listed as one of the possible occupations. Wow, he just says a lot. And the most grating thing about that tax is that it's a gross receipts tax, which means it's based on total revenue, so you don't get to deduct your expenses from it. Now, of course, the tax rate is very low as because it's such a broad tax. But this is also why economists hate this tax. Because it's so broad and was supposed to be for a war 200 years ago, and it's just stuck around magically. Trying to figure out if we would still be liable for this, if we're incorporated in Virginia. Seems like maybe not. But just in case, I've been kind of running down some rabbit holes of, to your question, should we change our state of incorporation, which is a process.
And so I consulted a couple of different places for this. And one that I found kind of helpful, is the service called First Base. And I guess before I talk about it, I should disclose that they are part of the Ernest capital portfolio, which is we are investors in it. And that's really the only way I know about them. But basically, they help people abroad set up companies in the US and they have this helpful little tool that you don't even have to sign up for that you figure out like, which state does it make sense for you to sign up to establish your business. And the two they recommend is either Delaware if you are planning to raise money and issue stock, and if not, Wyoming, for ease of doing business low, you know, low overhead, low fees, can do things online. Stripe also has a service that does this to Stripe Atlas, I believe they only incorporate you in Delaware. And I guess I should also disclose that Stripe owns Indie Hackers, and we're now part of the Indie Hackers, hackers Podcast Network. So lots of disclosures there. If you're still with me, congratulations. So, um, so yeah, so I've kind of been looking into that, um, it seems like maybe we won't be liable for that War of 1812 tax in Virginia, if we don't have a physical presence in Virginia. But I want to make sure that we don't have to, you know, file some paperwork every year saying that we're not liable for it. Or the other thing is with Earth Class Mail, they don't have an address in Arlington, where we are incorporated. They only have an address in Norfolk. So do we have to change to Norfolk? Like I have to... I don't I don't I don't really know. And the thing is, is when you Google anything about this, and then you add the word remote to it, any Virginia government website it it's just stuff comes up about remote learning, and it's not like they're, you know, this is kind of the thing like with so many things about being a bootstrapped company, like we're so weird in so many ways, like, like we defy a lot of the conventional ways of doing business, right. Like we don't have a ton of assets. We don't really have employees, we don't really issue stock like we don't raise money, like we do all of this stuff that businesses are started tend to do and governments tend to assume that businesses do. We don't do any of that. And now we're also running it from abroad, but it's the same company. And so I need to figure out that. Yeah, and so for some reason, this is what my brain has been like, this is a more pleasant thing to think about than the election.
Colleen Schnettler 10:21
I don't know, Michelle, this whole conversation makes me want to take a nap. And not cuz I don't love you. But like, because it sounds so horribly boring and painful, like to sort this out.
Michele Hansen 10:31
But it is less painful than biting my nails about the election.
Colleen Schnettler 10:37
So that's true. That's true. You've been able to channel your energy into something productive. That's good.
Michele Hansen 10:42
Yeah. And that just the weird thing about it is there's not doesn't seem like there's a ton of resources out there on converting from a work from home remote within the country business to a remote from out of the country business. I haven't really found any good resources on that. So I mean, if our listeners happen to know any, I would love to. I would love to see them. Because it seems like most remote companies outside of the US are established outside of the US from the get go, rather than transitioning. Yeah, it's kind of a weird thing.
Colleen Schnettler 11:22
Yeah, it's funny, because one of the things you said is the way your business is structured is so different than the way the government assumes businesses are structured. But the way your business is structured makes perfect sense. You actually make money instead of just take other people's money, right? You don't raise funding, you are two people who are married, who sell a service and product that people buy, like, it feels so simple. You have like a basic business model. And our system is not set up in any way to support that. It's just blows my mind.
Michele Hansen 11:52
I hope maybe in 10 years, someone will listen to this and say, Wow, can you believe that businesses, you know, had to deal with that and governments were so behind on the whole, you know, remote work and and bootstrapped companies angle.
Colleen Schnettler 12:08
I've been thinking a lot about your future, Michele. And I feel like we're gonna be referencing this podcast when you run for Congress. And like ten years.
Michele Hansen 12:15
I don't think I can run for Congress now that I've moved abroad. I think they'd be like nahh, she's not loyal enough.
Colleen Schnettler 12:21
Michele Hansen 12:23
They'll call me a socialist for being in Denmark.
Yeah, they would. Yeah, yes.
Yeah. Um, enough about politics. So are you out of are you into beta yet? Okay.
Colleen Schnettler 12:37
So for those just catching up, I am releasing my first software product, and I am releasing it in the Heroku marketplace. So I did a lot of work this past week, unfortunately, I am not out of so in the Heroku marketplace, you first are an alpha, and then you progress to beta. And once you're in beta, you can get up to 100 users. I am unfortunately not in beta not from anything I have done wrong, just because they have taken for forever to review my documents. So they Heroku has to come in and review the documents and approve the documents before you're in the add on marketplace. So unfortunately, that has not been done yet. But I have reached out to them. And they promised me you know, promised, but they assured me they were going to get right on it. And it should be done relatively quickly. But it hasn't been bad. Because with some of my first, I have 10 initial users. And I've been working through some things with some of my initial users.
So I actually got a lot of work like, like big changes kind of architecture changes done this week. And as we've talked about before, I don't want to over architect something that maybe no one is going to want. But it is something I want, so it needs to meet certain standards. And so what I actually did this week is I worked on splitting up the domains for security. So before I was serving files from the same domain, as my application was on so now I have a completely different domain to serve the files from. So that is going to help with security possible security issues. And I kind of rearchitected the file storage. So I think two weeks ago, we talked about how I was thinking of moving to lower cost storage. And at the time, I was unsure if it was worth the pain to move but you and I talked about it. And as you know this will be a commodity it yeah can win on price. So I moved to a lower cost storage provider, which also enabled me to use a third, a different storage provider for backup. So now when you upload a file, it goes to this primary storage provider, which is cheaper than AWS and it backs up on a different a completely different storage provider in the background. So I feel better, I feel good about good about it, like I feel good about it. Because now, you know, I have your file, I have a backup of your file, I'm serving your file from a new domain, I got, you know, serving your file through a new CDN from a different domain. So I feel like architecturally wise, I feel solid with what I have. So I'm happy about that. So yeah, so it's been a lot of work on on kind of sorting that out this week. And a lot of little things, too, that I'm just kind of trying to like, kind of knock out as I have time, like, for example, now, something I've really been concerned about is whether I should actually delete your stuff or not. Because if you're my customer, and you say, I don't want to use you anymore, if I delete those files, they are gone forever. So I now have, you know, at least an email that I send you. So when you delete the add on, it'll say, Hey, don't do if you do this, it will delete your files forever. And then I, you know, I haven't set up to send you an email to say, Hey, I'm going to delete your files forever, in seven days, contact me, if you don't want me to do that, just so just things like that make me feel a little more comfortable, as I scale up the number of people that are going to be using it.
Michele Hansen 16:13
A couple weeks ago, you had talked about how you were talking to someone who was using the service? And...
They were saying how they liked it for images. But they're also excited about it for PDFs. And I'm curious if you also played with the idea of expanding to other file types?
Colleen Schnettler 16:35
Yes. So I really, I'm really starting to think this is my win space, because as we've talked about, like, there are really good providers out there for images. And those image providers do all kinds of other fun stuff for you, they'll resize they automatically downgrade this size, they'll they'll let you pick the ratio, you know, I don't do any of that, like that's not really the space I want to compete in, at least not now. So yes, a big reason I wanted to move to this lower cost storage provider was because I'm going to open it up to other kinds of files. And I think those files tend to be bigger. And so I think that's why I think the lower cost storage with a higher limit. So I don't know, I guess next week, we're gonna have to like sort out what plan sizes I'm going to use. Because hopefully by next week, I'll be in beta. But I don't know what that size is going to be. But like, for example, you know, maybe your competitor, lets maybe the competitor lets you upload a five MG file, well, I can let you upload like 100 meg file if I want. So that's kind of kind of something that's been in my mind, too, is allowing like bigger file sizes, so they can use other kinds of files.
Michele Hansen 17:45
So it sounds like you've started a little bit to think about pricing and what you're going to charge for this.
Colleen Schnettler 17:54
Yeah, a little bit. I really, I really, that is definitely something I need, we need to we need to sort out because, you know, Heroku requires you to get 100 users, which is a lot of users, before you can charge for it. But as you and I have talked about previously, I'm not going to wait on that, like, I'm going to continue to try and get it ready for you know, the open world, if you will, to allow other people to use it. So my thought was all of these file upload services have a free tier. So my my thought in terms of in terms of trying to figure out pricing would be the first thing would be figure out what they're doing, they're being competitors, for their free tier, and exceed that, I guess, and then sort out the pricing from there.
Michele Hansen 18:45
I don't think you necessarily need to be more generous on your free tear than the competitors. I'm curious like, like, if I was doing this, I would make a spreadsheet of all of their different pricing. And I would write down like what is their, you know, the company, what is their free tier? You know, what are the different features they have? Like, how do they do their pricing? Is it is it free tier? And then metered? Or is it free tier then bands like so for example, you know, say, you know, so and so for $10 a month and then double that for $15 a month or like or is it pays you go? Or is it does it jump to subscription only, um, I would just see what everybody else is doing. But when it comes to features, I wouldn't say you necessarily need to exceed it.
You know, when we launched Geocodio, we set our free tier at 2500 free per day because that's what Google's was. And now there's is like 40,000 per month. So it's so, so we didn't purposely exceed that because really the help for us was being able to to pay on a pays you go basis. But I would also be curious to know, like people who are using those services like, are they also happy with that pricing model as well?
Colleen Schnettler 20:08
Yeah, because I think one of the things I've noticed, and as a user of some of these services, at least the image services, there's like a, you get a certain number of credits. And then each request you send to their back end is a credit. But it's very confusing, because for example, to upload a file is so many credits, but then if you're going to resize a file, like that, or if you want to run a, you know, a filter on a file, because all that hits their API, so they charge you these, it's really hard to figure out in my opinion, so they charge you like these credit this, like weird credit based system. So one of the things since I'm not offering any of this resizing, filtering stuff, like one of the other ways I want to compete is just simplicity, I think like it's going to be, you know, we're not going to have to guess how much it's going to cost, you're going to know how much it's going to cost every month.
Michele Hansen 20:56
And, you know, in a commodity space, competing on pricing, simplicity can really work. Especially if, if some of the competitors are trying to do you know, their pricing with obscurity, basically, and try to make money relying on people not knowing how much they're going to be charged, which I, quite frankly, I think that's pretty, pretty scammy business behavior. And you're above that. And I think people appreciate it when you treat them like adults, and you say, here's what it's gonna cost. And we recognize that the other folks are trying to pull the wool over your eyes, but know exactly where you're gonna be charged. That can be a competitive advantage.
Colleen Schnettler 21:46
Yeah, and so I think that spreadsheet is a great idea. So I think that'll be something I'll work on this week to chat more about, because hopefully, like I said, it'll be in beta next week. And so I'll really be focused on how to get it out there. And what I want to charge,
Michele Hansen 22:02
it might be interesting to simulate with all of their complicated models, like what it would cost with a competitor versus what it would cost like, and then kind of think through what that would cost for you, or how you might charge for that. Because that can also be you're basically writing the bones of your marketing copy saying hey, like, if you've got so so many files, and they get resized, and all these sorts of things, you would be paying x with our competitor or y with other competitor, but you're gonna pay, you know, x minus 25%, or whatever, with us.
Colleen Schnettler 22:38
Yeah, that's a great idea. I will definitely do that.
Speaking of marketing, and marketing copy, I've been working through the Story Brand book, and this week was chapter two. And so chapter two is about finding the villain. And he describes the villain is like, the thing you know, the thing like that's against goes is in your customers way of what they want. And something I really pulled out of this chapter was, companies tend to sell solutions to external problems, but customers buy solutions to internal problems. And that really struck me as we're all humans, we all have these like internal problems that motivate us, even though we might verbalize an external problem. And so we talked about step two in this process of clarifying your copy and clarifying your message is deciding what or who is your villain. And so, we talked about what makes a good villain. So one was a villain is the root source. Frustration is not a villain. For example, frustration is what a villain makes us feel villain should be relatable, he said people should immediately recognize it as something they distain villain should be singular, you can only have one. And then of course, villain should be real, like you don't want to fear monger. So I've been thinking about who my villain is, and I really want it to be AWS, but I don't want to call out, right, like AWS, the bane of my existence. Just kidding, you guys are great. Um, so I don't want to like call out AWS specifically. But when I think about my villain, in my in this story, and my customer story, I really think it's like a cloud storage provider, because they're hard to use. Their pricing is confused, confusing. Just like they're hard to use. There's so many ways you can screw up in terms of like permissions and and file sharing and object habit 10 excuse me, and object tagging that I feel like they're a good villain.
Michele Hansen 24:54
And you're the villain creates something that people are willing to pay for, which is the villain causes people to spend all of this time and mental energy on something and people want to have that time back. And so by reminding people of the villain, you can remind them what they would rather have, which is not having to deal with all of these super complicated things and go through the gymnastics of somebody else's pricing to figure out what they're going to be charged for something and how to set it up.
Colleen Schnettler 25:30
Yeah. Agree. So one of the things he talks about in the book is how people have three levels of problems. And the reason a lot of companies aren't successful is because companies focus on only one level, they focus on the external problem. So the external problem is the obvious problem you're trying to solve. But people also buy things to solve external problems, internal problems, and philosophical problems. So I have tried to take that and put that into what I'm building. So for me, the external, this is what I'm thinking, at least the external problem people are facing is they need a way to allow their users to upload files, save those files and serve them quickly. The internal problem is people feel intimidated by setting up drop zones, file, drop cloud storage, they want a simpler interface. And there's so many choices when you're trying to set this up. It makes them feel insecure. So the internal problem is they actually feel insecure, or imposter syndrome in their ability to be a good developer. And philosophical problem is you shouldn't have to be a DevOps engineer, to set up file uploads.
Michele Hansen 26:39
I like it. I can tell you spend a lot of time working on that.
Colleen Schnettler 26:41
I did, I was real proud of myself. Because I always struggled to work on this kind of stuff. Because as we've talked about a lot, like as a developer, I just want to keep tweaking the code and keep writing tests and just keep coding. So I'm really, really trying to take the time to work through this book and to like, get ideas and hopefully start implementing them. Because there's no point in having a product if no one's going to buy it.
Michele Hansen 27:06
I will encourage you to think a little bit more on that second, the internal problem, yeah, really honed in on the developer who is somewhat new to this. And I think that user is there. It strikes me that your motivation for creating this product. You are not creating it because you were a novice developer who couldn't figure these things out, you're creating it because you are an extremely experienced developer who's having to do the same problem over and over again, and you were frustrated about the amount of time you were spending on a repetitive task when you felt like your time was more valuable, or it could be used in more valuable ways. And so I would encourage you to think more about that type of user as well. I mean, you may have multiple types of problems that you're solving for people.
Colleen Schnettler 28:03
Yeah, that that is absolutely an excellent point. And I didn't occur to me, but you're right. The reason I'm building it is because I'm sick of setting it up over and over and over and over. Yeah, so that is definitely I guess, my internal problem, there would be frustration, like frustration and loss of time and just annoyance, like it's not fun to do slightly different. But the same thing for every client.
Michele Hansen 28:29
I mean, that's kind of similar to what we do, right? Like our tagline. And this could definitely be improved, is hassle free geocoding, right, like, in a way that you talk about AWS sort of B or major cloud providers being the villain. With how complicated it is, I think we're kind of in a similar space where the terms of service and pricing and usage restrictions, and just general usability of our competitors is such a hassle for people, that we don't necessarily call out the villain directly. But I think we absolutely are speaking to that internal problem that people are tired of the hassle of dealing with other options. I don't know if we really hit it a philosophical problem, though. I'll have to think about that one. I guess sometimes we do, like it, you know, you shouldn't have have to have a GIS degree to figure out geocoding. Other companies are making this overly complicated. It doesn't have to be so complicated and you just want to get the data and get on with your life.
Colleen Schnettler 29:36
Yeah, like it.
Michele Hansen 29:37
That wraps up this week's Software Social. We'd love to hear what you think! You can tweet at us at @softwaresocpod!
What is Software Social?
Two bootstrapped software founders -- one transitioning from freelancing, and one with an established business -- invite you to join their weekly chats about their businesses.