I recently had the pleasure of speaking with Sam Ross, the founder of Numeral Tax, about his experiences as a founder. He started out his career as a Growth Product Manager at Teespring, spent some time in growth at Airbnb, then leveraged his learnings to build and scale multiple ecommerce businesses to the tens of millions of dollars top line range. While scaling his ecommerce businesses, he experienced first hand the challenges of dealing with taxes appropriately across all 50 states. Despite his flourishing ecommerce businesses, he realized that “he wouldn't achieve a billion dollar outcome via ecommerce” and thus decided to pursue Numeral Tax full time.
In today’s article, I’ll share the top 3 tactical takeaways from my conversation with Sam, plus his biggest piece of advice for founders.
1. Start with growth and distribution and figure out the rest from there.
Before jumping head first into building a product, Sam and team knew they needed to test the gap in the market and validate the demand. They built a basic site on Webflow and linked to a Calendly so that potential clients could book calls with them. Some of these calls turned into paying clients, which Sam’s cofounder, an accountant, did the tax work for manually. There’s no better validation than people trying to give you money for your product/service, so Sam took this, set up a waitlist on the website, and got to work building.
2. Validate before investing whenever possible.
One of Sam’s ecomm stores that does ~$10m/year sells supplements. To help fuel growth, he consistently looked to add new products to his store, but before investing thousands of dollars in inventory on a new product, he needed to make sure there would be demand for it. To validate demand, he set up a parallel site that looked very similar to his brand but was branded differently. He would then run ad spend against that new product to understand demand and cost per acquisition. He would ultimately cancel and refund any orders placed to that store but used the CPAs to guide his decision on whether to invest in that product or not for his real brand. This strategy may not work well for small stores starting out or for all markets, but it goes to show that there are plenty of creative ways to validate an idea before investing in it.
3. Cold emails work 10x better when they are highly targeted.
Anyone that has done cold sales knows how brutal and challenging it can be. Despite that, Sam managed to drive so many quality leads that they actually had to STOP DOING OUTREACH to let the team catch up with the number of leads. Sam managed to do this by building an incredibly clever cold outreach machine.
He had a friend scrape together a database of every store on Shopify by sales estimate. He then used a tool to find people with the relevant job titles at these companies and sent emails via 50 different email inboxes so he could stagger sends and avoid landing in spam. Here’s the best part though - he also had his team build a bot that added an item to cart in each state and determined whether the store was calculating tax correctly or not. If they weren’t, he included the number of non compliant states in his outreach, detailed why that was a problem, and offered to fix it. Talk about a validated lead!
Sam’s biggest pieces of advice.
Sam gave two valuable pieces of advice:
- Make sure you’re working on the right project and moving in the right direction. Find the right gap in the market and have conviction in what you’re building.
- Speed is the advantage startups have. Take advantage of it. Speed matters for everything, even the little things like responding to emails and Twitter DMs.
Throughout his career, Sam has taken a laddered approach to entrepreneurship. He started with a bootstrapped ecommerce business, built a few cash flowing assets there, and now he is taking a higher risk approach with Numeral Tax that has an asymmetrical risk/reward curve. If he had to restart from zero, he would take this approach again. There is a lot that can be learned from this approach, and it happens to be the same approach that I have taken as I intend to build this newsletter as my base layer cash flowing asset.