Hello! Who are you and what business did you start?
Hello, I am Vamshi Vangapally, CEO and Co-founder of BearTax. We built a platform for cryptocurrency traders and accountants to help them consolidate trades and calculate taxes without heavy lifting.
BearTax offers 2 SaaS products, Beartax of traders and an accounting suite for accounting professionals. The B2C platform for traders is widely used by those who invested or traded cryptocurrency to file their taxes. The complexity of the problem is crazy because there’s not just one Bitcoin! But there are 2000+ cryptocurrencies and they are sold/traded over 1000+ exchanges across the world.
To maximize profit, traders often trade on various exchanges using USD (Fiat currency) or Bitcoin (BTC). Everytime a trader sells a cryptocurrency to USD (called Fiat currency which means a native currency to their own country) or buys one coin with another (he’s selling first coin to buy a second one), it is a taxable event (at least in the US according to IRS guidelines). More about the problem explained here. To solve this, we created BearTax.
We help you avoid hundreds of hours of manual effort, provide pricing information for every coin by minute since the beginning of its time. BearTax helps you import transactions from almost every exchange, process them, assign right prices and shows you the gain or loss for a given tax year for free.
After payment, you can download auto generated tax documents with all the details populated in there.
Started as a tool addressing the need of the hour in early 2018, we became one of the top cryptocurrency tax software in the US, Australia, Canada and India. With our legal and taxation partnerships across the countries, we are now serving more than 10,000 users across the globe.
What's your backstory and how did you come up with the idea?
I am a product consultant with a focus on UI and UX for web and mobile products. Been a technology enthusiast trying to solve problems that could be addressed with technology and been creating products for customers for the past 7 years. Prady Doddala, my co-founder and I have been working on such products together for more than 8 years. He’s my junior in undergrad and a good friend in this journey.
It’s like team Avengers, I’ve found the right team after years including Prady and another enthusiastic co-founder Arun NH. We complement each other in various skills that are necessary to build and scale a startup.
I’ve got stuck by Bitcoin bug in early 2017 when talking to friends facing ransomware issues on their servers. After exploring Bitcoin, I dug through the rabbit hole to understand various others like Ethereum, Litecoin and so on. I started understanding it and been explaining it to friends a lot over chat. To avoid redundancy, I’ve started writing things I learn on Medium and got a website confusedcoin.com to point the same.
Have close to a million readers now on medium.
However, reading, trying out and trading at the same time created a lot of anxiousness. It didn’t seem practical to keep track of prices and led me to try out automated trading. I searched for a trading bot on github (I would not suggest this to anyone as it’s not safe to trust some random bot with your funds). This bot I selected didn’t steal my funds, but it has posted a whopping 18,000 transactions trading just $100
These huge trades got me off the threshold that GDAX (now Coinbase Pro) has to report to IRS and I received an email informing the same. My details and trades will be submitted to the IRS and I have to file taxes on that. I wouldn’t have avoided - but this has made it mandatory for me to file without failing.
When I wanted to file, CPAs quoted for more than $3000 and existing tools were unable to fetch the 18000 trades in the first place and even if someone did, they would charge me hefty price to reveal my gain or loss. This was an unpleasant experience and was not straight forward and trustworthy as I had many pieces left in the puzzle.
So, I have a flow in mind on how this should be approached and consulted with accounting professionals I met at local blockchain meetup. With their validation, I got together with my Avengers and built something functional that could get my tax documents generated. This was the first step towards our journey. I was able to file my taxes with 2 weeks of caffeine and coding.
At that time, many folks were in a similar situation that I was in (receiving emails from GDAX regarding their profile being submitted to IRS) and were looking for a solution. Looking at this, I’ve used my thought process, included missing pieces in the puzzle and used my UX expertise to cover the entire flow. I and my team worked together for another 3 weeks and finally launched BearTax on March 20th of 2018.
We’ve set up a constant feedback loop using the chatbot and improved the user experience and added missing pieces. Domain experience, A fast-paced engineering team, and the scalable approach have helped us get this off the mark pretty quickly.
Since this was a necessity and many traders were looking for solutions on Reddit, Telegram, Blind already, we were able to get them to try our product and we served them well beyond their expectations.
Take us through the process of designing, prototyping, and manufacturing your first product.
We strongly stand by the Quote “Necessity is the mother of invention” because I’ve had this problem of calculating Gain/Loss information to report to the IRS and the tools available then had many issues to handle my account.
User testing is more than important in the B2C world. Make sure you get some users to use your product right in front of your eyes so that you get a fresh perspective on how things are done outside in the real world.
We built this product to address one specific issue: to aggregate the trades across exchanges and to calculate a Gain/Loss statement.
We’ve had several brainstorming sessions in the initial days of the startup, we even have those sessions but now we are on the right path hence less intensive.
At that time there was little reference from where we could copy the UX. TurboTax is considered as the godly figure in taxation so we did take some inspiration from it, but the crypto side was entirely from our brains trying to solve the taxation problem.
The initial prototype was done in 2 months with more than 5 exchanges and the ability to download the 8949 documents, used to report to IRS.
We weren't really concentrating on the sales, we really took this challenge up to file the taxes ourselves. That is when we made this public, we marketed to the close circle of friends and family.
The public beta has refined our product a lot, we have conducted user interviews and decided to update the workflow. Two essential steps were added to the original workflow and it has solved issues of active traders.
Conversational support tools that come in as automated chatbots or chat-boxes, that let you interact with customer help you a lot if you are solving a necessity. There is some level of product definition that you do yourself, but the interaction, feedback will make it better. Acting on this feedback as quickly and promptly as possible will make it more helpful and users will become your ambassadors when their word is heard. Enabling this feedback loop and improving the platform from day one has helped us a lot.
Given our product nature and the necessity of it, we focused solely on building a well-engineered, robust platform that can handle the volumes of transactions posted by every user. A fast-paced engineering team that can get things done is necessary to get a working product out to the users. Fortunately, we are all technical founders - may be missed out on a lot of opportunities where sales are important - but we succeeded in building this product as we have what it needs.
Since I faced the problem, I got to know various venues where this problem is being discussed. As I was the one who is desperately seeking a solution, I know who others had it. Platforms like Reddit, Blind, Telegram were places where people discussed this topic. Reaching out to them, sharing our solution has got us initial users and got the word out quickly. Launching on Producthunt made us withstand the critical community as #4 product of the day. (Thanks to the good words from our users.)
Into the wild embed:tweet
Started with 5 exchanges embed:tweet
Minimal start-up costs. Infrastructure Credits from YC startup school has helped us get to the state where we can cover a few months and the revenue generated in those months gave us enough runway to stay bootstrapped and work on the next steps.
Defined pricing models for different levels of users have enabled them to cater perfectly without making them feel overpriced.
Describe the process of launching the business.
Website, Email, Mail Automation, Chatbox
- Set up your landing page that gets the eyes of people you reach out. Have the copy done well enough to articulate what you are doing and what users get out of it.
- Free illustrations, free website templates can get you started with a pretty good landing page to start with.
- Create a free email to look and sound professional when you reach out to prospective leads.
- Sendgrid or Mailchimp can get you started on sending automated emails to your users on various interactions.
- Have chat software embedded into your landing page for your leads to connect with you - Use a free plan of Drift for this. There are a lot of alternatives for this.
Since launch, what has worked to attract and retain customers?
Cryptocurrency is an interesting space where trust is something very important. We built such trustworthy partnerships early with Blockfi and were able to get initial users who trusted us.
Also, traders respect the suggestions and solutions for their problems. This approach has brought us a good number of users via our educational blog confusedcoin.com and medium articles on hackernoon.com.
SEO targeted articles that provide value for users looking for answers in trading, using various platforms, calculating taxes and more has routed more users.
We led the organic growth for the first tax year as we didn’t have many dollars to spend. So, ads were out of the question and also there was a strict ban on cryptocurrency-related ads on Google, Facebook, Twitter and almost everywhere. Paid promotions on other websites were expensive, so didn’t go for it.
Focused on talking to customers via chat, understand their questions and their thinking. Wrote blog posts that address those questions and more that could come up while they approach taxes. This helped traders and investors find us and use our platform.
Producthunt launch went well and we stood as the top product launched on the day we did. With more than 240 upvotes and reviews from more than 30 users made it very engaging and gave us good exposure.
Happy customers embed:tweet
Certain growth hacks worked us in our favor. One such thing is adding an additional button saying “other” where people click a button to import from the exchange they used. Most of the users who didn’t see their exchange clicked this and we made them to email us - this way, our engineering team build what they wanted as quickly as possible.
Enabling to preview our user’s gain or loss is a big differentiator. This is something that came out of my own experience. I tried other platforms, but they masked and put my crucial information behind a paywall! I wasn’t satisfied enough to give them their money. Whereas in our platform, we show the final gain or loss to the user without paying anything. This could have spent some valuable infrastructure costs on generating numbers for unpaid users, but their satisfaction has led to more conversions.
Just right above the pricing table, we set up an incentive for people to tweet about their experience and get 10%. They can share good or bad experience - however, we were confident that someone has reached pricing step means they were satisfied by their free preview of gain or loss and would like to download their tax documents.
How are you doing today and what does the future look like?
Yes, we are profitable, Bootstrapped.
We have spent on ads this year and sponsored blockchain and cryptocurrency events this year.
There’s a lot more to come as we scale up the team and expenses would go up. The coming year would be interesting on how we can keep up the margins as our expenses grow
We launched our beta in February 2018 and since then there is a coherent growth.
A high percentage of our customers are from the USA and the next chunk is from Australia. We are already supporting users in the USA, Canada, Australia, and India and we are planning on rolling out to other countries soon. It is as easy as clicking a button to support a new country on our website but there will be lots of background work going on regarding the regulations and taxation rules which are very different considering how the USA does.
Through starting the business, have you learned anything particularly helpful or advantageous?
User testing is more than important in the B2C world. Make sure you get some users to use your product right in front of your eyes so that you get a fresh perspective on how things are done outside in the real world. We use a heatmap application to understand user behavior and continuously improve our application every day.
The volume we serve every day has been increasing and it has become almost impossible for founders alone to tackle it, so we ended up hiring support staff. I would suggest everyone starting a business to get a support person early in the game so that they know in and out of the application to provide better customer service.
Have a solid FAQ page and redirect most of your traffic early in the funnel.
Dealing with challenges and handling them.
Handling rebuttals and getting back in the game.
Networking well from being reserved. In the era of technology, meeting people outside has become less prominent. The old techniques always work, try to attend networking events and get to know people. Learning from other's mistakes and experiences is important. One of the beginner mistakes that tend to happen is not following up with the people whom you’ve met at the event. The big guys/speakers will always listen to what you say and end the conversation with “reach out to me and we can talk more.” because they know that 90% of the people don't exactly do that. So take that extra minute and just reach out to the people you’ve met. You will be surprised to know who you get introduced to you and where your product goes.
Presenting at producthunt ATL embed:tweet
Keep a track of changing winds in your domain. Also, have an eye on what you are paying in your daily life. It could be a coffee or a travel-agent or tax-preparation - if it matches what you are interested in (coding, Fintech and cryptocurrency in my case) - you can build a product out of it.
Don’t aim for a perfect product to launch. Make a minimum viable product and have an enthusiastic team to grow it further at a fast pace as a response to the feedback you receive. This has helped us grow from a bare-bones platform to something that is connected to 50+ exchanges, multiple wallets, integrations and much more. Having a well-thought architecture for what you are building (scalability model, adaptable nature and more which could be related to even non-SaaS products)
Tools that can help you track the utilization of certain pieces of your platform will give you a clear picture of prioritization. Having them from initial stages will definitely help. Tools are always good - but it is also important to infer in the right way. This is the responsibility of the co-founder who knows the domain well and what has to be inferred from user-actions.
Explore partnerships and where you can pitch in to help solve someone’s problem. They might not be looking for it or they may be rebuilding or reinventing what you already did. Identify and lend your hand and these partnerships could help you get a better reach. BlockFi has been one of such good partners for us in the initial stages.
YC Interview embed:tweet
Venture Atlanta embed:tweet
Startup battle embed:tweet
Email lists, SEO and other classical concepts that have been in existence since the beginning of the web 2.0 are the most important ones and cannot be ignored. All the new tactics are to enhance the conversions after you get your prospects - but these are not to be ignored.
What platform/tools do you use for your business?
Our technology architecture and decision on using certain tools from the beginning made a lot of difference. These choices are not just buzzwords or state of the art, but chosen from our experience so far working on various technology products in various domains.
AWS - cloud platform that provides computing power and databases hosted remotely on cloud, which you can scale up and scale down depending on your needs. Gives a lot of flexibility and also when configured right - avoids a ton of downtime situations. YC Startup school and other startup programs give you credits that would be valuable in your initial days to scale your platform right.
Sendgrid - Initially used for transactional emails like welcome, activations, tax run status, etc., and now migrating for more marketing purposes and marketing automation has given its competitive price over Mailchimp.
Mailchimp - This is a no-brainer user-friendly email-marketing tool. Easy to start with, but costs mount up easily as your email list grows. It is a good problem to have, we are still trying to solve this.
Drift - conversational marketing platform that can be used in 100 different ways. We use it for chatting with our users, reaching out to potential customers on CPA side. This has been the most helpful one for our product iteration. We started with their free plan and named our chat assistant as Mr.Ted with a cute little bear. People loved it. They asked every question they had regarding the platform usage, questions on taxes and that helped us shape our product well for them.
Unsplash - Free high-quality photos for commercial and non-commercial usage. Found the right one for our articles and social media posts that went a long way in communicating our message through thumbnails and featured images. Thanks a lot for creating such tool.
Medium - Wrote our blogs here (informational, educational and how-to guides) - later moved to self-hosted one for platform-specific content.
Jira - We follow agile development methodology and Jira helps you keep track of everything you need while building a software platform. We maintain a product backlog from our customer requests, Starbucks sessions and more shower thoughts. Pick some and deliver every 2 weeks. Our support staff can track issues and resolve them appropriately with this.
Sourcetree - code versioning - much needed when multiple people working on various things.
Slack - communication platform for the team. Various channels help us be organized.
Stripe - A lovely payments platform that’s built for developers to integrate and start accepting payments. Previously, I used to defer the payment gateway integration for any project as it used to be tricky and that made validation delayed. Having stripe really helped get our initial customers fast. Refunds and dispute management is pretty simple.
What have been the most influential books, podcasts, or other resources?
Naval Ravikant’s various podcasts helped me on how to perceive life. His thoughts though sounds philosophical, I would say are practical and can be easily implemented. They encourage you to try different things by making them reachable.
Listen to Joe Rogan Experience 1309 to get a perspective. This definitely helped me become to think like a maker and pursue my passion to build something.
Hooked by Nir Eyal for habit-forming products - This is a book that’s mentioned by our COO Mr. Satish Gidugu while building products that aim to revamp healthcare across India. It encourages you to think of creating experiences, add nuances, include some abstract thinking into a product that enables you to build useful and successful products. It’s kind of a secret sauce. Others could build the same product - but you’ll still have your edge as they couldn’t see it.
Advice for other entrepreneurs who want to get started or are just starting out?
As a person that has transformed from “someone already did that” to launching a successful product in the past 10 years. I realized that everyone can have a piece of the pie. If there is a market out there, then you have your share of it for sure. All you need to do is execute your strategy and acquire your share of it. Learn from mistakes and validations done by others. Ignore the narrative “it’s already there”
Worry not about competition - As @cdixon of A16z mentioned “Startups are primarily competing against indifference, lack of awareness, and lack of understanding — not other startups. For web startups this means you should worry about users simply not coming to your site, or when they do come, hitting the BACK button.” Focus on what you are building and how you make your product visible to more customers.
Just the technology knowledge might make you a good problem solver but not something people will know of. You ought to have a combination of a non-tech skill or co-founder who has it to make it reach masses. There might be miracles happening with just techies making it big - but you might be missing their innate talent of marketing, strategizing and other non-tech skills. For beginners, focus on sales/marketing from the beginning. Don’t build and pray.
Don’t look at short term incentives - if you are getting enough money to survive from a remote job, then utilize the time flexibility to achieve what you want in life. Don’t be greedy to get a bigger paycheck. Focus on what makes you happy and work towards it. Read this Climbing The Wrong Hill as it explains it with a nice analogy.
Are you looking to hire for certain positions right now?
- We are building a demand generation team right now and hiring content strategists, bloggers, sales and marketing people right now to fuel our growth in the right direction.
- All our jobs are paid with location flexibility (remote).
- Learn more in the jobs section on Angelist
Here are some interesting tweets along our journey! Australian exchanges embed:tweet
Made some memes embed:tweet
Unsupported exchanges embed:tweet
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
BearTax has provided an update on their business!
4 months ago, we followed up with BearTax to see how they've been doing since we published this article.
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