Solo didn’t begin in an executive boardroom and it definitely didn’t begin in a silicon valley garage – far from it. Solo began because two Wellington house painters did a ‘cashie’ on the side that went wrong.
The initial idea for Solo can be traced back to 2018 and a road trip with my brother, Phill. If you ask him, I’m sure he’ll take full credit. As we wound through the valleys between Bulls and Taihape Phill updated me about his house painting business and the misadventure of two employees.
Looking to make some extra cash, the painters had decided to take a job on the side painting a friends house. However they were pissed to discover that instead of being paid cash, as promised, the homeowner deposited their pay directly into their bank accounts. As far as they knew this meant they would now have to pay tax on the income, or risk the wrath of the tax man. It wasn’t that they didn’t want to pay the tax, they just didn’t want to deal with the hassle of filing a tax return and holding onto the tax until it was paid. Both knew they would likely spend the tax long before it was due.
Listening to Phill’s story, and having spent years dealing with tax as a self-employed web designer, I was ‘triggered’, and a passionate rant began about how frustrating the tax system is.
Tax when you’re self-employed is unbelievably confusing and you never know how much tax you actually owe until, all of a sudden, it’s due. It feels like driving blindfolded each time you file a tax return. And hiring an accountant, only to still spend hours preparing the paperwork, who has the time or money for that? Imagine if a business made you hire someone just so you could understand how to pay their bill. They’d go bankrupt.
Eventually we calmed down and our rant turned to spitballing solutions. The idea we arrived at was this: All our transactions are already available in our online banking and we already pay tax bills directly from there. So what if we could just mark bank transactions in our online banking as income or expenses and our online banking would calculate the tax and automatically put it aside for us? It would be simple and the banks might even improve their customer retention.
This was a solution I wanted. I was still doing my taxes using a spreadsheet my ex-girlfriend had created for me while she was an accounting student. I needed the solution to exist.
I spent a few days designing how I thought the concept should work and then I lined up meetings with four of New Zealand’s largest banks to pitch them the idea. I assumed the banks would jump at the idea. It did not go well.
Banks don’t really do innovation, they make money by selling mortgages and mortgages haven’t changed much. The people I met with were curious and genuinely supportive, but it became obvious that a bank was never going to create a digital service for self-employed kiwis. Early stage startups often worry that someone will steal their idea, but try giving it away for free and you’ll soon realise that ideas are usually worth less than nothing – I couldn’t have paid the banks to build it.
The silver lining to those naive bank meetings was that I met Peter, a Digital Advisor to one of the banks, who kindly bought me a coffee and patiently explained to me that the only way the solution would exist was if I created it as an app myself.
Build a tax app myself? No way. Besides not being an app developer, I had also recently recovered from burn-out, and building a tax app – which would require a team, extensive research and a massive commitment – was the last thing I should be doing.
And let’s face it, it’s tax – I wanted the solution to exist so I didn’t have to deal with tax. The idea of spending the next few years of my life building a tax app sounded like a nightmare. So I put the idea on hold.
But the idea wasn’t done with me. Over the next few months, as I couch surfed my way around the country, I would tell people about my various startup ideas and each time Solo (as it was now called) was the one that hit a nerve. “I had a tax bill that wiped out my savings, I wish I’d had this”, “this should exist”. Although people liked the idea it still seemed too daunting for me and I decided to build another smaller project.
My small project was a failure – the problem I was trying to solve just wasn’t really a problem. It was a brutal realisation. Despite having designed and built countless websites during my career, when it came to apps and startups I was a rookie. I was still wallowing in my failure when I received a message from a couple of my Wellington friends who were both in between jobs and keen to work on a new project together – the timing was perfect.
Mike and Aju had the experience I lacked, they had both worked on digital products for some of New Zealand largest companies – Mike as a designer and Aju as a product manager. They were motivated and their passion and enthusiasm were infectious. I moved into the spare bedroom of Mike’s half-renovated house and we began discussing how we would conquer the startup world.
After a few white-boarding sessions Solo came up and again it hit a nerve. We had all been self-employed and felt the pain of managing our tax. But we knew that such a complex problem would be incredibly difficult and before committing we first needed to know how big the problem really was. As we discovered, there are approximately 430,000 self-employed people in New Zealand and 1.1 million kiwis file a personal tax return each year. With the rise of the gig economy and the ease of eCommerce, self-employment is growing globally. We agreed it was worth a shot.
For the next six months we immersed ourselves in customer research; surveying the self-employed community, interviewed potential users, testing and refining designs. It was creative and it was fun. The more we learnt the more mind bogglingly complicated the problem became. Self-employment has many sub segments such as freelancers, contractors, retailers, side hustlers and rental property owners. Each income source has a different set of needs and many self-employed people have multiple income streams. The amount of edge cases was endless. But we also heard countless stories of stress and frustration; savings destroyed by unexpected tax bills, the cost and complexity of accounting software, the lack of definitive practical information and the horror of filing tax returns. One interviewee was so stressed about filing their tax return that they had developed a serious illness.
The core issue was uncertainty; uncertainty of how much money to set aside to cover tax bills, uncertainty of which expenses to claim, uncertainty of filing tax returns. This uncertainty, combined with serious penalties for getting it wrong, created a huge amount of stress. There was also an undercurrent of feeling victimised, like the system was stacked against them, each time they felt they were getting ahead a tax bill would arrive and wipe out their savings. They felt hopeless. From this research we arrived at two objectives; Solo should help people confidently managing their taxes and it should help them achieve financial success.
We also met with accountants and were surprised to discover that they too were interested in Solo. Although wary of unestablished products, accountants were used to recommending software to their customers and they saw Solo as a cheaper, more user friendly alternative to existing products.
After months of testing and iteration we arrived at an innovative design that automated the entire tax process, removed all guesswork and maximised money saved – our target customers loved it. We were excited and ready to build, but there were two big problems; Firstly, we didn’t have a developer, and secondly, the vision we had designed wasn’t yet technically possible.
Aju solved the first problem by convincing a highly regarded senior developer to join us as our fourth co-founder. We had our rockstar team and, although our full vision wasn’t yet possible, we began to build in the hope that the technology would catch up by the time we needed it. It was 2019 and a local fintech accelerator was beginning it’s yearly intake. Although we weren’t sure exactly how we would benefit from the accelerator we were eager to continue our momentum and leverage the accelerators network of experts. We registered Solo Ltd as a company and applied for the accelerator – we were on a roll. This is when things started to turn to shit.
After a series of interviews we reached the final stage of the application process; a pitch by our team to the accelerator leadership and their panel of industry experts – including a representative from Xero. Solo would be competing directly with a previous graduate of the accelerator – of which the accelerator was a shareholder – and we were assured that there was no conflict of interest. We were told to expect ‘an informal chat with friends’.
What we walked into was a dragons-den interrogation. The mood was hostile from the moment we walked into the room and our pitch was met with utter contempt. We were belittled by their questions and our answers were openly sniggered at. To his credit the representative from Xero was the only encouraging person in that meeting. Weeks later the head of the accelerator met with a member of our team and apologised.
But the damage was done. We left that pitch stunned and went to nearby bar to debrief and drown our sorrows. The mood of the team couldn’t have been lower. It felt like a wake, Solo’s wake. The ‘experts’ had told us Solo would never succeed and who were we to argue? I wonder how many startups die simply from a lack of corporate approval.
After our doomed pitch I went on a pre-planned trip overseas for a few weeks. While I was away I could feel that the momentum of the team had stalled. When I returned my co-founders informed me that they were all leaving the project. Would I continue? I was gutted. I didn’t know if I wanted to continue and even if I did, I had that nagging voice in the back of my mind that many self-employed people know well. The one that says “can I do this alone?” Aju had been Solo’s frontman and I doubted my ability to lead.
For a month I pondered what to do next. I still felt that Solo would be a success, and being self-employed I just wanted to use it myself. I didn’t know if Solo would succeed but I knew that it would haunt me if I didn’t at least try and find out. I had to know and that meant taking the wheel and starting again. It was time to go solo.
Most startups require a huge amount of investment, both time and money, before they start generating revenue, let alone make a profit. There are usually two funding options; get investors, or ‘bootstrap’ it yourself – neither option would work for me. I had some savings left over from my agency days but that would run dry long before Solo reached the market. At that time Solo only consisted of the ability to create an account and upload some transactions, there were no categories, tax calculations or even settings. Solo didn’t actually do anything yet.
Getting investment without a team would be impossible. And I didn’t want investors. The goal of an investor is to make a large return on their investment as soon as possible. This would mean focusing on large international markets and result in creating a generic solution. My goal wasn’t to create a billion dollar company, it was to empower self-employed kiwis. Also with investors involved it would still be my startup, but I would be working for them. My freedom meant too much to me. But how was I going to build this thing without money?
All I had to offer developers were shares in a company that wasn’t worth anything yet. None the less I posted on FACEBOOK and asked developers for help. God bless New Zealand it worked. Senior developers with experience at Trademe, Xero and MYOB jumped onboard and Solo began to move again (I’m glossing over a lot of trial and error during this period, but I’ll spare you the details). Despite some success I eventually realised that this was not a sustainable way to create a business. Just when Solo was starting to regain momentum I lost my lead developer – again. I was at another crossroads. Was I willing to go all in and financially back Solo myself or did I cut my losses and walk away? How much did I really believe?
The turning point was an open banking hackathon in Auckland. Standing in the crowd, waiting for the hackathon to begin, I met a very talented freelance app developer, Josh. Over the next two days Josh built the foundation of the Solo mobile app and a full working demo of a bank feed integration. I was stunned. If you enjoy using the Solo mobile app you have Josh to thank. On the final day of the hackathon I presented Solo to a crowd for the first time and they were amazed. I left the event feeling reenergised. There was hope.
Soon after the hackathon Jamie joined our team. Finding Jamie was nothing short of a revelation. Previously a senior developer at Xero, Jamie was now contracting from Northland and raising his young family. He had considered creating an accounting app himself and from our first meeting I knew he was a perfect fit for Solo. Over the coming months we worked intensely on creating Solo’s tax calculations and prepared Solo for market. Then covid happened and whole world took a pause to reassess it’s priorities.
The first version of Solo eventually went live in May 2021. It was a miracle. I wish this was one of those stories where we launched and were an instant success. But the reality is the first version we launched was incredibly basic and paying customers were few and far between. Solo contained a range of innovative firsts – such as real-time tax calculations and income tax returns – but it lacked essential features for most users and it’s one paid feature, automatic bank feeds, was completely unreliable.
Providing bank feeds was a bigger challenge than I expected. Integrating with each bank is far too costly so partnering with an aggregator service is required. When we launched there was only one bank feed service available for New Zealand and it was incredibly unreliable. Occasionally Solo would lose access to a major bank for months at a time. It was a disaster.
It took almost a year before a New Zealand startup, Akahu, arrived to save the day with a much more reliable solution. Our new, vastly improved, bank feed service launched in May 2022. We were back on track.
With reliable bank feeds now in place Solo started to consistently grow. We added essential features such as invoicing, profit and loss reports and asset deprecation. We also continued to innovate and became the first accounting software to integrating directly with the IRD to automatically sync taxed income sources.
As we grew we listened to our customers and their needs. A huge benefit of providing in-app chat support is that I talk with Solo customers every day. Occasionally I get asked who owns Solo and the short answer is, the people who built it do. We don’t have investors, corporate backers or even an office. This means that each new subscription goes directly to improving Solo and empowering a wider range of self-employed kiwis.
Despite the challenges over the last four years, Solo is now growing faster than ever. We have in place an outstanding team, located across New Zealand and overseas, and we continue to make Solo easier to use while providing more value to our customers.
Yes we have made great progress, but we are still only getting started. Solo, as it is currently, is simply the foundation for a larger vision. A vision that remains almost unchanged from those early months interviewing potential customers and testing prototypes. Unlike conventional accounting software, Solo will continue to get simpler as it evolves and continue to put even more money back in the pockets of self-employed kiwis.
I can’t wait to share with you some of the exciting innovations we have in store. Thanks for reading and I hope to see you on the next stage of the Solo journey.