The following interview is a conversation we had with Ben Borodach, Co-Founder and CEO of April, on our podcast Category Visionaries. You can view the full episode here: $40 Million Raised to Embed Intelligent Tax Experiences
Ben Borodach
Thanks for having me, Bret. Great to be here.
Brett
Yeah, I’m super excited. Let’s go ahead and kick off with a quick summary of who you are and a bit more about your background.
Ben Borodach
Yeah, sure. So I’m a fintech entrepreneur. Been in financial services and technology my whole career. I started at Deloitte Consulting, where I led pretty significant fintech practice there. And then the last several years, I’ve been building and scaling fintech and cybersecurity companies at a venture firm called Teammate. Deep background intelligence and former military leadership, especially out of Israel, and got the opportunity there to incubate and develop a number of companies. One was called Curve in the digital asset security space, which we sold to PayPal, and another one called visible risk in the cyber risk and assessment space, which we sold to bitsight.
Ben Borodach
And the last couple of years, been thinking a lot about the future of consumer finance, the future of american households, and several years ago, partnered with a great individual named Daniel Marcus to build April and help Americans leverage tax to have better financial outcomes.
Brett
If we look back at the early part of your career, did you always know eventually you would go into tech and go into starting and building tech companies?
Ben Borodach
So I actually started my career as a founder. When I was at NYU, I started my first company. It was called published. We were backed by a first mark partner that had funded us out of his salary at NYU and had gone on and raised some venture money and was actually parallel processing my economics and business degree at NYU while running a venture backed company. So I was literally, like, taking an Uber to a customer meeting or an investor meeting and then going back to class and finding a way to pass my midterm. You could imagine my parents felt very good about paying NYU tuition while I was trying to do something else, which created an interesting discourse. And so I’d seen how hard that was up close and eventually made the decision to turn down more institutional money.
Ben Borodach
And then eventually, that’s how I ended up at Deloitte. And a lot of the reason I ended up at Deloitte was because I recognized how difficult enterprise sales were. And so I went there really to learn about the enterprise and eventually continue my entrepreneurial journey.
Brett
When it comes to founders that inspire you, who comes to mind?
Ben Borodach
I think the exciting thing is that there are so many different folks out there to pick from. A lot of the kind of well known founders that have either pioneered industry and are now on Twitter or X, kind of know the Elon Musk of the world and others that you certainly have to kind of be in awe of to some extent. I think I’ve been really fortunate where a lot of the best founders that I’ve learned from are the ones that I’ve gotten to work with really closely. So some of those have been like Amir Zilberstein, who built a company called Clarity in the industrial security space. Really hard space to build in. You’re talking about reverse engineering complex protocols for industrial systems built by Siemens and Schneider.
Ben Borodach
I had the opportunity to work with him a bit at teammate when he was building clarity, now a multi billion dollar company in the industrial security space. And now in April, been working with the likes of Nasia, who co founded etoro, and Jeff Prudderton from Acorns and Eli Broberman from betterment and others, and have the fortunate opportunity to be surrounded by great fintech founders as well, who have pioneered a lot of sort of fintech 10, building some of those applications like acorns and Bettermin and etoro, and going through the hardship of pioneering regulatory pathways or technology pathways that didn’t exist at the time, and learning from them in a way that really informs the way that we’re building here.
Brett
In April, how do you define fintech 2.0?
Ben Borodach
I think we may actually almost be in fintech 30 in some ways, and maybe I’ll talk about the trajectory. Right, because I think 10 sort of was about these point solutions that created digital formats for things that were maybe not available to all kinds of people. And so those could have been bank accounts that were mobile and didn’t have fees attached to them or investing accounts. And I think a lot of those things were developed in the eight to 2013 14 and have now you think about the chimes and the acorns of the world. And then I think we’ve had sort of a second wave that was looking to be more holistic or to go into more complex areas, whether that’s in crypto or net worth, and expand on that v one, maybe call it v one and a half.
Ben Borodach
And I think what big bet in April was for v two or v three, depending on how you want to look at it, was really all about intelligence and all about personalization. We’re entering the age where most of financial services are going to be increasingly delivered online. And that means that consumers will increasingly expect that what they’re seeing is completely contextual to them. And the reality is that most financial storefronts today that are digital don’t service a customer in a particularly specific way. They kind of treat them fairly generically and provide that bank account or a credit product. And so there’s a lot of effort on the consumer’s part of the household, the small business, to stitch together all the different solutions that they need.
Ben Borodach
And I think the world that we’re moving towards is all about bundling and having holistic services that are provided to you that leverage software and AI to provide things that are highly contextual, down to your specific needs. And so I think we’re moving back from a world of distribution scale of these digital platforms. And I think we’ll see room for a lot of specialization and intelligence to better serve more specific types of consumers, households and small businesses.
Brett
It’s a perfect time to dive a bit deeper into what April is doing. So I know we’ve touched on that a little bit here, but let’s just go back to the beginning at a very high level. What problem does April solve for customers?
Ben Borodach
Yes, so we have two customers. We’re a b, two b to c company. Our first customer, if you like, are our financial partners. So the likes of, let’s say, like acorns and gusto that are partnered, April, and we sell them tax products. And what that allows them to do is offer a service to their customers that they couldn’t previously offer. So that could be in the form of tax filing, or it could be in the form of tax forecasting and providing visibility around what someone may owe in taxes today, or becoming compliant and getting their refund faster. It allows them to offer a service that they otherwise couldn’t and create a more holistic conversation with their client or their user around tax. Because tax is the largest expense item that most american families have on par with housing.
Ben Borodach
It’s also the largest single paycheck in the form of the tax refund that many Americans get back. And it’s also, if you think about it effectively, a government mandated financial health check, right. It’s the only time per year that Americans have to kind of sit down and do a tabula Rosa on what happened in the last year. And right now, what’s happening is that goes out of ether and what April facilitates in a trusted manner. The way to help these financial brands leverage tax, to have a conversation with their customer around their holistic financial profile and better them. And so what we’re doing for the consumer, for the taxpayer, is creating an embedded service that reduces the friction, changes the cost structure. Right. Everyone knows the turbotax model, where you’re going to get upsold to death until they extract every last penny from you.
Ben Borodach
We don’t need to do that because we’re embedded inside of an app that has your best interest in mind. That could be platform, a payroll platform, a banking app, and we can serve you in a way that leverages data that platform already has and provides you a personalized experience at a more cost efficient manner. So we’re looking to add value to that value chain, both to finance platforms and to taxpayers. And the idea is that we help them achieve better financial outcomes. And by achieving better financial outcomes, we can create a win situation where we, of course, get paid, but also create a sum that’s greater than the.
Brett
Parts when it comes to the b to B side. Can you give us an idea of the types of companies that you’re seeing, really adopt and embrace this?
Ben Borodach
Yeah, I think we’re seeing a wide array of adoption across different finance apps. I think the ones that we’re focused on heavily today are in the banking credit space. And when you think about liquidity and you think about ways where either you’re going to get a refund, or you might owe money and making sure that you’re staying ahead of that, or if you’re a small business and you might owe quarterly estimates and making sure you have the liquidity and that you’re staying compliant, seeing a lot of traction in that space, seeing a lot of traction in the investment category. So you can think about apps that are having conversations with their customers around life events.
Ben Borodach
Well, if you have a kid or you want to save to buy a home, there’s a lot of implications of those life events or the things that trigger that. And when those life events happening, there’s also be changes to your tax situation, and there’s going to also be tax impact of those things. Where you have a child, you’re going to get a credit for that, you’re going to buy a home, maybe you can itemize some of that mortgage interest. And so having some kind of visibility into tax, that really doesn’t exist in the marketplace today. Right. It’s really a black box. We’re seeing a lot of adoption there, and a lot of interest from tying those life events to those tax scenarios. And then third is going to be payroll, right? Because that’s where folks get paid. That’s where their paycheck is coming from.
Ben Borodach
And we know that in pay, there’s a lot of uncertainty complexity we have in the US market, especially around what comes out pretax things like Ira or health benefits. And then what’s my take home pay, and how is that going to fluctuate based on my tax situation? And so we’ve recently launched a very exciting product with gusto that actually allows an employee on their platform to constantly track their tax situation in real time based on their gusto payroll data. And they can actually update and change their withholding in order to ensure that they are compliant, but saving the right amount of money, that makes sense for their specific situation.
Brett
When it comes to those first paying customers. If you reflect on that, how’d you pull that off? And the reason I ask, that’s something that all founders tend to struggle with, is getting people to pay you money in the early days.
Ben Borodach
Yeah. Look, one of my mentors, the dub who started a teammate and previously led military intelligence for the IBA, is big sign in his office. And so when I joined teammate, there was about 40 million Aum and about twelve people. Now, the firm, I think, is 100 people and about a billion out of management and the big side in their office, that the hardest part is getting started. Right. And so that’s kind of the advice to all founders is like, there isn’t really a secret sauce I see out there. Okay, you’ve got a growth, Hackett. And that has advantages. Or you go through the network and that has advantages. I think you’re a product of your circumstance, so you’re often playing from what you have in the early days. And each product and category is going to have a different way that makes sense.
Ben Borodach
So, I don’t know that there’s a right answer. I can tell you. For us in April, we’re focused on mature financial companies that really value trusted relationships. So we’ve surrounded ourselves with great cap table of investors from teammate and treasury and QED and Nica and others. And so we leveraged my network, the network that we put around the table, in order to build trust and relationships over time. Any of our customers were either people that I already knew, or that folks around the table already knew.
Brett
When it comes to your market category, how do you think about the category that you’re in?
Ben Borodach
Yeah, so I think it’s an interesting question, right? Because modern tax, e file, as they call it, is basically something that was invented only in the last couple of decades. And basically the market construct today is the same players that have existed since the beginning of that market. And so what we call the DIY market, which is basically a self served market, is heavily dominated primarily by turbotax as the dominant player in that room. And you have other providers like Sharblock and Jackson Hewitt and Tac that are serving customers directly. But turbox is by such a wide margin the largest provider and extremely dominant to date, and leverages that dominant position. And they have the other side of the market, right? Of that, 107,000,000 taxpayers, 32 million small businesses primarily served by accountants.
Ben Borodach
And a lot of those are mom and pop accountant shops that are powered by software provided by some of those same players and also the likes of like Reuters and Walters, Bluer and others. And there hasn’t really been much innovation in that space in the last couple of decades. And so when we look at the DIY segment where we’re playing is we’re really finding alternatives to what Intuit has built. And part of that is there just isn’t other providers. Like building tax software is hard. And so a lot of the friction, or headwind, if you will, is just building something that consumers can use because you’ve got a federal tax law that’s ballooned 350% over the last few decades. You have income tax in over 40 states. And so to build something at scale has got to raise a bunch of money.
Ben Borodach
You have to put a team together that has different discipline and expertise from tax to engineering product and so forth. And then you also have to think about user acquisition, because to it is just so dominant that they’re going to outspend anybody that’s out there, including some of those second and third players that I mentioned. And so you’ve got to come with a business innovation that allows you to get distribution in a different way. And that’s one of the things that we’re focused on here in April. And one of the core competencies of the company is working with finance apps and platforms where we can be that tax alternative for them, right. Because it can be hard for them to partner with someone like a turbotax that’s not to be integrated and has their own interest in mind.
Ben Borodach
And we can come kind of as that independent player that’s a true infrastructure provider and in return, get distribution for a product that would otherwise be extremely expensive to market.
Brett
This show is brought to you by Front Lines Media, a podcast production studio that helps B two B founders launch, manage, and grow their own podcast. Now, if you’re a founder, you may be thinking, I don’t have time to host a podcast. I’ve got a company to build. Well, that’s exactly what we’ve built our service to do. You show up and host, and we handle literally everything else. To set up a call to discuss launching your own podcast, visit IO Slash podcast. Now back today’s episode.
Brett
I believe I read that in the coming year, maybe two years, the IRS is going to be rolling out their own filing system or a direct filing system, something along those lines. Is that going to have any impact to what you’re doing? Is that going to make things easier and better for you? Is it going to take away potential customers? What impact will that have, if any?
Ben Borodach
Well, I’ll give you the kind of company take on it, and then I’ll try to give you my personal view. I think as a company, what we believe is that taxpayers need more options. And any additional options in the market should be welcomed because we live in a capitalist society. And what that means is we should have free market competition and government should be able to compete in market. They should do it in a way that’s fair. But I think we’ve seen that in healthcare, where we’ve had programs and they provided alternatives. And I don’t see why government shouldn’t be able to provide an alternative. And market is big enough that maybe that works for some taxpayers.
Ben Borodach
I think on a personal level, working with tax authorities, we would love it that there was an equal emphasis on investing in their own technology that they and providers will need to use to be successful. And when you think about data schemas and the testing mechanisms, there’s a lot of things that go on behind the scenes to get compliant tax software to market. There’s a body called NACTP that just focused on representing the tax industry with these state and federal bodies. And I think our view needs to be more emphasis on that, of upgrading the systems, of improving service for taxpayers and for software providers. So we would, of course, always advocate for that and helping get the best possible capabilities and hands of american taxpayers and small businesses.
Ben Borodach
I think the reality is this is very hard to do and we’ll watch the IRS. I don’t think we’re particularly concerned about it. We have a very unique capability and infrastructure here in April that’s second to in the market. But I think it’s a tall order that they’ve taken on and they will have to build it or partner with someone to help them do so. And it’s certainly not trivial to do.
Brett
Not sure if you want to have the conversation, go there, but I want to also ask about Turbotax and some of the stuff I read. I think it was a couple of years ago, I think ProPublica did like a big investigative piece on them and their lobbying and their efforts. What are your thoughts on that? Is that a real thing? Was turbotax really lobbying kind of in their own best interest that harmed consumers or what’s going on there? From your perspective and from an insider.
Ben Borodach
Perspective, I don’t have any insider information that someone else doesn’t have. So I read the report just like you did. And I think obviously they were fined pretty significantly. So if you look at the model, what they try to do, and this goes back to this free file alliance concept, and that’s related if we want to get a little more specific to this IRS direct file, because for years there’s been a mechanism called free file for americans to qualify and are under the income threshold to file for free. But the problem is that if you’re a company, you got to make money somehow so that it doesn’t really serve a business purpose. And then the other challenge, I think a lot of the software in there wasn’t competitive in market and consumers were willing to pay for a better product, which makes sense.
Ben Borodach
I don’t know that there’s something out there that says people need to get a service for free. I think certainly taxpayers need to have options. And also I think when you look at, and you don’t have options, you often get gouging. So I think when you look at Turbo, it’s been a case of there being basically a monopoly or monopoly that has both a distribution and a product that others can’t and don’t have at least to date. And they’re taking advantage of the situation and relating to free file or file for free. And then people get in the door and that’s their model. It’s an upsell model. You look at their investor day, they talking about how they’re using AI and things to improve their ability to upsell. That’s what they do.
Ben Borodach
And obviously they were fined and continue to be investigated for certain things that they did. And that’s in the aisle of the regulators. And the authorities on that. But what I would say here in April is we don’t do that. We believe that what the customer sees is the price that they pay. And the challenge in tax is that you have all of these different forms and complexities. And at one point, probably a correlation between the amount of money you earned and how complex your taxes are. But now that’s gone, right? You can have someone who traded crypto $50 worth, now needs capital gains forms. You can have someone that’s driving for Uber. Guess what? Now they’re a small business. They need this thing called a schedule c. That person might be making $35,000 a year. Great American had good intent.
Ben Borodach
And now they go to file their taxes and they’re like, wait a minute. So because of the type of job that I work and because I tried to invest for my future or buy a financial product, I now have to pay way more in tax. That’s not something that people necessarily understand, and it’s not necessarily fair. And when we say fair, what we mean is people should be able to operate within the income and life and have a way to understand what they’re going to pay when they need to file their taxes. Right. So if problem transacting and I’m going to buy more stock, it should be fairly easy to know, like, oh, wait a minute, I’m going to have to pay more when I go to file my taxes. And right now, that’s just kind of hard to do in the market.
Ben Borodach
And so we believe having more of a flat fee model where what you see is what you pay is really the best thing for the consumer. And there’s not a reason why you also can’t have a great business in the process. And so that’s kind of what we’re pushing more towards here at April.
Brett
Are there any numbers you can share that highlight the growth you’re seeing?
Ben Borodach
Yeah, I can say as far as publicly, we’re seeing dozens of companies on the platform. We have hundreds of thousands of users, and we’re also seeing a lot of validation, both in the form of, like, NPS, that’s in the high fifty s and sixty s and high customer satisfaction with our support and also our ability to execute, because this is a really hard problem to solve. It’s not trivial to have a national filing app. And so I think for us, a lot of it is also showing partners and ourselves that the tech feasibility is.
Brett
Legit when it comes to marketing. What are you doing to rise above the noise?
Ben Borodach
Look, it’s a noisy market. Out there, right? There’s just a plethora of noise on almost every platform. And so I think for us, what we’re doing is two things. One is investing heavily in our brand and making sure that our buyers have a way to learn and find out about us and trying to be creative in the ways that we get in front of them. I think if you’re paying, I think the days of like CAC arbitrage on Facebook or some of these other platforms are unfortunately kind of gone. I’m not saying that there aren’t pockets of places or very smart growth hackers that are finding niches there, but I think especially in a category like tax that has very saturated marketing, it’s very difficult. And as a brand, we’re really trying to stand for more than tax.
Ben Borodach
We’re really trying to stand for financial outcomes. And how can typical american small businesses leverage tax to get ahead the same way that wealthy people do? Because that’s the name of the game, right? Very wealthy people have teams of people. They can extract tax laws, they can understand things in real time, and most of us don’t have the time, we don’t have the resources. And that’s how April is seeking to leverage the playing field. And so for us, we’re solving tax, but it’s actually a much bigger prize and we stand for something much broader than that. And from a consumer perspective, this is our model by distributing through finance platforms, and there we do substantially less marketing. We try to have a clear brand that a taxpayer can understand what April is very clearly, but we don’t do a lot of marketing there.
Ben Borodach
We really rely on our partners to market to a captive audience that they already have.
Brett
As I mentioned there in the intro, you’ve raised 40 million to date. What have you learned about fundraising throughout this journey?
Ben Borodach
I’ve been in this venture market for a long time now, north of a decade. I’ve been on the investor side, on the entrepreneurial side. And I think the most important part, in the end, to the extent you can, is try as best possible to surround yourself with great people. Because the ride is always going to be unpredictable and there’s always going to be unexpected things, both that go better and worse or different than what you expect. And the constant is really going to be the people that you surround yourself with. And I can’t emphasize that enough to founders. Not everybody’s in the position. And sometimes you have to take a check and that sometimes is what it is.
Ben Borodach
But the biggest thing is the people at the end of the day, you’re buying a business partner and those people are going to be with you for the journey of the company. And so to the extent that you can find like minded people who will challenge you and help you build a great business, but also complement your skill set and have a shared set of values and are really there to do the job, it makes a tremendous difference. As an entrepreneur, what do you think.
Brett
Has been the most important decision you’ve made so far for the company?
Ben Borodach
It’s trite, but it’s the co-founder. Right. It’s that setup of going through that process and who you’re going to work with. Again, it’s the constant, right. Because you can adapt, you can pivot, and many things, if you go back and you look at our plan from early 2021, before we started the company, high level, many things are roughly what we thought they would be. There’s many changes, of course, we’ve made iterating within them, but it’s much harder to change co founder and when I’ve seen things go south for many of the companies I had invested in, a lot of the times it had to do with the co founder pair. And sometimes it’s because there’s a falling out and sometimes it’s just because the relationship isn’t in a place where it can be constructive to the business.
Ben Borodach
And so I think Daniel’s not just a great talent. He was the CTO of Waze, the lead data scientist for Google Israel. But he’s also a bench and a wonderful human and someone that complements me very well and knows how to challenge me, but also push back in places where he needs to. And so I think that give and take with a partner is paramount and you kind of can’t unselect it. I’m not saying there aren’t companies that have co founders that leave or can’t recover from it, but that is that thing that sets you up just for years, and it impacts every other decision that you’re going to make.
Brett
From a go to market perspective, what would be the number one piece of advice you’d give to a founder based on everything you’ve learned so far?
Ben Borodach
It’s a good question because I’m kind of in the weeds on my very specific challenge here, so it’s kind of hard to give generic advice. I think what I’ve always found is in some ways, it’s kind of at ods, I think you’ve got to be willing to try lots of things, but on the same time, you’ve got to have real focus and discipline. What you end up with is if you try too many things in too many places, you find you get spread too thin.
Ben Borodach
So, like in our case, you can try different marketing messages, you can try different sales tactics, you can try different product positioning, but you’ve got to probably pick a number of verticals that you’re willing to spend time in because otherwise the product team gets too stretched or you’re in so many different places that you can’t possibly garner data that’s going to be valuable in a focused manner. But at the same time, you’ve got to give yourself enough shots at success. And so I think a lot of the early days in the startup are that balance. So try to give yourself enough shots at success and trying enough things, but also maintaining a very strict and disciplined manner about the sequencing and the scope of those activities.
Brett
Final question for you, let’s zoom out into the future. So let’s say three to five years from today. What’s the big picture vision that you’re building?
Ben Borodach
The big picture for April is that whenever the US taxpayer individual small business is going to transact, they can get complete clarity about the impact to their taxes. And if we do that correctly, that means that we will have embedded tax visibility across many different layers of finance. But it also will mean that we figured out how to help finance platforms and their users be served holistically. And if we do those things, us consumers will be significantly better served than they are today from a financial services perspective. And we will also have more profitable and more valuable finance platforms.
Brett
Amazing. I love it. All right, Ben, we are up on time, so we’re going to have to wrap here before we do. If there’s founders listening in that want to follow along with your journey, where do they go?
Ben Borodach
You can always drop me an email at ben@getapril.com that’s going to be the easiest way to get a hold of me.
Brett
Awesome, Ben, thanks so much for taking the time.
Ben Borodach
Thanks for having me, Bret. Really appreciate it.
Brett
No problem. Keep in touch.
Brett
This episode of Category Visionaries is brought to you by Front Lines Media, Silicon Valley’s leading podcast production studio. If you’re a B2B founder.
Ben Borodach
Looking for help launching and growing your.
Brett
Own podcast, visit Frontlines.io podcast. And for the latest episode, search for Category Visionaries on your podcast platform of choice. Thanks for listening, and we’ll catch you on the next.
Twitter
facebook
linkedin