The Massachusetts Software Tax

I am lucky enough to work in an industry that, compared to other industries, is lightly regulated. When odd regulations pop up, however, they are glaring. Massachusetts has apparently passed a new tax law for software companies who do any business at all in the Commonwealth. It makes no sense, even after Fast Co Labs tried to explain it:

This added levy is not only cumbersome, it’s super confusing. For example:

  • if you install software (Microsoft Office, Constant Contact, Drupal, etc.), it’s taxable
  • if your client clicks the mouse to install it, it’s not taxable
  • training your client to use this software is not taxable
  • but if you “customize” or configure the software in any way, it’s taxable
  • if you don’t actually make any changes, but just discuss them and plan them, it’s consulting and not taxable
  • if you create graphic design mockups, it’s not taxable
  • but as soon as you implement that design (i.e. program it), it becomes taxable if you’re using “prewritten” software “not developed” by you (such as WordPress)

At least, that’s how we think it works.

Read the entire article. I emailed the article to my accountant, here in Oregon. Sadly he has to be an expert in tax law for all 50 states and maybe overseas, too.

We are starting to see the desire to charge software taxes, first with the Internet sales tax and now with laws like this. Our landscape is only going to get more confusing. And, sadly, we are all going to have to be more active politically to protect our sanity.

via O’Reilly Radar

Compressed Into The Shape Of The Tube

This little nugget buried in a footnote to Paul Graham’s latest masterpiece on convincing investors:

Most people emerge from the tube of their upbringing in their early twenties compressed into the shape of the tube. Some find they have wings and start to spread them. But this takes a few years. In the beginning even they don’t know yet what they’re capable of.

I thought I had found my wings in my mid-twenties. I really didn’t find my wings until my mid-thirties. And I was raised in a house where I was constantly pressured to find my own wings, as it were. I can’t imagine how long it takes people who grow up in repressive households, abusive households, households riddled with drug abuse. No wonder we as humans are generally so screwed up.

Introducing Equals or How We Will All Work With Numbers In The Future

I am proud to introduce you to Equals. Our goal with Equals is to make working with numbers as easy as writing sentences. While we only have a web site up right now, the products and services are coming soon. Please email me with any comments or feedback, and hope you will be interested enough to sign up for notifications at the Equals web site.

We have had many successful years developing powerOne calculators, combining aspects of spreadsheets and calculators into the template format. But the world has changed drastically over the past few years, especially since the iPhone App Store launched in 2008. powerOne was built and designed for that pre-App Store world.

We’ve been looking for something new for a while, something we can build a long-term business around, one that fulfills my thesis that the tools we use to work with numbers need to change just like the PCs we use those tools on have. A few of the reasons we are so excited about Equals:

Customization

Screen Shot 2013-08-13 at 8.57.52 AM

What made spreadsheets incredible is that, while they still required some basic algebra (B3 is nothing more than a variable, after all, no different than X), it allowed customers to craft spreadsheets concretely. Enter a value into B1, another into B2, then add them up with a simple =B1+B2 formula. Immediately the customer can see the results, even change B1 and B2 to see the impact.

powerOne… not so much. In powerOne the scripting language is more akin to programming. The author must think through the entire calculation, remove the equations from the data, and craft the template. Then he or she can plug in numbers to see if it works. This is hard for most people to visualize.

Equals is more like a spreadsheet in this regard. It is much easier to build calculations from the data. But we wanted to take this a step further. Could we start making variables look like sentences so customers didn’t even need to think in algebra at all? In Equals I can name a variable anything, with only a few limitations (for now):

2013 Q4 Sales
Interest Rate
Avogadro’s Number
Acceleration

It worked so well that after a few sessions with Equals it became clear that I could read notes just like I was reading a page with text. I could understand the variables, understand the equations, whether I wrote them or not. This opened up calculations so not only can anyone write one, but anyone can take someone else’s note and customize it to their own needs. This is critical. Life is custom, after all.

Finally, we realized that the way people looked at the numbers physically is different. powerOne and Excel both expect to see calculations in a very specific format. Sometimes that format made sense and sometimes we copied and pasted numbers into Word and other text editors to layout the numbers.

This is no good. These arbitrary barriers between form and function were designed for an era when computers could only handle one or the other. That’s not a problem any more.

Newton's Laws

Internationalization

powerOne is filled full of text. There are thousands of words of help, template descriptions, labels and more. The cost to bring powerOne to a language other than English was astronomical, let alone our lack of understanding of certain calculations in other countries. Back in the Palm OS days we weren’t hurt horribly by this fact. Now, though, non-US sales of apps, by some reports, account for most app revenue.

One of our goals with Equals was to get Infinity Softworks out of the middle of this localization. The apps and site we are working on is more iconic, less text-centric. The product is your notes, your calculations. Let them be designed and presented in the language of your choice. There will still be some work on our part to localize Equals. That’s fine. Just so long as it isn’t overwhelming.

Cross Platform

As if localization wasn’t bad enough, powerOne is a bear to port. At a minimum we are looking at six months of intensive work for multiple people and that doesn’t include on-going maintenance and support. iOS couldn’t pay the bills around here. Android has been even worse. The motivation to develop for any other platforms is at an all-time low.

When we started working on Equals one of our goals was to make sure we could move across platforms more easily. We focused on putting as much of the technology in HTML5 and ANSII C so we could run it on multiple platforms more easily. This doesn’t mean everything is in HTML and C, however. It means certain core technologies are. We are testing this immediately with both iOS and web versions. We are excited to add Android and other platforms as well.

App Stores

App Stores are an unbelievable resource. The iOS App Store eliminated 70% of our support burden just by handling the install and reinstall issues we encountered in the past. While the App Store is an amazing resource for distribution, it is a horrible resource for making a living wage. We are excited to introduce a product and service that we think is not just valuable to customers but also sustaining for us as well.

In addition, getting out of the app stores allowed us to think more broadly. What does it mean to share calculations? How could this be done easily? What would be an appropriate business model that allows us to get paid and for customers to have a valuable product, whether or not the app stores will support that model?

Don’t get me wrong. The app stores have their place. We just intend to use them for what they are really good at.

Valuation

Long Life

I like products I can think about and work on for a long time. After 16 years, powerOne has reached the end Yes, there were some things we could do to it, features that customers wanted, but the big ideas were already there.

Equals is exciting to me. It has long legs. The way customers will use it, the enhancements we can make to improve it from collaboration to data to integration with other services, gives me years and years of material to work with.

I hope you are excited. Equals ushers in a whole new era for working with numbers, one designed for the web and mobile world we all live in today. The site is ready for your review today; the service, mobile and web apps very soon. I hope you will check it out and tell me what you think.

Changing The World Has No Time Table

I linked to this last week but wanted to highlight this specific passage from Mark Suster’s post entitled Why You Need To Ring The Freaking Cash Register:

Some businesses take time to find their magic. And I only know one reason companies go out of business – they run out of money. Delaying going out of business gives you way more chances at product / market fit than any other strategy I know of.

I’m a freaking master at not going out of business! I’ve been not going out of business for longer than most companies have been in business. Hell, my kids haven’t been around as long as I’ve been not going out of business.

In 2006 it became apparent that powerOne was going to struggle to make us a living, let alone change the world. The problem was I didn’t have anything better.

I could have changed my thesis — that the tools we use for working with numbers hadn’t changed since the advent of the personal computer even though the personal computer had — but felt that changing the world of numbers was an audacious goal that impacted all segments of life: how we work, how we live and how we learn. I didn’t want to start a new thesis from scratch.

So we bided our time. We tried other products, a web education platform called MathPoint that almost got us acquired then a powerOne-like platform called FastFigures focused on the data. We also experimented with two or three other ideas that didn’t make it off the ground.

We kept moving forward. We worked hard on versions of powerOne for iOS, Android and Tizen. We learned Rails and did contract work to fill the financial gaps. We rebuilt our skill set around modern languages for the day when we had the right idea. We kept our tiny little team, reduced from 13 in 2003 to 2 in 2006, together.

Many people thought I was mad. I saw the steps as ends to a means, a long planned out path that most people couldn’t see. I knew, if I just didn’t go out of business, that all the learning, all the experiences and all the observations would coalesce into an unmistakably earth-shaking product.

More on that tomorrow.