📝 Breaking the TurboTax

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The Hustle

Congrats to Luke Shapiro for winning our $25k business giveaway! Our team and Andrew Gazdecki are now helping Luke acquire a business from MicroAcquire, for free.

Learn more about Luke — who referred an astonishing 3k+ new readers our way — and other top Ambassadors at the bottom of this email.

The big idea
emails from TurboTax

Inside the monopoly of tax e-filings (and how to change it)

This year, the IRS extended tax day to May 17, giving millions of filers more time to reach for a trusted friend: TurboTax.

In the US, TurboTax — an Intuit company —  controls much of the e-filing market, processing ~40m tax returns per year. But its practices have often come under scrutiny.

Product whisperer Ayo Omojola outlined how to take down TurboTax in a recent post on his blog.

It’s an interesting look into the future of tax prep, and made us wonder…

Why do products like TurboTax exist?

Short answer: The US tax system is complex.

Like, no-other-government-in-the-world complex. So complex that there is an $11B industry just to help citizens file (Intuit and H&R Block control a combined 43% of this market).

Other countries, like Japan and the UK, employ a system called “precision withholding” that doesn’t require citizens to file their taxes at all. They simply receive a postcard with the amount they owe or are owed.

One reason the US tax system is complex is that the US government has used the tax code to administer social policy (e.g., tax incentives to encourage behaviors like homeownership or employment).

Tax preparers like TurboTax thrive on a complex tax system

A report by ProPublica detailed a nearly 2-decades-long effort by Intuit to enshrine TurboTax’s dominance as law.

The effort culminated in the passing of 2019’s Taxpayer First Act, which makes it illegal for the IRS to make its own online system of tax filing. In exchange, tax preparers promise to offer free services to Americans.

Since then, companies like TurboTax and H&R Block have been caught delisting free services from Google search results, using UX trickery, and even changing the domain.

What’s the alternative?

Omojola says existing fintech apps — like his ex-employer, Cash App — have direct financial relationships with users.

Even better, since the apps are used year-round, they can provide a “real-time tax position” based on earnings and spending.

Still, Omojola’s solution relies on private companies coming to the aid of citizens, which raises the question: Would we be exchanging one Intuit for another?

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Snippets
  • Uber’s comeback: The ride-hailing giant saw a 9% increase in bookings between February and March of this year. Meanwhile, the company is eyeing cannabis delivery.
  • Robo-surgeons are coming. Following FDA authorization, robotic surgery startup Memic raised $96m in Series D funding.
  • 35k autonomous delivery vehicles from Intel subsidiary Mobileye are slated to operate on city streets by 2028. One US-based company has already placed an order for 1k of them.
  • Autonomous pizza delivery is now a thing in Houston. Domino’s is rolling out its partnership with Nuro, whose vehicles are already delivering items from Houston CVSes.
  • The Zebra is an African equine with black-and-white — wait, wrong zebra. It’s actually an Austin-based insurtech startup that just raised $150m after doubling net revenue in 2020 to $79m.
  • Own a piece of America’s pastime: Topps will soon offer NFT baseball card packs. (A similar platform, NBA Top Shot, has generated $500m+ in NFT sales.)
The Kardashsians

Keeping Up With the Kardashians may be ending, but Kim Kardashian West is just getting her show on the road.

Forbes estimates Kardashian West is now worth $1B, up from $780m in October. How’d she shape into the billionaire she is today?

Shapewear. A whole lot of shapewear.

In 2019, Kardashian West launched Skims. Today, the not-even 2-year-old brand is on fire:

  • Skims did $145m in sales last year and predicts $300m in 2021
  • The brand has sold 4m+ units and has a customer retention rate of 30%+

Skims just raised $154m at a $1.6B valuation led by Thrive Capital, a VC firm that has backed Warby Parker and Glossier.

Kardashian West knows her stuff

She’s deeply involved in the business, helping design fabrics, choose photographers, and review sales data.

When the shapewear category saw sales dip 30% in 2020, she led a pivot toward pajamas and loungewear.

Now, Skims is “your basics go-to” that’s “still able to keep that shapewear core,” Kardashian West told The New York Times while prepping for a shoot.

It’s not Kim’s first venture

In 2017, Kardashian West launched KKW Beauty, a cosmetics brand that sold 300k contour kits in its first 2 hours and eventually hit ~$100m in revenue.

She recently sold 20% of KKW to cosmetics giant Coty for $200m at a $1B valuation. Forbes estimates her remaining stake is worth $500m.

Oh, and don’t forget her supplemental income: ~$20m from the family’s TV show, and a reported $1m per sponsored Instagram post.

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M&A
Microsoft and Nuance logos

Microsoft drops $16B to acquire Nuance in its biggest deal since LinkedIn

Microsoft’s CEO Satya Nadella really wants to spend cash.

As reported by CNBC, Nadella tried to buy TikTok last year for ~$30B. Since that deal fell apart, Microsoft has been linked to a number of huge-dollar deals:

  • $7.6B for gaming company Zenimax
  • ~$10B for a potential acquisition of chat platform Discord (TBD if deal will close)
  • $16B for Nuance Communications, a speech recognition company

The Nuance deal was announced on Monday

And it will be Microsoft’s largest acquisition since buying LinkedIn in 2016 for $26B+.

Per CNBC, Nuance primarily sells “tools for recognizing and transcribing speech in doctor office visits, customer-service calls and voicemails.” Revenue hit ~$1.5B in 2020.

The deal will help boost Microsoft’s health care platform

Burnout is a big issue in the health care field, and the deluge of administrative work (e.g., note taking, report writing) contributes to the problem.

Doctors can use Nuance tech — which is already integrated with Microsoft Teams for virtual visits — to record conversations and automatically transcribe high-quality notes.

In general, the digitization of health care is a huge market, and Sadella seems more than happy to throw cash at the opportunity.

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TRENDS

Let’s talk about sextech…

In last week’s Trends newsletter, we outlined the massive opportunities in a space that’s growing ~90% YoY:

Sextech.

The sexual wellness market is forecast to double to $125B in the next 5 years.

And funding for new ideas in this space has never been more available.

So, how do you get in on the sextech boom?

Our newest report outlines the niches with the biggest areas of opportunity along with specific recommendations on how to capitalize.

We’ll give you the information and the tactics you’ll need so that you can get building immediately.

When you read through the report, you’ll learn:

  • How one sextech entrepreneur raised a $2.3m seed round through a single cold email
  • How another brings in $50.4k/month on Amazon alone selling aloe-based lubricant
  • The 5 key areas of sextech with no clear market leaders
  • And much more…

If you’re not already a member of Trends, sign up today for a $1 trial to get access to the full report.

See the Full Report →

Meme of the day
meme

Via meme man @TrungTPhan

AMBASSADOR SPOTLIGHT

In January we had a crazy idea: “What if we gave away a business to one of our readers?” After a few months of work and a ton of help from MicroAcquire, it’s happening:

Luke Shapiro, a Hustle reader since 2017, is our winner — and soon he’ll be acquiring a business from MicroAcquire, completely free! You’ll learn about Luke and his new business in future issues of The Hustle. But for now we want to show some love for our top Ambassadors who didn’t win, but came close.

Please support them because they’re our biggest supporters:

  • Ryan Sneddon is an entrepreneur building an email newsletter local media company and launching a second project on April 19. Learn more about his companies on Twitter.
  • Tyler Donahue ran a paid ad agency for 4 years and generated millions in sales for a variety of B2B & B2C companies. After selling his ecommerce store in the fall of 2020, he joined the SkillBank team and embarked on a mission of changing higher education for the better.
  • Josh Schoen is an active domain investor, broker, and marketplace operator. Learn more about him and his brokerage and marketplace on Twitter.
  • Keevin O’Rourke is a startup founder and an entrepreneur in residence at a number of startup accelerators. He writes about business ideas and startup opportunities at brainstorms.io
Become an Ambassador, Share The Hustle →

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