Why Is the US Tax System So Complex?

Navigating the Idea Maze to The Unlikely Birth of Finch

Finch, a platform providing a unified API for employment data, was born out of failure and uncertainty. Ansel Parikh and Jeremy Zhang, the co-founders, first met during On Deck's second cohort. Both were passionate about solving the plumbing behind big problems and gravitated towards challenging infrastructure issues.

Finch was born out of failure. Initially, they attempted to launch an embedded lending platform, but the COVID-19 pandemic disrupted their plans. Banks and customers began rejecting them as the future of lending became uncertain. Who was going to give a loan in such an uncertain environment? 

It wasn't until a small business lender they were potentially going to work with approached them with a request to help access employment data for the Payment Protection Program (PPP) that they discovered the opportunity that would eventually become Finch.

Although the PPP was nearing its end when they built their solution, Ansel and Jeremy received enough positive feedback to continue pursuing the employment data problem. They embraced a "hard to get information made legible" business model, rather than following a thesis-driven approach. 

This allowed them to quickly pivot and adapt based on their unique founder-product fit: Ansel's background in fintech and infrastructure investments, combined with Jeremy's engineering and product experience, enabled them to quickly develop a product and secure their first customer. They emphasized the importance of failing quickly and focusing on the problem, rather than falling in love with a particular solution. Ansel also highlights that there is no “perfect moment” to get to conviction, you just need to make a decision.

Finding the Right Co-Founder

For Ansel and Jeremy, finding the right co-founder was critical to their success. On paper, they had a unique founder / product fit.

• Jeremy had a background on engineering and product, and had worked on API challenges before that transferred to employment data ecosystems and the work they were doing at Finch.
• Ansel had been a late-stage investor at Kleiner Perkins and had spent a considerable amount of time on fintech and infrastructure investments so he was deeply familiar with the space.

That said, they had to test whether they actually worked well as a team. They recommend setting up a three-week sprint with a potential co-founder to work on a project together, setting daily goals, and discussing progress. 

On top of that, they found another co-founder team who were going through the same stage and became accountability buddies. In their case, On Deck played a crucial role in helping them meet and build a strong working relationship because it provided with the structure they needed throughout that period.

Embracing Complexity and Turning Illegible Information into Legible Data

Finch's business model revolves around transforming illegible, hard-to-find information into legible, connected, and programmable data. The challenge of building a single source of truth for employer-employee relationships lies in the uniqueness, obscurity, and hyper-dynamic nature of these connections.

• Employment relationships vary significantly across industries and sectors, with different structures and incentives. Blue collar vs. White collar is not the only distinction. As an example, startup employees value equity, other type of non-tech companies value benefits, and factory workers value overtime.
• Moreover, employment data is often hidden in obscure systems that don’t communicate with each other, making it difficult to access. 
• Adding to the complexity, this information is continuously changing, and outdated data is often used for critical decision-making at various levels.
• The US tax system and the US employment rules are a nightmare. There are different tax brackets and regulations at a city, state and federal level, and they also vary across industries. 

By focusing on making illegible information legible and valuable, the company offers a playbook for others looking to build successful businesses in the face of adversity.