I’m not going to bury the lede. If you’re a startup, MainStreet will make you money. Here’s how:
You sign up and connect your payroll system.
MainStreet finds tax credits and incentives that apply to your business.
MainStreet sends you money now. You don’t need to wait until April.
MainStreet makes money by keeping 20% of the money the government pays you. If you don’t get anything, they don’t get anything.
On average, MainStreet finds its customers $51,000. Instead of waiting until April to get the cash, they can cash advance you what you’re earning real-time at 0% tomorrow -- interest rates are baked into the fees you were going to pay them anyway. It’s free money.
No deal with the devil, no gotcha. MainStreet is just solving for the fact that dealing with the government is opaque and annoying, and that most companies don’t want to deal with it themselves.
Who is MainStreet for? If you’re a tech company that’s less than five years old and conducts some sort of activity in the US, you’ll typically qualify. It takes about 5 minutes to find out. Just plug in your payroll and credit card details and they do the rest automagically.
If you’re a founder, impress your investors. If you’re an investor, help out your portfolio companies. If you’re a startup employee, be the hero by telling your finance team. And if you’re on the finance or HR team, become a revenue driver for the day!
Nick was nice enough to give Not Boring readers a couple of extra benefits:
Instant Access: Get your cash within 24 hours vs. a few days
25% off for life! Instead of paying MainStreet 20% of the money you receive, you only pay 15%
If you’re convinced and you just want to go save money now, get to it:
We’re also here to learn, so I want to go a little deeper into MainStreet the company. We can’t invest in this one (yet) because they’ve already raised from some great investors and are focused on building, but MainStreet’s story is cool because it seems so simple, but there’s a lot going on under the hood.
Rebuilding MainStreet
MainStreet has been trying to give people money for no-brainers since the beginning, but it wasn’t always tax credits and incentives. When it launched a year ago, MainStreet offered to pay people $10,000 to leave the San Francisco Bay Area. (I’m sorry SF readers!)
MainStreet is founder and CEO Doug Ludlow’s third company. He previously founded Hipster and sold it to AOL, and The Happy Home Company, which he sold to Google. While at Google, he was Chief of Staff for SMB ads, and saw the challenges that small and medium businesses in the country had in attracting talent.
His initial vision was to create 1 million jobs in suburban and rural communities by facilitating the transition to a remote work future, way back in November 2019, before it was cool. MainStreet would recruit and train employees who wanted to move out of SF into a smaller city or town and set up local hubs where remote workers could build a sense of community.
He could not have been more right on the trend. When Coronavirus hit, it spurred the migration from cities like San Francisco, and MainStreet got a ton of demand from employees interested in relocating. But the company also received a ton of unexpected inbound: emails and calls from state and local governments trumpeting their incentive programs.
Ludlow and his co-founders, Dan Lindquist and Daniel Griffin, decided to rebuild MainStreet to focus on getting startups some of that free government money. Despite the huge COVID-induced demand spike for the old model, the pivot makes sense. Running recruiting, training, and a nationwide network of co-working spaces is not nearly as scalable, profitable, or fun as building a tech-powered way to help companies find $50,000 in their metaphorical couch cushions.
It sounds like a blast to get to do that for work every day, but when Nick told me about MainStreet, my first thought was: why won’t a bunch of companies just do this and drive each others’ fees into the ground? This is an awesome product, but is it a good business?
After digging in, I’m coming around.
DoNotPay for Startups
Back in April, when Coronavirus was fresh and unemployment was skyrocketing, I wrote about one of my favorite companies, DoNotPay.
Do Not Pay is one of my favorite companies that I’ve discovered in the past year. Joshua Browder, a 23-year-old Stanford graduate and the son of Red Notice author Bill Browder, founded the company when he was 17 to help people in the UK get out of parking tickets.
Now, the company has expanded to the US, and handles everything from parking tickets to suing people and companies in small claims court. Last summer, it launched a virtual credit card that subscribers can enter when they’re signing up for free trials so that they’re not auto-charged when the trial expires.
Just last week, they launched a new product that allows subscribers to claim their unemployment payments at the press of a button. Filing for unemployment has been a nightmare for many. They desperately need the money, but they aren’t able to figure out the forms, the websites are overloaded, and they can’t get through when they try to call in. DoNotPay will handle all of that. It guides them through the claim form via a chat interface, submits the form for them, and in states that require a phone call, calls the unemployment office every hour until it gets through. Once benefits are approved, it also automatically handles the weekly certifications of unemployment necessary to keep receiving checks. It makes a painful process easy.
DoNotPay is so magical because it uses software to help people do all of the things that they should be doing but don’t because they don’t know how, they forget, or it’s too much of a pain in the ass. The more capabilities that DoNotPay adds, the more ludicrously cheap its $3/mo subscription seems. It works, because after all of the painful work of onboarding new capabilities and translating them to software, DoNotPay has almost zero marginal costs.
MainStreet is DoNotPay for startups.
Think about it. Finding, applying for, and keeping up to date with tax credits and incentives is a time-consuming, annoying, labor-intensive process for any company that wants to do it one-off. Breather, where I used to work, is HQ’ed in Canada and is therefore eligible for Canada’s sweet, sweet SRED credits, which essentially paid like 60% of our engineering and product teams’ salaries (don’t quote me on the exact number, but it was that unbelievable). It was an amazing benefit and a main reason that we did engineering there, but it was a pain in the ass. Our finance and legal teams spent weeks applying for and following up on SRED credits.
But applying for tax credits and incentives is a job that’s perfectly suited for software. It’s repetitive, boring, and rules-based. Chances are that no one on your small team loves or has time for the process of finding and applying for tax credits, or continuing to update and submit paperwork any time new credits are added or you hire more people. Software loves that shit.
MainStreet doesn’t really talk about the fact that it’s an AI company, but Gradient Ventures led its $2.3 million seed round in June. Gradient is Google’s early-stage fund that invests in AI companies. When you think about Artificial Intelligence, depending on where you fall in the “Child to Futurist Philosopher” spectrum, you probably think of movie robots like Wall-E or Goal Seek functions gone wild like Nick Bostrom’s paperclip maximizers. But for now, the most practical applications of AI are being built by companies like MainStreet that use machine learning to automate things that humans either can’t or don’t want to do.
A few examples in Gradient’s portfolio:
Boring. None of these companies is building anything hyper-futuristic. What they and MainStreet all have in common is that they help businesses handle repetitive tasks more consistently, and get smarter and more valuable the more they do those tasks and the more new tasks they add.
Which brings us back to MainStreet. Today, MainStreet gets you money in a few ways:
R&D Credits: up to $250k/year
Hiring and Company Expansion Credits: up to $1,000 per new hire
Training and Workforce Development Credits: up to $5,000 per employee
Over time, it will add more and more state and local tax credits and incentives, and apply them to your business automatically. Just by having your payroll and credit card hooked up, MainStreet will constantly be on the lookout for ways to take money from the government and give it back to you.
Getting all of those credits and incentives onboarded is a schlep -- there’s a lot of manual work people on the MainStreet team need to do to get them set up and to deal with the back and forth with the government entities involved. But unlike your company, which has to do all of that work to get money just for your company, MainStreet scales that upfront work across all of the companies it works with. That’s its compounding advantage over time:
Do the hard work to find and connect credits and incentives manually
Acquire customers and save them money
Automatically scan and apply existing credits and incentives in the system to your company
Add more tax credits and incentives
Automatically scan and apply existing credits and incentives in the system to your company
And on and on…
Like Stripe or Agora, MainStreet customers get the benefit of any software improvements or new credits without having to do anything. Unlike Stripe or Agora, the benefit to MainStreet’s improvements is more cash directly in your bank account.
In addition to Gradient, MainStreet is backed by an all-star lineup of early stage investors including Ryan Hoover’s Weekend Fund, Shrug Capital, SV Angel, Remote First Capital, Basement Fund, Basecamp Ventures, Backend Capital, and a lot of angels.
Its customers, including Sandbox VR, Italic, and Pipe, sing its praises, and I really think you will too. I want to hire a team just so I can use it myself.
Just yesterday, MainStreet’s CEO tweeted that the company has now saved startups and SMBs over $15 million in its short life.
I’m really excited to partner with MainStreet to give you money. It’s a no-brainer.