VCU News | Leila Ugincius
ACe Callwood says he wasn’t the best of students when he attended Virginia Commonwealth University, but that hasn’t stopped him from launching some successful startups since graduating from the School of Business’ Entrepreneurship Program in 2012.
Callwood and fellow VCU School of Business alumnus Justin Kauszler developed the popular Coffitivity app, which allows users to listen to the ambient sounds of various coffee shops as they work. They brought in former classmate Matt Russo, a Richmond developer, to build up the app’s mobile experience.
The three worked well together, so when Russo, who was working as a freelancer, got nailed with a $15,000 tax bill, it became the impetus for the trio’s latest project, Painless1099. Many freelancers struggle with estimating the taxes they will owe, and particularly for those new to self-employment, the amount is often a rude awakening come tax season. An easy way to set aside taxes has the potential to help a lot of people — freelancers make up more than one-third of the U.S. workforce, according to a 2015 report from Freelancers Union.
“If anyone can build it, it’s us,” Russo told his partners. “Why not solve our own problem?”
Painless1099 handles tax withholding for independent contractors who don’t typically have taxes withheld from their paychecks. When you sign up with Painless, you get a new savings account in which your clients can directly deposit your checks. An algorithm separates what you need to save for taxes and then automatically sends the remainder to your regular checking account.
The guys knew they had the perfect storm of knowledge and opportunity, but still spent a month or so researching their idea and talking directly with freelancers.
“That’s a lot of our background, and what we got in the [VCU entrepreneurship] program is don’t just start a business, look at some of the drivers and understand if it’s an opportunity worth pursuing,” Callwood said. “So we got together and just had a really frank discussion on some of the things we had experienced: Matt’s personal pain point and me and Justin having consulted and wanting to figure out taxes.”
They had the advantage of a built-in focus group in their Coffitivity customers.
“Of the millions of people across the world who have used Coffitivity, 50 to 60 percent earn some 1099 income,” Callwood said. “They’re the technologists plugged in, sending lines of code, or the creatives who are hanging out enjoying coffee shop sounds.”
The partners officially incorporated Painless1099 in February 2015. Around the same time, Kauszler came across a competition sponsored by 43North, a Buffalo-based business idea competition billed as the largest in the world.
This was the most interesting — and seemingly the most unobtainable — program they had seen. With millions of dollars in prizes at stake — as well as a year of incubator space, mentorship opportunities, resources and tax breaks — more than 11,000 startups applied for 11 spots. Painless was one of the last two teams standing for the $1 million prize and just barely missed the mark. But, with the $500,000 that came with second place, “A winner is a winner at that point,” Callwood said.
Cash is king in the startup world, and the money has relieved some pressure for Painless. Beyond that, winning a spot at 43North allows Painless to spend the year in Buffalo working with the 10 other winning teams and sharing their experiences.
“So much opportunity comes with a new community, and with that you get to tie in the old community too,” Callwood said. “So for me, being an advocate and huge fanboy of Richmond has been cool, in Buffalo especially because the cities are so similar. With my entrepreneurship-community builder hat on, the mid-tier cities have to stick together.
“I like being 15 minutes ahead, or talking to someone who is already 15 minutes ahead of me. That’s all you need to point out a pothole. It doesn’t have to be years and years of experience, so if I can share something that resonates with another entrepreneur and help them avoid a pain point, that’s great.”
Callwood also shares advice with future entrepreneurs who may struggle with their grades.
“I think it’s important to share that I was not your A student,” he said. “I was a very square 2.5-2.8 student, but I had a great experience regardless and that’s the beauty of what VCU offers.”
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