Mark, the 500 Startups Marketing Manager, sent us an email instructing us to “make a fun (and funny) video!”

On our internal mailing list, we threw around tons of ideas. One that had decent traction was a “Breaking Bad” spoof.  Hopefully Dave won’t kill me for sharing this:

I actually hadn’t heard of Breaking Bad before, so I watched a couple episodes.

I hated it.

So I was really glad when Lucia of Sverve humbly suggested a music video spoof of Macklemore’s Thrift Shop, even though it was a new idea and we had only one week until the video had to launch.

I actually hadn’t heard of Macklemore or Thrift Shop (yeah I’m out of it) but I watched the music video and loved it. The ridiculous costumes, the well-timed slow-mo, the insanely catchy tune, the thrift shop theme. So much impeccable editing and tiny details that just make the whole thing unforgettable. It’s perfect.

I helped with an early version of the lyrics, and some other folks took it from there.

So the Saturday before the big launch, virtually all of Batch 6 got together and shot the clips for the video. I wish I took some pictures here, but I didn’t. In a future post (or revision of this post) I’d like to show off a few behind-the-scenes pics if I can acquire them. Otherwise, just watch our video at the bottom.. although a lot of clips did get cut from the final video.

Here’s a random pic I took of myself the evening after the filming.

Reppin’ the new 500 Startups swag

Some of the video was filmed at The Regency, a sweet apartment complex just a mile from 500 Startups, and that’s where I am in the photo above. We weren’t filming all day; some of us, myself included, took a long break to jump in the pool and splash around.

So the whole video was very grassroots and low-budget. We literally went to Goodwill to get our costumes. It also didn’t take much time at all; from start to finish, it was about 48 hours, mostly over a single weekend.

Kevin of Geekatoo did a phenomenal job of editing it all together. Honestly, I had my doubts at some points during the process, but Kevin totally pulled it together.

The Controversy

In the back of my mind, I saw this coming. The video stirred up ton of controversy in a few different places.

Now note: my opinion is my own, and NOTHING that I say represents anyone else. What I’m writing here does not represent the views of 500 Startups, GreenGar, nor my fellow batchmates.

But in my opinion, this is exactly what I wanted to see happen. If you’re going to bother doing something, you ought to make it memorable. Even better if you can stir up a debate.

And I actually agree with most of the criticism. Why so much of a funding focus instead of a product or customer focus?

Excellent concern. In fact, I want to build a sustainable business and I’m absolutely concerned with deep issues of business development and solving real problems. That’s what I actually think about on a daily basis.

That said, Dave McClure’s comments are golden. Here’s a super brief snapshot of just one example.

We were criticized in The Atlantic Wire:

Let’s start with the early shot of whatever car that is, the one that looks like it costs over $100,000. …

Dave responded:

the car was borrowed from a friend; it didn’t cost a thing. we thought that was rather thrifty. …

And of course Dave is 100% correct. My cofounder, Thuy, borrowed the car from a friend. Actually, a friend of a friend. And that friend wasn’t even around; we got the keys from the friend’s sister.

We are relentlessly resourceful.

—-

It has been 3 weeks since my last post about 500. It has flown by and so much has happened that there’s no way I could hope to cover 1% of it. Yet I will try to pick out some highlights.

Entrepreneurship is a lonely road. Prior to joining 500, I had thought about giving up. Many founders can relate to the experience of feeling on top of the world one day.. only to feel like everything is broken and we’re about to die the very next day. Even successful startups and founders have related this experience to me.

The fact that the 500 partners believe in us, put a bit of money in our bank account, and take the time to address any stupid question that we have – it makes a huge difference.

Christine, Elliot, Thuy, Dave

I was recently reminded that Airbnb actually re-launched three separate times before gaining the traction they needed to succeed.

I see our current work as a re-launch of GreenGar. Not only are we changing the capitalization of the second “G”, but we’re also revamping everything from our product positioning to our development pipeline. I may write more about our past phases in the future, but suffice to say that things are moving quickly and I’m WAY more optimistic today than I was just two months ago.

And it’s not just the 500 partners and organization. The “500 family” is a big part of it as well, and even more specifically: the batch 6 founders and employees. The whole team is important. They call it the #500STRONG family, and these words are important. Words shape the way we think, and that begins to affect our actions.

The value of community is simply incredible. Making the video was just one of the ways that our batch is bonding and supporting each other.

So to wrap up…

Here’s that video we made:

Among other things, Marvin told us to make sure we have a really good filter when listening to mentors. Most of the time, what they say is wrong. They don’t understand our business the way that we do. Marvin has great energy and tends to be louder than most of the people I’ve talked with. Our initial mentor meeting was scheduled for half an hour, but we went slightly over.

On Thursday, we had an off-the-record fireside chat with the founders of Punchd. They were in the first batch of 500, and they were acquired by Google just months after graduating. It was very cool to meet the three of them: Xander Pollock, Niket Desai, and Reed Morse:

I was impressed that, though we hadn’t met in person, Niket already knew me due to my apps! That’s what I love about being in this industry: having huge reach. I love to distribute stuff that I build, especially to people I don’t know yet. Reed actually has my Color ID app installed on his iPhone 5 – before we even met!

One thing I learned is that whenever you’re not in control of your company, you have to play by someone else’s rules. They might say you’ll have independence, but you don’t. They add friction. Even though the Punchd team is now at Google, they love to chat with startups like us.

Two of them went to Cal Poly – which I believe is only a few hours from where I grew up in LA. We also have a mutual friend. Silicon Valley is a small place.

I spent my Saturday making major progress on our new app, an MVP built on the Smartboard Platform. It was a great feeling to be able to focus without interacting with others. I’m doing a complete redesign from what I’d initially started with. Want to beta test it? Leave a comment.

I still have my apartment in San Francisco, but I’m trying to decide what to do with it. However, my apartment in Mountain View is shared with the other two Greengars. I’m here in Mountain View for the summer accelerator program. But after the summer, perhaps I’ll go back to the city.

Why Accelerate?

Those who know me might ask: “Elliot, your startup began years ago, you have over 14 million downloads, and you have revenue! Why are you joining 500 Startups?”

Great question. We are different from other early stage startups that begin with nothing but a couple founders and an idea. We have that. But we have a little more, too. With years of experience and over 20 apps on the App Store, some would say that we’re past the stage where an accelerator would be useful.

Not so. And last week really drove that point home for me. To understand why, I have to explain a bit about the origins of Greengar.

When I started building apps, I wasn’t trying to start a company. I just wanted to make cool apps. I didn’t have strong connections to Silicon Valley. I didn’t have any funding. I didn’t have any mentors. I was just a kid in a living room, hacking away on his first Mac.

In a lot of ways, things haven’t changed much since then. Several of my apps were huge successes– Brain Tuner, Whiteboard, Flashlight– but I still wasn’t trying to build a company. I was hiring people because there was a ton more work/features that I wanted done/built than I had time to do myself. So I hired, but deep down, I was reluctant. At the beginning, I worked closely with my hires. Eventually, they pushed me away, not wanting the pressure of the “boss” looking over their shoulders. So I moved away instead of leaning in.

When we were accepted to 500 Startups, everything changed. I realized that I had to know my team and know my product. I realized that we had stagnated because the people I had hired (or allowed to be hired) did not care about the company the way I did, and did not have the product sense and user experience expertise that our industry demands.

Furthermore I found that it was time to build a real company. It was time to deprecate the LLC we’d been operating under, connect with a startup lawyer, and set up a proper Delaware C-Corp.

Justin, Thuy, and Elliot with Greengar Stock Certificates

So in many ways, this is a new beginning for me and my team.

One of my greatest fears is that I’ll get locked into a “zombie” startup that pays the bills but doesn’t go anywhere. It’s a trap that’s easy to fall into, so I’m determined not to let it happen. One of the attractions of 500 is the fixed term leading up to Demo Day. We aren’t going to be working here at the beautiful 500 office forever. We’re pretty much only here until Demo Day.

Why 500?

Greengar was actually accepted to two different accelerator programs, and we decided to go with 500. There are a lot of reasons, including the $50k, the 500 brand, and the recommendations of others.

The first talk of the batch was by Paul Singh on Fundraising for Startups. His solid talk reinforced the reasons I decided to join 500 in the first place: mentors, connections, focus, and guidance. These resources build companies.

At 500, folks frequently use “forcing functions”, the events and deadlines we employ to make things happen fast. That’s a critical distinction between doing a startup alone and joining an accelerator. I’ve met people whose non-accelerated startups have been stagnant for 9 months or longer. An accelerator is a forcing function that encourages startups to either grow like gangbusters or fail fast. That’s what I want.

By the way, the attitude toward failure here is deeply inspiring, reassuring, and motivating. Paul Singh reminded us that sophisticated angel investors know that 80% of startups will fail. “We know we’re going to lose our money.”

Yet failures are not only accepted, but encouraged. “If you’re good enough, you’ll fail at something once a week.”

And people whose startups fail are not kicked out. They’re in the 500 family for life, no matter what happens. When you can fail, then you can take bigger risks. When you take bigger risks, you can have a shot at doing something truly great.

Dave McClure

I’ve told a few people that we’re joining 500, and more than one has wanted to hear more about Dave. We had a solid meeting with Dave on Wednesday and the care and attention he gave us was incredible. He pointed us to relevant people and startups that will really help us to move forward. Niren, co-founder of Searchman, happened to be walking by, and Dave introduced us on the spot!

I’m incredibly excited to join the 500 program and look forward to building relationships with the entrepreneurs here.

It’s not something that we like to talk about, but doctors die, too. What’s unusual about them is not how much treatment they get compared with most Americans, but how little. They know exactly what is going to happen, they know the choices, and they generally have access to any sort of medical care that they could want. But they tend to go serenely and gently.

… Torch was no doctor, but he knew that he wanted a life of quality, not just quantity. … The cost of his medical care for those eight months, for the one drug he was taking, was about $20.

• Why Doctors Die Differently - WSJ

Each day, we only get 1,440 minutes.

In one lifetime, we only get about 675,000 hours.

In my case, at 25 years old, lots of those hours are already behind me. Many of my future hours will be spent sleeping.

I must make the most of each one.

The Lord is my programmer, I shall not crash.
He installed His software on the hard disk of my heart. All of His commands are user friendly.
His directory guides me to the right choices for His name’s sake. Even though I scroll through the problems of life,
I will fear no bugs, for He is my back-up.
His password protects me.
He prepares a menu before me in the presence of my enemies. His help is only a keystroke away.
Surely goodness and mercy will follow me all the days of my life and my file will be merged with His and saved forever.

Amen

• Psalm 23 (Geek’s Translation) via Sam Gichuru

There are many problems with the federal income tax. One is that it allows politicians to protect friends, punish enemies, and to tax certain groups to give benefits to other groups. There are numerous tax loopholes and deductions which make the tax unevenly distributed, and not in a good way.

Another problem is that it is incomprehensibly complex. People who are willing to put in the time and effort to figure out the tax system are able to pay less in taxes. This leads to tremendous inefficiency and resentment. It also enables tax evasion through the use of loopholes. The tax laws are bad enough for individuals, but they’re also pretty awful for businesses.

Next, there is the economic argument. What we tax, we get less of, as long as the item is of elastic supply (and labor certainly is). The income tax discourages people from working: It reduces their incentives to work. Currently, the income tax takes about a third of what most Americans make, which is a large drain on the economy. Effectively, it’s a penalty on productive behavior. Furthermore, the administrative complexity adds additional cost.

In addition, our income tax is ostensibly progressive, so the more you earn, the more you’re supposed to pay. As the marginal benefit of extra work falls, people are less motivated to be more productive and creative. Also, due to deductions and loopholes, the current tax system is effectively regressive in many cases: as income increases, the effective income tax rate actually decreases.

Finally, there is the ethical argument against the income tax. Some believe that the income tax, as a tax on property that individuals create through their own labor, is equivalent to theft. It gives government a claim on our lives and our work, and destroys our privacy in the process.

Since the federal income tax is so broken, what can be done about it?

A Realistic Way to Eliminate the Federal Income Tax

The FairTax would abolish all federal taxes and replace them with a 23% nationwide sales tax that applies only to new goods and services. This rate was chosen because it would be revenue neutral (PDF), meaning that under the FairTax, the government would still collect about the same amount of tax money that it does today.

A used car and secondhand clothes would be exempt, while groceries would not. Also, everyone would receive a monthly prebate check, which eliminates federal taxes on the poor. The prebate untaxes spending up to the poverty level. It’s a vastly simplified tax.

In other words, it’s a single-rate national sales tax on final retail consumption with no exemption. Business inputs are not taxed. Education tuition is not taxed.

The IRS would be abolished. The FairTax would be administered by the states and a sales tax bureau in the Treasury Department.

U.S. exports are not taxed since they are consumed abroad. Imports are taxed on an equal basis as U.S. produced goods.

Compliance costs would be reduced by 90% because individuals would be exempt from filing tax returns. Businesses making retail sales will file sales tax returns for a total of about 20 million tax filers.

Some people think that the FairTax would be too generous to the rich, and harmful to the middle class. Well, the fact is that under today’s tax laws, about 55,000 millionaires already pay a lower effective tax rate than millions middle-income Americans, which is why The Buffet Rule has been proposed. So today’s income tax is not particularly generous to the middle class. And even if it were, I would argue that the rich probably should not pay inordinately more taxes than other people, from the standpoint of both fairness and economic reality (maximizing everyone’s overall wealth).

If you have more questions about the FairTax, take a look through their research here.

The Problem of Tax Dodging

Now, some people think the FairTax would not work because there will be too much dodging of it. Even though states have used sales taxes for over 60 years, some people think that the FairTax wouldn’t work because the 23% tax rate is “high”.

The U.S. Receipt Lottery

The solution I’d like to propose? A Uniform Invoice lottery, similar to the system that has been employed in Taiwan since 1951. With the Uniform Invoice lottery, better known as the Taiwan receipt lottery, consumers receive a Uniform Invoice receipt with every purchase.

This encourages merchants to keep things on the books. With millions in winnings on the line, customers now demand a receipt with every purchase, so merchants wind up reporting all their sales to the government.

A lottery system works a lot better than a stick-oriented approach, with penalties for businesses that don’t adequately and accurately report. It’s an easy and effective way for the government to maximize tax coverage. While penalties and enforcement are the “obvious” approach, the lottery system is a creative “carrot” incentive that actually works pretty well.

By the way, the receipt lottery would not be the sole means of enforcement. Sales taxes are not voluntary. They are (and still would be) required by law. The receipt lottery is merely an additional incentive in addition to everything else that already enforces sales taxes today. As I mentioned above, states have been using sales taxes for over 60 years.

Modern and Electronic from Day One

In recent years, Taiwan has been moving to an e-invoice initiative, where customers with smart cards or other identification can have the lottery numbers sent to them electronically.

Since the U.S. has yet to implement anything like the invoices that Taiwan has been using for over 50 years, I propose that we start it off the right way, and have e-invoices from Day 1.

Many private companies are doing it already. Remember the last time you bought something from the Apple Store? You just gave them your email address (or confirmed if it was already on file), and they emailed you a receipt. No paper necessary!

That’s the way the FairTax should work: as a lottery with e-receipts automatically emailed to customers. While there are a couple holdouts who don’t have email, I think it’s fair to require it. It’s 2013. People who don’t have an email address can forfeit their lottery number (or donate it to charity).

Hackathon Project Idea

Implement an e-receipt lottery system for online e-commerce sales. For extra credit, use Bitcoin.
 
  
  
  
  
Thanks to Pierre Johnson and Shaon Bhuiyan for reading a draft of this.

Leave a comment if you’re making games too!