What are the key takeaways from this Build Your SaaS episode?

Key insights include: **Section 174 Tax Impact:** Software development costs must now be amortized over 5-15 years instead of expensed immediately, creating phantom profits that get taxed. Companies report 400% tax increases, forcing layoffs and business closures despite Congress never intending this provision to take effect.; **Grassroots Advocacy Strategy:** Coalition letters to Congress require customization to count as separate contacts rather than one bulk submission. The SSB Alliance letter reached all 50 states, was entered into congressional record, and legislators use it to persuade colleagues, demonstrating small business political impact.; **Daycare Economics as Startup Motivation:** Infant daycare costs $25,000 annually in major US cities, exceeding state college tuition in most states. This financial pressure motivated building side projects with specific revenue milestones tied to family expenses like childcare, air conditioning repairs, and student loan payoffs.

What did Michele Hansen and Michele Hansen discuss on Build Your SaaS?

Michele Hansen updates on Section 174 tax legislation affecting software businesses, leading the Small Software Business Alliance advocacy effort with 597 signatories, while discussing the realities of bootstrapping a SaaS company alongside raising young children. Key topics include: **Section 174 Tax Impact:** Software development costs must now be amortized over 5-15 years instead of expensed immediately, creating phantom profits that get taxed. Companies report 400% tax increases, forcing layoffs and business closures despite Congress never intending this provision to take effect.; **Grassroots Advocacy Strategy:** Coalition letters to Congress require customization to count as separate contacts rather than one bulk submission. The SSB Alliance letter reached all 50 states, was entered into congressional record, and legislators use it to persuade colleagues, demonstrating small business political impact..

How long is this episode of Build Your SaaS?

This episode is 60 minutes long. SignalCast provides an AI-generated summary so you can get the key insights in about 3 minutes.

Build Your SaaS

Michele Hansen update: Section 174 and bootstrapping with kids

May 16, 2023

60 min episode · 2 min read

Michele Hansen,Michele Hansen

Episode

60 min

Read time

2 min

Topics

Career Growth, Productivity, Health & Wellness

AI-Generated Summary

Published Dec 25, 2025

Key Takeaways

✓Section 174 Tax Impact: Software development costs must now be amortized over 5-15 years instead of expensed immediately, creating phantom profits that get taxed. Companies report 400% tax increases, forcing layoffs and business closures despite Congress never intending this provision to take effect.
✓Grassroots Advocacy Strategy: Coalition letters to Congress require customization to count as separate contacts rather than one bulk submission. The SSB Alliance letter reached all 50 states, was entered into congressional record, and legislators use it to persuade colleagues, demonstrating small business political impact.
✓Daycare Economics as Startup Motivation: Infant daycare costs $25,000 annually in major US cities, exceeding state college tuition in most states. This financial pressure motivated building side projects with specific revenue milestones tied to family expenses like childcare, air conditioning repairs, and student loan payoffs.
✓Parenting Constraints as Productivity Tool: Limited availability with young children creates forced prioritization and deadline pressure. Having only one hour daily to work on side projects eliminates procrastination and increases focus, particularly effective for founders with ADHD who thrive under time constraints and crisis situations.
✓Work-Life Integration Framework: Matt Wensing's model requires distributing 20 tokens across four buckets (family, social, health, startup), with startups needing minimum 9 tokens to succeed. Jason Cohen separates spousal relationship from child-rearing as distinct buckets, acknowledging you cannot run everything at 100% simultaneously without something suffering.

What It Covers

Michele Hansen updates on Section 174 tax legislation affecting software businesses, leading the Small Software Business Alliance advocacy effort with 597 signatories, while discussing the realities of bootstrapping a SaaS company alongside raising young children.

Key Questions Answered

•Section 174 Tax Impact: Software development costs must now be amortized over 5-15 years instead of expensed immediately, creating phantom profits that get taxed. Companies report 400% tax increases, forcing layoffs and business closures despite Congress never intending this provision to take effect.
•Grassroots Advocacy Strategy: Coalition letters to Congress require customization to count as separate contacts rather than one bulk submission. The SSB Alliance letter reached all 50 states, was entered into congressional record, and legislators use it to persuade colleagues, demonstrating small business political impact.
•Daycare Economics as Startup Motivation: Infant daycare costs $25,000 annually in major US cities, exceeding state college tuition in most states. This financial pressure motivated building side projects with specific revenue milestones tied to family expenses like childcare, air conditioning repairs, and student loan payoffs.
•Parenting Constraints as Productivity Tool: Limited availability with young children creates forced prioritization and deadline pressure. Having only one hour daily to work on side projects eliminates procrastination and increases focus, particularly effective for founders with ADHD who thrive under time constraints and crisis situations.
•Work-Life Integration Framework: Matt Wensing's model requires distributing 20 tokens across four buckets (family, social, health, startup), with startups needing minimum 9 tokens to succeed. Jason Cohen separates spousal relationship from child-rearing as distinct buckets, acknowledging you cannot run everything at 100% simultaneously without something suffering.

Notable Moment

Michele recalls attending a hackathon six months pregnant while deliberately wearing baggy clothing to hide her pregnancy from judges and investors, fearing loss of legitimacy at an all-night pizza-and-beer event that exemplified 2012 startup culture's incompatibility with parenthood.

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Episode Transcript

This podcast is hosted by transistor dot f m. Hello, and welcome to Build Your SaaS. This is the behind the scenes story of building web apps in 2023. I'm Justin, and I've got Michelle Hansen, cofounder of Geocodio, back on the show today. Michelle's been fighting the good fight with this rotten section one seven four tax legislation in The USA. How's it going, Michelle? It's going. It's going. What time is right now, it's noon Pacific time for me because I'm in North America. You are originally from The States, but where where are you right now? So I live in the Danish countryside now. The Danish countryside. It is 09:06PM. 09:06? That's about the time when I'm thinking how how old are your kids, by the way? We have one daughter, and she is nine. Nine years old. Okay. See, I always thought that once they got a little bit older, I would be, you know, around like, eight, 09:00 used to be just I was dead tired. And that's, like, store you know, when they're younger, story time, bedtime, all that stuff. And I was just so exhausted. I still get exhausted at 9PM. Nothing's changed. So so you're you're in you're making it happen here, with the time zones. And, yeah, you've you've got an update for us, I think, on section one seven four. We've done a episode on this already. Folks can go back. Do you wanna maybe briefly, again, describe what section one seven four is? And then, yeah, just give us an update on what's happened since the last time you were on the show. Yeah. So the TLDR is, in 2017, Congress passed a bunch of tax cuts. And one of the ways they sort of quote, unquote paid for these tax cuts according to the Congressional Budget Office, which sort of does an estimate of how much, any bill might cost, was that they said starting five years after the bill was was passed, companies would no longer be able to expense what is called research and experimental, activities and instead would have to amortize them. Mhmm. And so I'm gonna unpack that jargon for a second. Basically, research and experimental is actually a huge category of things that businesses do. And for us, it specifically calls out software development as a research and experimental activity. This is different than research and development, because they couldn't make it easy for us. And, you know, and there there's some r and d tax credits and people can get that, but, unfortunately, that's a much, much, much smaller group of things that qualify for that. Mhmm. So research and experimental is everything from software development, to market research. It's basically anything that goes into building a new product or making improvements to an existing one, which is, I think the the biggest the one of the biggest surprises about this. And then, normally, we used to be able to expense all …

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