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Episode Summary
Most owners never sit down and answer the question that shapes every other decision: are you building a profit company or a growth company. Cammie and her three partners answered it on day one, in 1998, before they ever wrote a line of code. They picked profit. Two years, no pay. Equal shares, with a clause that let three partners vote a fourth out cold if the work ethic slipped. They wanted to be a thorn in Intuit’s side and get bought in a year or two for a quick million bucks. Fourteen years later they sold TaxAct to InfoSpace for all cash. In between, they took a private equity recap with TA Associates in 2004 to get chips off the table, signed a definitive agreement with H&R Block in 2011 that the DOJ blocked in federal court, and built a tax software company that retained 95% of its customers by year five. I wanted Cammie on the show because this is what the long version of the game actually looks like. Not the headline. The texture.
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## Top 10 Takeaways- Decide on day one if you’re building for profit or for growth. That single decision changes every line item for the next decade.
- Equal partners only works if you’ve watched each other’s work ethic and put a vote-out clause in the operating agreement.
- Offices next to each other, doorway conversations, no department silos. Communication architecture is a partnership decision.
- Run the business to sell it even if you never sell. A profitable company funds your life either way.
- Taking chips off the table early gives you the freedom to make competitive moves you otherwise can’t afford.
- Private equity is not your final exit. They have a fund clock and they will sell your company in five to ten years.
- Talk to companies a PE firm already sold, not just the ones they still own. Those people can speak freely.
- Building free distribution on a competitor’s platform builds their brand. Pull the offer back onto your own site.
- Repeat customer retention compounds: 55% year one to two becomes 95% by year five. Stickiness is a financial asset.
- Selling your company is its own job. The next layer of leaders has to run the company and face the buyers while you do it.
Sound Bites
“We had a clause that if three of the four felt that one was not pulling their weight we could vote them out and they would lose their shares.” (@00:11:38) — Cammie Greif
“We felt like we were playing Texas Hold’em all in every year. It was nice to be able to take some of those chips off the table, put it in our pocket, and continue to run the business.” (@00:26:38) — Cammie Greif
“Private equity will sell your company. Your company will be sold again. There’s no getting around that.” (@00:29:43) — Cammie Greif
“If you aren’t planning on sticking around, you better get your next level of management front and center of anybody you’re pitching your company to. They’re the ones who are going to have to develop the relationship.” (@00:47:18) — Cammie Greif
“Starting a company and then taking it to a sale is a pilling ride. Every day there’s ups and downs. Let me just say it is worth it in the end.” (@01:04:54) — Cammie Greif
About This Episode
Cammie Greif is co-founder of TaxAct, originally Second Story Software, the tax software company she and three partners built from a bootstrapped startup in Cedar Rapids, Iowa in 1998 to a roughly $70-75M business they sold to InfoSpace in January 2012. Before TaxAct, Cammie worked at Parson’s Technology under Bob Parsons (who later founded GoDaddy), where she rotated through development, marketing, and technical support and built one of the company’s first commercial websites. She is a CPA and today mentors startups through the Iowa Startup Accelerator and analyzes small-cap acquisition candidates as a hobby. This conversation walks the full 14-year arc: the bootstrap, the profit discipline, the TA Associates recap in 2004, the DOJ-blocked H&R Block deal in 2011, and the all-cash exit in 2012.
Resources Mentioned
- TaxAct — The company Cammie and her three partners founded as Second Story Software in 1998.
- Parson’s Technology — Where the four founders met and built their working relationship under Bob Parsons.
- TA Associates — The private equity firm that recapped the company in 2004 (Boston and Menlo Park).
- H&R Block — Signed a definitive agreement to acquire TaxAct in 2011; the DOJ blocked it in federal court.
- InfoSpace (now Blue Kora) — The publicly traded company that bought TaxAct in January 2012 for all cash.
- Free File Alliance — The IRS-industry partnership that drove the competitive moves on irs.gov.
- Iowa Startup Accelerator — Where Cammie now mentors early-stage founders.
- Cammie Greif on LinkedIn — How to reach her.
Connections
Phase + Module:
- Module 1 — Ownership Goals — The profit-vs-growth decision the four partners made on day one
- Module 7 — Leadership Team — The succession layer the PE firm pushed them to build
- Module 9 — Operator Transition — The 14-year arc of building the next layer to face the buyers
Milestones:
- Milestone 13 — Strategic Plan — Annual decision: pitch the company this year or keep building
- Milestone 25 — Operator Transition Plan — The next-layer leaders who fronted the final sale process
- Milestone 26 — Recruit Successor — Hiring the CFO TA pushed them toward
Concepts referenced:
- The Multiple & WACC — Revenue multiple at the InfoSpace exit, EBITDA multiple at the TA recap
- Normalized EBITDA — Profitability discipline that made the bootstrap viable
- The Owner-Operator Trap™ — The four partners deliberately built around it by hiring the next layer early
- Value Gap — The eight years between the TA recap and the InfoSpace exit, where value tripled