EP #341] [ENG] - Strategies and tips to open your structure your company - Arjun Mahadevan

EP #341] [ENG] - Strategies and tips to open your structure your company - Arjun Mahadevan Unknown Speaker: Welcome to The Ecommerce Lab By Ecomcy. This is the place for everything related to Amazon private label and e-commerce. Learn exactly what you need to start or scale your business. Get insights from the top industry experts who will discuss the latest trends and best practices in the world of Amazon. From choosing products and sourcing from a supplier to setting up your Amazon account and marketing your business, you will hear it here. Let's get started. Here is your host, Vincenzo Toscano. Speaker 1: Hello guys, welcome to another episode of The Ecommerce Lab By Ecomcy, the place where everything related to Amazon FBA, private label and e-commerce. My name is Vincenzo Toscano, founder and CEO of Ecomcy and today we bring another special guest. His name is Arjun and he's the CEO of Doola, which is one of the top Companies out there, when it comes to helping you, you know, setting up your company, everything around you, LLCs, your taxes, we're keeping the foundation of your business. And we know as ecommerce businesses, we usually try to focus, you know, on the advertising, the strategy, but what about things that really matter, such as the whole structure of your business? So today with Arjun, hopefully we're going to learn, you know, all the mistakes you should be avoiding, things that you have to have in place, and make sure you have a successful journey when it comes to scaling the business forward. So Arjun, welcome to the show. How are you doing? Speaker 2: Thank you for having me on. I haven't met too many people who have enjoyed things like getting the business set up or the bookkeeping or the taxes, but that's why we exist. It's not the sexiest stuff, but the goal is so it helps founders focus on what they do best. So I'm really excited to chat about maybe some unsexy topics, but they're critical topics. Speaker 1: Yes, 100%, 100%. So I guess, you know, for people that might not know you and everything, so tell us more about yourself, you know, who you are, the company, so people can learn more about you. And then, of course, let's dive into the topic, yeah? Speaker 2: Perfect. My family is originally from India and they're both doctors. They moved to England and started practicing medicine there. So I was actually born there, believe it or not. I lost the accent, as you can tell. And when I was six years old, my brothers and I, we all moved and parents moved to Boston. So technically that's my hometown. And I grew up in Boston. I went to school at the University of Pennsylvania, where I studied mathematics and statistics. And when I was in college, during one of my internships, I had this itch to go work at a tech company. I think it came from the fact that I was doing a sales and trading internship. And it was fun to watch the stock price, but I wanted to influence it or change it. I thought it'd be cool to build a product and put your hands on something that millions of people can use. So I interviewed for some jobs in San Francisco. My first time out there was for an interview at this company called Dropbox. And my second time out there was day one on the job. And I joined, they were a cloud storage company in San Francisco. And I did a rotational program there. So I started as a product manager on the security team. I did business development analytics. I was a data scientist on the retention team. And I eventually was a growth PM doing retention for small businesses. And the crazy thing about San Francisco is You're around these companies and people who were maybe normal people, but eventually started something that's impacted so many people. So my commute to work, which very much shaped the way I viewed the world was I would bike down and I would pass on Market Street, Uber, and then Twitter. And then I take a right on second, I pass LinkedIn. And then on my street, Brandon Street was Dropbox, Airbnb, and Pinterest. And that was what I saw every single day. So believe it or not, I actually did not know that you could start a company without raising money. It sounds silly, but in San Francisco, you see these companies raising millions of dollars, applying to Y Combinator, pitching investors, getting on TechCrunch, and I didn't know what an LLC was. I didn't know what bootstrapping meant. I thought that was a shoe. I never heard of these terms, but ironically, after leaving Dropbox and starting a company that failed with over $30,000 in legal fees, The dream was, hey, we went down this pain point, it sucked, why can't I have a button to press to start this next company? And then we were like, wait a second, that's a business idea. Why can't we have a button with this one-stop shop where you can click a button and you don't have to go to the state's website, which is confusing, or go to Google and get counterintuitive information. Your company's formed, your bank account's set up, your bookkeeping's done, your taxes are done, your website, all of it in one place. And that was the idea for Doola, this business in a box. So the ironic thing though is that today most of our customers are not raising venture capital and the truth is most of the world is not raising venture capital. They're building these bootstrapped profitable businesses from day one. SMBs power the global economy and that's who we serve. Over the last four and a half years, we've served over 10,000 founders in 175 countries. Most of them are ecommerce businesses on Shopify or Amazon. We've raised $13 million of venture capital and there's a huge pain point out there we're solving and my favorite part about Doola is that we get to see the future because we have founders who have an idea. They come to work with us, they tell us what they're building, and then they go do it. So we actually get to see it before the rest of the world does, and that's been very impactful. So that's a little run-through on Doula, and we've learned a ton along the way about all these disparate pain points, but the main goal is that founders should focus on what they do best, which is hard, building the business, the growth, the product, and let us handle the unsexy and critical back office, and there's a market for that. Speaker 1: Yeah, I agree. I mean, I think what you just mentioned is so true. Like people think that, you know, to start a business, you need to have this crazy business plan, investors. I run a line of credit and everything. And let's be honest, most business really start from a garage, you know, bootstrapping it from the ground up. And I think, you know, a solution like yours really allow that kind of, I would say, yeah, a filter to go from zero to 100 in terms of opening a company so much easier. However, I think there's a lot of, you know, misunderstanding around, you know, what really you need to have in place when it comes to that, because most of the time we don't have somebody around you, like an entrepreneur, Oh, somebody has a business in the past. It's very daunting to figure out how to do LLC, how to do the taxes, how to do all the things that are really important to for a company to essentially function. So I guess let's start with that. Like, what do you think are some of the basics people are still missing in 2025 that you think like, man, that's something that is making people, you know, you know, costing them hundreds and thousands of dollars because they are not doing this on their own, you know. Speaker 2: I would split this into two groups. I'll answer this for an international founder and a founder in the U.S. because they can be different, although they share benefits. For international founders, one thing that a lot of people sleep on is first that you can start a U.S. business from outside the U.S. and you can open a U.S. bank account remotely. And you might wonder, okay, I didn't know that. You can also pay taxes and depending on your tax treaty, for most international countries, There actually isn't a U.S. tax filing requirement. There's an informational filing, and you pay taxes in your home country. So when someone learns, wait a second, I can get a company, a bank account, and do an informational tax filing. That's awesome. I didn't know that. The main benefit, though, is access. Access to U.S. banking, access potentially to U.S. credit, access to have a U.S. entity, which adds more credibility and social proof, access to sell in the dollar, which is a globally accepted currency, access to U.S. payment gateways like Stripe, which might have lower chargebacks or higher acceptance rates. All of that has a material impact on your business. And that's a huge, huge unlock for international founders. You obviously don't need a U.S. company. You can sell internationally, but the U.S. is the most lucrative consumer base in the world. And I think at some point you're going to be selling to the U.S. A lot of people say, hey, from day one, let's make that my hub. For U.S. founders, a lot of those same things exist. You go from being a freelancer to a business, and that makes you more professional. You get access to business banking credit as well. But I will say a big reason why people should incorporate is, one, Separating personal from business. That means in the case of a lawsuit, which obviously no one thinks will happen, you're protected. Your personal assets aren't at risk. And then the second thing, it's part of the name, it's the liability protection. I guess that's kind of the first one. But I would say the biggest one is that it's legitimacy. You're separating personal from business. You're setting up the right intensity and the right structure. And I really do think it comes down to how serious you are. If you are serious about generating some revenue and it's not just a complete passion side product, you should form an entity. You'll take it more seriously. And I think it helps in terms of how you treat the business and externally. How customers treat you too. And having the liability protection and that seriousness for a couple hundred dollars, to me it's totally worth it. You sleep better at night and it increases, I think vastly, the odds that you and your business will succeed too. Speaker 1: Yeah and I think let's also bring to the table the fact that most founders they make money actually when they exit their business. So if you don't have a structured, well-optimized for an exit, that's also going to be something that is going to be very costly for you down the line, right? Speaker 2: Correct. An ounce of preparation, a pound of cure. So many things in life, if you just do those small things up front. So I think getting set up properly is a huge thing. And then the second thing I would touch on is You can only manage what you measure. And I think there's so many things that you can only learn by doing business, but even things like revenue is different than profit. You meet a lot of founders who are saying, you know, I made $10,000 last month, but they don't know what their costs are. So actually the overall bank balance is going down and that's not a business. That's I'm losing X dollars per month, which is why simple things like using a self-serve bookkeeping solutions, you actually know, here's my revenue. And it automatically tracks for my bank account, for my payment processor, Here's my payroll. Here are other costs for my cards. Even just having a simple view like that lets you know from day one what's coming in, what's going out. So those are the basic things I would say. Get your business set up properly with a bank account. Have some tracking in place. You shouldn't be using a spreadsheet in 2025. And then lastly, from a tax perspective, This is where having the right books in place can help. I'll give one piece of alpha. As a U.S. founder, for U.S. founders listening, when you're generating 50 to 75k in profit, and the only way you'll know that is if you're tracking, you can do this thing called an S-Corp tax election, which actually can save you 5 to 10k plus in taxes by effectively creating this employee-employee relationship between you and the entity and your self-employment payroll tax comes down. So overall, that's free money. It's keeping your hard-earned profits and it's not an IRS loophole. It's part of the tax code. But the only way you'll know this is one, if you have the information, two, if you're tracking your numbers, And then you should take advantage of it. So that's our goal is we want to educate people. Everyone wants to keep their hard-earned profits. I don't meet founders. Really, I don't. Let's say I want to skirt the IRS. The law is no, people want to stay compliant. And ultimately, I really think that all of these things we just discussed are barriers to people starting. And my belief is, hey, if you can solve those for people, More people will start businesses. And even if the business doesn't work, I think in life you went for it. And that's all you can ask for. It's a short life we have. So it's really, it's meaningful if we can support people saying, hey, I'm going to take the leap. And even if it didn't work, doula helped support me there. And I think a world with more entrepreneurs is a better place. Speaker 1: Yeah, and it is something that I like about your focus on this point is around numbers. I mean, I'm sure you find this every single day. I talk to so many entrepreneurs and I say, OK, OK, you're doing this. You're trying to achieve X, Y and Z. But at the end of the day, what are your numbers? You'll be surprised. Most people have no clue. They think that, you know, the revenues coming through the door is potentially somehow going to be, you know, converted into profit. But then when you actually look at the books, Most of the time they are in red and I think that's where, you know, if you don't have a solution like the ones that you guys bring to the table, you cannot even make a decision. What are you going to do with marketing? What are you going to do with hiring? What are you going to do with projection? So I think, and this is for a lot of our listeners that do, you know, Amazon and things like that, like the fact that you don't know your finances is one of the main reasons why businesses fail, you know, because you don't have the cash flow to keep growing. Speaker 2: A hundred percent, a hundred percent. Speaker 1: Now, when it comes to another thing I wanted to bring to the table in terms of topic is when it comes to all this kind of, you know, kind of setup process and the reason why this is going to be very insightful for a lot of our listeners is with all this kind of, you know, globalization we're going through, you know, like there are so many attractive places now we feel The people say you should go to Dubai, you should go here because of the taxes, because of incorporation, but everything has a personal account and I think given that I'm sure you get these questions every single day like what are some of the things people need to consider when thinking to incorporate maybe outside of the United States if they're thinking that because there's definitely negatives when it comes to that and I'm sure you know this better than me so it would be great to hear some of those. Speaker 2: I appreciate the question. Let's talk about what people miss or what you should keep in mind if you're incorporating in the US. You don't just form the company and that's it. A lot of people miss the ongoing compliance. So there are companies and people out there that might say, oh yeah, you can just form the LLC. But the second you do that, there's a registered agent that's required year-round. There's annual state filings that are required. There's your business informational filing or federal taxes if you're a US citizen. Bookkeeping is a way to keep your books clean. You're going to have to pay the piper at some point, either with catch-up bookkeeping to do your taxes or you're going to have to do it. And then there might be sales tax registrations that you need, a certificate of good standing. So all of those things, a lot of people don't realize and it's not, it really just isn't just start the LLC and that's it. The journey has just begun then. So I think that's one thing you should keep in mind is that I don't share that to scare people off, but I share it to say, hey, if it sounds too good to be true, like, hey, here's just the LLC, there's more that you need to keep in mind. The second thing I would say, and this is especially for international founders is Something to keep in mind is this concept called effectively connected income, which means I'm not a CPA, but I joke I've learned enough in my next life I might be reincarnated as one. If you as an international founder, depending on the tax treaty with your country, but with those two qualifications, do not have a physical presence in the US, so no physical office, you're not physically here, you don't have physical full-time employees here, your warehouse could be a third party supplier, that's okay, but you don't have your own warehouse. Physical is the key word. Then you don't have what's called effectively connected income, which in the eyes of the IRS would make you then pay taxes in the US. If you do not have that physically connected income, then your LLC is viewed as a foreign disregarded entity, which effectively means profits or revenues pass through and you pay in your home country. That's something which is a reason why you maybe shouldn't form in the US because if you do not realize that you have this physical presence, all of a sudden, you might have opened yourself up to a US tax filing obligation. All of these things might sound scary. Part of what we did with Doula is we said, hey, you shouldn't have to go figure this out on your own. So we offer no strings attached demos with our team that has done this for thousands of entrepreneurs to help walk you through it. No strings attached. It's not an AI avatar yet. They're all humans. You can talk to them and actually ask them, hey, here's my situation. So we think that's really valuable and important. Our philosophy overall is not to replace humans, but to augment them with tools like AI. But we really believe when it comes to starting your business, Talking to someone matters. Your business is your baby. We want to help you start it but then also grow it too. So that's what I would say. I appreciate you asking this too. Those are things to keep in mind from the U.S. from a compliance perspective and tax perspective but you can open a bank account. You can start an LLC in any state and I'll throw in one more tip here. A lot of people ask what's the best state to form in. For international founders, you can actually choose any state. Our recommendation is actually Wyoming. It's not Delaware because Wyoming is actually where the first LLC was invented. But Wyoming is actually cheaper than Delaware. Annual fee of about $60 versus $300 in Delaware. Very digital business friendly and ecommerce friendly too. Now Delaware has a great prestige because that's where most Delaware C-Corps are formed. There's actually More companies formed in Delaware than the amount of people there. So a lot of people start there. The Chancery Court has great case law, which a lot of investors like too. But my rec is for an international founder, you save money with Wyoming and you get a lot of the benefits too. For a US founder, just to throw this in, my recommendation is actually forming an LLC in the state that you live in. Because if you form outside your state, you now have to do a foreign qualification, which means registering to do business in multiple states. So let's say I live in New York and my friend said, do Delaware. I've just doubled my fees. I need a registration in both states. And I did that just because I thought Delaware was a better option. So to summarize, very simple. If you're international, I strongly recommend Wyoming as an LLC. And if you're a U.S. founder, the state you live in, if you're raising venture capital, just do a Delaware C Corp because that's required by investors. And that's the answer that a lawyer won't tell you. They'll tell you the 11 things you shouldn't do. Speaker 1: I know. Speaker 2: That's a very simple decision tree for how to think things through. Speaker 1: Love it. Now, throughout this conversation, I see you keep mentioning AI a lot and I actually see that you guys become pioneers when it comes to really embedding AI throughout the whole journey of setting up a business. And I'm very curious, like, how do you see AI affecting this? Because I'm assuming now you can be so much smarter and faster with decision making, things to do with tax, things to do with what kind of company you have to open. Give some examples of how, for example, that's been shifting the landscape and what people should be aware of it in the first place. Speaker 2: I believe AI won't take a human's job, but someone who knows how to use AI will take your job. So that's my fundamental belief. That means if you aren't going to learn or aren't embracing it, at some point, it might not be today, someone's going to take your job. Now, I think there's two ways to view that. You can be scared or you can embrace it. And I'm very much in the camp of this is the most exciting time ever to build. And a lot of people might say, but You know, my AI hallucinates or look at this final output again, wrong. That's okay. If AI can take what used to take 10 hours and chop it down to one, let alone to 10 minutes, how much efficiency do we get? Imagine anything you do, it gets you 90% of the way there. Even if it never can one-shot a perfect output, that's completely okay. So our belief with AI is internally, we talk about building the Ironman suit for our team. Tony Stark is just Tony Stark. When he puts the core in and the suit in, he's Ironman. Same thing for our team. We're not going to replace and have autonomous full processes on their own. These are important processes we do. Company formation, tax, bookkeeping. Our goal is human in the loop, where a bookkeeper today might be able to serve 50 clients. Once we build the Ironman suit for them, they can serve 5,000, and that's what we want to build towards. It's about leverage. It's about augmentation. It's not about replacing someone. So the way I think we do that tactically is there are so many workflows, whether it's filing docs for the state website or categorizing transactions, that technology can do more quickly, do it more accurately. And that means time savings and cost savings, which can get passed on to the customer too. Yes, it's great for our business and our margins internally. That means we can offer a cheaper solution to you as an end customer. And then with that, what I would say, My philosophy is augmentation is so key. Something I very much encourage internally is don't use it to replace your thinking, but to augment it. You have this 200 plus IQ always on genius at your fingertips with access to the world's information. I think it's really important though to you take your first critical thought, but then spar with it, give it feedback, ask it to criticize and poke holes. I think that's really cool again, because it accelerates decision making. So my philosophy is augment, not replace, build the Ironman suit for the team. We want to be the ones that AI is not replacing. We want to be the people that are replacing others because we're very much embracing AI usage. Speaker 1: Now, just to also get a bit more insight on this side, and it could be from the perspective of maybe an advice, I think a lot of the mistakes, going back to numbers, it's also how you do your bookkeeping in the first place. I think from my experience, I feel most of the time when a founder creates a business, They start operating that business without the actual mindset of this business has to become profitable. Like profit was never actually built a part of the SOP, if we want to call it somehow. And I'm sure this is something that potentially you're seeing across people that go through your platform, also colleagues. And what I want to get from your expertise is like, is that something that you see still happening? Like being an issue that most of the time, Profit is not even in the equation, that means on the line when you bring it, then it's going to be very difficult for you to really scale the business. How do you see that kind of mindset playing a key role as well, from your perspective as well? Speaker 2: A lot of people think that business is when you start the LLC, when you make the website. No, a business starts when someone pays you. That's how I would define a business. Someone pays you or, in some cases, when someone uses your product if you're going to monetize in the future. That's like a social network, but I think for most businesses, that's not the case. A true business is money is being exchanged. And why money? Money is a universal store of value. It's what we all agree upon as a, hey, I'm giving you this in exchange for value. I don't agree with like, oh, but there's still value. No, if someone's not paying you, it's not as much value as you think. They have to pay you with their time or their money. And if they're paying with time, that means you can monetize them in some other way via an ad. So with that, I do think that so much in business, and it's okay, You don't know until you try. So I think this is where it can feel overwhelming saying, hey, I don't know what numbers to track. I'm just trying to get someone to pay me to set up my website. But this is why I come back to saying, I think it is really important to as early as possible, even if it's just simply starting simply with what's my profit, which is here's my top line revenue, here are my costs going out, and just knowing those numbers, literally as simple as that. And then from there, I think the next thing, let's take an ecommerce business. You can start to think through things like what is my return on ad spend or how I'm acquiring customers, my customer acquisition cost, which is I spend this much to run ads. And then I get a customer who pays me this much. Ideally, the customer is paying more than what you spent on the ads. And that's after the customer pays you, then you have your cost to serve. So those are, I'd say, the basic things I would think through is, okay, here's the revenue coming in, all of the costs going out, including the ad spend, if there's salary, you're paying yourself and other things, just knowing those things to start. And I really do think in this day and age, We have a bookkeeping solution, but there's plenty of other ones out there too. QuickBooks, Wave. Use some tool. I'm obviously biased, but use some tool. There's no need in this day and age to do it manually. You can literally connect your bank account, connect your Stripe, and all of this will be tracked automatically. So I really do think just starting somewhere. You don't need to have your full cash flow and P&L and balance sheet and financial forecast. Start somewhere, and I would really just focus on those. Revenue in, costs out, your profit overall, and then Because you need to acquire customers, start to think through your customer acquisition costs. How much am I spending to get a customer? And then how much do they pay me? And then you can start to optimize that equation. Speaker 1: Love it, love it. Awesome, Arjun. I think, you know, today we've been discussing taxes, company incorporation, profitability, I guess to start bringing the conversation to a closure. What do you think people need to be aware for the remainder of the year, Q4 pretty much 2025, that you think like, guys, please make sure you're doing this because every single time I have a conversation with founders, they're not doing it and that's why they're struggling. If you had to choose one thing, what do you think would that thing be? Speaker 2: This is a bit more of a meta answer, but I'd say it's focus. I think in this day and age, it is so easy to have shiny object syndrome because. Speaker 1: TikTok and this and that. Speaker 2: That's more focused than what I was thinking. In GPT, you could ask it, hey, give me a business plan. It'll go do deep research for a business plan in any niche or idea. So you might be thinking, oh, but that seems cool too. It's a double-edged sword. So I think what you're saying is at least focused within, hey, here's my business. But I think to your point, I actually think in business, the way I think about it is, There's these three Q's. There's quantity, quality, and then quest. I actually think most of the time in your business, if you spend 80% of your effort on just quantity, doing more of what's working, and then quality, doing it better, That's where the sauce is. You actually don't need to go do something new, although you should be testing, whether it's ad platforms or a new product. I think in this day and age, it's so easy to flip that and say, let's do 80% or 90% quest, trying this new tool, this new platform. And I think the reason why this happens, it's a double edged sword. To start a business, you need to have that kind of impulsiveness or the, hey, I'm just gonna go do this because otherwise you wouldn't have started the business. But when you hit a certain point where it's working, and working doesn't have to mean millions in revenue, it could mean five or 50 purchases. The unsexier yet more bountiful thing to do is just focusing on what's working. And it's not as fun to like, hey, let's get the web visits to get started rate, let's double that. And it's not as fun to say, how do we eke out some efficiency? It's way more fun to build new ads and test Snapchat, etc. So I'm not saying don't do that. But I think that's what I try to think through is, hey, We're working on an initiative this quarter just to improve our Google Ads efficiency. It's not the sexiest thing. It'd be really cool to like go build an automated webinar system on a new platform. And we will do that someday, but at least now it's, hey, Google Ads is working. How do you eke out some efficiency or channel partnerships are working? How do you go from getting two per month to five per month? So I'd say focus on the quantity and quality, do some quest, but 80-20. So 80% I would say for the most part on what's working, making it better doing more, and then 20% on the new bucket. Speaker 1: Love it. Thank you, Arjun. So it's been a pleasure to have you on the show. Thank you so much for your time and everything you share with us. And I guess for people that want to, you know, maybe have a deeper conversation with you or working with you guys, how people can find you. Speaker 2: Enjoy the Convo. And I think, again, now is the most exciting time to start a business, to run a business. So if you're on the fence, this is why we created Doolab, because I truly believe if you can remove the friction from formation, the bookkeeping, the tax, and just have peace of mind that someone can do it for you, you're more likely to start. And you're more likely to go negative one to zero, which is overcoming in your head that you can't do it, to getting that business off the ground, which for many people is a dream. So you can check us out at doola.com, no strings attached, free consultations. We have a team around the world that can answer your calls all the way from India to the US around the clock. And It's never too late to turn your dream idea into your dream business. I'll finish with this. The best time to plant a tree was 20 years ago. Second best time is today. So if you're on the fence, life is too short not to try. The very worst thing that happens is you're down a couple hundred dollars, but you gave it a shot. The best thing that could happen is it changes the trajectory of your life. And hopefully we can be a part of it. But even if we aren't, I hope this information was valuable today. Again, doula.com. You can schedule a demo, you can create a free account, and we'd love to be a part of the journey. Speaker 1: Awesome, man. I appreciate it. Thank you so much and see you in the next one. Yeah. Have a good one. Speaker 2: Awesome. Thanks a ton. Unknown Speaker: Thanks for listening to The eCommerce Lab by eComcee. Be sure to subscribe so you don't miss an episode. While you are at it, we would appreciate it if you could leave an honest rating and review on Apple Podcasts, Spotify, or wherever you listen. That will make it easier for others to find out about the show and benefit from it. Want more? Visit our website at www.ecomc.com where you can get your first consultation for free. Or find us on Instagram, Facebook, and LinkedIn at ecomc.