Recent Posts

Palm Beach County Votes to Cut Property Taxes


The commissioners of Palm Beach County, Florida recently voted (unanimously) to cut the millage rate for property taxes from $4.715 to $4.5. Millage is the amount of tax per $1,000 of taxable property value (so a millage of $4.5 means that an owner will owe $4.5 per $1,000 of taxable property value).

There are two types of property taxes for property owners in Palm Beach County, Florida: (1) ad valorem taxes (e.g. county property taxes, school district property taxes, and hospital district property taxes) which are based on property value, and (2) non-ad valorem assessments (e.g. Solid Waste Authority fees) which are based on the cost of service.

The recent commissioner vote only affects a single type of ad valorem tax, the county-level ad valorem property tax. It does not affect other ad valorem taxes (e.g. school district property taxes) and does not affect non-ad valorem assessments.

Ad valorem taxes are computed as follows:

Taxable Value = Assessed Property Value – Tax Exemptions

Ad Valorem Taxes = Taxable Value x Millage Rates

For example, at the current millage rate of $4.715 per $1,000, the county ad valorem tax on a property with a taxable value of $500,000 would be:

County Tax = $500,000 x (0.004715) = $2,357.50

The average property in Palm Beach County increased more than 10% in value from January 1, 2022 until January 1, 2023. That means if last year your property was worth $500k, this year your property might be worth $550k. At the current millage rate, that would mean your property tax bill in November, 2023 would be:

County Tax = $550,000 x (0.004715) = $2,593.25 (a $235.75 increase over last year).

If your property is homesteaded, however, then your annual increased in assessed property value is limited to 3% which would mean you property tax would only be:

County Tax = $515,000 x (0.004715) = $2428.23 (a $70.80 increase over last year).

Compare that to a millage rate of $4.5, where that county tax would only be:

County Tax = $515,000 x (0.0045) = $2317.50 (a $40 DECREASE over last year).

For real estate investors and other property owners who aren’t homesteaded though, the decrease in millage rate may not be enough to prevent an increase in county property tax. Going back to our example of a typical property valued at $500k in 2022 which increased to $550k in value in 2023, the county tax at a millage of $4.5 would be:

County Tax = $550,000 x (0.0045) = $2,475 (a $117.50 increase over 2022).

However, even homesteaders may see a property tax bill increase when considering that this tax cut only applies to the county portion of their property taxes, not their school district, solid waste authority assessments, or other taxes.

Additionally, while it’s likely that the newly voted in $4.5 millage rate will be finalized, that outcome isn’t guaranteed. The county commissioners will hold two public hearings on September 7th and September 26th, and it’s not unusual for such hearings to change the proposed rates. Property owners are welcome to attend these hearings in order to advocate for the cuts.

References

[1] Palm Beach County – list of ad valorem taxing authorities

[2] PBC Property Appraiser

4 Characteristics that Make SaaS Products Sticky


1. High-Stakes Applications

If a company uses a cybersecurity tool to protect itself from ransomware attacks, that company is very unlikely to ever switch unless the tool fails. That’s because the risk of switching is high.

Any SaaS product designed to solve high-stakes problems will be sticky due to the high risk of switching.

Examples of high-stakes applications:

  • Cybersecurity
  • Legal & regulatory compliance
  • Tax compliance
  • Medical diagnostics

2. Deep business integration

It’s relatively easy for a company to switch from one text-to-speech API to another because all text-to-speech APIs do the same well-defined task. On the other hand, it’s very difficult for a company to switch from one ERP to another. That’s because an ERP system handles inventory tracking and management, bookkeeping, billing, customer relationship management, human resource management, supply chain management, process modeling & management, process automation, and more. An ERP touches so many aspects of a business that to rip it out would be extremely costly, time-consuming, disruptive, and risky.

Examples of SaaS products with deep business integrations:

  • Practice management software (for medical offices, veterinarians, lawyers, CPAs, and other professionals)
  • ERP systems (e.g. Oracle NetSuite, SAP)
  • All-in-one CRM & marketing automation systems (e.g. Hubspot, Service Titan, Salesforce)

3. Network effects

I personally don’t like Snapchat, but I use it because I have a few friends that use Snapchat as their only social media. That makes Snapchat sticky.

A lot of CPAs don’t like Quickbooks, but since a lot of small businesses already use Quickbooks, the CPAs don’t have much of a choice but to work with Quickbooks. Since the CPAs already have to use Quickbooks for some of their clients, they just end up onboarding new clients into Quickbooks also. That makes Quickbooks sticky.

Examples of software categories that often have network effects:

  • Social media
  • B2B software that is designed to be accessed & used both by clients and providers (e.g. accounting software)

4. Habits

If someone uses a software every day as part of their routine, then it will be more disruptive for that person to move to a different software. In other words, if you can design a software that people use habitually, that software will tend to be stickier than infrequently used software.

However, this comes with a caveat. If a person uses a software daily and that software has some annoying features, then that person will be annoyed every single day. In the end, the annoyance may grow so high that the person leaves the software.

Lesson: Design software that can be used frequently as part of someone’s routine, but take the time to eliminate as many annoyances as possible from the user experience.

Walmart’s New $3 Billion Advertising Business


Screenshot of Walmart.com showing a sponsored product placement at the top of the search results

Walmart generated $611 billion of revenue in 2022, but it only brought home $20 billion of operating income. That’s a 3.3% margin — terrible for an average business, but normal for a retail business. That’s why Walmart’s CFO said that the company will stop being a retailer within 5 years. Or more precisely, he said that within 5 years Walmart will likely be generating more profit from advertising and third-party e-commerce seller fees than from traditional retail sales.

Walmart has been growing its advertising business at around 40% per year, and advertising is 10-times more profitable than retail. In 2022, advertising only made up about 0.5% of Walmart’s revenue, but it made up 5% of Walmart’s operating profit! And Walmart is about to seriously ramp up its advertising business even further. Here’s how it works.

Walmart will offer 5 main types of advertising:

  1. Online search ads. Just like Google ads on a Google search results page or sponsored products on an Amazon search results page, Walmart.com and the Walmart app will show sponsored product listings for companies that pay for premium placement.
  2. Digital display ads. When you read a blog article, you’ll likely see ads interweaved with the content. Similarly when you scroll down an Amazon product page, you’ll likely see recommendations for other, related products. Those are both examples of digital display ads. Ecommerce sellers can now purchase more display ads on Walmart.com and the Walmart app.
  3. In-store screen ads. Companies selling products at Walmart can advertise their products on the TV screens in the back of Walmart stores and on the screens of self-checkout machines.
  4. In-store radio ads. Brands can purchase 30 second ad slots to be played over the in-store radio.
  5. In-store product sample stands. Companies will soon be able to pay to host free sample stands on the weekends in more than 1,000 Walmart stores. These stands will be staffed by brand ambassadors who will try to sell people on buying products.

Walmart isn’t the only retail company trying to become a media & advertising company. Kroger, Target, Amazon, and Walgreens have all been moving towards retail media opportunities. However, the retail media strategy must be pursued carefully or it may backfire, as Walgreens already experienced.

In late 2020, Walgreens launched an initiative to replace some of their fridge & freezer doors with screens that featured ads, and it didn’t take long for TikTok and Twitter to start roasting them. The flashy screens made it harder to find what shoppers were looking for, until eventually Walgreens hired a new CEO who shut down the fridge advertising program.

66 Profitable Industry Niches for B2B SaaS


A good B2B SaaS product is one which the customer deeply embeds into their business so that the product is very sticky. SaaS products built for specific industries (“niches“) often have that property. They also benefit from cheaper marketing, higher pricing power, and less competition (compared with more general SaaS companies). Here are some of the common categories of SaaS products which can be specialized to particular industry niches:

  • CRMs
  • ERPs
  • Practice management software (basically an all-in-one software to run your business)
  • Project management software
  • Market / pricing data tools
  • Simulation / modeling software

In the rest of this article, I’m going to list 66 different industries which are profitable target markets for entrepreneurs buying or building B2B SaaS companies.

1. Veterinarians

Examples of existing veterinarian-specific software:

  • ImproMed
  • IDEXX Neo
  • Cornerstone Software
  • Covetrus Avimark
  • Covetrus Pulse
  • Chetu
  • Provet Cloud
  • eVetPractice
  • DaySmart Vet
  • ezyVet
  • VETport
  • Vetstart
  • Vetter Software
  • VetBlue
  • Shepherd
  • Digitail
  • Dragon Veterinary

2. Dentists

Examples of dentist-specific SaaS products:

3. Podiatrists

Examples of podiatrist-specific software:

4. Psychiatrists

5. Plastic & cosmetic surgeons

6. Personal injury law firms

7. CPA firms

Examples of CPA-specific SaaS products:

  • Canopy
  • Avise
  • CPACharge

8. EA firms

Enrolled agents are tax professionals with less training than CPAs. Their practices tend to be narrower in scope than a CPA.

9. Immigration law firms

Examples of immigration law firm specific software:

  • DocketWise
  • Imagility
  • Lolly Law

10. Family law firms

11. SEC-registered investment advisors

Examples of RIA-specific software:

  • Altruist
  • Tamarac
  • RIA in a Box
  • AdvisorEngine
  • eMoney
  • Smartria

12. State-registered investment advisors

13. Estate planners

14. Residential property management companies

Examples of software built specifically for residential property management companies:

  • Buildium
  • Yardi Breeze
  • Appfolio
  • TurboTenant

15. Vacation property management companies

16. General contractors

17. Auto mechanic shops

18. Fertility clinics

Examples of software tools built specifically for fertility clinics:

19. Walk-in medical clinics

20. Radiology centers

Possible subniches:

  • Diagnostic radiology (i.e. using X-rays, MRIs, radioactive substances, etc to diagnose medical issues)
  • Radiation oncology (i.e. radiation cancer treatment)

21. Chiropractors

22. Nutritionists & dietitians

23. Dermatologists

24. Freight brokerages & logistics companies

25. Car dealerships

26. Boat dealerships

27. Heavy equipment rental companies

28. Doggy daycares & dog hotels

Examples of software built for doggy daycares:

29. Lumber stores

30. Optometrists

31. Gyms

32. Climbing gyms

33. Machine shops

34. Foundries

35. RV parks & campgrounds

36. Assisted living facilities

Examples of SaaS products developed for assisted living facilities:

37. Nursing homes

38. Churches

39. Dog trainers

40. Insurance agencies

41. Mortgage brokers

42. Business brokers

Here are some examples of software products built specifically for business brokers:

43. Farms

Possible subniches:

  • Microgreens farms
  • Hydroponic farms
  • Family farms

44. Real estate GPs

45. CTAs

Commodity trading advisors are basically like investment advisors but instead of helping clients invest in stocks & bonds, they help clients invest in commodities. CTAs are regulated by the CFTC rather than the SEC.

46. Dance studios

47. Prop trading firms

48. Kidney dialysis centers

49. Allergists & immunologists

50. Physical therapists

51. Surgery centers

52. Gynecologists

Examples of software built for gynecologists:

53. Pediatric medical practices

54. Urologists

55. Real estate law firms

56. Criminal defense law firms

57. Civil engineering firms

Examples of software products built for civil engineering firms:

  • GeoHECRAS
  • GeoHECHMS
  • Tekla Tedds
  • Civil 3D
  • OpenRoads Designer

58. Electrical engineering firms

59. Biomedical engineering firms

60. Architecture firms

Examples of SaaS products built for architects:

  • Revit
  • ArchiCAD
  • Enscape
  • Lumion
  • Bluebeam

61. Geotechnical engineering firms

62. Real estate development companies

63. Schools

Possible subniches:

  • Elementary schools
  • Middle schools
  • High schools
  • Private schools

64. Wholistic financial planners & wealth managers

Examples of software built for financial planners & wealth advisors:

65. Home care agencies

Examples of SaaS products built for home care agencies:

66. Cardiologists

Why Local Businesses Are Low-Hanging Fruit for Entrepreneurs


Local businesses are easier to launch but tougher to scale past a few million dollars in annual revenue.

By “local” I mean a business which is physically constrained so that consumers have to buy from a business that is somewhat near them.

Examples of local businesses:

  1. Roofers
  2. Plumbers
  3. Electricians
  4. Pool cleaners
  5. Pressure washing companies
  6. Painters
  7. HVAC contractors
  8. Handymen
  9. Cleaners
  10. Concrete contractors
  11. Landscapers
  12. Cabinet installers
  13. Gyms
  14. Climbing gyms
  15. Dentists
  16. Orthodontists
  17. Med spa
  18. Massage therapist
  19. Daycare
  20. Dog groomer
  21. Doggy daycare
  22. Veterinarian
  23. Landfills
  24. Window washers
  25. Auto repair shops
  26. Bars
  27. Dog trainers
  28. Paintball arenas
  29. Laser tag arenas
  30. Escape rooms
  31. Indoor skydiving
  32. Sky diving
  33. Scuba lessons
  34. Sailing lessons
  35. Appliance repair companies
  36. Funeral homes
  37. Unique location tour companies
  38. Heavy equipment rental companies
  39. Coworking spaces & executive suites
  40. IT managed service providers (MSPs)
  41. Assisted living facilities
  42. Nursing homes
  43. Pharmacies
  44. Laundromats

Examples of semi-local businesses:

  1. Tutors
  2. Moving companies
  3. Property management companies
  4. General contractors
  5. Financial advisors
  6. Estate planners
  7. Management consultants
  8. Business intelligence consultants
  9. Photographers
  10. Business brokers
  11. Car dealerships
  12. Boat dealerships

Examples of non-local businesses:

  1. Bookkeepers
  2. SEO agencies
  3. Social media marketing agencies
  4. Website developers
  5. E-commerce businesses
  6. Blogs
  7. Marketing consultants
  8. Media buying agencies
  9. SaaS companies

Local businesses are easier to launch because you can run geographically-constrained Facebook ads with very little competition. That’s especially true if you don’t live in a big city.

On the flip side, local businesses are harder to grow because they are either asset-heavy or labor-intensive.

Nevertheless, if you are an entrepreneur just starting out, it will be easier and cheaper to get your first 10 customers if you start a local business rather than a non-local business.

Examples of Local White Collar Businesses

  1. Architects
  2. Attorneys (especially family law, divorce, and personal injury attorneys)
  3. CPAs
  4. Dentists
  5. Doctors
  6. Cost seg firms
  7. Engineering firms (especially civil engineering firms)
  8. IT managed service providers (MSPs)

A Chink in Section 230’s Armor? Hundreds of Schools Sue Social Media Companies.


Over 500 school districts are suing YouTube, TikTok, Snapchat, Instagram, and Facebook for causing a child mental health crisis and interfering with their educational duties.

A high school girl on her phone in a dystopian world of social media

These school districts blame social media apps for incentivizing students to participate in trends that damage school property and put school employees in danger. They also blame social media apps for exacerbating a child mental health crisis that puts a greater financial burden on schools that need to hire therapists, train teachers to identify children at risk, and spend time identifying and responding to online school threats.

The lawsuit filings reference dozens of research papers to back up their claims of deteriorating child mental health.

From 2007 to 2019, the suicide rate among American youth age 10-24 increased by 57%. From 2009 to 2019, the rate of high school students who reported persistent feelings of sadness or hopelessness increased by 40% to one out of every three kids.

But proving that kids’ mental health is deteriorating isn’t enough to win the lawsuit, even if the schools can prove that the deterioration is due to social media. That’s because in order for an internet company to be held liable, the schools need to get past Section 230: the single most important law of the internet that says tech companies aren’t liable for content posted by third parties.

There is bipartisan momentum towards removing some of Section 230’s protections, but as of now that momentum hasn’t made it into final legislation.

The schools’ lawsuit takes a three-pronged approach to bypassing Section 230:

  1. The schools accuse social media companies of marketing their products to teens and preteens, despite knowing that social media is harmful to kids. Since marketing is not part of publishing, section 230 doesn’t protect social media companies from deceptive advertising charges.
  2. The schools accuse social media companies of designing algorithms that maximize engagement, despite knowing that such algorithms are likely to promote emotionally distressing content.
  3. The schools claim features like “suggested accounts to follow” are not protected by Section 230.

All three approaches are based on the legal theory of so-called “public nuisance”. A public nuisance is legally defined as something that harms a large proportion of a community — in this case, the community of school-age kids and school employees. Public nuisance is the same legal theory that required Juul, the e-cigarette company, to pay billions of dollars to settle with school districts and other plaintiffs over deceptive marketing to kids.

Juul bought adspace on kid-focused websites like Nickelodeon, Cartoon Network, and Seventeen. If TikTok or Snapchat did something similar, then it’s possible that the school districts may win at least part of the case. However, the most likely outcome is still that Section 230 protects big tech companies from liability.

Appendix A: Quotes & Stats from the Case

  • 7% of American teens have had explicit images of them shared without their consent.
  • 16% have received physical threats online.

“Researchers studying the effect social media has on the brain have shown that social media exploits ‘the same neural circuitry’ as ‘gambling and recreational drugs to keep consumers using their products as much as possible’.”

Seattle Lawsuit

“The rates at which children have struggled with mental health issues have climbed steadily since 2010 and by 2018 made suicide the second leading cause of death for youths.”

Seattle Lawsuit

“From 2009-19, the rate of high school students who reported persistent feelings of sadness or hopelessness increased by 40 percent (to one out of every three kids). The share of kids seriously considering attempting suicide increased by 36 percent and the share creating a suicide plan increased by 44 percent. From 2007 to 2019, suicide rates among youth ages 10-24 in the United States increased by 57 percent.”

Seattle Lawsuit

“Meta’s algorithms are not based exclusively on user requrests or even user inputs. Meta’s algorithms combine information entered or posted by the user on the platform with the user’s demographics and other data points collected and synthesized by Meta, make assumptions about that user’s interests and preferences, make predictions about what else might appeal to the user, and then make very specific recommendations of posts and pages to view and groups to visit and join based on rankings that will optimize Meta’s key performance indicators. In this regard, Meta’s design dictates the way content is presented, such as its ranking and prioritization.”

Seattle Lawsuit

The lawsuit makes several accusations:

  • Increasing depression among adolescents by encouraging unhealthy social comparison and feedback seeking behaviors.
  • Contributing to sleep deprivation by sending push notifications and emails at night when children should be sleeping.
  • Contributing to educational deficits by sending push notifications and emails during school hours.
  • Contributing to eating disorders.
  • Contributing to cyberbullying.

Schools say they have had to spend extra money to deal with these problems, including money to:

  • Hire additional mental health professionals,
  • Provide teachers and staff with additional training to identify students suffering from mental and emotional health issues,
  • Educate students about the dangers of social media,
  • Repair or replace school property damaged by students acting upon harmful trends they found on social media,
  • Spend time meeting with students and the parents of students caught using social media at school, and
  • Investigate and respond to threats made against schools and students over social media.

Appendix B: What is Public Nuisance?

The definition of public nuisance is different from one state to another (public nuisance is a state law level concept). However, in general, a public nuisance refers to an activity that harms a large proportion of a community.

Appendix C: Definition of Public Nuisance in California

In California, section 360 of the Penal Code defines a public nuisance as “anything which is injurious to health, or is indecent, or offensive to the senses, or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property by an entire community or neighborhood, or by any considerable number of persons, or unlawfully obstructs the free passage or use in the customary manner, or any navigable lake, or river, bay, stream, canal, or basin, or any public park, square, street, or highway.”

Appendix D: Definition of Public Nuisance in Washington State

In Washington, RCW 9.66.010 defines a public nuisance as a crime against the order and economy of the state, including every place:

  1. Wherein any fighting between people or animals or birds shall be conducted; or
  2. Wherein any intoxicating liquors are kept for unlawful use, sale, or distribution; or
  3. Where vagrants resort.

Additionally, Washington includes some acts in its definition of public nuisance.

Every act unlawfully done and every omission to perform a duty, which act or omission:

  1. Shall annoy, injure or endanger the safety, health, comfort, or repose of any considerable number of persons; or
  2. Shall offend public decency; or
  3. Shall unlawfully interfere with, befoul, obstruct, or tend to obstruct, or render dangerous for passage, a lake, navigable river, bay, stream, canal or basin, or a public park, square, street, alley, highway, or municipal transit vehicle or station; or
  4. Shall in any way render a considerable number of persons insecure in life or the use of property;

is a public nuisance.

References

[1] WSJ: Schools Sue Social-Media Platforms Over Alleged Harms to Students. July 23, 2023.

[2] Seattle School District No 1 v. Meta, Alphabet, Snap, and Bytedance. Jan 6, 2023.

[3] Frantz Law Group: Social Media Litigation

[4] Keller Rohrback L.L.P. social media litigation