When Daniel Hanemann returned to WunderTax in 2022, he found a company with 25 people, a plateauing market, and a unicorn competitor — Taxfix — with 300 million euros raised and an eight-digit annual marketing budget. Instead of raising venture capital to compete head-on, Daniel made a counterintuitive bet: stop competing on the same terms entirely. He identified that WunderTax's API-first architecture was an asset he could open up — and began approaching other companies in the tax and accounting space who needed niche tax forms built but didn't want to build them. The result: a "flanking technology" strategy that turns competitors into distribution channels.

When Daniel Hanemann returned to WunderTax in 2022, he found a company with 25 people and a lot of accumulated slack. He took it from 25 to 15 — and the way he did it is more instructive than most restructuring stories. He didn't use radical transparency as a management philosophy. He used something quieter: sharing his train of thought with anyone who asked, explaining the reasoning behind decisions that would otherwise look like mismanagement, and letting people opt out with enough clarity to make the choice their own. The one person who left voluntarily did so because the culture had changed — he missed ordering the toilet paper.

Daniel Hanemann grew up trilingual in Hong Kong — German father, Taiwanese mother, Cantonese city. He's a "third culture kid" who never fully belonged anywhere, and credits that perpetual outsider status for his adaptability as a founder. He also did standup comedy — and it gave him one of the cleanest mental models in the episode: every bad pitch, like every bad set, is forgotten faster than you think. There's always another stage, another audience, another investor.

Roland Siebelink (00:00)
Hello, everybody, welcome once again. The Scaling Without Breaking podcast is there for startup leaders done winging it, ready to lead like true CEOs. Today's guest built a company, hit a million euros in revenue in under a year, raised VC money, of course, and then, yeah, just walked away. Years later, his investors called him back. He found a shell of a company remaining. He completely rebuilt it and just when he could have coasted, he made a bet that puts him in competition with a unicorn by refusing to compete with them at all? Meet Daniel Hanemann. He is the co-founder and CEO of WunderTax. Welcome to the show, Daniel.

Daniel Hanemann (00:42)
Hi Roland, thanks for having me.

Roland Siebelink (00:44)
Okay, Daniel, let's dive right in. Your competitor, Taxfix, has budgets that you cannot match. Your answer was to stop competing on their terms entirely. What made you see the different embedded play and what does it mean?

Daniel Hanemann (01:00)
I do believe that small companies are very powerful. The reason why startups exist in the first place is because there are new innovations, maybe on a macro level or even in a technological level, and you can build and challenge incumbents. But the thing is, I think my story is a bit different in that sense, because when I came back to WunderTax, it was already an established company.

And we competed head on — or previous management competed head on — with the unicorn Taxfix. We have essentially the same product. We do tax software for individuals in Germany and Taxfix has bet the whole business — or their initial thesis was we do everything mobile.

We had more of a desktop approach. Because we said back in the day, this is 2016, we said, why would you do it mobile? It was something as important — and I think that was like an inherently millennial thing to say because Gen Z doesn't agree with that and the numbers prove it. Taxfix was wildly successful, raised a total of 300 million euros, and of course, their annual budgets vastly exceeds ours in marketing. We had to really think about this — are we going to compete with them? Because our budgets are a six-digit amount. And their budgets are more like an eight-digit amount, Euros. Are we gonna go head-on? Are we gonna go into a bidding war against them? And it's not even just Taxfix. There's an incumbent player called Wiso Steuer in Germany — their revenues are double of Taxfix. You have to imagine us, the small little player, competing against them.

We're not going to win the bidding war. What we were thinking about, we called it flanking technology, because in real life, let's put David and Goliath in a ring. Most of the time Goliath is going to win against David. But how did David win? In the Bible, David had a slingshot and used that to win against Goliath. Now, of course, we're not out to defeat the big competitor. But we are thinking about how can we carve a niche for ourselves? And we were thinking, we looked at our assets. We looked at our technology. What have we built? What can we build with ours?

And what we've seen is our tool is inherently API first. When we launched a mobile app, we built a front end, which is the app on top of our API. And then we asked ourselves, why not just open the API and basically ask other companies if they want to offer tax filing services? We started approaching other companies, asking them if they want to do pilots. Let me tell you, it's been a grind. Because one of the hardest things to do is get into the product roadmap of other companies. From a push perspective, if they ask you, it's really easy because they have the need. But if you want to push yourself into a product roadmap, you're gonna have a bad time. It was a grind. We made some connections in the market, but ultimately we now have two pilots coming up.

Roland Siebelink (05:06)
Can you reveal what kind of providers you are working with for this embedded strategy?

Daniel Hanemann (05:12)
Absolutely. The thing is, those two pilots that we're working on are in the tax base themselves. That's what we found as well. They do a little bit different — they provide tax services or more like accounting services, but they don't want to deal with the nitty gritty.

They want to concentrate on the workflows themselves that they provide their customers, but they don't want to build stuff like rental income or depreciation on your rental objects. These nitty gritty tax services or these nitty gritty tax forms are a nuisance to build and we've built them already, so why reinvent the wheel?

Roland Siebelink (05:38)
In a way, you've not only come back to revive the business, but you also had to change the entire model, almost going back to pre-product-market fit, in a way. Would you say that's correct?

Daniel Hanemann (06:09)
Well, not for the whole company. We have a running business. We process about 100,000 tax returns per year for the end consumer. But the reality is that we've seen and are seeing a plateau because for anybody who has some affinity to Germany, of the listeners here, you will know that there were massive amounts of ads promoting tax returns in Germany, because in Germany, you get an average of 1000 Euros back. But the biggest difference with the US is you don't have to do your tax return in all cases. A lot of people, if they don't have to do their tax return, a lot of people don't do it, even though they have back pay. Every year, it's about 10 million people that don't do their tax return with an average refund of 1000 euros, which is a lot of money. And so in Germany, what we've seen is there was massive marketing battles being fought and everybody knows this. Everybody knows they should do a tax return. Our new customers are all people starting in their first job or expats coming into Germany.

But it's not a lot of people that have never done a tax return before and now suddenly believe that they should do a tax return.

Roland Siebelink (07:43)
In a way, strategically, it's more like you have your existing business, but you see that plateauing, so now it's building your second line of business on the same platform, on the same technology.

Daniel Hanemann (07:52)
Exactly, I call it a soft pivot with a stable launch pad.

Roland Siebelink (07:59)
Sounds like move and break things but on top of stable infrastructure.

Daniel Hanemann (08:07)
Yeah, that's how we like it in Germany. A little bit more stable support.

Roland Siebelink (08:16)
How do you change that with a team that will have been there for years? You have to change a few people, but how do you actually get people to buy into a pivot like that?

Daniel Hanemann (08:28)
I think maybe I would answer this question not even with a pivot, not just in connection with the pivot, but also in connection with the whole restructuring that we've done in the last four years. The thing is my startup story is not very conventional. When I founded it in 2016, it was the typical startup story with growing and raising angel investments.

And when I came back in 2022, it was a different story. I came back, it was about 25 people in the company. And frankly speaking, there was a lot of slack in the company. And when we downsized to a serviced office with shared facilities and people taking care of it, our office manager, who was also the customer service person, who was also working on products, told me, like a third of my job is gone. And I was like, yes, that's the point. You shouldn't be ordering toilet paper. We should hire somebody to do that. And he was like, but I like ordering toilet paper. This is the most simple example of this.

People hate change. I think that's very important in restructuring processes. And the way I do it, or I did it, is transparency. I try to communicate.

I don't like the whole radical transparency movement thing because sometimes it's just an excuse to be an asshole. But I like to share my thoughts. I like to share my train of thoughts with anybody who asks.

Why do we do what we do? Why do I make these decisions? Because in my career, I've always had this. Startups are messy.

It's a cliche. People love to talk about their boss behind their back. And I get it.

Some decisions just seem idiotic! Just seem like mismanagement. But the truth is, the inherent truth of being a founder is you're juggling so many things, managing so many stakeholders, it's really, really hard to please everybody. You're going to be an idiot for somebody. And I think the only way that I had to mitigate this is to share why I did the decisions that I wanted to do and that I had to do. And the people that didn't like them — I think this is a little bit my secret sauce, how the whole restructuring went so well — was because I was so transparent in my train of thought and my decision process, people had the chance to say, I don't agree with you, I'm not going to be part of this.

We did have to let a few people go in the whole restructuring process. But I would say we got out of it pretty well. We're now 15 people, back then it was about 25. And you always say, you know, you have to count with 10% collateral.

We barely had collateral. The only person that quit was because of the toilet paper. He was the only person that — it was not his culture anymore. We wanted to keep him but it wasn't his culture. No hard feelings there. But everybody else who we had to let go that were part of the restructuring, I tried to be as transparent as possible, try to share my train of thought. And it worked well, is what I can say, it worked. And that's how I would say also, going back to your question, regarding the soft pivot, I would always try to explain this without, especially to your employees, without the grandiose startup pitch.

Be vulnerable. Explain to them what are the factors that led you to this decision.

Roland Siebelink (13:04)
You're about 15 people now, down from 25 you said. But you're doing a lot of stuff with that team: Two business models, B2C that needs still customer acquisition skills, B2B2C needs the partnership skills you're building up right now. How much attention are you putting into that team every day?

Daniel Hanemann (13:24)
Well, I have a very talented management as well. I do have the privilege that I'm at a position where I'm not too involved in the day to day anymore. I have a strong COO, strong CMO, strong CTO, of course. I am able to also manage the outward facing stuff. The stakeholder management towards the outside. And of course, our Mondays are hectic.

We have weekly team meetings, weekly all hands. Although it's called weekly, it's more bi-weekly. What makes Wundertax a quite nice place to work at is I think everyone's involved. Everyone knows the other person. This is inherent in small startups.

The chasm, and every founder who's been there will know this, the productivity of each additional person vastly drops as a whole. Every single extra person reduces the per person productivity, which essentially is a really, really hard thing to manage. That's why thousands of management books are written every year. But the thing is, with this size, it's extremely fun, because things get done very quickly.

Roland Siebelink (15:02)
You mentioned in our prep call that you had also gone through a few M&A activities, but where you learned that the finances are one thing, but that the strategic fit is far superior as a criterion. Can you expand on that a little bit?

Daniel Hanemann (15:01)
Yeah, absolutely. For all the founders that are looking to sell their company or thinking about it now or in the future.

What I've learned is that companies — you don't sell a company. You get bought. There's a subtle but very meaningful difference here. Because when I first got exposed to this world, I always thought it's like a bazaar, or maybe a more sophisticated example, it's like the stock market, where there will always be a buyer at some price point. Except if it's zero. There's always going to be a buyer at some price point. And that's not the truth when it comes to startups or private markets. The thing is you get bought by a company because the company wants you. If you're not part of a strategic project or a strategic fit, etc, they won't take you even for free.

Roland Siebelink (16:27)
Right. In that sense, it's maybe more like the dating market than like the stock market.

Daniel Hanemann (16:33)
Yeah, that is a very, very good analogy. Yes. The stock market is liquid…

Roland Siebelink (16:38)
Let's not go there. Come on. I can see you are trying to surreptitiously insert your talents as a stand-up comedian now.

Daniel Hanemann (16:54)
Yeah, that was a once upon a time, yes.

Roland Siebelink (16:58)
But since you did do some standup comedy and since you're the only one of German heritage that I know that has any experience in that field, what did they teach you for being a founder and a company leader to have been in that standup comedy field?

Daniel Hanemann (17:15)
Yes, I have a very, very clear answer to that: everyone's a narcissist. Some more, some less. And why am I saying this is because you might think that you are embarrassing on stage. You bomb. You have an awful show.

And you're ashamed to the ground and it's the worst if you had a bad show. You go off stage and people won't even remember. Of course, if you're really bad, if you're negative bad, that's something else. But if you're just badly bad, nothing's gonna happen. And I think that was my main learning; everyone's more embarrassed themselves in a day to day life than anybody will ever be embarrassed about you.

What I'm trying to say is, if you get rejected, if you have a bad presentation, if you have a bad pitch — there's always another show, there's always another stage, there's always another audience. And there's always another investor you can pitch to.

Roland Siebelink (18:15)
I was going to say that sounds like a VC fundraising round.

Daniel Hanemann (18:39)
Yeah. This sounds a bit strange, but if you don't do anything ridiculous — a bad pitch is never going to be so embarrassing that you'll be out of the picture. And the same thing with standup comedy.

Roland Siebelink (18:56)
We like to get a little bit personal at the end of the show as well, Daniel. You were born in Hong Kong from a German father and a Taiwanese mother, so big multicultural background. How has that shaped your life?

Daniel Hanemann (19:04)
That has shaped my life in a lot of ways. A little bit background information, I grew up trilingual. My dad spoke German with me. My mom spoke Mandarin with me. Hong Kong is natively Cantonese.

Because my mother didn't want me to mix the two languages, she wanted me to only speak Mandarin. It is very different from each other, but you do mix it, especially because my exposure wasn't that big. My classmates were all speaking English or German. What I had was I grew up in a place where I was the perpetual expat.

And even nowadays, I have a Hong Kong passport, and if I meet people from Hong Kong, it's very difficult because of just the language thing. I'm not really from Hong Kong, even though I lived there for 18 years. It's the same thing when I meet people from Taiwan; I speak the language, but I've never lived there. It was at the beginning when I moved to Germany, it was the same thing. I didn't really relate; it was all very different for me.

And I think that really shaped me intensely by my adaptability, I would say.

There's this word called third culture kid. And this third culture kid was told to us when we were still in school. Our teachers would be like, you're third culture kids and stuff like that. And we were like, no, we're just normal.

Roland Siebelink (20:35)
As almost like a derogatory sense?

Daniel Hanemann (20:52)
Well, we thought, why are you putting labels on us? But once I actually moved abroad, or for me abroad to Germany, I understood, we are a third culture. I meet people that went to international school in Spain with Central European parents, and I relate to them. And I have nothing to do with them culturally, from the cultural background. But we're friends because we have that common ground of being a stranger wherever.

Roland Siebelink (21:25)
Almost like native expats or what they call Erasmus babies in Europe.

Daniel Hanemann (21:38)
Yeah, native expats is a good word. I think what that taught me was adaptability. And I'm very thankful for my parents that they've given me so much cultural enrichment.

Roland Siebelink (21:42)
Daniel, where can people reach you or get to find out more about you? Anything they should download, in particular, from Wundertax?

Daniel Hanemann (21:58)
Well, if you are a German that has to do their taxes or we service expats as well, we have an English tool, please try out Wundertax. You can reach me on LinkedIn for startup advice. If you want to just spar, send something over; happy to connect. LinkedIn is probably my most active one.