Building April: Lessons from Competing with a Market Monopoly Through Infrastructure Play
Every market dominated by a monopoly presents two options: compete directly or change the rules of competition entirely. In a recent episode of Category Visionaries, April co-founder Ben Borodach revealed how they turned TurboTax’s market dominance into an opportunity by becoming the infrastructure layer for fintech platforms.
Understanding the Monopoly’s Weakness
The tax software market seemed impenetrable. As Ben explains: “You’ve got a federal tax law that’s ballooned 350% over the last few decades. You have income tax in over 40 states. And so to build something at scale has got to raise a bunch of money.”
But April identified a crucial weakness in TurboTax’s dominance: their business model relied on aggressive upselling. “Everyone knows the TurboTax model, where you’re going to get upsold to death until they extract every last penny from you,” Ben notes.
Turning Dominance Into Opportunity
Instead of competing directly, April positioned themselves as the independent infrastructure provider for fintech platforms. “We can come kind of as that independent player that’s a true infrastructure provider,” Ben explains. This strategy turned TurboTax’s dominance into a liability – their competitive interests made them unsuitable as a partner for fintech platforms.
Reimagining the Business Model
April’s infrastructure play enabled a fundamentally different approach to pricing. “We believe having more of a flat fee model where what you see is what you pay is really the best thing for the consumer,” Ben shares. “And there’s not a reason why you also can’t have a great business in the process.”
Strategic Partner Selection
They focused on three verticals where tax integration created clear value:
“We’re seeing a wide array of adoption across different finance apps,” Ben notes. “I think the ones that we’re focused on heavily today are in the banking credit space… seeing a lot of traction in the investment category… and then third is going to be payroll.”
Their recent Gusto integration demonstrates this strategy in action: “We’ve recently launched a very exciting product with Gusto that actually allows an employee on their platform to constantly track their tax situation in real time based on their Gusto payroll data.”
Building Trust Through Independence
April’s positioning as an independent infrastructure provider resonates with platforms wary of competitive threats. They enhance their credibility through strategic investor selection: “We’ve surrounded ourselves with great cap table of investors from teammate and treasury and QED and Nica and others.”
Early Validation
The strategy is working. April has attracted “dozens of companies on the platform” with “hundreds of thousands of users.” Their NPS scores “in the high fifties and sixties” suggest they’re delivering better customer experience than traditional models.
Looking to the Future
Ben articulates an ambitious vision: “The big picture for April is that whenever the US taxpayer individual small business is going to transact, they can get complete clarity about the impact to their taxes.”
Lessons for Founders
April’s approach to competing with a monopoly offers several key insights:
- Look for weaknesses in the monopolist’s business model
- Turn their strengths into liabilities through strategic positioning
- Enable new business models through different distribution approaches
- Build trust through independence and strategic partnerships
The broader lesson? Sometimes the best way to compete with a monopoly isn’t by building a better product – it’s by fundamentally changing how that product reaches customers. April’s story shows how deep understanding of market dynamics can reveal opportunities to turn seemingly insurmountable barriers into strategic advantages.