Avalara's Kushniruk Tackles Sales Tax

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Marshal Kushniruk's job is to make paying sales tax less taxing for his customers. Avalara's executive vice president of strategic accounts and customer experience came onboard in early 2004, and headed to Microsoft's Convergence conference armed only with screenshots and a proof of concept. That June, Avalara released its first interface for Microsoft Dynamics GP, and for Sage MAS 200 one month later.

Since then, the company, which is based in Bainbridge Island near Seattle, Wash., has partnered with other vendors including Epicor, Intuit and NetSuite to integrate its Web-based sales tax automation applications into their products and formed ISV and OEM agreements with about 80 businesses, from small print shops to eBay's ProStores.

By year's end, Kushniruk anticipates that Avalara will have 1,000 businesses as customers and more than 14,000 registered users, expand into several different countries and continue adding to its roster of acquisitions.

Partner Insights

Kushniruk, who has worked for 20 years in sales and marketing for accounting, financial and ERP software vendors, including a position as sales manager for Great Plains in Canada, talked about the reasons for Avalara's success and plans for future growth:

What makes prospects decide to buy a sales tax application?

Sales tax is a statutory requirement. All businesses that sell are required by law to collect tax. It's time-consuming; it can be very complex depending on the number of jurisdictions or type of products they sell; it's by nature non-revenue-generating. If we can remove the tedious work and the burden and help them ensure a greater level of compliance are they willing to talk to us?

How do you sell the products?

We go to market with a product line exactly how that product is sold-Microsoft connectors go through market through the Microsoft partner channel. Sage started going through their partners, but now has OEMed our product so [AvaTax] is on their product list. With QuickBooks, we use the ProAdvisor channel and also sell direct. Epicor out of the gate was an OEM agreement, so it's simply built into the latest releases in three product lines.

Explain Avalara's main channel programs.

The Infinity Partner Program is for partners that belong to channels that we go to market with, someone who is already reselling another product. It is called infinity because we are a recurring revenue product, we pay partners year after year. While we may not pay them 50 percent year one, they get 20 to 25 percent every year, so they're actually making more money by reselling our product. We have more than 600 of those partners.

The Alliance Partner Program essentially consists of direct distribution deals we have with different software or e-commerce manufacturers.

What kinds of partners are you looking for?

Anybody who needs a tax calculation in their application. Our target ranges from small operations to the big eBay ProStores. We're talking to Yahoo shopping cart, X-cart and ERP manufacturers.

What about acquisitions?

[In August], we acquired Trustfile, which filed monthly sales tax payments for 8,000 users with a back-end technology to transfer money from a company's bank account into a state's bank accountant. We did all the front-end calculation of how much a company owes. Trustfile provided an important piece for us to finish the loop.

Some more acquisitions are on the horizon, but the biggest part of our growth is going to be through OEM agreements, where by doing a deal with one vendor, you have access to thousands of customers. In 2004, that was zero percent of our business. In 2005, it was 5 percent; 2006 it was 20 percent and this year, over half.

Any other growth plans?

We've brought in a whole layer of senior management and grown to almost 80 employees. In Q4, we plan to expand into several different countries, probably starting with Australia, Great Britain or the U.K., and in 12 to 14 months we'll be rolling support into 170 countries, embracing local channels like NAV in Europe and Sage in the U.K.

I think 2007 is going to prove to be our banner year in that we've moved from a startup proving the concept and a market exists to stepping into truly a company that's going to have thousands of customers. We're going to move into 2008 poised to become a large company.

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