Should Avalara prioritize expanding AvaTax's global tax coverage or improving its existing domestic calculation accuracy?

Introduction

The trade-off question at hand is whether Avalara should prioritize expanding AvaTax's global tax coverage or improving its existing domestic calculation accuracy. This scenario involves balancing the potential for market expansion against the need for core product reliability. I'll analyze this trade-off by examining the business context, user impact, technical considerations, and resource allocation.

Step 1

Clarifying Questions (3 minutes)

• Business Context: I'm thinking Avalara's current revenue mix might influence this decision. Could you share the breakdown between domestic and international revenue for AvaTax?

Why it matters: Helps determine the potential impact of global expansion Expected answer: Majority domestic, with growing international segment Impact on approach: Higher international revenue would favor expansion

• User Impact: Based on customer feedback, I'm assuming there might be pain points with domestic calculation accuracy. Can you elaborate on the most common issues users face?

Why it matters: Identifies the urgency of improving domestic accuracy Expected answer: Occasional discrepancies in complex transactions Impact on approach: Significant issues would prioritize domestic improvements

• Technical Feasibility: Considering the complexity of global tax systems, I'm curious about our current technical capabilities. How much of our existing architecture can be leveraged for global expansion?

Why it matters: Determines the effort required for global expansion Expected answer: Core engine adaptable, but significant localization needed Impact on approach: High reusability would favor expansion

• Resource Allocation: Given the potential scope of both options, I'm wondering about our team structure. How are our product and engineering teams currently organized – by geography or function?

Why it matters: Influences the ease of implementing either option Expected answer: Primarily functional teams with some regional specialists Impact on approach: Strong regional teams would support expansion

• Timeline Considerations: Thinking about market dynamics, I'm curious about any upcoming regulatory changes. Are there any major tax reform initiatives on the horizon, either domestically or in key international markets?

Why it matters: Could create urgency for either option Expected answer: Some international markets planning significant changes Impact on approach: Imminent changes would prioritize the affected area