With $630 billion worth of retail sales projected to happen in the U.S. during this holiday season, it’s the time of year that governments fill their coffers with tax.
And there’s one company quickly becoming a technology of choice for easily and accurately calculating those taxes and creating returns on behalf of retailers (and even Etsy shops) everywhere. It’s called Avalara
and it’s fast on its way to employing 350 people on downtown Durham’s American Tobacco Campus.
It’s the busiest time of year for the Seattle-headquartered tax software company that opened up shop in Durham less than two years ago. But that’d be hard to believe considering what seems to be constant speed of acquisitions, hires and new clients.
Today, Cyber Monday, the company will process 50 million transactions, representing a 100 percent increase in traffic over the same day last year. The growth is a result of $142 million in private equity
raised over the last year, which allowed for acquisitions of a telecom tax compliance company in Kansas City, a European business tax software company from Belgium and lodging tax solutions provider from Denver, along with new vendor partnerships and product announcements. It's also prompted IPO speculation
A significant portion of all of that growth is happening in Durham, where a fifth of Avalara’s entire workforce spends its days and where any job open within the company can be housed. It’s also where an entrepreneur with several startups under his belt is running several Avalara businesses and ensuring an office culture that is both mission-oriented and fun, a quality he says is missing from most tax software companies.
He's specifically referring to nine core company values, ranging from adaptability, humility and urgency to optimism, fun and passion, along with a company manifesto created every five years and memorized by every employee. The "Mission to Mars" just wrapped up, in favor of the next five years' "Shoot the Moon."
"The sense of direction about where we're going is really novel from my experience," Tormollen says. "Culture is the differentiation."
But Avalara's story in Durham doesn't begin with Tormollen.
It began when Avalara acquired a small Raleigh software company called Tax Technology Services in January 2013. At the time, Avalara was beefing up its sales tax automation platform for retailers. Its software works like this: When an item hits your online shopping cart, for example, and you're ready to make the purchase, a query goes out to a huge database to determine the tax rate in that particular state and/or municipality. The software then calculates the amount owed and on the back end, tracks all taxes a retailer owes in that month and produces the monthly return documents.
Over time, the company expanded to calculate taxes required by other industries like fuel, tobacco, alcohol, lodging and more. Avalara prides itself on its content experts who ensure every tax law everywhere is up to date in its databases.
TTS was an appealing acquisition because founders Silvia Aguirre, Matthew MacNeil and Jeffrey Mitchell had spent 12 years building a software for managing sales tax exemption certificates, with more customers than any competitor. Called CertCapture, its databases included millions of tax certificates, W-9s, exemption certificates and more and integrated with most other financial software systems to help clients determine a customer’s exemption status in real-time and stay compliant.
Also appealing was its team of 25, and location in a region full of quality technical and business talent. As Avalara became an increasingly global company, the Triangle offered a central location to the world's population along with access to talented technology people.
"Recruiting in Seattle is difficult," Tormollen says. "Corporate wanted a second hub and based on the experience with TTS, went all in."
Hiring is constant at the office which opened earlier this year in American Tobacco's recently renovated Diamond View I building. More than 200 people work there, and each have access to spin and workout classes taught by Tormollen and others, along with an app that accesses a kegerator from 5 to 8 p.m. during the week and beginning at 4 p.m. on Fridays. The entire kitchen is decorated like a tiki hut, and looks the same as the kitchen areas in other Avalara offices. A tiki bar even pops up at trade shows and serves margaritas.
Orange really is the color of choice. And that's because its so different from the typical logos and color choices in the accounting software industry.
Also different, according to Tormollen, is a constant focus on innovation and owning every industry that collects a tax in the U.S., and increasingly globally. In June, a division led by Tormollen began offering online filing to small and mid-sized fuel distributors for the first time. It previously only offered software to large companies in the space.
And in October 2015, the Durham office launched a new product that calculates e-cigarette excise taxes and generates the forms required in Louisiana, North Carolina and Minnesota, the first states to tax e-cigs as tobacco products. At least 17 other states have their own legislation pending, and Avalara wanted to be ready to handle those taxes for clients.
The company has also grown its client base through integrations with vendors like Stripe, which provides payment processing for web and mobile businesses, and marketing/sales software companies NetSuite and Magento. Increasingly, it is competing for the business of Fortune 500 businesses.
They were certainly enough to lure Tormollen out of Texas. And he expects even more of the executive team to be based in Durham over time.
"As we shift more globally, this office will become more of a central hub," he says. "Already I interface more with Europe and Brazil than the Seattle office. We're doubling down on RDU."