Avalara and AWS Turn the Marketplace Into a Growth Engine

Hey, everyone. Welcome back here to our coverage of Avalara CRUSH at the Omni Hotel in Fort Lauderdale. It's a great place, especially we're local here, so this is a home game for me.

I want to introduce you to our next two guests. To my immediate left is Brent Young from AWS. Brent, welcome.

Thank you. And to my far left is Frank Hanzlik, and he's, as I've been told, an Avalarian, which means he's part of the Avalara team. Frank, Brent, welcome to Techstrong TV.

Thank you. It's great to have you on here. Appreciate it.

Frank, I'm going to ask you to go first. Tell us what you do at Avalara, but give us an idea of your journey- Sure. Yeah ...

getting here. Yeah. So I'm really excited to be at Avalara.

I've been here about seven years, and I lead partner development, which is basically the group that's responsible for the relationship with our biggest tech partners around the world. Just great to be part of a leadership company, and great to be at an event like CRUSH, which is our premier customer and partner event of the year. Absolutely.

Brent, how about you? Yeah. So really great to meet you.

So at Amazon, I run the ISV private equity sales teams. So we cover about 40 software companies that are owned by private equity firms. Like Avalara is owned by Vista.

And so I've been there for two and a half years. Like I said, beforehand, I was at Intel for 18 years, doing a bunch of sales strategy operations. My background's actually technology.

I have a bachelor's and master's in computer science. Worked for a couple startups then got my MBA and then went on that journey. Very cool.

I've also done my share of startups and did that whole thing. I thought I was out and then started what became Techstrong about 13, 14 years ago. That's cool.

Yeah. It's a journey, man, and you're never out. Just when you think you're out- You get pulled back in ...

it pulls you back in. Yeah. Exactly.

Yeah. Guys, I wanted to talk-- Well, we should start off, the two of you did a nice fireside chat here at CRUSH this year. People at home probably haven't seen it, right?

They can tell you they haven't seen it. Tell them what they missed. What was it about?

Yeah. The whole idea was around the future of procurement, which we really believe is marketplaces. And so Avalara, like many software companies, are in the marketplace now, in this case, the AWS marketplace.

And it's just a really exciting time for us because typically, the buyers of our solution are in the tax department, maybe rolling into the office of the CFO. So they're not necessarily the people that buy cloud. And so being able to kind of create that connection where now Avalara software can count against your cloud commitment spend is something that a lot of the folks we work directly with may not know of.

And so we wanted to really use the fireside chat to kind of raise awareness and really highlight some great success stories that we're having with some of our customers today on the renewal side, but also on net new business as well. I love it. Frank, I want to dig in a little bit, because I was always a biz dev guy in my startup years.

Corp dev, biz dev. But I've managed sales team, I've managed channel. You know how it is in startups.

You wear a lot of hats. I always divided my channels into, and partners into, what I would call strategic technology partners. Yeah.

AWS is a great strategic technology partner. Then I'd have other strategic partners, maybe because they were service integrators or- Yep ... the Accentures of the world and so forth.

And then I'd have people who really do work. The bread and butter partners who are reselling your product- Yep ... integrating into your product and doing that.

Is that kind of how you look at your product as well? It is. It's very similar, yeah.

I think the construct we use is pretty much three big buckets. So tech partners, strategic tech partners and principal. These are the biggest tech companies in the world that have integrations with Avalara.

Companies like AWS, where we work with through the marketplace relationship. Consulting partners, which are a whole host of system integrators, VARs, et cetera. And then accountant partners.

Accounting partners are a very, very important part of our past. Many of the practitioners really recommend Avalara are a part of that ecosystem. So we basically break it into those three categories, similar to what you described.

Yeah. Makes sense. So Brent, but you sit in a different seat now, right?

You get here and as you said, there's about 40- 40, yep ... PE-owned ISVs. Yep.

The fact that they're PE-owned means that they're probably not tiny. Yep. I don't know if they all rise to an Avalara scale where they are a leader in their marketplace and so forth.

But you have a unique cat's bird seat. What is it about Avalara, you think, that owes to their success, that kind of gets you excited? Yeah.

It's a great question. So the way that AWS looks at engagement with partners, great partners like Avalara, is co-build, co-market, co-sell. The three sort of distinct areas, and Avalara is a leader in all three of them.

In co-build, the agentic work that we're doing together is groundbreaking in terms of just really automating a lot of, and decision making of what's happening from a tax perspective, and compliance perspective. But then co-market and co-sell events like this, our presence here and Avalara's presence at a re:Inventors is just a small example. But then the co-sell.

And that's like the marketplace- Your market ... exactly. That we together really ignited this year.

So Avalara's listings on AWS Marketplace this year, and we talked about it in the fireside chat, is up seven times. 7X. 7X.

Wow. And the TCD of the deals is up 12X. So it's- Why?

What do you owe that to? I, well, they're- Or attribute it to ... so a lot of their commitment and our commitment together to then deliver for the end customer.

Because at the end of the day, it really is about making that procurement process for the end customer as seamless, as fast, and as simple, frankly, as possible. And that really helps scale Avalara through the marketplace. So Frank, there are, I was going to say thousands, it's probably tens of thousands if not hundreds of thousands of companies on the marketplace, on the Amazon Market.

The Amazon Marketplace is the marketplace- ... in technology, right? It's kind of the granddaddy of them, and really kicked it off.

What do you owe this kind of success to? I mean, just over the last year? Yeah.

Yeah, it's a-- Yeah. What did you guys- So I love to tell that story ... eat your Wheaties?

What are you doing? Yeah. We ate a lot of Wheaties, yeah.

Yeah. But no, it really, it's a great story because we've had a relationship with AWS for almost 20 years. We were born in the cloud, and we started with AWS very early.

But for the first 20 or so of those years, it was very much of a product and development relationship. So there's a lot of very good work that we've done together, more recently around the agentic kind of movement. But what really was the unlock was something called a strategic collaboration agreement, and there's a very, very small set of all of those ISVs that have this agreement.

It fundamentally enables those three lanes. There's the build lane, the sell lane, the market lane, and through Vista, through our relationship with Vista, we're able to kind of get that framework. So that really was the unlock, I'd say, for the first time in terms of taking what was a very, very successful product and development kind of relationship, and now expanding it to go to market.

And so we've got a lot of great coaching from Brent and the AWS team. We've been very thoughtful about how we've gone after business. We've got a lot of coaching from the Vista folks, et cetera.

So, we kind of came in maybe later than some folks that have been in the marketplace, but I would say we've been able to really leverage the learnings, the benefits, the playbooks in a way that now is truly bringing more value to our customers. And when we see customers having that reaction of, "Oh, I didn't know you were on the marketplace. " It just means we're doing the right things.

Yeah. No, it definitely makes it easy. Guys, if you don't mind, I want to pivot back to the tech piece of it.

Sure. And we mentioned Aviator. Brent, how is AWS working with Avalara to empower this agentic hub?

And they have over 100 agents- Yeah ... that are working mostly behind the scenes in Aviator. What role does AWS play in there in the AWS technologies?

Yeah, it's a great question. So obviously, technology provider, right? Things like Bedrock, Agent Core, access to multi-model, triaging, essentially, so you can smart route to different models.

What's called DevOps agents, so it's an internal optimization agent. com, I know. There you go, right.

We cover you pretty closely, yeah. The security agent, which is internal, et cetera. So we have a lot of building blocks.

Mm-hmm. So stepping back a second, our philosophy is we want to enable builders. Right.

Right? And so we show up with the building blocks and try to make them as great as possible, and then partner with our great partners to then leverage those building blocks to develop and deploy fantastic solutions, right? So it's the building blocks, but then it's the engagement.

" Right? So we really want to work backwards from the customer, understand their strategy, propose some ideas that maybe could help the strategy, then align on a roadmap, and then we deploy resources with the customer to help them build. Makes sense.

I wish we had you here for our previous conversation with the CPO, CTO. Yeah. Because I'd really- Yeah ...

getting into what is powered by AWS as part of this whole Aviator thing. Frank, I want to come to you, though, and there's probably a handful, maybe three or four, partners at the AWS level from you from a strategic- Yeah ... technology point of view.

But there's probably thousands of practitioners who are partners. Oh. What's the reception been on Aviator as you've taken-- And probably you're hearing it here today, right?

What has their feedback been? Is this, "Man, this is just what we were looking for. This is fantastic"?

Yeah. I'll say, truthfully, it's early, right? I mean, Aviator's just kind of being released here.

Well, it's not even in GA yet. Yeah, it's not even in GA yet. So, to your point, so I think to take a step back, we've been formally doing AI-related development since maybe 2019, maybe even a little bit earlier.

So, not our first rodeo, as we say in Texas, right? So we've been at it for a long time. I think as we've looked at even the last year, bringing out agents was the first piece of it, and we, for the first time, were able to bring agents into the workflows where people are really doing business.

That was a big, big topic from the keynotes this morning. So the natural extension is, what about the orchestration? Yeah.

We've got these agents, right? And they're great, and they're doing good things, and they're connecting with- NetSuite or SAP or Oracle or whoever the example is, right? And that's a great first step.

But what about that orchestration? So I think Aviator seems to be really scratching that customer itch in terms of now I have this kind of agentic orchestration, which is really great. However, we're still giving all of our customers, partners the control, right?

So responsible AI is a big thing. Are we making sure that I can let the machines kind of do the right pieces, but I still have a human in the middle, which is so important from a trust and a responsible AI perspective. So I think although it's early days, I think the feedback from the betas has been very positive.

I think we're really excited. We can take this into different instantiations where if you want to get this from the Avalara portal, you can get it that way. Or if you want to go into more of a headless kind of scenario where you're in, again, another person's UI interface, we can do that too.

So we're really excited about it, and we feel we've- Sure ... got some real leadership that's going to be beneficial to our customers and to our partners. See, this is one of the things that I love about working with Avalara.

The product innovation philosophy and strategy and excitement around what they're developing is real- Mm ... and has real end customer value. The headless MCP server that they've developed allows them to then integrate into a whole host of other platforms in addition to having their own UI and interface.

So it's sort of taking this philosophy of let's build the core agentic infrastructure, but then deploy it to meet the customer where they are- Right ... in the best way, right? Yeah.

This conversation we had earlier on today, we actually dove into this pretty- I mean, because it's not a MCP server. They have- Yeah ... you guys have been building MCP servers.

MCP's only a year and a half, two years old, right? I remember it came out January was a year, so almost coming up on two years, right? But you guys were building MCP servers almost two years ago, and they've come out with successive generations all doing different things, right?

And I would imagine we'll probably see that consolidate over time because MCP is becoming richer, more secure, more mature. And so the way there will be consolidation rather than what's called single purpose, right? We saw the APIs went through the same thing.

Yeah, they have. How many times do you say, "Oh yeah, they got an API," and then you find out the API only does this. It doesn't do what you want it to do over here.

Not going to mention names. But yeah, I think it's just touching on, I think one of the cultural things that's great about being at Avalara is go jump in the water. Go try it out.

Let's get in early. We're going to make some mistakes. That's okay.

We're going to get more things right than wrong. That's how you learn. And so because of that, we've been able to get in, we've been able to get that close customer feedback, a lot of close partner feedback, and then just to build off what Brent was talking about, our development organization is doing some great things.

But when augmented with a scale partner like AWS, wow, the stuff that we can do there is-- There's just not a lot of partnerships that can deliver that kind of outcome for our customers. So I think our customers see that. I think our prospects see that.

We've been very, very successful in the mid-market forever, and now in the last few years we've been moving up in the enterprise. And so some of the capabilities that AWS and Avalara bring, real scale capabilities, those are resonating really well with our enterprise class buyers as well. Yeah, totally.

And then the pace also in terms of delivering that. Like you were mentioning, MCP basically didn't exist, whatever, a year and a half, a year ago. Probably a year and a half.

But agentic didn't- Yeah ... at this scale, right? And that's the term, the focus area.

And I remember I was at a Vista event where Robert Smith told all the participants there, which the portfolio companies including Avalara, "You have to move fast on agentic," right? And I'm paraphrasing. And Avalara did, right?

I see a lot of companies across the portfolio, not just My40, but a lot more are ISVs or private equity owned, and some are not moving as quickly. Yeah. " And AWS is excited to have a partner.

You were at Intel early in your career. What was the old Andy Grove quote? Wasn't it, "Only the paranoid survive"?

Exactly. And that idea of constructive paranoia. " Right.

This is happening, and so again, who's going to transform is going to win. You know, with NVIDIA, I don't know if you guys are familiar with the NVIDIA company Lano is with 30 days from closing down. Yeah.

Like they were literally 30 days from not making payroll. Yeah. Yeah.

When these GPUs hit. Yeah. And it all started out on a napkin at Denny's too, right?

Or something. Yes. Right?

Yeah. So I actually have a book coming out- Do you? Yeah ...

August 6th about this whole AI wave- Yeah ... and comparing it to historical- Yeah ... fiber optics, phone, electric, railroads before.

And yeah, I have a whole chapter on it in the video- Yeah. Nice ... including the Denny's- Nice.

Yeah and that whole thing. But it's so true, right? I was doing a webinar this morning, and it was based on a white paper that was done in July and it was about generative AI and CICD.

" Right? That's so April, right? Well, we were talking earlier, we've been both in the-- I didn't go through all my journey, but I've been in tech my whole career, so.

Uh-huh. But we've said, it's never been faster. It's crazy.

If you think about three months ago. Yeah. When in your career was ever like, "Oh, I took a vacation for three months.

I came back. " I mean, fundamentally in AI, the world is changing. The world changes here every other week.

Yeah. And so if you're not on that velocity- They can make new models today that are 50% less- Yeah. Exactly ...

to the ChatGPT, which was a response to Anthropic, which is significantly, significantly less than Fable. Yeah. But to kind of tie all this together, that pace, right, Amazon has a leadership principle, bias for action.

That can never be more important than today. No. Right?

And it's always day one is another philosophy- Yeah ... that we have. That, again, because every single day actually is day one because there's new models, there's new, frankly, security standards, there's new communication methods, there's new innovations with your competitors and everything.

So literally, I wake up in the morning, through the day, and then you go to bed at night, the day has changed. Right? And so you just have to be moving.

Yeah. Constantly innovating. And you got to love it.

You got to love it or you're in the wrong business. Right. Like really.

Exactly right. Man, I got to tell you, so after all those years in startups and having living that, sitting where I sit now just talking about it, it's great. Yeah.

Yeah. Yeah. I find it cathartic.

It's why I wrote a book. I threatened to write a book for 20 years. It took this to get me off my butt and doing it.

Good for you. But anyway, hey, gentlemen, we're about out of time. Great speaking to you.

You as well. Thanks for giving us a peek into behind the curtains on what's going on, and continued success. Yeah.

Great. Well, great to be here. Thanks so much.

Yeah. Thanks so much. Thanks.

Appreciate it. Thank you. All right.

Hey, we've got more Avalara Crush coverage coming your way. Stay tuned. You're watching Techstrong TV.