Kintsugi’s Regulatory Timing Strategy: Building During Market Chaos When Incumbents Are Vulnerable

Some founders wait for perfect market conditions. Others create markets where none existed. But the smartest founders do something different: they build during regulatory earthquakes when established players are scrambling to adapt. That’s exactly what Pujun Bhatnagar did—and his father saw it coming years before anyone else.

In a recent episode of Category Visionaries, Pujun Bhatnagar, CEO and Co-Founder of Kintsugi, a sales tax automation platform that’s raised over $8 million, revealed how a Supreme Court case that most people ignored became the foundation for a company now doubling revenue month-over-month. This is the playbook for timing market entry around regulatory chaos.

The Warning Nobody Else Heard

Before Kintsugi existed, before Pujun left Facebook, there was a conversation with his father that would define everything.

“My dad built a career in compliance and taxation and really worked in the space for 37 years before retiring,” Pujun explains. “And ever since this case was taken to Supreme Court, he was like, ‘Pujun, you should really keep an eye out on this, because if South Dakota wins, this could have, quote unquote, an earth shattering effect on how sales tax is handled today.'”

Most people dismissed it as an arcane legal dispute. South Dakota was angry that Wayfair was using their infrastructure without collecting sales tax. It seemed like a narrow issue affecting a few e-commerce companies. Pujun’s father understood what others missed: if South Dakota won, it would detonate the entire foundation of how sales tax worked in America.

“Guess what? That is exactly what happened,” Pujun notes.

The Regulatory Earthquake

When the Supreme Court ruled in favor of South Dakota in 2018, it didn’t just change one rule—it invalidated the entire model that thousands of businesses had built around.

“Prior to 2018, the way to think about sales tax was charged based on where you were headquartered,” Pujun explains. “So a lot of companies were headquartered in California, and hence, like a lot of software companies, they didn’t have to worry about sales tax.”

The ruling flipped that overnight. Now it wasn’t about where you were located—it was about where your customers were. “Everything changed in this landmark ruling case, which was South Dakota versus Wayfair, where now it does not depend where you’re headquartered, but your sales tax liability is dependent on who is buying your product.”

The speed of adoption was staggering. “By November of 2019, 48 jurisdictions including DC and Puerto Rico had passed regulations around whether or not people should collect sales tax and how people should be thinking about sales tax, especially businesses who are operating in these states.”

Think about that timeline. In barely a year, 48 different jurisdictions each passed their own regulations. D2C businesses, e-commerce companies, B2B SaaS, B2C SaaS—everyone got affected simultaneously. Thousands of companies that never thought about sales tax suddenly had compliance obligations across dozens of jurisdictions.

Why Incumbents Failed

Here’s what made this moment special: it caught the 800-pound gorilla completely unprepared.

“At the time, there was already talks that Avalara, the 800 pound gorilla in the space, was not doing super hot because honestly, they were kind of caught with their pants down when this regulation changed,” Pujun shares. “And as a result, people were talking that Vista Equity is going to take them private, which ended up happening in 2022.”

Why did Avalara struggle? Because their entire product was built for the old world. Their systems, workflows, and customer base assumed sales tax was simple—calculate based on your headquarters location. When that model evaporated, they couldn’t pivot quickly.

“They were kind of caught with their pants down with the changing regulations, because if you have a sales tax engine that is powered by engineering, you can change the code and you can very quickly iterate to catch up with the different rules that are coming out,” Pujun explains. “But if you don’t have an engineering product and some of the other competition in the space, they try to build it like an agency, where they programmatically pull in the data and then they ship the data out to India, Vietnam, Philippines.”

Agency models can’t adapt to rapid regulatory change. When rules shift across 48 jurisdictions, you can’t just hire more people to handle it. You need engineering systems that can programmatically adjust to new calculations, thresholds, and requirements. Avalara didn’t have that. Most competitors didn’t either.

The Strategic Window

Regulatory chaos creates a specific type of opportunity—but only for founders who move decisively.

“So there was a massive hole in the market. This is when I was like, okay, I’m a data guy. I’ve already worked at Facebook for five plus years. I know how to build these systems. My unique unlock was I have a unique advantage because my dad has worked in the space, plus my technical ability of building these large systems. So I decided to marry them together and build a company in this space.”

The timing was crucial. Pujun didn’t launch immediately after the ruling. He quit Facebook in 2021—three years after the ruling. That gap was intentional. He watched Avalara struggle, saw Vista take them private, observed how competitors scrambled to adapt, and identified the specific wedge where a new entrant could win.

The regulatory changes weren’t settling down—they were accelerating. “Sales tax has now become the number one driver of revenue for local governments,” Pujun notes. Political pressures meant more jurisdictions would adopt sales tax regulations, and existing regulations would get more complex. “I suspect that in the next two years, it’s gonna be all 50 states and all 52 jurisdictions, which includes DC and Puerto Rico.”

The Political Economy Behind the Chaos

Understanding why the regulatory landscape shifted helps explain why the opportunity was durable, not temporary.

“Prior in like 1990s and early two thousands, it was really property tax that was funding a lot of local jurisdiction projects,” Pujun explains. “But what has happened is as the political landscape has developed in the US, all these local jurisdictions are very scared of increasing property taxes. So as a result, they are now turning to sales tax and especially doubling down after this Supreme Court ruling to essentially fund their projects.”

This wasn’t a one-time change—it was a fundamental shift in how local governments fund operations. “Sales tax in the US is defined on a city, county and state level. So it’s not something that you’re dealing with the IRS, it’s actually this is one of the key levers where now nearly 60% of local governments, the number one source of revenue, has become sales tax.”

That political economy created a sustainable tailwind. Local governments needed revenue but couldn’t raise property taxes. Sales tax became the politically viable alternative. The Supreme Court ruling gave them permission to extract it from out-of-state businesses. The complexity would only increase, creating more demand for automation.

Building for the New World

The key insight: don’t build an incremental improvement on the old solution. Build something native to the new regulatory reality.

Kintsugi’s approach? “We are going to build a sales tax engine that is empowered by AI, where with three clicks and three minutes, we’ll be able to show your sales tax liability and exposure versus our other competitors in the space. They take two to three weeks to just onboard a customer.”

This speed was only possible because they built from scratch, unencumbered by legacy systems or assumptions. “We are the only software in the space which actually has a get started button on the website and where people can actually, seven clicks or three minutes, they can get onboarded and see their sales tax liability within ten minutes without talking to a sales personnel.”

While competitors tried to retrofit old systems for new regulations, Kintsugi designed for complexity from day one. Multi-jurisdiction calculations, constantly changing rules, omnichannel revenue—all built into the architecture rather than bolted on later.

The Results of Perfect Timing

The combination of regulatory chaos, incumbent vulnerability, and purpose-built software created explosive growth.

“Ever since we were publicly available, we have been doubling in revenue month over month,” Pujun shares. The company went from three people to 47 in ten months, “quadrupled in revenue ever since we raised our Series A,” and recently secured additional funding “at two x the valuation of what we raised our Series A at.”

That’s not normal SaaS growth—it’s what happens when you nail regulatory timing.

The Lesson for Founders

Regulatory changes create the best B2B opportunities, but most founders miss them because they:

• Don’t have domain expertise to understand the implications
• Launch too early before the chaos fully manifests
• Launch too late after incumbents have adapted
• Build incremental improvements instead of ground-up solutions

Kintsugi’s timing was perfect because Pujun had his father’s advance warning, waited for incumbents to prove they couldn’t adapt, then built something native to the new world. The two-year gap between quitting Facebook and launching wasn’t wasted time—it was strategic patience while the market chaos unfolded.

For founders in regulated industries—healthcare, finance, compliance, logistics—the pattern holds: watch for regulatory earthquakes, wait for incumbents to prove they can’t adapt, then build the solution native to the new regulatory reality. The window doesn’t last forever, but when it opens, the growth can be extraordinary.