getting contacted by stores saying, ‘You’re located in California, we don’t want to work with you anymore,'” Matthews says.
Shopobot isn’t the only startup caught in this firing line. As Xconomy’s Wade Roush wrote in early June, online marketing company VigLink (also backed by Google Ventures) has faced similar questions about its revenue because of the sales-tax fight.
Shopobot’s Matthews and Schorzman didn’t have too many options. With the legal battle making their revenue source so uncertain, and with a strong background in the Seattle area—where Amazon already collects sales tax—they quickly decided to relocate to the Northwest.
“We could have gotten by without that source of revenue for a while,” Matthews says. “But just looking forward as a company, we didn’t want to have to fix this problem next year, or when we’re in the middle of a round of fundraising. We decided it’d be easier for us to solve this now while were small.”
Once the decision was made, the pair of entrepreneurs didn’t waste much time. They gave notice on their apartments, loaded up a truck, and headed up to Seattle. They’ve already made a hire here—a former Amazonian, actually—and are looking for more employees as they refocus on building the product. They moved into the new office the day after Labor Day.
The “punch line,” as Matthews says, was that California lawmakers and Amazon have now cut a deal that puts the entire sales tax question on hold for another year. But there’s still no certainty it will get solved in the next 12 months, with Amazon so intent on a national-scale solution that would essentially raise taxes on online purchases, and an upcoming presidential election cycle.
“And no, we’re not moving back to San Francisco,” Matthews says with a smile.
With all that turmoil behind them, Shopobot is back to work. Matthews says it’s hard to believe that something as apparently obvious as better product price-tracking hasn’t been solved yet, particularly with all of the experience in disrupting travel shopping that’s now old hat for consumers and businesses alike.
“The shocking thing is really that there isn’t a clear winner,” he says. “You don’t think of what app you use to shop online. You just go to a Web browser. It’s kind of amazing that this is still an open opportunity to really nail this, to take online shopping and really fix it from the user’s point of view.”
