By Brian E. Clark
It’s been a tumultuous 16 months for Fat Wallet, the bargain-hunting website started 14 years ago in northern Illinois by Tim Storm.
The company made big news last year when it jumped across the border (a mere five-mile hop) from Rockton, Ill., to Beloit. The move was due — at least in part — to a call from Wisconsin Lt. Gov. Rebecca Kleefisch, who told Storm she would do just about anything to convince FatWallet to move.
But Brent Shelton, a spokesman for the company, said the main reason FatWallet left the Land of Lincoln was to avoid a triple whammy of new Illinois laws enacted to help lower the state’s $8.3 billion deficit. One piece of legislation would have significantly increased Storm’s income tax rate, while another would have raised business taxes.
However, the killer was the potential loss of 30 percent of the company’s business with online retailers because of the March 2011 passage of the Main Street Fairness Act, which required online retailers with Illinois affiliates to collect and remit sales taxes to the state. Amazon.com, Overstock.com and Newegg.com all said they would stop doing business with FatWallet, Shelton said.
Still, he noted, Kleefisch’s efforts to grease the wheels of the move didn’t hurt.
“Wisconsin was obviously a consideration (as a place to relocate), along with Las Vegas, Florida and even the Bahamas,” he said.
Company officials also knew Beloit had some empty buildings and that shifting north a few miles would have little effect on employees’ lives.
Shelton said the call from Kleefisch came soon after the Main Street law was passed.
“She jumped on the opportunity,” he said. “I actually took the call and I sent her up to talk to Tim. She said ‘I’ll do whatever it takes to get you here. We want Wisconsin to be your choice.’ She made it easy for us to do it.”
FatWallet moved its 50-plus employees from Rockton on April 8 last year, and the relocation was covered by many media outlets. That was a Friday and by Monday, the company was up and running at 100 percent capacity, Shelton said.
Then, roughly six months later, the company was acquired by Ebates, a San Francisco-based company that Shelton said many at FatWallet considered a competitor. Founder Storm is now an advisor to FatWallet and serves on its board. During Storm’s tenure, Shelton said, the loyalty shopping site returned more than $30 million in commissions it earned back to customers. The company now has 2 million registered members.
“There were a lot of worried employees (after the sale),” Shelton said. “But our demographics are quite a bit different. We tend to serve more of a tech, male-driven demographic, especially with the tech and travel forums that lead most of our revenue.
“Ebates is in San Francisco and is more based on the mommy who rules the pocketbook and makes the purchases. So, actually the marriage has been fairly fruitful.”
Shelton said there have been no plans to move to California.
“There are advantages to having part of the company in Beloit,” he said.
“For one, there is still legislation on the books or in progress or on hold for a similar (Main Street Fairness) tax in California,” he said.
If that legislation passed, he said Ebates could quickly move to Wisconsin.
Shelton said FatWallet has continued to grow and now has 70 employees in Beloit.
“We didn’t lose any after the acquisition,” he said. “We are building up our customer service base, ramping up for what we expect to be a pretty big holiday season.”
In 2011, the company’s revenue was up 50 percent and it broke a number of records. This year to date, sales and “clicks to partners” are up another 20 percent.
Shelton said the future looks bright as more people use the Internet loyalty shopping companies like FatWallet to shop.
“We are developing mobile shopping and taking it to competitive level that few consumers have seen before,” he said. “It’s proprietary now, but we hope to have a beta mobile shopping app before the holiday season.”
But will FatWallet stay in Beloit?
“Our lease goes through April of 2013 and we see ourselves staying in Beloit at least into 2014,” he said. “We’re making sure we can house the proposed acquisitions we are working on.
“The downtown is starting to grow along with our company. There is a revitalization happening. We are also close to Beloit College and can tap into hidden talent there and interns.
“So it’s been very fruitful and we can only hope that we continue to win awards like the Top 50 Places to Work in America. Things are looking up.”