Amazon’s Massachusetts strategy in the past could be described with two words: free shipping. When the tech giant has acquired local companies, it has shipped the products and people out to Seattle. And when it has hired local talent, it has provided one-way tickets to Washington State, along with other lucrative relocation benefits.
That strategy will change in 2012, when Amazon opens up its first outpost in the Boston area. The company has been communicating with software developers who’ve previously been reluctant to head west, informing them that a Boston office will be open in February. And Amazon has also posted four public job listings for PhD-level research scientists who will work on “a variety of technical initiatives” in Boston. The research positions are apparently under the umbrella of Amazon’s a2z Development Center, a subsidiary that works on software to “enable great retailing experiences.”
For Amazon, a Boston office actually means Cambridge: the company has been hunting for about 40,000 square feet in the Kendall Square area, according to two people with knowledge of the search, both of whom requested anonymity. That’s enough space to ultimately house anywhere from 100 to 150 employees. Amazon has been trying to keep things quiet, asking to be described only as “confidential company” in dealings with prospective landlords.
Amazon seems to be on the fast-track to set up in Cambridge; while the target date for opening is February 1st, members of Amazon’s engineering team will be in town the week of January 23rd to conduct interviews. On the software development side, Amazon is looking for engineering managers, software engineers, and quality assurance engineers who will work on Amazon’s digital products team, which handles services like Amazon’s MP3 store, online video delivery, Kindle e-books, and Amazon’s Cloud Drive storage service.
In the late 1990s, Amazon acquired two Cambridge companies, PlanetAll and Exchange.com, but never set up a local office. More recently, it has recruited tech executives like Raju Matta from local companies — Matta had been a senior director of engineering at TripAdvisor — and moved them out to Amazon’s headquarters.
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”I’m intrigued by the idea of a Cambridge office,” says Jim Savage, the former CEO of PlanetAll who now works as a venture capitalist at Longworth Venture Partners. “Google has quite a big presence here, but from a consumer perspective, there’s no bigger brand than Amazon.” Savage says the local outpost is likely a way for Amazon to hire people who want to stay on the east coast.
Jeffrey Bussgang, a VC with Flybridge Capital Partners who previously worked for e-commerce pioneer OpenMarket, says an Amazon office will “contribute heavily to the ecosystem. We continue to be a talent pool that big companies want to tap into. And those offices can help create relationships that can lead to acquisitions of local start-ups or business partnerships. They can also help train engineers and technical talent who may eventually go off and start their own companies.”
But is Amazon now competing with Boston’s home-grown tech companies for talent? Bussgang doesn’t think so: “People have different points in their lives where they want to work on different things, and there are some technical people in particular that just want to work on big, hard problems. If Amazon lets them do that, I think it’s terrific.”
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Why is Amazon opening a Massachusetts office now? It may have to do with sales tax. Ever since people started shopping on the Internet, online retailers have only been forced to collect sales tax in those states where they have “nexus,” meaning significant numbers of employees, or a substantial business operation like a warehouse or call center. That kept online retailers from setting up offices in heavily-populated states like New York or Massachusetts or California, where suddenly they would have had to collect sales tax on all their transactions.
But federal legislation that would enable state and local governments to collect sales tax on Internet commerce is gaining steam in Washington, D.C. (It’d enable governments to collect about $23 billion annually in taxes that today are pretty much uncollectible: consumers are supposed to remit them on their own, which no one does.) If the proposed legislation takes effect, as many now assume it will, it would eliminate the “penalty” that online retailers used to pay for setting up outposts in other places around the country. Hence, Amazon Cambridge.
Amazon hasn’t yet responded to my e-mails or phone calls today seeking comment.
This article originally appeared in the Innovation Economy blog on Boston.com