I started writing this piece when news first hit that Amazon was looking for HQ2 (about a year ago). And I decided to finish it given recent news and telling this story to just my inner circle. The early stats and articles might be slightly dated, but the message and content is relevant.
Amazon’s tactic for an HQ2 and the promise of 50,000 high-paying jobs created a rare and unique public auction of sorts. A bid for the panacea to all urban ills, collecting 238 responses from around the nation. Every major news outlet, urbanist writer meticulously scrubbed Amazon’s site criteria to suggest the likely winner or a pick of favorites, like Denver, Austin, Atlanta, Dallas, Boston or DC, knowing the company is very data driven.
However, this was and remains a decisive business strategy to access talent and find HQmany. Let me explain.
I’ve lived in Seattle for nearly 20 years and watched the dot.com era birth then kill many start ups. And the online book company survived, finding a relevant business model then patiently dominated several markets and changed the culture of commerce, business and our modest town forever. The transformation of Seattle was remarkable, phenomenally aggressive and geographically consuming. Over the past 10 years, the company moved to occupy more than 13 million square feet, employing over 40,000 people in Seattle while the city gained 100,000 new residents and almost as many new housing units, more than any prior housing boom. Housing affordability declined given aggressive new job formation outpacing housing supply, increasing housing costs dramatically. And within the next couple of years, Amazon will occupy another 2–3 million square feet (potentially more), exacerbating local stresses. These stresses induced clustering, that is attracting other companies like Facebook and Google given that Seattle remains one of the lowest cost gateway commercial office markets in the country. Make no mistake, talent is THE driver. Without access to talent, growth for any technology company is not possible.
Amazon has been enormously creative in finding talent. The company is known to be very aggressive internationally, being somewhat of a military recruiter on technology educated campuses, securing over 13,000 employees via H-1B visas and Green cards since 2012 to fuel its growth — that’s roughly 3 million square feet of space needed just for visa holders. Seattle has seen its population become incredibly diverse as a result of tech immigration.
Amazon has ambitious plans in just about every industry from retail, robotics, logistics and pharmaceuticals. To continue its pace of growth, talent is the limiter and therefore Amazon must rapidly expand its core development centers into 16 different locations across North America and beyond.
Here is a summary of the top locations Amazon short listed based on talent and housing availability as well as other quantitative and qualitative factors leading up to the current story of it splitting HQ2 into two locations.
The point is that no city can fully accommodate Amazon’s growth and its need for diverse talent or have the infrastructure necessary to support the talent. The largest tech talent markets in the country are the Bay Area, New York and the DC metro areas, in that order and it’s likely going to be no surprise that Amazon needs to compete for talent with proximity. Matt McIlwain, the managing director at Madrona Venture Group also suggested there will be “centers of excellence”, or geographic areas that hold specialties where a company can concentrate growth. This is why, if you are Amazon you will “center” in (1) DC/Virginia for cloud (AWS) and cybersecurity, (2) Boston or Seattle for AI and Robotics, (3) Atlanta for logistics, (4) Pittsburgh for machine learning, and (5) the New York area given it one of the largest most diverse tech employment market in the country.
So why did Amazon chose this talent procuring tactic for soliciting suitors? Many other large, well capitalized companies have aggressively grown a presence outside of its main HQ (including Apple, Microsoft, Google and Facebook). This is really about Amazon’s style, as there are notable differences in each tech company’s culture. “Amazon’s ethos is about business ruthlessness rather than technical purity.” In other words, Amazon is cheap and loves a deal.