By Brian Mitchell, Managing Partner & CEO.
For over a year, literally hundreds of markets have been competing for Amazon’s 2nd headquarters to plant roots in their city or region. With the promise of massive job creation and economic uplift, over a billion dollars were “invested” by governments with economic development interests in making their case to attract the mighty Amazon to their region. Amazon’s RFP process evaluated cost of living, access to labor, labor costs, tax incentives, and many other factors. The list was narrowed down to 20 markets several months ago, 3 of which were literally bordering one another in the DC area. Ultimately, Amazon elected to divide the 2nd HQ between NYC and Crystal City, Virginia (across the Potomac River from DC). With GM Ryan’s two hub offices in NYC and DC, I should be thrilled…and I am, but I’m also a little torn. Is this great news or not?
Maybe it isn’t…
NYC and DC are already thriving markets who frankly didn’t need Amazon to pump up their economies. According to the bureau of labor & statistics, DC has the lowest unemployment rate in the country for college educated white collar jobs and NYC is 4th lowest. This seems like more evidence that the key areas for businesses are on the coasts which result in middle America losing, again. I don’t have any personal affinity for Cleveland or Indianapolis or Kansas City, but think what it could have meant for those kinds of markets to have won this Amazon presence. Pittsburgh, for example, was a supposed finalist and offered some of the lowest costs. The financial ripple effect in these “tier two” markets would be huge to local businesses, schools, facilities, and home lives for hundreds of thousands within the overall societal ecosystem, possibly for generations. And upon success, this move would serve as a bellwether example to other large tech giants that planting roots in smaller markets is an outstanding business decision. We’ll never know how many other companies would have followed that path over the next decade+. NYC is the biggest financial center in the world and DC has had 107 unicorn exits in the last decade…they don’t need the help.
Maybe it is…..
It’s not Amazon’s job to save middle America. Amazon is a for-profit business and should be looking out for its shareholders’ interests without compromise. NYC boasts exceptional sales and marketing talent as well as deep technical talent. It’s also the most significant financial hub on the planet and makes sense for Amazon to plant a bigger flag there. And given the move to Queens vs. Manhattan, Amazon is still providing some significant vitalization.
If there is any threat to Amazon it’s in the area of legislative regulation so planting a local flag in DC makes great sense. DC has more public affairs and legislative legal talent than anywhere in the country, along with deep technical talent and imbedded university graduate bench strength. Bezos also owns the Washington Post and has renovated a former museum to be his DC home (lots of CEO’s relocate companies for their own conveniences, this is simply magnified). Although the DC metro area has a comparatively thriving economy, it’s typically viewed behind Silicon Valley, NYC, and Boston as a true tech/investment centric innovation hub so Amazon’s presence could elevate that status.
It’s done. Perhaps the next tech giant will discern that building a large hub in St. Louis or Tulsa is actually in the best financial interests of their company. Or perhaps not, and the tech/talent/creative/education centers will gain further strength as in this case. Time will tell. You can always boycott shopping on Amazon if you feel strongly enough, but man, it sure is convenient to use their service.