Amazon Plans to Split HQ2 Evenly Between Two Cities
wsj.com
wsj.com
This works https://outline.com/pvJPEz
They have already expanded their engineering foot print in India and have continued to look beyond the US market when it comes to talent.
Without knowing anything about them, one would assume they're already tapping global talent pools with maximum aggression.
If anything, recession in the US may increase the supply and lower the cost (salaries) of American developers, thus making them more competitive against other countries.
That's enough for me.
Can I make the bet you describe for, say, seven years? I’d say five is highly likely to suffice but I’d rather play it safe.
Yep. Hence "if few is three" earlier.
I'm not interested in a bet. I'm interested in adjusting my priors. Thanks for the help.
If you’re not interested in a bet, why did you reply to me to ask if I’ve made one?
We have had 10 years of growth since the last recession (every gray line is a recession).
If you take into account the market corrections that we have seen this year as a sign, most people in finance will agree that there will be a correction in the next three years. It is far from speculation.
The charts was generated from here: https://www.macrotrends.net/2324/sp-500-historical-chart-dat...
Edit: FYI I did not imply that market corrections == recession. The reason I put the image is to show that there hasn't been a recession in 10 years and that we are due for one. We have had a few market corrections this year, but no recession yet.
It's also not even remotely clear to me that a plot of 500 of the largest corporations in the US SHOULDN'T be growing extremely/exponentially fast.
This happens in Oregon all of the time with Intel. We don't have a sales tax - we have an income tax and property tax. Everytime we want to raise property taxes, Intel makes a big stink and we give them presents to appease them.
https://www.oregonlive.com/hillsboro/index.ssf/2014/08/intel... https://www.nytimes.com/1999/06/09/us/fighting-sprawl-oregon...
Amazon is following the Boeing example. I fully expect Washington state to give away massive amounts of money the same way they did before.
To be clear, is your argument really that schools have lots of money so corporations deserve to get some too?
Am I wildly off here?
Yeah, it's unfortunate that often the deck is stacked against a company that could really bring some massive benefit to people, but you're right that they've done surprisingly well against that anti-momentum.
If we really wanted to stamp this out, throw some serious sand in the revolving door gears.
The only other alternative is to force companies to stay in an area, regardless of how attractive the business climate is.
But at least we didn't offer them crazy tax incentives like some other cities.
This is unfair to cities not making the list like Detroit. If Detroit was judged on only having to provide half the jobs would it not have been disqualified? Amazon changes the rules mid-stream.
Amazon just put some cities on a list and negotiated with them.
Any city not on the list is not there because Amazon didn't want it there.
I also doubt that existing talent pool size was such a major consideration. Crystal City VA doesn't strike me as an obvious tech hub, nor does Newark. Amazon is definitely counting on talent to relocate to its new offices, especially if they put them in such locations.
* Added: Especially if you factor in all the people that would normally commute into NYC or DC/Arlington from the surrounding areas now commuting to a potentially closer office location. Could be really big for lots of people (and of course Amazon).
"State legislators in various states are starting to think about how to stop companies from playing one state against another for tax breaks and handouts.
I suggested many years ago that the states should form a union to bargain collectively with these companies. We could call it 'The United States of America'."
https://stallman.org/archives/2007-jul-oct.html#23%20July%20...
"
A sword was brought & Bezos said “Cut HQ2 in half. Each of you can have part of it.”
“Please don’t split HQ2,” the true host city screamed.
“Go ahead, cut it in half," the other city said.
Bezos pointed to the first city. “This is the real host. Put the headquarters here.”
"
It makes me wonder if this is another negotiation tatic by Amazon to get the final city to shell out more incentives.
[0] https://twitter.com/publicroad/status/1059533656694362115
Alternately, Amazon has liked pitting cities against each other so much, that they decided to keep doing it forever. "City A, we're looking to start a major new project up. City B is willing to offer X, Y, and Z if we launch it in the City B office, are you willing to beat that for us to open it in your office?"
It gives them more negotiating power, and a lot more flexibility.
For those who aren't familiar with the reference:
I think it would drastically improve our government if there was an actually significant risk of people leaving when the government messed up.
Maybe we'll move away before the city is done paying for the stadium. See St. Louis and the Rams. It's rare that a city like San Diego refuses to buckle under.
In Portland, the City of Portland makes up the difference between the minimum wage and $15/hour for the employees who work the MLS Timbers games.
Nearby in Beaverton, Nike's property was guaranteed by the state not to be annexed by the city so they wouldn't be required to pay property taxes. There was muttering that maybe Nike would pack up and move if this didn't happen.
What I would love to see is that cities and states are not allowed to offer subsidies to companies. If you want to move here, great. How many stupid things like what Scott Walker is doing with Foxconn have to happen before something like that is prohibited?
In a show-down between corporate pros and local politicians, I know who's going to come out ahead.
And they get voted down. And the moneyed interests jam them through anyway.
I was stunned when the Chargers finally got told to get lost out of San Diego and it stuck.
While we're listing these cities, we should add Oakland to the list.
I'd be more upset if they stayed angry and showed up on election day.
Especially given that they are ramping up offices in Vancouver, BC, Northern Virginia, they have a presence in Austin thanks to Whole Foods, and probably other locations I'm forgetting off the top of my head, it has seemed to me like this "HQ2" business is somewhat of a red herring. Even if they do anoint some city as "HQ2" they've already put their eggs into more than one basket.
Other similar companies - e.g. practically all FAANGS - just have one large HQ, and several smaller offices in various locations to tap into local talent.
How is Amazon exceptional such that it needs this special "HQ2" office?
This never made much sense for them... Except as a big PR fanfare to drum up huge benefit packages from cities on their various long/short candidate lists.
So now they cut the prospective office sizes in half. Will the benefit packages be cut in half? Probably not.
1. DC area may have three potential cities, but Texas is the only other region that has two cities being considered
2. DFW airport is one of the US’s busiest airports, and American Airlines is headquartered there, so you can get a direct flight to anywhere in the country in 3 hours tops. Amazon already has multiple warehouses here and also ships freight through DFW and other airports in the area.
3. Public transit (Dallas has the largest light rail network south of DC), continued investment, world class museums, and honestly a pretty hip city with a lot of activity in the center, not unlike Seattle. Also lots of millennials moving there for its low cost of living and ample jobs.
4. You can’t beat Texas’ business environment — Bezos even praised it when he spoke at a business conference at SMU earlier this summer.
5. Establishing two offices will give Amazon influence in two places, and covering Seattle (West Coast), DC/NoVa (East Coast), Texas (South) gives them nationwide influence.
For instance, property taxes in Williamson County (Austin suburb, extremely conservative, are at 3.08% for new construction homes. Compare that to any other state.
California has the highest state income tax, near top sales tax rates and if you are a recent home buyer some of the highest absolute property taxes (thanks to the price dynamic described above). Plus you get screwed on federal SALT caps, mortgage interest deduction and maybe AMT.
I'll gladly take your 3% if there were more options for interesting places to work and it was not 110 degrees in the summer.
By this ranking, the tax burden in Texas is 33rd out of 50 states so it's not a low tax state, but it is definitely on the lower tax end of the spectrum. https://wallethub.com/edu/states-with-highest-lowest-tax-bur...
My understanding is that Texas doesn't have a lot of that or at least its minimized.
The reason "business environment" can't be duplicated or reversed because it's like a legal equivalent of tech debt code rot where also a large group of ops employees (politically influential bureaucrats) earn their life's income on the busy work the system creates.
Minus museums, this could be said of plenty of other cities that are in places with less wacky politics. Museums don't mean a thing. Low cost of living as a requirement means a relative low cost of living compared to the West Coast.
I'd prefer to see Denver as the location over Dallas. The State of Texas needs a swift kick in the ass regarding their state politics, specifically the war on women, and their continued absurd policies regarding weed. The last thing they need more of is to be rewarded for unsustainable tax policies.
I believe I've seen these trend analyzed in other states as well (low and middle income earners have the most to gain by moving to lower cost of living states, so it's a common pattern).
https://www.sacbee.com/news/state/california/article13647809... https://lao.ca.gov/laoecontax/article/detail/265 http://www.latimes.com/business/la-fi-california-migration-2...
Perhaps you should clarify that this is true of legal in-migration. Wanna take any guesses as to how wealthy and educated the folks crossing over the border on a continual basis are?
Illegal immigration to Texas btw is much higher than to California: https://www.sacbee.com/site-services/databases/article174373...
The fact that you've heard of it is entirely unrelated to the number of people it employs and in what capacity it employs them.
“Ever heard of X?” is an idiom that means something like “here’s an obvious example you should already know about.” It doesn’t imply that knowing about it proves something. It’s a perfectly fine argument that just says, “TI exists and attracts educated employees.”
Citation, or are you guessing? Which state has the most people migrating to it? To determine whether they are educated, the reason for the migration can help.
Dallas is a liberal stronghold in Texas, and in absolute numbers turns out more for Democrats than any other city in the state, including Austin (percentage-wise Austin wins by +5%, I believe). Unlike Austin, which is gerrymandered in the state legislature, every single state/county/city official in Dallas is a Democrat.
Dallas is also a gay rights stronghold, representing the only county and city in Texas, again including Austin, with non-discrimination clauses in employment and housing for LGBTQ+ individuals.
Furthermore— Texas is considering bi-partisan legislation to legalize weed. Dallas has already decriminalized it, and the State, while backwards in other regards, hasn’t indicated it will force Dallas to back down on that measure. Dallas also has stricter gun laws than the state of Texas.
Texas has a long way to go, but I think if you would step in Dallas you would learn to leave your preconceived notions of it at the door.
I believe an HQ2 would speed up Texas’ change.
A couple months ago I was there, and around my wife's parents' house, almost every yard had a Beto sign.
So I can verify that this is true, at least for some parts of Dallas.
You can have your LGBTQ anti-discrimination and TX still remain red, BTW. They're not mutually exclusive.
Also, the government race is not a good indicator. Lupe Valdez has made mistake after mistake in her campaign — I’m liberal, and even I wasn’t enthusiastic about voting for her. She’s doing so bad that she’s polling less than the percentage of registered Democrats there are in the state.
For change, look at the Beto polls — he’s not favored to win, but he’ll come within 5 points. That’s huge considering Cruz previously won by +21. Furthermore, in the 2016 election Texas was only +9 Trump — that’s less than conventional swing states such as Ohio.
Hillary did better in Texas than any Democrat since Reagan. Also, Texas last had a Blue governor in 1994. Texas hasn’t always been red — only for the past two decades — and it won’t stay red forever.
Which state did the only President to pass a civil rights bill since the civil war come from? And he passed 3 of them! 3-0 vs the field.
California last had a Republican governor in 2011, but people will look at you funny if you try to cite that as evidence that California wasn't dyed-in-the-wool Blue at the time.
To discount any state as unchanging is doing a disservice to all US Citizens: public opinion changes, demographics change, politics change, and people change.
In terms of margins she did better than any Democrat since Bill. Bill had a 3 point and 5 point loss respectively thanks to Ross Perot.
I don't really see the argument that businesses choosing location based on taxes is fine but choosing based on employee life satisfaction is a crisis.
We need to fix the culture divide in this country. Let's work from places where we agree rather than searching for disagreement. Lots of states are near the tipping point if we could only speak to each other honestly.
It is absolutely not bullshit. I would flat out refuse to relocate to a red state. In the high tech industry, I'm not alone. Setting up shop in a deep red state is not a good way to attract world class talent from across the globe.
> Gay marriage, for example, is federally protected.
Small comfort when you are gay and wish to find a safe place to hang out for a drink and hook up... Small comfort when you are an ethnic minority waiting for a bus....
> We need to fix the culture divide in this country
In my opinion this is not gonna happen any time soon. The divide is almost to the bone. It is a fundamental divide that can't be solved with mere empathy or compromise. There is no empathy to be had and no common point for compromise.
You can only tolerate an environment where absolutely everybody agrees with you?
You know where this goes, right? Let's pack all the liberals into 1/5 districts and give the rest to 60/40 conservative majorities. Great job everyone, at least nobody (rich) compromised their values.
Certainly not when there's so many people like you with bizarre black and white visions of the world.
If you're an employer, a great way to pre-emptively shoot yourself in the foot is to make yourself unattractive to employees and shrink your hiring pool in such a tight labor market.
What's the end game for "I refuse to deal with those people"? Permanent 60 R senators?
If you wouldn't live there, who should?
This is a bunch of malarkey. For a person who's supposedly not homophobic, he's appointed a lot of homophobic judges, has a homophobic Attorney General, is gutting a lot of executive orders and regulations on homophobia in the workplace, etc. And this is before we get into anything transgender. https://www.advocate.com/politics/2017/11/09/trumps-14-most-...
This. Gay marriage is a good litmus test if you're a minority of any kind trying not to get discriminated against or shot.
Careful making suppositions about politics based on a winner's party. Often it matters about the opponent strengths (or lack of). This is the same party-assumption failure people make about national elections.
Not really any different than Seattle, except Seattle has enough sway over the rest of Washington to keep it from going hard right.
Which, honestly, it should be - I get the /notion/ of a lot of US electoral history in trying to allow diversity and representation, but it's people who get to vote, not acreage. Punishing people for living in a city by making their vote worth proportionally less is wrong, and ironically, by acreage/population density is a rough analog of what many were trying to escape "more votes with more land holdings".
Given that the Puget Sound region has 65% of the states population...
At this point the Democrats can't win for losing. If you field broadly likeable A teamers like Beto and Davis and still lose to comical villains like Cruz and Abbott, it's laughable to think the tide is really turning in our lifetime. Something big has to change, and I'm not sure what it is.
Saying stuff like this just makes you sound like a partisan hack. I'm not a "both sides are equal" guy, and I have my preferences, but you should work on trying to see other's points of view a little better than what you apparently have been.
(lived in Texas, now live in Seattle)
Even if you're just coming at it from a place of power politics.. you think MORE packing of liberals into fewer and fewer areas is going to swing it for us? If tech companies were serious about liberal politics, they'd be opening big offices in TX and OH. Could solidify the blue wall for a generation with a few 10k people.
Part of that is ensuring they keep things as center to slightly right as possible and toss some money at social causes to keep their rep.
If the democrats actually won consistently they might start to shift left. These companies do not want a strengthened left wing in the US.
Yes, they do.
> Part of that is ensuring they keep things as center to slightly right as possible
Liberal politics are center-right.
> If the democrats actually won consistently they might start to shift left.
They might, at which point tech companies (and other big firms) would be less likely to support them.
I searched about this and found: https://www.aclutx.org/en/know-you-rights/abortion-in-texas
It does seem they have some fairly detailed restrictions.
It's a bit hurtful whenever the Midwest is left out like it's not part of the country.
Both NYC and DC have far better public transit and airports than Dallas. The only thing Dallas has beat over these two places is cost of living, where in both it's not too difficult to find affordable housing outside the city (something that isn't as much the case in other tech hubs).
The business environment aspect tends to matter more to smaller companies, or those building things like factories, than it does for Amazon, as they already have the resources to push through complicated government processes, and will receive substantial tax breaks to make up for the rest.
Just kidding. What about completely remote companies, or companies where the CEO is remote?
If you have a conglomerate, the existence of an HQ is totally meaningless.
The DC suburb makes sense for an East Coast hub, and it’s smart to be near the capital for DoD contracts. And Denver is a nice, growing tech city with an attractive lifestyle.
Its more or less a ghost town since BRAC moved out a bunch of agencies and contractors a few years ago. This had the effect of hollowing out what little independent retail / dining there was there as most of it catered to the office lunch crowd.
From a commuting perspective, its right across the river from DC which makes it very difficult to get to from a driving / bus perspective. Taking the metro is somewhat better but would require a transfer for many people.
That seems to match south lake union in Seattle, which used to be warehouses and car dealerships.
Also there's a relatively high concentration of metro stops as is for a section that's not urban/DC core, and Potomac Yard is finally coming in in a couple years as well. Plus a pretty high commercial vacancy and a bit of marginal land that can still be developed. I mean, the dream would be they come in there and somehow spur additional transit down Columbia Pike, but that's probably a bit too much to hope for.
It's also already not easy at all to buy a home there (speaking as someone who bought a place in Arlington a few months ago), so it must not be too awful to live there.
Colorado is nice, but it's nothing compared to the Texas population and economic boom. 28m people in Texas, versus 5m in Colorado. Texas is also building high-speed rail, which will end up linking all of their major cities, an immense bonus. Denver / Colorado also sit in the middle of a dead zone in terms of major populations, along with being slightly too far west from any major ports (Dallas or Austin get you close to the Gulf).
Chicago is far larger than Denver to draw talent from (including more surrounding populations) and far larger to draw general labor for. All have relatively good real-estate prices (comparable to Denver), plenty of tech talent, and are large shipping hubs. All three also have slightly lower tech industry wages than Denver. Toronto's tech and non-tech wages are far lower than all of these. Toronto gets them out of the US, but still very nearby, as a talent immigration hedge (political insanity hedge).
Dallas / Texas gets an interesting nod, because Bezos has deep ties to Texas. He's putting one of them in Northern Virginia because of WaPo, his second home there, and the DC politics. It might make sense that he'd favor Texas for similar self-beneficial reasons.
Atlanta, Dallas and Chicago are more diverse versus Denver, which is likely an important consideration for a mega corporation like Amazon. Chicago and Dallas are dramatically more diverse.
Toronto's extreme real-estate prices, double that of Atlanta and Chicago, is likely a big negative.
I give Denver a zero shot at landing one of the HQ2 sites.
Like it's only not annexed by Atlanta because they made a ten foot wide city called Chattahoochee Plantation on the border of the county.
EDIT: It's like saying that Arlington isn't part of DC, which while technically true, misses the whole point. Atlanta proper is only about 1/10 the population of the metro.
That the reason for the lack of usable public infrastructure for white collar workers in Atlanta is due to overt racism on the part of government officials is just the cherry on top.
> Texas is also building high-speed rail, which will end up linking all of their major cities, an immense bonus.
Denver already has light rail connecting the airport, Boulder, and Golden as well as other metro areas, as well as amtrak, shuttles, and other public transport to the mountain regions for skiing and other recreation. It's also among the most bike-friendly cities I've seen in the US, with routes extending extremely far and having a vibrant cycling culture. Workers commute with all of these options every day.
For being a smaller metro, Denver-Boulder's tech scene is much more vibrant than DFW's. Amazon _already_ has tech offices in both Boulder and Denver.
Among Texas cities, Dallas also doesn't have the tech talent pool and established network of transplanted tech companies that Austin already has, let alone the politics that many west coast tech workers (and Bezos) find attractive (although that point is kind of moot, because either way it's still Texas).
I don't really think it's going to be Denver, either. I'd be really disappointed if it's Dallas. I expect Chicago, Boston, DC, or Atlanta.
On the plus side, the buses do leave every ten minutes, with plans to increase that to every five minutes within the next few years.
Austin's tech worker population is peanuts compared to the East or West coast so I don't think it gives them much of an advantage over Dallas.
I'm not sure what this is based on. Do you mean like startups? Or general tech companies? Or large companies with significant tech presence? So much of this thread has devolved into these kinds of suppositions and city comparisons. Why do these discussions always come to this, with everyone rushing to defend one metro and demonize another?
> Dallas also doesn't have the tech talent pool and established network of transplanted tech companies that Austin already has
I think this may be making the same mistake of assuming a few satellite offices of a few large companies makes a difference. Or that you hear more about startups on this site and others gives a certain impression.
Yes to all of the above if you consider the full Boulder/Denver metro.
The writing is on the wall — Texas will turn blue sooner than later.
Dallas is a liberal stronghold in Texas, and in absolute numbers turns out more for Democrats than any other city in the state, including Austin (percentage-wise Austin wins by +5%, I believe). Unlike Austin, which is gerrymandered in the state legislature, every single state/county/city official in Dallas is a Democrat.
Dallas is also a gay rights stronghold, representing the only county and city in Texas, again including Austin, with non-discrimination clauses in employment and housing for LGBTQ+ individuals.
Furthermore— Texas is considering bi-partisan legislation to legalize weed. Dallas has already decriminalized it, and the State, while backwards in other regards, hasn’t indicated it will force Dallas to back down on that measure. Dallas also has stricter gun laws than the state of Texas. Dallas, unlike Austin, actually has the political capital to push back on state laws, because Dallas isn't gerrymandered nor represented by 4 Republicans like Austin is.
Texas has a long way to go, but I think if you would step in Dallas you would learn to leave your preconceived notions of it at the door.
I believe an HQ2 would speed up Texas’ change.
---
As far as public transit goes, I'm sorry, but DART rail blows Denver out of the water. I'm personally familiar with both systems, and Dallas also has the funds and political capital to keep expanding. In addition to an already extensive LRT network, we have a streetcar network with 2 lines (soon to be 3), we're building a second subway Downtown to double system throughput, we've started construction on another 26 mile line to the airport (we already have 2), and construction on the high speed rail from downtown Houston to downtown Dallas starts in February.
This is true of any large corporate campus -- 25,000 people at one site are not one cohesive unit, there are plenty of competing projects.
And you still end up using video conferencing even with people in the same campus because no one wants to take a 15 minute walk to the building on the other side of campus for a 30 minute meeting.
[0] like AMZN GetPromoted or AMZN WorkOnTheProjectYouWant
Wouldn't you agree that knowledge is power?
I suspect in the end they'll keep expanding in a quiet and steady pace while never officially declaring a "HQ2" at all whilst the cities feud over who gets the title and keep handing out incentives.
https://www.seattletimes.com/business/real-estate/seattle-ho...
Side by side with this story, it's hard to see why states and cities are still willing to play ball: https://www.theverge.com/2018/10/29/18027032/foxconn-wiscons...
Check out this population density map from the US census:
> https://www.census.gov/history/www/reference/maps/
From the article:
"The driving force behind the decision to build two equal offices in addition to the company’s headquarters in Seattle is recruiting enough tech talent, according to the person familiar with the company’s plans. The move will also ease potential issues with housing, transit and other areas where adding tens of thousands of workers could cause problems."
This thing already feels like a boondoggle and it hasn't even officially happened.
The whole HQ thing doesn't make any sense. It's just another office location.
https://www.nytimes.com/2018/11/05/technology/amazon-second-...
If anything Miami is still alluring to those across the US for warm weather, no income tax, and tanned guys/gals (or both?!). The Miami economy still is dominated by tourism and real estate unfortunately!
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