Speaker 1: Get in touch with technology with tech Stuff from how
Speaker 1: stuff Works dot com. Hey there, and welcome to tech Stuff.
Speaker 1: I'm your host, Jonathan Strickland. I'm an executive producer with
Speaker 1: How Stuff Works, and I heart radio and I love
Speaker 1: all things tech. And one of the really big stories
Speaker 1: in technology, really in tech business back in that being
Speaker 1: this year. It just feels like it was a decade ago.
Speaker 1: It focused on Amazon and its search for a second
Speaker 1: North America headquarters location, which has finally been decided and
Speaker 1: announced and talked about, but the search inspired cities across
Speaker 1: the continent to bid for attention with incentives and some
Speaker 1: with some pretty silly publicity stunts. At the same time,
Speaker 1: numerous journalists dove into the mix, speculating on how m
Speaker 1: Amazon might reshape a city, or, as it turns out,
Speaker 1: cities that it would pick for the honor of being
Speaker 1: the second headquarters, and also examining how Amazon has affected Seattle,
Speaker 1: the location of its main headquarters, and ultimately how Amazon's
Speaker 1: whole approach would affect cities not just the ones that
Speaker 1: it picked, but the ones that it named as contenders.
Speaker 1: So in this episode, I'm going to look at all
Speaker 1: of these things and talk about how technology can affect
Speaker 1: us indirectly, and why it's important we know about it.
Speaker 1: So let's get the basics down first. Let's set the
Speaker 1: ground here. Jeff Bezos founded Amazon dot Com back in
Speaker 1: as an online bookstore. The company managed to make it
Speaker 1: through some very very lean years, and that included the
Speaker 1: dot Com crisis. The company was not turning a profit
Speaker 1: when it went into the dot com crisis. The way
Speaker 1: that Bezos and his company were able to get through
Speaker 1: this was that Bezos had some very smart people working
Speaker 1: for him, and they were able to establish some critical
Speaker 1: financing for the company at various points during its early history,
Speaker 1: including just before the dot com bubble burst, before that
Speaker 1: crisis had really hit. So Amazon got an influx of
Speaker 1: cash when it would need it most, because, as it
Speaker 1: turned out, the the rug was pulled out from under
Speaker 1: the technology sector in general and the dot com sector
Speaker 1: in particular. You could also argue Amazon had positioned itself
Speaker 1: well by incorporating elements that later analysts would refer to
Speaker 1: as web two point oh features and I hate that term.
Speaker 1: It is useful in the sense that you can group
Speaker 1: together some basic components that were helpful for a lot
Speaker 1: of site. Remember in the early early days of the
Speaker 1: Worldwide Web, a lot of the web pages out there
Speaker 1: were static. There was no interaction. It was just a
Speaker 1: place you would go. You would read some stuff that
Speaker 1: would never be a reason to go back to that
Speaker 1: web page again because it would never change. But Amazon
Speaker 1: was one of the companies to incorporate stuff that was
Speaker 1: what people would call web two point oh would have
Speaker 1: user generated elements like reviews, So an Amazon web page
Speaker 1: would change over time as people left reviews for items,
Speaker 1: and you could interact with it. You could improve the
Speaker 1: performance of Amazon by giving your input, or at least
Speaker 1: improve the experience of people who were using Amazon to
Speaker 1: shop for stuff. And of course, the company expanded well
Speaker 1: beyond books to carry all sorts of different products. Today
Speaker 1: you can buy pretty much anything on Amazon. But Amazon's
Speaker 1: first really profitable quarter would not arrive until the end
Speaker 1: of two thousand one, which is interestingly right at the
Speaker 1: tail end of the dot com crash. So from when
Speaker 1: it was founded to two thousand one, the company was
Speaker 1: losing a lot more money than it was earning in sales,
Speaker 1: and the dot com crash had done a real number
Speaker 1: on Amazon's stock price, as it had for the stock
Speaker 1: price of numerous dot com businesses. So my point that
Speaker 1: I'm trying to make is that I don't think Amazon's
Speaker 1: survival was guaranteed by a long shot. You know, you
Speaker 1: can look at the success of the company today and
Speaker 1: the company's founder, who spoiler alert, is the richest man
Speaker 1: in the world. But I don't think that that success
Speaker 1: was a guarantee back in two thousand one. If it
Speaker 1: hadn't been for that financing just before the dot com
Speaker 1: troubles really took off, I think the company might have
Speaker 1: joined all those other web based businesses that fizzled out
Speaker 1: in two thousand two thousand one. Now, to be clear,
Speaker 1: the company wasn't profitable on an annual basis in the
Speaker 1: wake of two thousand one. It just had that one
Speaker 1: quarter that was profitable, and then in two thousand two
Speaker 1: it had another rough year. It had losses every single
Speaker 1: quarter until the final quarter once again, which might tell
Speaker 1: you that holiday sales make a huge difference for a company. Now,
Speaker 1: that profit wasn't offsetting the losses of the previous quarters.
Speaker 1: So two thousand two as a whole was not profitable.
Speaker 1: It wasn't really until the middle of two thousand three,
Speaker 1: and then into two thousand four that the company began
Speaker 1: to regularly post profits and turn the corner. There were
Speaker 1: also still a couple of very big dips, big losses.
Speaker 1: One happened in two thousand twelve, and there were a
Speaker 1: couple in two thousand fourteen. But if you skip over
Speaker 1: that and then you look at the final quarter of
Speaker 1: two thousand seventeen, it's astounding. The difference is night and day.
Speaker 1: Amazon ranked in an income of one point eight six
Speaker 1: billion dollars in the fourth quarter of two thousand seventeen.
Speaker 1: Not over the year, but in that one quarter. That
Speaker 1: is definitely a princely some Now. According to the online
Speaker 1: journal Courts, Amazon made as much money in that one
Speaker 1: final quarter of two thousand seventeen as the company had
Speaker 1: managed to make in the previous fourteen years combined. And
Speaker 1: this was helped not just by Amazon's business, which was
Speaker 1: doing legitimately really well, but also because the United States
Speaker 1: government had just passed an enormous tax cut that was
Speaker 1: a huge benefit to Amazon. In fact, that tax cut
Speaker 1: added nearly eight hundred million dollars to Amazon's earnings all
Speaker 1: by itself. So yeah, politics matter, guys. This is why
Speaker 1: we see these big companies lobbying very hard in politics
Speaker 1: in the United States because they can end up keeping
Speaker 1: so much money it nearly doubles their revenue for a quarter.
Speaker 1: All Right, So you've got Amazon, which is a company
Speaker 1: everyone knows it's it's it's omni present. Nearly one hundred
Speaker 1: million people in the United States holding Amazon Prime membership,
Speaker 1: so the company is regularly getting revenue from people, whether
Speaker 1: they're shopping or not. However, the average Prime member is shopping.
Speaker 1: Because the average Prime member spends about four hundred dollars
Speaker 1: on Amazon every year. The company's name is synonymous with
Speaker 1: online shopping. It's by far the most popular online store
Speaker 1: by a long shot. And as I said earlier, it's
Speaker 1: founder Jeff Bezos is, as of this recording, the richest
Speaker 1: person in the world. He pulled ahead of Microsoft founder
Speaker 1: Bill Gates a couple of years ago. Bezos is worth
Speaker 1: around a hundred twelve billion dollars and that blows my mind. Now.
Speaker 1: By two thousand seventeen, Amazon was really writing high as
Speaker 1: a company. It employed more than three hundred eighty thousand
Speaker 1: people worldwide, and about forty thousand of those employees work
Speaker 1: at Amazon's original headquarters, which are in Seattle. Washington. Amazon
Speaker 1: has a dominant presence in Seattle. That's putting it lightly.
Speaker 1: And I'll talk more about that in a little bit,
Speaker 1: but just to give you an idea of what I
Speaker 1: mean by a dominant presence, if you look at all
Speaker 1: of the office space in Seattle, Amazon occupies nearly twenty
Speaker 1: percent of it. So that means if you were to
Speaker 1: go office to office in Seattle, one out of every
Speaker 1: five visits would be to an Amazon office. So that's
Speaker 1: in ouible. And meanwhile, Amazon is a company is still growing,
Speaker 1: and the company needed more space to grow into, and
Speaker 1: it would also make sense to distribute itself somewhat, to
Speaker 1: locate some offices, perhaps in a different part of the country. Uh.
Speaker 1: And most people guessed it was going to be on
Speaker 1: the East Coast, and as they turned out, they were right.
Speaker 1: But we'll get to that. So on September seven, two
Speaker 1: thousand seventeen, when Amazon announced it was searching for a
Speaker 1: second North American headquarters, cities across North America paid attention
Speaker 1: and accorded to Amazon, the intent was to pick a
Speaker 1: location and invest up to five billion dollars in building
Speaker 1: out a new headquarters a new campus, establishing those offices
Speaker 1: and in addition to this new building, in this new campus,
Speaker 1: there would be lots of jobs to the tune of
Speaker 1: fifty thousand high tech position ends. According to Amazon, the
Speaker 1: estimated average salary for those jobs would be more than
Speaker 1: a hundred thousand dollars per year. The company also noted
Speaker 1: that this wouldn't happen instantaneously. It's not like they would
Speaker 1: build the building and then without fifty thousand job offers. Instead,
Speaker 1: they said this was a a long term process, that
Speaker 1: the the ramp up to fifty thousand employees would probably
Speaker 1: take between ten and fifteen years. But there was this
Speaker 1: really tempting promise there, so it was totally understandable that
Speaker 1: numerous city governments and business councils and business organizations jumped
Speaker 1: at this news. It would mean wealth would flow into
Speaker 1: the respective community, or at least it would flow into
Speaker 1: specific industries within that community. It would boost employment, there
Speaker 1: would be a new call for for new housing, for
Speaker 1: renovated housing. Uh, that sort of development could encourage other
Speaker 1: businesses to set up shop. We're talking stores, restaurants, entertainment options,
Speaker 1: all that other type of stuff that has to go
Speaker 1: around with growing communities. So, in other words, landing Amazon
Speaker 1: for your city looked like it would be a huge win,
Speaker 1: Like it would be knocking over an enormous domino that
Speaker 1: was set off to to start a chain reaction of prosperity.
Speaker 1: That was the general reaction. Now, Amazon created a formal
Speaker 1: request for Proposal, or an RFP in proposal speak. Interested
Speaker 1: in qualified communities were to respond to this RFP by
Speaker 1: October nineteenth, two thousand seventeen, so cities had about a
Speaker 1: month to put together a package to convince Amazon to
Speaker 1: select their home, their city, their community for this second headquarters.
Speaker 1: The RFP spelled out some of the requirements that Amazon
Speaker 1: had in mind for potential h Q two sites and
Speaker 1: the company stay that had a quote unquote preference for
Speaker 1: the following. It wanted a place that was a metropolitan area,
Speaker 1: so it had to be a place that was a city.
Speaker 1: It could not just be in the middle of a state.
Speaker 1: There had to be at least a million people living there.
Speaker 1: They wanted a business friendly environment, which is a very
Speaker 1: vague phrase. I think it's a nice way of saying,
Speaker 1: we want a place where they're going to be really
Speaker 1: good to us. We want incentives, we want tax breaks.
Speaker 1: You scratch our back will scratch yours that kind of thing.
Speaker 1: They wanted only locations that were urban or suburban locations
Speaker 1: with the potential to attract and retain strong technical talent.
Speaker 1: So in other words, there needed to be a place
Speaker 1: where they could draw a pool of talent from, and
Speaker 1: there needed to be places for those people to live.
Speaker 1: Preferably they would be moving into a city where they're
Speaker 1: already as a nice, healthy pool of tech talent, but
Speaker 1: if not, it needed to be a city that people
Speaker 1: were willing to relocate too. And it was also looking
Speaker 1: for quote communities that think big and creatively when considering
Speaker 1: locations and real estate options end quote, which might be
Speaker 1: code for we want to see some really nice places
Speaker 1: where we might be able to set up shop, and
Speaker 1: we don't want to to just point us at that
Speaker 1: disused car lot that used to be really popular but
Speaker 1: has been unoccupied for ten years. That kind of thing.
Speaker 1: In addition, Amazon said that HQ two could be but
Speaker 1: was not required to be an urban or downtown campus,
Speaker 1: So it could be located deep in a city or
Speaker 1: maybe not. It could be similar to layout to Amazon's
Speaker 1: existing Seattle headquarters, but maybe not. It could be a
Speaker 1: development prepped site the company said, quote, we want to
Speaker 1: encourage states, slash provinces and communities to think creatively for
Speaker 1: viable real estate options while not negatively affecting our preferred
Speaker 1: timeline end quote. So again, this puts the onus on
Speaker 1: the responding community rather than Amazon the messages. We have
Speaker 1: the upper hand here, so don't waste our time by
Speaker 1: showing us substandard real estate than no one really wants.
Speaker 1: More specifically, the RFP said that the preference was to
Speaker 1: have a site that was no more than thirty miles
Speaker 1: outside the center of population for the community. It needed
Speaker 1: to be within forty five minutes of an international airport.
Speaker 1: It needed to be no more than two miles away
Speaker 1: from the closest major highway. There needed to be an
Speaker 1: access to mass transit at the site itself, so there
Speaker 1: needed to be public transportation that could go straight up
Speaker 1: to wherever the location was. The building requirements included an
Speaker 1: initial square foot requirement of five hundred thousand plus square
Speaker 1: feet for Phase one and up to eight million square
Speaker 1: feet for twenty twenty seven and beyond. I have more
Speaker 1: to say about this whole process in just a moment,
Speaker 1: but first let's take a quick break to thank our sponsor.
Speaker 1: The RFP listed more information for those interested in bringing
Speaker 1: Amazon to a specific city. But you can easily read
Speaker 1: the RFP for yourself if you want to. It's available online.
Speaker 1: It's only eight pages long, and it's not written in
Speaker 1: weird jargon or anything. It's very simple to understand. So
Speaker 1: if you want to know the full details, just pop
Speaker 1: online and search for the Amazon RFP. So in early September,
Speaker 1: Amazon sends out this RFP and gives the deadline for
Speaker 1: October nineteenth, seventeen for response, and by that time Amazon
Speaker 1: had received two hundred thirty eight proposals from cities in
Speaker 1: the United States and Canada. Even at this early stage,
Speaker 1: before Amazon had reached that deadline, reporters were gleefully writing
Speaker 1: about some of the more let's call them creative methods
Speaker 1: that communities were employing in order to get attention. Now,
Speaker 1: keep in mind, any city that responded likely had some
Speaker 1: hefty incentives wrapped up in those responses and lofty promises
Speaker 1: to boot. So all these cities were trying to outdo themselves.
Speaker 1: And now get more into that a little bit later.
Speaker 1: Now I know there was one city in Georgia that's
Speaker 1: technically part of the metropolitan Atlanta area, but no person
Speaker 1: who lives in the city of Atlanta would refer to
Speaker 1: it as being in Atlanta. I'm talking about stone Crest, Georgia.
Speaker 1: It's technically twenty miles to the east of the city
Speaker 1: of Atlanta. Now, if you were to travel down Highway
Speaker 1: by twenty from Atlanta to stone Crest, you'd see development
Speaker 1: along the entire fire way. It's not like it's a
Speaker 1: isolated community, but it is not inside the city limits
Speaker 1: by any stretch of the imagination. Stone Crest, however, was
Speaker 1: in contention for this consideration, and that made my eyebrows
Speaker 1: go up as a resident of Atlanta, because I already
Speaker 1: knew what the requirements were that Amazon was asking for,
Speaker 1: and I really didn't feel that Stone Crest necessarily met them.
Speaker 1: And this is just too specifically illustrate what was going
Speaker 1: on across North America. Not just to call out Stone
Speaker 1: Crest in particular, but one of the things Amazon was
Speaker 1: looking for was mass transit. That's a subject about which
Speaker 1: I feel very strongly. Here in Atlanta, there are busses
Speaker 1: that go from Atlanta to stone Crest on our metropolitan
Speaker 1: transit system. It's called MARTA. It takes about an hour
Speaker 1: to go from the closest Marta station to Stone Crest
Speaker 1: by bus, and that's a Martestation that's on the outskirts
Speaker 1: of Atlanta itself. If you're talking about moving from the
Speaker 1: center of the city, or Heaven help you from the airport,
Speaker 1: it will take you much, much, much longer than that. Now,
Speaker 1: my point is, I think a lot of cities that
Speaker 1: didn't really meet these criteria. We're throwing themselves hard into
Speaker 1: this arena and making a lot of promises like, oh no,
Speaker 1: we'll make sure that this is bolstered and it will
Speaker 1: meet your expectations. And they were offering up all sorts
Speaker 1: of things like huge tax cuts and other odd incentives
Speaker 1: in order to get Amazon's attention. So sticking with stone
Speaker 1: Crest for just a moment. One of those wacky incentives,
Speaker 1: one of the ones that was treated with more levity,
Speaker 1: was that the mayor of Stone Crest, Jason Larry, said
Speaker 1: he would lead a movement to d annex part of
Speaker 1: Stone Crest in order to rename that that section of
Speaker 1: the city Amazon Georgia up. And on top of that,
Speaker 1: he proposed having a special shipping distribution highway and calling
Speaker 1: it one thousand Jeff Bezos Parkway. So I suppose an
Speaker 1: appeal to vanity was his strategy. But Stonecrest, Georgia was
Speaker 1: just one applicant. There were lots of others that included
Speaker 1: some publicity stunts with their applications. So another one that
Speaker 1: got a lot of people giggling was from Tucson, Arizona,
Speaker 1: which shipped a twenty one foot saguaro cactus to Amazon.
Speaker 1: Bezos didn't accept it. He donated it to the Arizona
Speaker 1: Sonora Desert Museum and said his company could not accept gifts.
Speaker 1: In Birmingham, Alabama, the city built three installations that looked
Speaker 1: like enormous delivery boxes with the Amazon logo on the box.
Speaker 1: These were in various locations around the city. They were
Speaker 1: each about a story tall, so like ten twelve feet
Speaker 1: tall they were. They were huge. The years from Danbury,
Speaker 1: Connecticut and Washington, d c. Each separately made videos as
Speaker 1: part of their pitch to Amazon, and incorporated sort of
Speaker 1: a joke in which they asked Amazon's voice activated assistant Alexa,
Speaker 1: where the best place would be to locate Amazon's second headquarters,
Speaker 1: And of course, in those videos, Alexa's response was Danbury
Speaker 1: for the Connecticut video and Washington, d C. For DC's video. Also,
Speaker 1: the DC mayor pointed out that Bezos already had a
Speaker 1: home in the DC area and that he owned the
Speaker 1: Washington Post, suggesting that it made sense to bring the
Speaker 1: whole HQ two there after all Bezos already had a
Speaker 1: presence or In Chicago, Mayor Ram Emmanuel organized a council
Speaker 1: of business leaders representing some of the largest companies in
Speaker 1: the United States. In New Jersey, the proposal promised seven
Speaker 1: billion dollars worth of tax breaks over the course of
Speaker 1: a twenty year period. That this was to pennant upon
Speaker 1: a proposed law passing in the state legislature first. Other
Speaker 1: cities like Philadelphia, San Francisco, which was also partnering with
Speaker 1: Fremont and Oakland, Toronto, and Vancouver all applied as well.
Speaker 1: Not all the cities included outlandish overtures, but they were
Speaker 1: all trying to get noticed. On January two, thousand eighteen,
Speaker 1: Amazon announced it had narrowed its selection to twenty cities.
Speaker 1: So those twenty cities were in alphabetical order, Atlanta, Georgia, Austin, Texas, Boston, Massachusetts, Chicago, Illinois, Columbus, Ohio, Dallas, Texas, Denver, Colorado, Indianapolis, Indiana,
Speaker 1: Los Angeles, California, Miami, Florida, Montgomery County, Maryland, Nashville, Tennessee, Newark,
Speaker 1: New Jersey, New York City, New York, Northern Virginia. So
Speaker 1: not a specific city, but like the Arlington area, Philadelphia, Pennsylvania, Pittsburgh, Pennsylvania, Raleigh,
Speaker 1: North Carolina, Toronto, Canada, and Washington, d C. Over the
Speaker 1: next several months, Amazon officials visited with these various cities,
Speaker 1: explored the proposed campus sites. They evaluated the various features
Speaker 1: like you know, mass transit, highways, airports. They probably talked
Speaker 1: a lot about proposed tax incentives that would make the
Speaker 1: deal a little sweeter. I mean, the message was essentially,
Speaker 1: if we pick your city, we're going to contribute an
Speaker 1: enormous amount to your local economy. So make this easy
Speaker 1: for us and help us decide by sweetening the pot. Now,
Speaker 1: Amazon had said it would pick the new site sometime
Speaker 1: in ten but did not give a more specific timeline
Speaker 1: than that. So through much of the cities on that
Speaker 1: short list were kept waiting and wondering where things stood.
Speaker 1: That's how things went throughout most of I remember in
Speaker 1: the summer, there was talk about it getting narrowed down
Speaker 1: to just a few of those finalists. I think Atlanta
Speaker 1: and Austin seemed to be holding on for a long time,
Speaker 1: and then in September. On September, Jeff Bezos spoke at
Speaker 1: the Economic Club at Washington, d C. He said the
Speaker 1: company would announce a decision by the end of the year.
Speaker 1: A month later, in early November, Amazon announced that rather
Speaker 1: than pick a single location, they were going to pick two.
Speaker 1: H Q two would get split up between two locations. Now, initially,
Speaker 1: Amazon did not reveal where those two places would be,
Speaker 1: but on November that all changed. Amazon announced that New
Speaker 1: York City, specifically Long Island City, which is in a
Speaker 1: neighborhood in Queens and not confusingly in the area that
Speaker 1: most New Yorkers referred to as Long Island. It is
Speaker 1: on Long Island, but paradoxly not in Long Island, and
Speaker 1: Arlington County, Virginia, near Crystal City, would be the home
Speaker 1: of these two new headquarters offices. And here's a funny
Speaker 1: coincidence that happens to be two of the locations for
Speaker 1: Amazon's largest East Coast US offices that already exist. Also
Speaker 1: equally coincidental. I'm sure Jeff Bezos happens to own two
Speaker 1: really large, really lavish homes, one in uh in Virginia
Speaker 1: near Crystal City, one near Long Island City in Queens,
Speaker 1: New York. Probably just a coincidence. Now, some people living
Speaker 1: in the cities that were passed over felt a sense
Speaker 1: of relief at this news. They were worried about the
Speaker 1: impact Amazon might have on their communities. Others felt disappointment,
Speaker 1: particularly if they were penning a lot of hope that
Speaker 1: Amazon's agreement would mean the community would build out a
Speaker 1: lot of improvements to infrastructure, and that the overall community
Speaker 1: would be able to enjoy those improvements. In other words,
Speaker 1: things like, yeah, we built out our mass transit system,
Speaker 1: which is part of the deal we made with Amazon.
Speaker 1: But on the flip side, everyone can benefit from that.
Speaker 1: That would have been awesome. So some people were disappointed
Speaker 1: if their city wasn't picked. There have been several articles,
Speaker 1: mostly ones that are written from a local perspective, that
Speaker 1: revealed some of the details about the various proposals that
Speaker 1: failed to bring Amazon to respective cities. Pittsburgh had reportedly
Speaker 1: included up to ten billion dollars in financial incentives In
Speaker 1: their pitch. Maryland was right behind with eight and a
Speaker 1: half billion dollars, and Newark, New Jersey was, as I said,
Speaker 1: at seven billion. Dallas, Texas proposed building a new higher
Speaker 1: learning facility called Amazon University. Atlanta, apart from having this
Speaker 1: part of Stone Crest renamed Amazon Georgia, had even suggested
Speaker 1: perhaps Amazon would get an exclusive rail car on Marta trains,
Speaker 1: which would have infuriated me had it come to pass.
Speaker 1: I would have hated waiting for a train and realizing
Speaker 1: that the only car that wasn't completely full of people
Speaker 1: was exclusively for Amazon employees. Then uh, Atlanta also had suggested,
Speaker 1: by the way, that there could possibly be an exclusive
Speaker 1: executive lounge at the Atlanta Airport reserved just for Amazon
Speaker 1: executives and their guests. Again, this starts to get very elitist,
Speaker 1: and it tends to get my my rather liberal dander up. Now,
Speaker 1: how much did New York and Virginia offer? After all,
Speaker 1: they won the bids, right the Amazon ultimately chose New
Speaker 1: York in Virginia and there are these other cities that
Speaker 1: were offering incentives of billions of dollars. What did the
Speaker 1: two winning sites offer well? For New York. New York
Speaker 1: offered two point eight billion dollars in incentives, a princely
Speaker 1: some in itself, obviously, but still much less than some
Speaker 1: of the other cities. Virginia's promises were way more modest,
Speaker 1: at five hundred seventy three million dollars. Now, this has
Speaker 1: led some people to speculate that perhaps Amazon always knew
Speaker 1: where it wanted to go, that it had those destinations
Speaker 1: in mind the entire time, it never intended to really
Speaker 1: seriously consider any other location, and that the only reason
Speaker 1: the company released an RFP in the first place was
Speaker 1: because it would hit these locations against each other and
Speaker 1: they would be in competition with all these other cities
Speaker 1: that appeared to be legit candidates, and by that Amazon
Speaker 1: could put pressure on New York and Virginia, where they
Speaker 1: were already planning on going, and convinced them to cut
Speaker 1: better and better deals. Yikes. Well, I've got a lot
Speaker 1: more to say about this decision and what it means,
Speaker 1: but before we get into that, let's take another quick
Speaker 1: break to thank our sponsor. The news of Amazon's decision
Speaker 1: brought with it some other reports that raised a few eyebrows.
Speaker 1: There was one that is still kind of playing out
Speaker 1: as I record this. Condos sales in Long Island, New
Speaker 1: York increased dramatically after the news broke that Amazon was
Speaker 1: going to locate one of its headquarters facilities in New
Speaker 1: York City, and some Amazon employees had apparently been shopping
Speaker 1: around before the announcement had even become public. In other words,
Speaker 1: people who were in the know that this was going
Speaker 1: to be the new location started trying to purchase some
Speaker 1: real estate before the announcement because perhaps they knew the
Speaker 1: increase in demand was going to drive up costs, so
Speaker 1: if they could get in before the announcement and buy
Speaker 1: some condos, then they would be sitting pretty before all
Speaker 1: the prices jumped up. However, many percent this behavior, in
Speaker 1: turn began to fan the flames of fear among some
Speaker 1: New Yorkers that Amazon's arrival is going to bring with
Speaker 1: it rent hikes and landlords are going to start increasing
Speaker 1: those rent prices. People who had been living in those
Speaker 1: places for years would no longer be able to afford
Speaker 1: to do so. There are similar fears in the Virginia
Speaker 1: area that's very close to Washington, d C. In fact,
Speaker 1: you can easily get there on the Metro in d C.
Speaker 1: Many government staff who work at the Capital or the
Speaker 1: Pentagon they call northern Virginia home, and that's a concern
Speaker 1: that they too, are going to get priced out of
Speaker 1: the neighborhoods they currently live in, and that they'll have
Speaker 1: to move further and further out, which will increase commute
Speaker 1: times and have a negative impact on quality of life.
Speaker 1: That is not an unreasonable fear, because you just have
Speaker 1: to look at how things are going in Seattle. Now.
Speaker 1: The situation in Seattle is different because Amazon grew up
Speaker 1: in Seattle. It was not a multibillion dollar global corporation
Speaker 1: that then waltzed into Seattle and established itself. It grew
Speaker 1: slowly gradually, at least until seventeen when growth exploded. So
Speaker 1: the conditions in Seattle are not necessarily what will happen
Speaker 1: in New York and Virginia. In fact, I suspect we're
Speaker 1: actually gonna see dramatic differences, since now we're talking about
Speaker 1: a behemoth moving into an established neighborhood as opposed to
Speaker 1: growing up with it. Now. Amazon's growth triggered a series
Speaker 1: of changes in Seattle. For example, as Amazon bigger, I
Speaker 1: need to hire more talent including talent with high tech skills.
Speaker 1: That encouraged people with those skills to move to the
Speaker 1: Seattle area. People said, well, there's work to be had there.
Speaker 1: I can get a really good job with Amazon. Let's relocate.
Speaker 1: Tech firms began to build offices or even relocate to
Speaker 1: Seattle because that's where all the talent was going. If
Speaker 1: the talents all starting to gather in a place, then
Speaker 1: companies are saying, well, in order for us to take
Speaker 1: advantage of this, rather than have to lure them to
Speaker 1: move across country, let's set up a shop. Let's set
Speaker 1: up a presence in Seattle. So they were moving into
Speaker 1: Seattle as well. In order to take advantage of this
Speaker 1: growing talent pool, which feeds upon itself, more talent starts
Speaker 1: to move to Seattle. Amazon was creating opportunities. Those opportunities
Speaker 1: were attracting workers. Those workers were attracting other companies, and
Speaker 1: that created more opportunities for workers. This process actually has
Speaker 1: a name in the industry, it's agglomeration. Since twenty companies
Speaker 1: in the Fortune five hundred have opened up offices or
Speaker 1: R and D facilities in Seattle to take advantage of
Speaker 1: that talent pool that's there. That includes companies like Google, Facebook,
Speaker 1: and Apple. This is a pretty big positive benefit for
Speaker 1: people in that city on some level. On top of
Speaker 1: the forty thousand employees who work at Amazon's HQ one,
Speaker 1: Seattle has seen the creation of more than fifty thousand
Speaker 1: high tech jobs at these other companies. That's a pretty
Speaker 1: darn good development. With those jobs comes seventeen billion dollars
Speaker 1: in compensation that includes salaries, incentives, and benefits. It also
Speaker 1: includes an increase in tax revenue. There are a lot
Speaker 1: of things that you can say are positives because of this,
Speaker 1: and it's important to remember that Amazon's not wholly or
Speaker 1: solely responsible for this. Microsoft, which is in Redmond, Washington,
Speaker 1: it's not that far from Seattle, is also a really
Speaker 1: big reason why there's so much tech talent in Washington State.
Speaker 1: So Microsoft's presence is another anchor point for all of
Speaker 1: that talent, and in fact, Microsoft had been a source
Speaker 1: of agglomeration a decade before, more than a decade before
Speaker 1: Amazon was. Seattle has also seen housing prices increased dramatically
Speaker 1: as Amazon has grown. Gentrification and rent hikes have pushed
Speaker 1: a lot of people out of the city into suburbs,
Speaker 1: moving them further and further away from their jobs and
Speaker 1: the areas they're familiar with. It increases the commute times,
Speaker 1: it increases the amount of traffic that's in Seattle, and
Speaker 1: it decreases the quality of life for people who don't
Speaker 1: happen to hold a sweet gig at Amazon that allows
Speaker 1: them to afford to still live in the city. This,
Speaker 1: in turn has contributed to that massive traffic problem. So
Speaker 1: since Amazon's exponential growth, Seattle has gone from being a
Speaker 1: city that has typical traffic shoes but not you know,
Speaker 1: extraordinary ones, to landing in the top ten cities with
Speaker 1: the worst traffic in the United States. According to one
Speaker 1: source I read, it ranked as high as number three
Speaker 1: at one point, although most of the ones I see
Speaker 1: have it in the lower group of the top ten.
Speaker 1: On the other hand, Seattle has also seen a huge
Speaker 1: boom in new businesses, particularly restaurants. People have to eat somewhere,
Speaker 1: So it's not like everything is awful. I don't want
Speaker 1: to suggest that it is very complicated. It is dependent
Speaker 1: upon what you do in Seattle. Seattle has also seen
Speaker 1: incredible booms in construction. The last time I was in
Speaker 1: the city, you could not turn around without seeing a
Speaker 1: sky crane anywhere. In fact, according to wonder report I read,
Speaker 1: there were more sky cranes in Seattle than there were
Speaker 1: in San Francisco and New York combined. So there are
Speaker 1: good and bad things that go along with enormous companies
Speaker 1: making an impact on communities. And your question then, is
Speaker 1: what elements here matter the most for me? Is it
Speaker 1: ultimately good or bad for my own personal experience? And
Speaker 1: that ends up being a kind of a personal unique thing.
Speaker 1: I can't answer that for everyone. As for the cities
Speaker 1: that were left behind, the ones that were not chosen
Speaker 1: by Amazon, perhaps were never seriously in contention, there still
Speaker 1: may be a lasting effect of this whole competition, and
Speaker 1: some of those effects may not be totally beneficial. On
Speaker 1: the one hand, some of those cities have raised profiles,
Speaker 1: and some of them poured money into making improvements in infrastructure.
Speaker 1: That's a good thing, even if it didn't pay off
Speaker 1: with Amazon picking that city in the short term, because
Speaker 1: if you live in a city where the streets are
Speaker 1: filled with potholes, you're probably happy if those potholes get filled,
Speaker 1: and you might be less interested in the reasoning behind
Speaker 1: why it was finally done, unless, of course, you're just
Speaker 1: worried that the inverse structure is going to crumble again,
Speaker 1: and now that Amazon is not expressing interest, no one's
Speaker 1: ever gonna bother to fix the darned things. But in
Speaker 1: the short term, at least, infrastructure improvements are probably something
Speaker 1: that a lot of people are enjoying. According to Forbes,
Speaker 1: one of the other effects is that many of the
Speaker 1: HQ two rejects might see an increase in real estate prices.
Speaker 1: The leader of the pack is my hometown of Atlanta.
Speaker 1: Atlanta is expected to have a jump of more than
Speaker 1: thirteen percent in real estate prices in twenty nineteen, which
Speaker 1: could be great news if you happen to own a home,
Speaker 1: then you're looking to sell it for a tidy profit
Speaker 1: and maybe move somewhere further out of the city where
Speaker 1: you're still not having to pay the the higher prices.
Speaker 1: But for a lot of people it could mean increased hardship.
Speaker 1: They could get priced out of the areas in which
Speaker 1: they live. That would push them further out from where
Speaker 1: they work and where they're familiar. It's it's gentrification on
Speaker 1: a citywide scale, something that has been a problem in
Speaker 1: other places like San Francisco. San Francisco is notorious at
Speaker 1: this point for having incredibly expensive housing, to the point
Speaker 1: where average shmows, normal folks, people who are not high
Speaker 1: paid tech workers or executives, can't afford to live there anymore.
Speaker 1: The tech industry has been a really big part of
Speaker 1: this in many cities, and it's not unique to tech.
Speaker 1: It's not like there's something about tech that makes it
Speaker 1: inherently do this to communities. It's that we value tech.
Speaker 1: We place a high value on the products that the
Speaker 1: tech industry creates and the services, and that means the
Speaker 1: people who make the stuff are highly valued and they
Speaker 1: get paid a lot. So it becomes this kind of
Speaker 1: self feeding cycle, that agglomeration sort of process. But there's
Speaker 1: so many companies that need those skill are people who
Speaker 1: work in those industries will frequently hop between companies. So,
Speaker 1: in other words, just because you might work for Amazon
Speaker 1: doesn't mean you plan to work there forever. You might say, well,
Speaker 1: I'll work here until some other companies, some other tech
Speaker 1: company in the area gives me a better offer, and
Speaker 1: I'm gonna go work for them, and then I'll work
Speaker 1: for them for a while until I get a better offer.
Speaker 1: That is happening quite a bit in the tech industry
Speaker 1: doesn't happen in all industries, but in tech it does.
Speaker 1: So we tend to see concentrations of companies in these
Speaker 1: specific regions, and we're going to continue to see that happening.
Speaker 1: It's also another reason why Amazon picked New York and Virginia.
Speaker 1: Those are two regions that already have pretty healthy tech
Speaker 1: communities built up around them, and that's just going to
Speaker 1: increase with Amazon's presence there. It's gonna pull tech away
Speaker 1: from some communities towards d C in New York. Other
Speaker 1: cities that were on the HQ two shortlist but weren't
Speaker 1: selected are also expected to see increases in real estate
Speaker 1: prices in twenty nineteen. It has led to what Forbes
Speaker 1: calls the Amazon Effect. Now, in the end, what do
Speaker 1: I think about this? Largely, I think that Amazon was
Speaker 1: mostly playing everybody. I really do think that Amazon had
Speaker 1: their goal, their their ideal destinations picked out well ahead
Speaker 1: of time. It would not shock me at all to
Speaker 1: learn that they weren't seriously considering any of the other
Speaker 1: locations as a possible site for h Q two. Um
Speaker 1: I think they had always planned on splitting it into two.
Speaker 1: I think they had always planned on New York in Virginia.
Speaker 1: I think the fact that Jeff Bezos has homes in
Speaker 1: both of those places is not a coincidence. I'm not
Speaker 1: suggesting that Bezos wanted them there just so that they
Speaker 1: were convenient to his homes, but rather he chose homes
Speaker 1: in those locations for specific reasons. I think Virginia makes
Speaker 1: a lot of sense because it's also very close to
Speaker 1: the political capital of the United States. It's a place
Speaker 1: where am Amazon can end up having even more direct
Speaker 1: influence on politicians in order to create policies that are
Speaker 1: beneficial for the success of the company. Ultimately, Amazon is
Speaker 1: a publicly traded company, which means ultimately its purpose isn't
Speaker 1: to sell stuff to people. That's not its reason for existing.
Speaker 1: Its purpose as a publicly traded company is to increase
Speaker 1: its stock prices and reward shareholders for their investments, which
Speaker 1: means try and figure out how to make as much
Speaker 1: money as you can and hold on to as much
Speaker 1: of that as you can, and that way you can
Speaker 1: pay out your investors and they're happy. So it's a
Speaker 1: very cynical way of looking at things, but it's also
Speaker 1: realistic anyway. I realized that this doesn't deal directly in
Speaker 1: technology the way the show typically does, but I think
Speaker 1: it's a very important case study to look at an
Speaker 1: important event and to see exactly how things were manipulated, uh,
Speaker 1: the reactions to it, the impact of those actions, and
Speaker 1: the political implications. All of that's important because it plays
Speaker 1: into how tech and society merge together, and that's really
Speaker 1: the heart of what I try to do on this show. Now,
Speaker 1: ultimately Amazon's choices may be incredibly beneficial for Virginia and
Speaker 1: New York. It may be that once you weigh everything,
Speaker 1: measure for measure, as Shakespeare would say, or the Bible
Speaker 1: that's where that's phrases originally from, if you measure it
Speaker 1: all out, you may say, well, ultimately, the good that
Speaker 1: has been done far outweighs any negative impact. That is
Speaker 1: certainly a possibility. I'm not trying to suggest that that
Speaker 1: everybody has been hurt by this decision, but again, as
Speaker 1: with all things, I recommend using critical thinking to examine it,
Speaker 1: so you don't just read a headline and think, oh okay,
Speaker 1: think about things, think about what the implications are, what
Speaker 1: the impact happens to be. Uh. It will allow you
Speaker 1: to make better decisions. In your day to day life,
Speaker 1: probably not decisions as monumental as whether or not to
Speaker 1: locate a multibillion dollar companies headquarters, and you know, Virginia
Speaker 1: versus Atlanta, versus Raleigh, North Carolina versus Austin, Texas. But
Speaker 1: it's certainly an important skill to develop. That's it for
Speaker 1: this episode. If you have any suggestions for future topics
Speaker 1: of tech Stuff, whether it's a company technology, maybe that's
Speaker 1: an event in tech that you would like to know
Speaker 1: more about. Maybe there's someone I should talk to as
Speaker 1: have on as either a guest or to interview on
Speaker 1: the show. Let me know. Send me an email. The
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