Speaker 1: Welcome to tech Stuff, a production from iHeartRadio. He there,
Speaker 1: and welcome to tech Stuff. I'm your host, Jonathan Strickland.
Speaker 1: I'm an executive producer with iHeart Podcasts and how the
Speaker 1: tech are you at? So today I thought we could
Speaker 1: revisit something that really happened just a few years ago.
Speaker 1: In fact, I actually did an episode of tech Stuff
Speaker 1: about this back in the fall of twenty eighteen. But
Speaker 1: a lot has changed since then, including the COVID nineteen
Speaker 1: out break, which would throw an enormous monkey wrench into
Speaker 1: the whole thing. And it's all about the controversial Amazon
Speaker 1: HQ two decision and how everything kind of unfolded from
Speaker 1: the moment when Amazon announced a request for proposal. So
Speaker 1: let's get to it. And as I said, there's an
Speaker 1: episode in twenty eighteen about this, and it's so funny
Speaker 1: because obviously a lot, a lot would change from then
Speaker 1: to now, including one of the locations picked for HQ
Speaker 1: two would be dismissed between then and now. At the time,
Speaker 1: I didn't know that was gonna happen, all right, So
Speaker 1: let's get some background before we jump into all this.
Speaker 1: Jeff Bezos founded Amazon in Bellevue, Washington, way back in
Speaker 1: nineteen ninety four, which means it celebrated its thirtieth birthday
Speaker 1: this year. And like a lot of famous tech companies,
Speaker 1: Amazon got its start in a garage. Now. Back then,
Speaker 1: Amazon's business was all about books. You remember, books. You
Speaker 1: would pop onto Amazon dot Com. Actually before it was
Speaker 1: Cadabra as an abracadabra, but it became Amazon. But you
Speaker 1: would pop on Amazon and you would order a book
Speaker 1: that you wanted. You know, maybe it was a book
Speaker 1: it was just hard to track down in your neck
Speaker 1: of the woods, Like maybe there was a limited printing
Speaker 1: of those books and no one near you had it,
Speaker 1: or maybe you live someplace that wasn't close to a bookshop,
Speaker 1: so you go on to Amazon, you'd place your order
Speaker 1: and you wait for a while for Amazon to ship
Speaker 1: the book to you. It was a pretty humble start
Speaker 1: to a business, and it gave no indication that the
Speaker 1: company would grow into one of the largest wealthiest organizations
Speaker 1: in the world, propelling Jeff Bezos to be in the
Speaker 1: running for richest person on Earth. And it would also
Speaker 1: end up being a company that would hoard enormous amounts
Speaker 1: of customer information, mostly to put to the use of
Speaker 1: selling stuff to you more effectively than it had before. Well,
Speaker 1: I'm not going to do a full rundown on the
Speaker 1: history of Amazon. I have done episodes about that in
Speaker 1: the past, and even though a lot has happened since
Speaker 1: the last of those, we're just focusing on really one
Speaker 1: element to it. But I will hit a few high
Speaker 1: points just to kind of mark the passing of time. So,
Speaker 1: unlike lots of other web based businesses that were founded
Speaker 1: in the nineties, Amazon was actually one of the few
Speaker 1: that weathered the insane storm that was the dot com
Speaker 1: bubble burst, as well as the tragedy of the terrorist
Speaker 1: attacks in the United States on nine to eleven. In fact,
Speaker 1: Amazon ultimately posted its first ever profitable quarter at the
Speaker 1: end of two thousand and one. Like many other internet startups,
Speaker 1: the company operated at a loss for the first several
Speaker 1: years of its existence. It required regular investment rounds in
Speaker 1: order to stay afloat, so it was generating more and
Speaker 1: more revenue. Like things were moving in the right direction,
Speaker 1: The losses were coming down, the revenues were coming up,
Speaker 1: but you were still operating mostly in the red. Amazon
Speaker 1: was still losing money year over year, and finally made
Speaker 1: a profitable quarter at the end of two thousand and
Speaker 1: one one, which was an interesting thing to have happened,
Speaker 1: considering that that was in the wake of the September
Speaker 1: eleventh terrorist attacks, so Amazon wouldn't have its first profitable
Speaker 1: year until two thousand and three. That year, it earned
Speaker 1: thirty five million dollars, as opposed to the previous year
Speaker 1: in which it lost nearly one hundred and fifty million dollars.
Speaker 1: So yeah, Amazon was really turning things around. This was
Speaker 1: kind of like the inflection point for the company, and
Speaker 1: also Amazon obviously branched out beyond just selling books. They
Speaker 1: started selling all sorts of stuff. In fact, books would
Speaker 1: just become one of millions of different items carried by
Speaker 1: Amazon over the following years, and it would also experiment
Speaker 1: in other areas as well, such as in digital streaming
Speaker 1: many years later, so Amazon kind of got its hands
Speaker 1: into everything. But two thousand and three was a big year.
Speaker 1: That was also the year that Amazon introduced Amazon webs Services,
Speaker 1: at least in full. The company had already been dipping
Speaker 1: its toe in those waters in previous years, but two
Speaker 1: thousand and three was really where that became a thing,
Speaker 1: and the average person is probably much more familiar with
Speaker 1: Amazon's online storefront, but it's really Amazon's Web Services that
Speaker 1: brings in big bucks. Or to be more precise, actually,
Speaker 1: Amazon Web Services doesn't make the most money out of
Speaker 1: all of Amazon's divisions. I think it's closer to like
Speaker 1: between fifteen and twenty percent on average, so not the most,
Speaker 1: but it's the most profitable division within Amazon because the
Speaker 1: amount of money it's bringing in versus how much it
Speaker 1: costs to operate the division, there's a much larger profit
Speaker 1: margin there. When you're looking at Amazon's other businesses, the
Speaker 1: cost of doing business is so high comparatively speaking, that
Speaker 1: less profit is generated from that revenue. So AWS is
Speaker 1: Amazon's business to business service. They offer cloud computing and
Speaker 1: online development platforms to their various clients, and these days
Speaker 1: that includes providing compute power for startup AI companies, but
Speaker 1: you know, that's another story for another episode. The company
Speaker 1: introduced Amazon Prime in two thousand and five, so at
Speaker 1: the time, for seventy nine bucks a year, customers could
Speaker 1: sign up and receive unlimited two day shipping on their orders.
Speaker 1: Amazon was busy building out distribution centers around the world
Speaker 1: in order to make this a possibility. So the company
Speaker 1: was hard at work streamlining supply chains and making sure
Speaker 1: that goods were really close to where they would be needed.
Speaker 1: And knowing so much about customers through the process of
Speaker 1: like data mining and stuff, Amazon could actually anticipate the
Speaker 1: sorts of things that were needed in different areas and
Speaker 1: move things to where they needed to be proactively and
Speaker 1: be able to deliver on that two day promise in
Speaker 1: lots of different regions. So we have this big company
Speaker 1: that's based out of Washington State, and it has distribution
Speaker 1: centers and data centers all over the place. It is huge.
Speaker 1: By twenty seventeen, the company employed more than half a
Speaker 1: million people. Now, of course, only a fraction of those
Speaker 1: were working at the corporate headquarters in Seattle, Washington. Many
Speaker 1: people were working in things like warehouses and stuff like that.
Speaker 1: But the company's growth was insane, and the higher ups
Speaker 1: decided that what was needed was a second corporate HQ,
Speaker 1: potentially one on the opposite side of the United States
Speaker 1: of America. So on September seventh, twenty seventeen, Amazon released
Speaker 1: a statement alerting the world that the company was looking
Speaker 1: to establish a secondary headquarters HQ two, and this would
Speaker 1: be equivalent to the home operations in Seattle, Washington. The
Speaker 1: company issued an RFP that stands for request for proposal,
Speaker 1: and essentially this was Amazon saying, hey, y'all, we're looking
Speaker 1: to build ourselves away real nice operation someplace. It surely
Speaker 1: will bring a whole message jobs to your doorstep, and
Speaker 1: getting us on your map is certain to put a
Speaker 1: big old feather in your political cap. So if you're interested,
Speaker 1: send us your thoughts, hugs, and kisses. Amazon. Clearly I'm
Speaker 1: paraphrasing here. USA Today's Elizabeth Weiss wrote that at the
Speaker 1: time of Amazon's announcement, the Seattle HQ was the workplace
Speaker 1: for around forty thousand people. Now that's hard for me
Speaker 1: to even imagine. I have only ever worked in offices
Speaker 1: where there were fewer than two hundred people there, and
Speaker 1: usually most of those offices it was actually fewer than
Speaker 1: one hundred people. Why said the Amazon's workforce took up
Speaker 1: nearly twenty percent of all the office space in the
Speaker 1: city of Seattle. So imagine that. Imagine you live in
Speaker 1: a city and you run into someone who's dressed up
Speaker 1: in say, business attire, and you figure there's a one
Speaker 1: out of five chance they work for Amazon. That's crazy. Anyway,
Speaker 1: everyone seemed to take it at face value that Amazon
Speaker 1: of course needed to build a secondary corporate HQ. The
Speaker 1: operations of the company had grown so large and so
Speaker 1: complex that there was really no doubt that expansion was
Speaker 1: required and that it made more sense to move away
Speaker 1: from Seattle, not because Seattle is not a good location,
Speaker 1: but because Seattle was getting tapped out for things like talent,
Speaker 1: So you wanted to locate this partly because it would
Speaker 1: also mean if you say, had a location on the
Speaker 1: East Coast, you would have operating hours that would span
Speaker 1: more of the day, right because the East coast of
Speaker 1: the United States is three hours ahead of the West coast.
Speaker 1: So that seemed like that was a good idea. But
Speaker 1: who was going to get this and in fact, who
Speaker 1: was going to throw their proverbial hat into the ring
Speaker 1: for consideration. Well, actually, let's answer that second question first,
Speaker 1: like who got involved, because, as it would turn out,
Speaker 1: the answer was a whole bunch of cities and various
Speaker 1: other regions that were begging for consideration. In fact, Amazon
Speaker 1: received two hundred thirty eight submissions to their RFP. That's
Speaker 1: a lot of responses, and the applicants included cities in
Speaker 1: the United States as well as in Canada. From October nineteenth,
Speaker 1: twenty seventeen, to January eighteenth, twenty eighteen, the team at
Speaker 1: Amazon began to whittle the list down to a group
Speaker 1: of just twenty finalists, and I'm going to tell you
Speaker 1: what they were. So the finalists for Amazon's HQ two,
Speaker 1: in alphabetical order, They included Atlanta, Georgia, which is my hometown, Austin, Texas, Boston, Massachusetts, Chicago, Illinois, Columbus, Ohio, Dallas, Texas, Denver, Colorado, Indianapolis, Indiana,
Speaker 1: Los Angeles, California, Miami, Florida, Montgomery County, and Maryland. As
Speaker 1: they say in seventeen seventy six, Nashville, Tennessee, Newark, New Jersey,
Speaker 1: New York City, New York State, a region in northern
Speaker 1: Virginia called Arlington County, Philadelphia, Pennsylvania, Pittsburgh, Pennsylvania, Raleigh, North Carolina, Toronto, Ontario, Canada,
Speaker 1: and Washington, DC. Those were the contenders who would win. Well,
Speaker 1: that would be something of a surprise. I'll talk more
Speaker 1: about that, but first, let's take a quick break to
Speaker 1: thank our sponsors. Okay, before the break, I mentioned a
Speaker 1: list of twenty regions that had kind of made the
Speaker 1: short list for Amazon. But even before that list was announced,
Speaker 1: there was this crazy period in which various cities and
Speaker 1: regions that were trying to pull out all the stops
Speaker 1: in an effort to cox Amazon into choosing them for
Speaker 1: the location for HQ two. And it got pretty absurd
Speaker 1: and more than a little gross, or at least it
Speaker 1: was gross if you find some aspects of capitalism to
Speaker 1: be icky, you know, like how some cities will spend
Speaker 1: way more money in an effort to lure businesses into
Speaker 1: them than they would spend to do stuff like, I
Speaker 1: don't know, address infrastructure problems, or fund schools or address
Speaker 1: housing crises. And yeah, we'll have more to say about
Speaker 1: that later because that becomes a big critical point when
Speaker 1: we talk about New York City. So through the first
Speaker 1: half of twenty eighteen or so, you would occasionally see
Speaker 1: news about some city or another making outlandish promises or
Speaker 1: ridiculous public displays in an effort to stand out among
Speaker 1: the other candidates. For example, the city of Tucson, Arizona,
Speaker 1: which I'm sure you'll notice was not on that list
Speaker 1: of twenty on the short list, Tucson sent a plant
Speaker 1: to Jeff Bezos. Not just any plant. It was a
Speaker 1: twenty one foot tall saguaro cactus. Amazon News responded to this,
Speaker 1: saying the company was not allowed to accept gifts, so
Speaker 1: instead it had donated the cactus to a desert museum
Speaker 1: in Birmingham, Alabama. The city put up three giant Amazon
Speaker 1: delivery boxes around town and encouraged citizens to go out
Speaker 1: and take selfies with the boxes, and then to tweet
Speaker 1: their selfies using the hashtag that read bring a to
Speaker 1: b which is cute, but in the end it didn't
Speaker 1: really move the needle. Here in Georgia, to our great embarrassment,
Speaker 1: the city of stone Crest was vying to become the
Speaker 1: new home of Amazon HQ. This was seen as a
Speaker 1: long shot, as stone Crest itself is not a very
Speaker 1: large city. It's actually kind of in the metro Atlanta area.
Speaker 1: It's outside the perimeter. The perimeter, by the way, for
Speaker 1: those not in Atlanta, that's a highway called two eighty five,
Speaker 1: and two eighty five encircles all of the city of
Speaker 1: Atlanta and some of the outlying metro areas. Stonecrest is
Speaker 1: outside of that. It's a little less than a half
Speaker 1: hour drive from downtown Atlanta. The traffic's not bad, but anyway,
Speaker 1: Stonecrest's proposal included the chance for Amazon to essentially have
Speaker 1: its own city within Stonecrest itself. Stonecrest would continue to exist,
Speaker 1: but the city of Amazon would be carved out from
Speaker 1: a space within Stonecrest's holdings, with Stonecrest apparently handling all
Speaker 1: the utilities and municipal things that would be required for
Speaker 1: Amazon to operate. But people figured that Stonecrest didn't really
Speaker 1: have a chance because Atlanta had its own proposal into Amazon,
Speaker 1: and as we would see on that short list, Atlanta
Speaker 1: would end up making it on the list, Stonecrest did not. Now,
Speaker 1: other places were taking a less gimmicky approach, but no
Speaker 1: less effective. New Jersey offered tax breaks amounting to around
Speaker 1: five billion buckaroos. That's a princely sum, if ever there
Speaker 1: was one. Now, this was figured because the deal said
Speaker 1: that the state would offer up to ten thousand dollars
Speaker 1: per job created within New Jersey per year for an
Speaker 1: entire decade. Now, Amazon was pitching the HQ two as
Speaker 1: a project that would ultimately bring in fifty thousand jobs
Speaker 1: to whichever area the facility would be located in. So
Speaker 1: if you take fifty thousand jobs, you multiply that times
Speaker 1: ten thousand dollars, then you multiply that times ten years,
Speaker 1: and you get five billion dollars over that ten year period.
Speaker 1: Other cities offered their own incentives, all eager to convince
Speaker 1: Amazon to pick their location for HQ two. Now, this
Speaker 1: would ruffle feathers in more than a few places. There
Speaker 1: were critics who were arguing that peticians seemed far more
Speaker 1: eager to cater to one of the world's richest human
Speaker 1: beings rather than actually use their powers to make the
Speaker 1: lives of their constituents better and safer. Many people were
Speaker 1: worried that should their own city actually win the bidding,
Speaker 1: it would mean a net loss for the region, that
Speaker 1: whatever benefit Amazon's arrival would bring wouldn't be enough to
Speaker 1: offset what the area had given up in order to
Speaker 1: get Amazon there. I feel this distinctly because living in Atlanta,
Speaker 1: there's still people at least of my age or older
Speaker 1: who are wincing over the Summer Olympics of nineteen ninety
Speaker 1: six because Atlanta bent over backward in order to get
Speaker 1: the Olympics to our city and spent an awful lot
Speaker 1: of money in order to make that happen. And while
Speaker 1: many of the facilities that were built were repurposed after
Speaker 1: the Olympics, so they didn't like just go to waste
Speaker 1: or anything. There were a lot of questions as to
Speaker 1: whether or not it ultimately was worth the expense that
Speaker 1: was paid to get the Olympics there. That's a matter
Speaker 1: for another time, but I mean this is a common thing,
Speaker 1: like within cities where you'll hear about cities that are
Speaker 1: trying to coax a company or other organization into the city,
Speaker 1: and that sometimes the things they're using to coax the
Speaker 1: company end up costing more than any benefit you see
Speaker 1: from the company actually going there. That was a real
Speaker 1: fear in a lot of places. Now this gets complicated
Speaker 1: because many times the actual deals that were being proposed
Speaker 1: were covered by non disclosure agreements, which means they were
Speaker 1: not public knowledge. People were not allowed to talk about
Speaker 1: what was actually in the deal. So we had cases
Speaker 1: where people just didn't know what the cities were agreeing
Speaker 1: to and you wouldn't know until Amazon made its decision.
Speaker 1: And if it shows your city, then presumably at least
Speaker 1: some of the information would become public and maybe you
Speaker 1: wouldn't agree with it. But at the time you weren't
Speaker 1: being told anything, which obviously was not helping with trust issues.
Speaker 1: And you know, some cities were really worried about how
Speaker 1: Amazon would have a big impact on their communities, like
Speaker 1: in New York. I mentioned that earlier. In New York City,
Speaker 1: there were lots of critics who were bringing up questions
Speaker 1: about this, that Amazon's impact on the city would be
Speaker 1: so severe and meanwhile, it would be off the hook
Speaker 1: for paying for that stuff, that all of that burden
Speaker 1: would go to citizens instead. So in New York that
Speaker 1: became a huge conversation about how, Yeah, according to the brokers,
Speaker 1: it's not like they were taking money away from one
Speaker 1: project and giving it to Amazon. The brokers were saying,
Speaker 1: we're not doing that. We're not taking money away from
Speaker 1: anything that's in our budget. We're doing is we're offering
Speaker 1: incentives to Amazon. But the critics were saying, sure, but
Speaker 1: if Amazon takes you up on it, and they build
Speaker 1: this facility and they use that facility, they are going
Speaker 1: to put more stress on our infrastructure, whether that's in
Speaker 1: the school systems, in the roads, in the public transportation,
Speaker 1: whether it's just in all these other things that might
Speaker 1: or might not be intangible. They're going to put a
Speaker 1: strain on that. And meanwhile, through these tax incentives, you're
Speaker 1: not going to require Amazon to pay for them, but
Speaker 1: it has to be paid. Someone has to pay for that,
Speaker 1: so that ends up falling on all the other citizens.
Speaker 1: So what you're essentially doing is giving Amazon a free
Speaker 1: pass and making New Yorkers pay for it. That was
Speaker 1: like the big conversation that was happening in New York,
Speaker 1: And honestly, I think that there's a lot of merit
Speaker 1: in those criticisms. Now, in some cases, the incentives that
Speaker 1: were being offered in these deals would turn out to
Speaker 1: be the ones that didn't have any actual legislative backing. So,
Speaker 1: in other words, the people who were responsible for putting
Speaker 1: the proposal together didn't actually have the authority to make
Speaker 1: the offers they were making. They were doing what some
Speaker 1: salespeople often do. This is based upon my own personal
Speaker 1: observations in that some salespeople will make really big promises
Speaker 1: in order to land a sale, particularly salespeople who were
Speaker 1: on commission. They will make promises to the moon and
Speaker 1: back in order to get the ink on the dotted line,
Speaker 1: and once that ink has dried, they shift to the
Speaker 1: next deal, and meanwhile someone else is left holding the
Speaker 1: bag figuring out how do I deliver upon the promises
Speaker 1: that were made by the salesperson. That stinks. It's not
Speaker 1: the salesperson's job necessarily to deliver upon those promises. They're
Speaker 1: already doing something else. It's your job that sucks. I
Speaker 1: have been that sucker more than once and it is
Speaker 1: no fun. But yeah, there were cases in which Amazon
Speaker 1: was dealing with people who did not have the authority
Speaker 1: to make the deals they were offering. So the next
Speaker 1: step if Amazon had picked those places would be that
Speaker 1: the brokers would have to turn to the legislation and
Speaker 1: say our legislative body rather and say, hey, can we
Speaker 1: agree to make this a law? Because I already kind
Speaker 1: of told Amazon it could have a puppy, so we
Speaker 1: kind of got to get it a puppy. Sorry by then.
Speaker 1: In the end, Amazon did not choose a single place.
Speaker 1: It chose two places. However, as we'll get to Amazon
Speaker 1: would subsequently hit the eject button on one of those
Speaker 1: two choices and ultimately just go back down to one.
Speaker 1: Now Further, some would argue that Amazon's choices would reveal
Speaker 1: that the company had always had its future destinations in
Speaker 1: mind and had never really seriously considered any other potential location.
Speaker 1: So this is not, you know, verified, But there are
Speaker 1: skeptics who said, oh, Amazon always planned for these two
Speaker 1: locations to be the answer. They just said they were
Speaker 1: accepting proposals because it created a bidding war. Like if
Speaker 1: you already know where you're going to move, but you
Speaker 1: also know that your move is something that a lot
Speaker 1: of people are going to look at as a desirable thing,
Speaker 1: like they want you to move into the location, why
Speaker 1: not create a bidding war so that you get the
Speaker 1: sweetest deal possible. Right, Yeah, you know you're already going
Speaker 1: to go there, but they don't know that. So what
Speaker 1: you say is, hey, we're thinking about going someplace. We
Speaker 1: haven't made up our mind yet, what are you going
Speaker 1: to do to convince us to come to your neck
Speaker 1: of the woods. That was the kind of allegation or
Speaker 1: accusation or suspicion. Suspicion is probably the best word for it.
Speaker 1: A lot of people held that Amazon had already had
Speaker 1: in mind where it was going to go, they just
Speaker 1: hadn't told anyone because it was a way to wheedle
Speaker 1: out the best possible deal. Now, I'm not saying Amazon
Speaker 1: actually did stack the deck from the start. However, there
Speaker 1: are other people who don't have a problem floating that possibility.
Speaker 1: For a long time, it actually seemed like Atlanta, Georgia
Speaker 1: was out in the leite Like all the way up
Speaker 1: to almost the end, people thought Atlanta was seriously in
Speaker 1: the running. There was a time when most folks figured
Speaker 1: that Amazon was going to go to Atlanta, to the
Speaker 1: point where bookies in Vegas were giving Atlanta the best
Speaker 1: odds of being the city to become HQ two. But
Speaker 1: that is not where Amazon chose to go. In the end,
Speaker 1: Amazon sort of chose to divide and conquer. Now, part
Speaker 1: of that might have been because it turned out to
Speaker 1: be a lot harder to find a single location that
Speaker 1: would have access to fifty thousand or so tech workers
Speaker 1: that the company was looking to fill out these offices
Speaker 1: over the course of like a decade. There just weren't
Speaker 1: very many great single locations that could handle that kind
Speaker 1: of demand, and so Amazon instead chose to split the
Speaker 1: HQ two into two locations, one in New York City
Speaker 1: specifically Long Island City in Queens, and the other in
Speaker 1: Arlington County in northern Virginia. As we will see, that's
Speaker 1: not exactly how things would turn out. But first let's
Speaker 1: take another quick break. We're back. So Amazon announced their
Speaker 1: decision in November twenty eighteen. The backlash happened almost instantly. Now,
Speaker 1: to be clear, there were plenty of critics who had
Speaker 1: lots to say about how Amazon had conducted the whole
Speaker 1: search in the first place, and then there were even
Speaker 1: more critics about how the various areas that were under
Speaker 1: consideration had tried to outdo one another in publicity stunts
Speaker 1: and incentive packages that were s with NDA's. But when
Speaker 1: Amazon said, yeah, we're actually spliting this up and neither
Speaker 1: of the choices include the cities that were thought to
Speaker 1: be in the top of the running, folks kind of
Speaker 1: flip their lids right Like people were just already assuming
Speaker 1: that Atlanta was going to be the location, for example,
Speaker 1: or maybe Miami, Florida. But when it turned out not
Speaker 1: to be the case, a lot of folks were saying, well,
Speaker 1: that makes no sense. You must have had this planned
Speaker 1: out from the beginning. Now, it did become clear that
Speaker 1: in New York, the city had offered truly massive tax
Speaker 1: breaks more than a billion dollars tied to job creation.
Speaker 1: And remember this is half of the jobs that the
Speaker 1: HQ two was to hold. Right, the original concept was
Speaker 1: a single campus that would house around fifty thousand jobs.
Speaker 1: Instead we're looking at two campuses, each capable of holding
Speaker 1: around twenty five thousand employees. Now, some of the folks
Speaker 1: who brokeered the deal really defended it. Like I said,
Speaker 1: they argued that they weren't taking money from other projects,
Speaker 1: so this was not a net loss in any way,
Speaker 1: shape or form for the city. But then, as I mentioned,
Speaker 1: critics were saying, well, yeah, it's not like you took
Speaker 1: money out of the school budget to give to Amazon,
Speaker 1: but you are offering Amazon the chance to occupy a
Speaker 1: large part of Long Island City, not paying taxes, and
Speaker 1: meanwhile being a burden on taxpayers in the city, And
Speaker 1: that was something you couldn't just dismiss. Now, that was
Speaker 1: an ongoing issue, largely brought by AOC Alexandria Arcasio Cortes,
Speaker 1: who had just recently been elected to the House of
Speaker 1: Representatives in New York, and she was making a very
Speaker 1: strong and passionate argument against the deal that was being
Speaker 1: offered to Amazon. She was not the only one like
Speaker 1: there were Republicans who also disagreed with the deal that
Speaker 1: was being offered. So, as I mentioned before, this was
Speaker 1: something that people across both sides of the aisle had
Speaker 1: agreement upon. They just felt that this was an unnecessary
Speaker 1: gesture to a company led by someone who again was
Speaker 1: frequently in the running to be the richest person in
Speaker 1: the world. Things in Virginia were a little bit similar,
Speaker 1: but you know, they had promised more than half a
Speaker 1: billion dollars in cash grants, again tied to job creation
Speaker 1: within the region, but in Virginia, resistance was a bit
Speaker 1: more muted. It wasn't nearly as passionate as what was
Speaker 1: happening in New York. Also, Virginia had facilities that needed
Speaker 1: to be filled. There were these large campuses of buildings
Speaker 1: that at one time or another belonged to defense contractors,
Speaker 1: but those companies had gone out of business or moved away,
Speaker 1: and so there were some pretty significant office space areas
Speaker 1: that were vacant, and the idea was that, well, we
Speaker 1: need to fill that space up. It's not doing any
Speaker 1: good right now. So that became part of kind of
Speaker 1: the deal to Amazon. There were more than enough questionable
Speaker 1: decisions going around. However, for example, in Virginia, according to
Speaker 1: an article I read by Casey Newton in The Verge,
Speaker 1: the deal brokers had agreed to make sure that Amazon
Speaker 1: would actually receive written notice of any Freedom of Information
Speaker 1: Act public requests in advance, so that the company would
Speaker 1: have kind of a head start to figure out how
Speaker 1: best to protect itself before you know, something potentially nasty
Speaker 1: becomes public information. And many of the folks who had
Speaker 1: tried to land this deal had, as a matter of course,
Speaker 1: done all this, like I said, in secret, so that
Speaker 1: truly undermines citizen trust, like when you find out your
Speaker 1: leaders are secretly making these deals that have huge benefits
Speaker 1: to a company and allowing the company to operate by
Speaker 1: a completely different set of rules than the rest of
Speaker 1: us do. Like I think most Americans have an understanding
Speaker 1: that there are different judicial systems, and those systems depend
Speaker 1: heavily upon how influential and wealthy you are, and the
Speaker 1: more influential and the more wealthy you are, generally speaking,
Speaker 1: the better off you are, and the less repercussions you
Speaker 1: will face if you are ever cold in front of
Speaker 1: the court. And sometimes you know, laws just don't apply
Speaker 1: to you. That's not always the case. If you steal
Speaker 1: from other rich people, for example, you can still be
Speaker 1: sent to you know, prison for a long time. See
Speaker 1: also Sam Beateman freed. But for the most part, if
Speaker 1: you're really wealthy and influential, you don't have to worry
Speaker 1: as much. Well, that seemed to be the feeling people
Speaker 1: were having with these kind of deals with Amazon, that
Speaker 1: Amazon was giving this preferential treatment that no one else
Speaker 1: in the region would receive, and that rubs people the
Speaker 1: wrong way because it's inherently unfair. In New York, politicians
Speaker 1: on both sides raised questions and resistance to the plans,
Speaker 1: and just a few months after Amazon announced its intention
Speaker 1: to move into the Big Apple, the company changed course.
Speaker 1: In February twenty nineteen, Amazon said, you know what, on
Speaker 1: second thought, we're not going to build an HQ in
Speaker 1: Long Island City and they canceled those plans even then,
Speaker 1: like there had been some money, time and effort spent
Speaker 1: on preparing for this, so that was a waste. But yeah,
Speaker 1: Amazon pulled out, and the brokers in New York called
Speaker 1: it one of the biggest tragedies they had ever seen.
Speaker 1: Now keep in mind they said that in twenty nineteen.
Speaker 1: All they needed to do was wait a single year
Speaker 1: and then they would see what a real tragedy actually is,
Speaker 1: because trust me, the pandemic was way worse than a
Speaker 1: big company deciding against moving into town anyway. At that
Speaker 1: point in twenty nineteen, Virginia would become the one and
Speaker 1: only site for HQ two, or maybe HQ one point five,
Speaker 1: because it wasn't as big as HQ was going to be, right,
Speaker 1: it was going to be twenty five thousand people, not
Speaker 1: fifty thousand. So Amazon would also open some supplemental offices,
Speaker 1: one of which would be in New York, one that
Speaker 1: would be in Nashville, Tennessee. They just wouldn't be on
Speaker 1: a scale of an HQ two. So those financial deals
Speaker 1: that Virginia had made, keep in mind, those were tied
Speaker 1: to job creation. But then between Amazon's announcement of the
Speaker 1: HQ two locations, which ultimately would just become Virginia, and
Speaker 1: when HQ two would actually be ready to open, which
Speaker 1: was in the summer of twenty twenty three, we got
Speaker 1: the pandemic and boom, Suddenly people were not going into
Speaker 1: offices at all, even offices that were going to be
Speaker 1: State of the art and the result of huge political
Speaker 1: and financial deals would remain largely empty. Heck, I mean
Speaker 1: the construction work on offices would stop for quite some
Speaker 1: time because of lockdown and things of that nature. So
Speaker 1: Amazon was not ready to open the Virginia facility until
Speaker 1: the summer of twenty twenty three, which, as I'm sure
Speaker 1: you've noticed, came after the pandemic hit. And perhaps this
Speaker 1: is one of many reasons why Amazon has pushed so
Speaker 1: hard for a return to office, because again, the company's
Speaker 1: financial incentives in Virginia are tied to job creation within
Speaker 1: the region, and Amazon just has not been hitting those numbers.
Speaker 1: They have not been on track at all. In fact,
Speaker 1: Tao Armas of The Washington Post reported in April of
Speaker 1: this year that the number of people employed in the
Speaker 1: Virginia office actually shrank last year. The HQ two as
Speaker 1: it stands right now, includes a pair of high rise
Speaker 1: buildings and has a capacity for around fourteen thousand employees. Now, remember,
Speaker 1: the goal ultimately is to hit twenty five thousand, and
Speaker 1: originally the idea was to hit twenty five thousand by
Speaker 1: the end of the twenty twenties. And while it has
Speaker 1: the capacity for fourteen thousand in its existing facilities. Right now,
Speaker 1: it's more like eight thousand people work there. That's according
Speaker 1: to the most recent estimations I could find. It may
Speaker 1: not be exact, it may be more or less, but
Speaker 1: somewhere around eight thousand, so slightly more than half capacity.
Speaker 1: And again there are issues with the remote work. Plus, Amazon,
Speaker 1: like many other tech companies, has held a few rounds
Speaker 1: of layoffs in recent years that has impacted the hiring
Speaker 1: in Virginia. They've had hiring freezes and layoffs. That's really
Speaker 1: part of the problem. That's why the numbers have shrunk.
Speaker 1: And some of this is to do with the pandemic.
Speaker 1: A lot of it is, in fact, because during lockdown,
Speaker 1: a lot of tech companies in particular went into kind
Speaker 1: of a hiring extravaganza. But then once things calmed down,
Speaker 1: when the pandemic began to ease off a little bit,
Speaker 1: there were more hands on deck than we're needed, and
Speaker 1: so companies began to cut back again. We've seen this
Speaker 1: with Meta, We've seen it with Google, We've seen it
Speaker 1: with other places. Elon Musk positively eviscerated staff numbers over
Speaker 1: what used to beat Twitter. So in some ways you
Speaker 1: could argue Amazon was a little more gentle with their layoffs,
Speaker 1: which is a weird way to put it. I don't
Speaker 1: think getting laid off is ever really gentle. It stinks.
Speaker 1: But Amazon maintains that it still wishes to get to
Speaker 1: those twenty five thousand jobs on the books in Virginia. However,
Speaker 1: it may take a little bit longer than they initially
Speaker 1: anticipated when they were brokering these deals in the late
Speaker 1: twenty tens. So according to the company's VP of worldwide
Speaker 1: Economic Development, a woman named Holly Sullivan, the plan is
Speaker 1: to reach the twenty five thousand job milestone in Virginia
Speaker 1: by around twenty thirty eight, so another fourteen years. Ough.
Speaker 1: So the pandemic has really changed things, and you do
Speaker 1: have companies like Amazon that are passing return to office mandates.
Speaker 1: But the reality is that a lot of companies have
Speaker 1: found that remote work works. That's a pretty tough pill
Speaker 1: to swallow when a lot of your strategy has centered
Speaker 1: around the procurement of significant office space. It's tough for
Speaker 1: leaders who envisioned their towns turning into like a city
Speaker 1: of the future, filled with people who are working and
Speaker 1: living and playing in these high tech community centers. Tastefully
Speaker 1: landscaped and designed for ultimate pedestrian maneuverability. Instead, we're getting
Speaker 1: these large office buildings that are dramatically underutilized, with companies
Speaker 1: paying huge bills for rent and electricity and water and stuff,
Speaker 1: and meanwhile only a fraction of employees are even going
Speaker 1: in there. In some ways, I think it's understandable why
Speaker 1: company leaders are pushing back against remote work. They have
Speaker 1: heavily invested in some really expensive stuff, and if no
Speaker 1: one is going to the office, it's hard to justify
Speaker 1: those hefty expenses to your stakeholders, whether they're shareholders or
Speaker 1: private investors. And if people can work from remotely, they
Speaker 1: might not even live in places like Virginia where leaders
Speaker 1: expect you to deliver upon your promise to bring tens
Speaker 1: of thousands of jobs to the region. What if the
Speaker 1: people working for HQ two actually don't live anywhere close
Speaker 1: to Virginia because they don't have to. They can just
Speaker 1: log in remotely and work, well, then you're going to
Speaker 1: have problems trying to get those cash guarantees that you
Speaker 1: are banking on when you brokeer these deals back in
Speaker 1: twenty eighteen. So that's a big problem. Now there are
Speaker 1: other reasons why some bosses want folks to return to office.
Speaker 1: It's not all cynical stuff like justifying the office space
Speaker 1: or improving the optics, because you know, no one wants
Speaker 1: to have a client visit a practically deserted office floor
Speaker 1: that doesn't look good. You want the office to look
Speaker 1: busy and vibrant. So there are those reasons, and those
Speaker 1: are fairly shallow reasons for requiring employees to come back
Speaker 1: to the office. But there are at least some studies
Speaker 1: that have shown that for certain types of jobs, collaboration
Speaker 1: is the most effective when people are working within close
Speaker 1: proximity of one another, particularly with regard to mentoring. So
Speaker 1: that's not the case for everybody, but for engineers, for example,
Speaker 1: coder's computer scientists that kind of thing, they tend to
Speaker 1: benefit from working within proximity to others, particularly if you're
Speaker 1: talking about people who are kind of entry level into
Speaker 1: the position. They receive more frequent and higher quality feedback
Speaker 1: on their work from their peers who happen to be
Speaker 1: working within the same office space than if they would
Speaker 1: if everyone was working remotely. Like, people still get feedback
Speaker 1: on their work when they work remotely, but it doesn't
Speaker 1: tend to be as frequent or as high quality. So
Speaker 1: there are some use cases where a return to office
Speaker 1: has been shown to improve the overall quality of output.
Speaker 1: So I don't want to suggest that the only reasons
Speaker 1: any leaders ever want folks to go back into an
Speaker 1: office are shallow. I don't believe that's the case. I
Speaker 1: do think it's something that has to be considered carefully
Speaker 1: because there are so many other factors that affect your employees.
Speaker 1: For example, cost of living. Right like, there's so many
Speaker 1: tech companies that are in the San Francisco area, but
Speaker 1: I'm sure a lot of you are aware the price
Speaker 1: to live in San Francisco is so high that it's
Speaker 1: prohibitive for a lot of people. So remote work gives
Speaker 1: the ability to get one of those great salary jobs
Speaker 1: but potentially live someplace where it's a much lower cost
Speaker 1: of living. Your dollars go much further, So that makes
Speaker 1: a lot more sense. Being forced to come back into
Speaker 1: the office might mean that you have to relocate. It
Speaker 1: may mean that it's honestly unrealistic that you cannot do
Speaker 1: it because you can't afford to work at the place
Speaker 1: if you have to live there. So like I said,
Speaker 1: it's a delicate thing. It's nuanced, and the problem is
Speaker 1: that corporate policy as a rule doesn't do well with nuance.
Speaker 1: It does broad brush strokes. Anyway, that is what has
Speaker 1: happened to Amazon's HQ two so far. It is a
Speaker 1: work in progress. Clearly, to hit that goal of twenty
Speaker 1: five thousand jobs, Amazon is going to need to build
Speaker 1: even more office space in order to accommodate those extra bodies.
Speaker 1: They only have room for fourteen thousand. But before they
Speaker 1: do that, they still have six thousand empty desks to
Speaker 1: deal with at the existing facilities. I think all those
Speaker 1: cities that previously had bid upon the honor of having
Speaker 1: Amazon come to their town should probably pat themselves on
Speaker 1: the back for having dodged a bullet, unless, of course,
Speaker 1: people have found out more details about those proposals that
Speaker 1: the city had offered to Amazon, then there might be
Speaker 1: some more tough questions to answer. But that's a follow
Speaker 1: up on the story of Amazon's HQ two. There's obviously
Speaker 1: even more than that, and there are a lot of
Speaker 1: complicating issues that I didn't really touch on. But I
Speaker 1: think that that would require almost a full mini series
Speaker 1: to dive into everything from the polytical intrigue to you know,
Speaker 1: I didn't even touch on the fact that Amazon has
Speaker 1: famously been dealing with a lot of resistance from employees.
Speaker 1: A lot of employees in not just office spaces, but
Speaker 1: employees in like the warehouses, have been working toward unionization,
Speaker 1: and how Amazon has opposed that, sometimes to a degree
Speaker 1: that has been questioned as being potentially criminal. All of
Speaker 1: that plays a part into these kinds of stories, but
Speaker 1: again that would probably require its own mini series to
Speaker 1: get into real depth. I just wanted to give kind
Speaker 1: of an overview of how things had turned out because
Speaker 1: I was just looking back on old Tech Stuff episodes
Speaker 1: and I thought, oh, here's something I feel I should
Speaker 1: probably update, because when I recorded the first one, New
Speaker 1: York was still very much going to be one of
Speaker 1: the locations for Amazon's HQ two, and then just a
Speaker 1: few months later that was off the table. Well that's
Speaker 1: it for this episode. I hope all of you out
Speaker 1: there are doing well, and I'll talk to you again
Speaker 1: really soon. Tech Stuff is an iHeartRadio production. For more
Speaker 1: podcasts from iHeartRadio, visit the iHeartRadio app, Apple Podcasts, or
Speaker 1: wherever you listen to your favorite shows.