Amazon’s HQ2 Search Was About Specialized Talent

When Amazon chose Long Island City in Queens, New York, and Crystal City in Arlington, Virginia, as the sites between which to split the company’s second headquarters, I kept hearing that the choice was all about talent. Or, according to the title of an analysis from Brookings: “talent, talent, talent.”

Of course it was about talent. To be more precise, the company made its decision by selecting locations with specialized kinds of talent that meet certain needs.

What’s critical is that Amazon gets very different kinds of talent between New York City and the D.C. metro area. New York is a center for global finance and the headquarters of many international companies; it’s also a media center and budding tech hub. New York is the place to be for global management talent. As Stacy Mitchell put it in an article for The Nation, Amazon’s ambition spans more than a single market; its aim is to become a “radically new kind of monopoly with ambitions that dwarf those of earlier empires.” With that in mind, it’s easy to imagine why Amazon would want to attract the best talent in management. Jeff Bezos wants Amazon to dominate, and he needs great managers for that.

Tech talent is easy to recruit to Seattle and the Pacific Northwest. But this kind of talent is not: it knows it needs to stay in the kind of network that only New York and London have to offer. (Economic geographers identify London and New York as the only two “Alpha Plus” cities in the world.) For Amazon to attract the kinds of global executive talent it needs to grow to the next level, it simply has to be in New York.

Crystal City, in the D.C. metro area, puts Amazon closer to tech talent, but also to government leaders, cloud customers, and the U.S. Department of Defense. If New York has long attracted the best and the brightest financial, marketing, advertising and headquarters talent, D.C. has long attracted the upper reaches of America’s and the world’s political and policy class. A whole host of metros offer deeper pools of tech talent than D.C., including Seattle. A D.C. headquarters is about getting access to the kind of global political talent that has long gravitated to and is ensconced in Washington.

Revisiting the list of Amazon HQ2 finalists, it’s clear (at least by now) that it isn’t really a list of potential sites for a second standalone headquarters. Sure, New York, D.C., Boston, Chicago, Dallas, Atlanta, and Toronto all make sense for a second HQ. Pittsburgh and Austin are tech hubs with unique kinds of talent in fields like artificial intelligence and machine learning. Columbus, Indianapolis, and Nashville have the logistics capacity. Miami is the Latin American gateway.

All of these places offer unique and specialized clusters of industry, suppliers, end-users, specialized firms, and talent. That’s why I have long said HQ2 has always been about more than a single headquarters decision. It’s a broad corporate locational strategy to site lots and lots of different things in different places. A corporate locational strategy does not mean optimizing for one thing only. Rather, it means searching across a broad economic landscape to find matches between specialized kinds of talent and location.

When we look at Amazon’s HQ2 process through this lens, we see that it was never about finding a single site for one more headquarters. Instead, it was Amazon’s way of crowdsourcing information on sites, their specialized types of talent, universities, training programs, transportation, and so on. And it shouldn’t be overlooked that another central goal was to extract maximum concessions, incentives, and leverage from state and local governments.

Amazon’s corporate locational strategy makes sense for Amazon, but that doesn’t mean it makes sense for the cities granting incentives, nor the people who currently live there.

While Bezos and the site-selection group seem to have implemented a smart strategy in one sense, they seemingly forgot that the places they picked are filled with people who value where they live and have a real emotional attachment to their communities, many of whom feel Amazon will hurt more than it will help them. A backlash is already taking shape, both in the two big HQ2 winners and in losing cities across the heartland.

I recently had the opportunity to talk to an economic development official who once headed up site selection for a major U.S. high-tech company. He said Amazon seems to have done its homework and picked locations that are crucial to the company’s future. But he added that it made two crucial mistakes that will likely haunt the company down the road. For one, the public auction was going to create more losers than winners, creating anger and animosity which could have been avoided by doing this much more quietly. Worse, he said, the first law of site selection is not to stoke up opposition and make an enemy of your new hometown.

Press coverage of the negative potential of Amazon coming to town also hurts the company’s brand. Recodetitled one of its recent podcast episodes “Amazon’s HQ2 was a con, not a contest.” New Yorkers organized anti-Amazon protests on Black Friday and Cyber Monday. For a consumer-facing company whose customers are average people, Amazon’s brand should be worth even more than the $3 billion in tax incentives it’s reaping from New York.

In picking Long Island City, Amazon placed its New York headquarters smack in the middle of the district of newly elected Alexandria Ocasio-Cortez, who has already come out strongly against its incentive windfall. Amazon could not have found a more capable opponent—a unique type of talent the company failed to anticipate.  

CityLab editorial fellow Nicole Javorsky contributed research and editorial assistance to this article.