The Lesson from the Amazon HQ2 Fiasco


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No matter whether you think Amazon HQ2 in New York was a good or a bad idea, it is worth considering how terrible the execution of the whole affair has been. It all started with the way Amazon conducted the search for the new location. Making a bunch of cities compete in a secret bidding contest may strike some people as brilliant but was always a terrible idea. Didn’t anyone at Amazon think: “Hey we are one of the world’s most valuable companies, run by the world’s richest person and so asking cities to give us massive concessions is not going to look good?” Apparently not, or at least not anyone who dared say it or had any real pull inside the company.

I should be quick to point out that’s not actually all that surprising. Success tends to beget that kind of failure mode where eventually everyone is so into how everything a company does is obviously good and awesome and everyone else in the world will surely see it the same way (just look at Facebook if you want another example of that). Still it is a failure to “read the room” of epic proportions.

And what about New York City? Similar story. Nobody thought about the optics? At a time when riding the MTA is testing everyone’s patience (never mind the debacle around the L train) and when the city is experiencing its worst affordable housing crisis in decades, didn’t anyone go: we need to really sell how this deal will be broadly good for New York, and not just for people in tech whose salaries have been growing faster than anyone else’s? Any near-term HQ2 concession should have come with commitments to take a meaningful portion of long-term tax revenue gains and use them to address transportation infrastructure and affordable housing.

There are a lot of lessons here. And none of them will be learned by simply accusing the other side of not getting how economics works. This is all about misunderstanding where we are on the perception of tech companies and their role and responsibility with regard to the polarization of society.