Amazon for Austin?

  • October 21, 2017
  • Scott
  • 0 Comments

Is Amazon bound for Austin?  Is Austin the right city for Amazon’s HQ2?

The whole search for Amazon’s HQ2 is a fascinating Rorschach test.  We have an instant view of how the contestant cities see themselves: how they assess their strengths and weaknesses, and attempt to turn weaknesses into strengths.

But it is also a Rorschach test for Amazon.  What do they really value in their second HQ?  What does Amazon value in their community?  Will they go for contrasting culture and dynamics vis-a-vis Seattle or complementary?  Do local politics matter? Culture? Real-estate prices? Natural beauty?

We just won’t know until Amazon decides. And once Amazon decides, we’ll know a lot about how they see the world and their own interaction with it.  The business journals, have, by the way, run a series of articles that could be turned into a coffee-table book on this subject – I believe every single Business Journal (Austin’s included) has contributed an article to the compendium of Amazon analysis.  It’s fascinating.

I’m in the best position to understand Austin’s case, as made in this article.

One thing is certain amid this shifting retail landscape: When the ink dried in late August on its lightning-quick acquisition of global grocery retailer Whole Foods Market Inc., Amazon jumped up the ranks of the Austin area’s largest employers virtually overnight, with some 7,000 workers on its payroll.

In the process, Amazon has turned the Texas capital into the tip of its spear aimed at disruption in the grocery sector, which will in turn add to its already staggering clout in the retail industry. Indeed, that foray into the grocery sector means another prominent company with a major Austin presence is now in Amazon’s crosshairs: HEB Grocery Co., which recently displaced Dell Technologies Inc. as Central Texas’ largest employer.

I have to say, living in Austin, we have been spoiled by two of the best grocery businesses in the world:  HEB and Whole Foods.  I well remember when friends in California didn’t believe me that Whole Foods was based in Austin (pre-smartphone fact-checking).  Having so many employees in Austin, as well as a critical new grocery business, moves Austin up the list in the Austin Business Journal’s mind, and in many Austinites’.  Both Amazon and Apple count Austin as now their second largest city by employment.  Working in Austin for more than 20 years has been an amazing experience. Founding BP3 here in Austin, I wouldn’t have it any other way.  Our culture has been profoundly improved by our location and the cultural context around us.

Austin has submitted a bid to Amazon, as expected.  This article reflects what I’ve observed: that Austin is pursuing the bid with little fanfare.  Austin leadership want to win, but also understand that Austin is what it is. We can’t wish for more lavish tax breaks and incentives – or frankly we just wouldn’t be Austin.  And we can’t wish for more open land in the heart of the city, or we wouldn’t be the vibrant city we are.  And we can’t wish for rust-belt era make-overs because we were barely a blip in Texas during the heyday of the rust belt.

And if Amazon desires the culture and nature and ethos of Austin, no incentives will make us more hip, more cool, or more beautiful.  And if Amazon doesn’t care about those things, then what incentives could we possibly offer that would change their mind?

I think Adler and the City have tuned this right – taking seriously the prospect of winning Amazon over, but being realistic about what we can do without sitting down at the table with Amazon directly.  And, city leadership are smart to downplay our odds of winning because we don’t really know the calculus behind the scenes.

I think Austin will do just fine either way.  Austin’s startups will do just fine either way.  Austin’s traffic will get worse but honestly: with 65,000 people moving to Austin every year, it isn’t clear whether adding another 40-50,000 jobs over 10 years will really be the critical factor.  And it isn’t as if Amazon isn’t used to traffic issues in Seattle… Some wonder whether there is space in Austin for such a large campus, but clearly there is.  And locating in the Domain area of Austin would also leave open the possibility of leveraging our meager light rail capacity in Austin for transit to-and-from downtown (a mutual investment in that infrastructure might be a great win-win for Austin and Amazon).

Amazon, if you’re listening, and you’re coming to Austin, negotiate for some mass transit routes or other civic goods that you have the power to influence that will benefit your team and the community. You have, I think, the opportunity to nudge Austin to invest in its own long-term future and benefit by being a critical part of our community.  But that’s just it – being part of the community has to matter if you’re going to choose Austin. Because if community doesn’t matter, there are other cities with more tax rebates on offer.

 

 

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