Choosing Austin

Post by
Scott Francis

Not so long ago, a number of entrepreneurs in Austin wrote about why they choose Austin - and I wrote my own post on the subject. Recently we had two big announcements from two of the top companies in the world by market cap: Amazon and Apple.

Amazon announced it was splitting it's HQ2 investment into two regions - just outside of DC and also in NY. Many folks in Texas were disappointed they didn't go to Dallas. The main thing in common between the areas Amazon picked seems to be distance from a home owned by Jeff Bezos.

In the debate that preceded Amazon's choice, some Austinites feared that Amazon would have too big an impact on Austin - on traffic, on culture, on space, on home prices. I didn't share those fears - I think Austin would rise to the challenge. Some feared Amazon wouldn't choose Austin because of a lack of infrastructure and international flights, a lack of transit options, and the like.? Some feared we didn't put enough into our effort to recruit them - no tax savings packages, no prospective offers hoping to lure them.? I never worried that we didn't try hard enough to win Amazon, either.

I maintained all along that if Amazon chose Austin it wouldn't be for the incentives, though surely Amazon could have picked Austin and negotiated some. That if Amazon was going to choose Austin it would be for other reasons - culture, work-life balance, their ability to make an impact and partnership with Austin to effect positive change that benefits both Amazon and Austin. Austin already is HQ to Whole Foods, an Amazon subsidiary, and already supports thousands of Amazon employees in addition to Whole Foods, so in some ways it may have been logical to expand here (and it may still expand here in Austin more quietly). But I was not surprised when they chose elsewhere. There was no signaling of putting value on anything more than incentives in the process...

Meanwhile, Apple announced a $1B campus here in Austin, doubling their current footprint, potentially quadrupling it over time. And Austin welcomed Apple with open arms, rhetorically:

Apple has been a vital part of the Austin community for a quarter century, and we are thrilled that they are deepening their investment in our people and the city we love,? said Austin Mayor Steve Adler in a statement. Apple and Austin share a creative spark and a commitment to getting big things done. We share their commitment to diversity and inclusion. We're excited they are bringing more middle-skilled jobs to the area. And we're particularly gratified by their commitment to providing a great place to work for a large and growing number of America's veterans.

Interestingly, Austin proper didn't offer any tax incentives, while Williamson County and Texas did. They were modest incentives - about $22M over time, rather than the numbers followed by the word Billion that Amazon pursued and captured.

I think Adler's comments reflect a more core truth:? Apple has been in Austin for a long time, and has had good success here. They've fostered great teams, built a great business here, are part of the community, and can see a path to the expansion they want to do while embracing the city and culture rather than challenging it.? No one fretted about traffic nor about the impact on home prices, though there will surely be an impact on both.

An interesting comment in this article on CityLab has a different take on choosing Austin:

Mark Muro, a Senior Fellow at the Brookings Institute's Metropolitan Policy Program. "While some may view Austin as a rise-of-the-rest story, I think it's a rich-getting-richer story," he says, "or what CityLab's Richard Florida calls winner-take-all urbanism."

I think it is both - and example of the "rise of the rest" with respect to Silicon Valley -but also an example of the rich-getting-richer story when you compare Austin (and a handful of other tech centers) to the rest.

And I think Apple mainly chose Austin because it has worked so well - for both parties - for so many years. I'm confident it will work well for many years to come!

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