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October 16, 2024 41 mins

In 2018, more than 200 cities competed to become the site for Amazon's second headquarters. Late that year, Amazon would choose two locations. A year later, it would pull out of one of those two sites. And today, the HQ2 sits nearly half empty. What happened?

 

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Speaker 1 (00:04):
Welcome to tech Stuff, a production from iHeartRadio. He there,
and welcome to tech Stuff. I'm your host, Jonathan Strickland.
I'm an executive producer with iHeart Podcasts and how the
tech are you at? So today I thought we could
revisit something that really happened just a few years ago.

(00:27):
In fact, I actually did an episode of tech Stuff
about this back in the fall of twenty eighteen. But
a lot has changed since then, including the COVID nineteen
out break, which would throw an enormous monkey wrench into
the whole thing. And it's all about the controversial Amazon

(00:48):
HQ two decision and how everything kind of unfolded from
the moment when Amazon announced a request for proposal. So
let's get to it. And as I said, there's an
episode in twenty eighteen about this, and it's so funny
because obviously a lot, a lot would change from then

(01:08):
to now, including one of the locations picked for HQ
two would be dismissed between then and now. At the time,
I didn't know that was gonna happen, all right, So
let's get some background before we jump into all this.
Jeff Bezos founded Amazon in Bellevue, Washington, way back in

(01:32):
nineteen ninety four, which means it celebrated its thirtieth birthday
this year. And like a lot of famous tech companies,
Amazon got its start in a garage. Now. Back then,
Amazon's business was all about books. You remember, books. You
would pop onto Amazon dot Com. Actually before it was

(01:52):
Cadabra as an abracadabra, but it became Amazon. But you
would pop on Amazon and you would order a book
that you wanted. You know, maybe it was a book
it was just hard to track down in your neck
of the woods, Like maybe there was a limited printing
of those books and no one near you had it,
or maybe you live someplace that wasn't close to a bookshop,
so you go on to Amazon, you'd place your order

(02:15):
and you wait for a while for Amazon to ship
the book to you. It was a pretty humble start
to a business, and it gave no indication that the
company would grow into one of the largest wealthiest organizations
in the world, propelling Jeff Bezos to be in the
running for richest person on Earth. And it would also

(02:37):
end up being a company that would hoard enormous amounts
of customer information, mostly to put to the use of
selling stuff to you more effectively than it had before. Well,
I'm not going to do a full rundown on the
history of Amazon. I have done episodes about that in
the past, and even though a lot has happened since
the last of those, we're just focusing on really one

(03:00):
element to it. But I will hit a few high
points just to kind of mark the passing of time. So,
unlike lots of other web based businesses that were founded
in the nineties, Amazon was actually one of the few
that weathered the insane storm that was the dot com
bubble burst, as well as the tragedy of the terrorist

(03:21):
attacks in the United States on nine to eleven. In fact,
Amazon ultimately posted its first ever profitable quarter at the
end of two thousand and one. Like many other internet startups,
the company operated at a loss for the first several
years of its existence. It required regular investment rounds in

(03:41):
order to stay afloat, so it was generating more and
more revenue. Like things were moving in the right direction,
The losses were coming down, the revenues were coming up,
but you were still operating mostly in the red. Amazon
was still losing money year over year, and finally made
a profitable quarter at the end of two thousand and
one one, which was an interesting thing to have happened,

(04:02):
considering that that was in the wake of the September
eleventh terrorist attacks, so Amazon wouldn't have its first profitable
year until two thousand and three. That year, it earned
thirty five million dollars, as opposed to the previous year
in which it lost nearly one hundred and fifty million dollars.

(04:23):
So yeah, Amazon was really turning things around. This was
kind of like the inflection point for the company, and
also Amazon obviously branched out beyond just selling books. They
started selling all sorts of stuff. In fact, books would
just become one of millions of different items carried by
Amazon over the following years, and it would also experiment

(04:47):
in other areas as well, such as in digital streaming
many years later, so Amazon kind of got its hands
into everything. But two thousand and three was a big year.
That was also the year that Amazon introduced Amazon webs Services,
at least in full. The company had already been dipping
its toe in those waters in previous years, but two
thousand and three was really where that became a thing,

(05:08):
and the average person is probably much more familiar with
Amazon's online storefront, but it's really Amazon's Web Services that
brings in big bucks. Or to be more precise, actually,
Amazon Web Services doesn't make the most money out of
all of Amazon's divisions. I think it's closer to like
between fifteen and twenty percent on average, so not the most,

(05:31):
but it's the most profitable division within Amazon because the
amount of money it's bringing in versus how much it
costs to operate the division, there's a much larger profit
margin there. When you're looking at Amazon's other businesses, the
cost of doing business is so high comparatively speaking, that

(05:52):
less profit is generated from that revenue. So AWS is
Amazon's business to business service. They offer cloud computing and
online development platforms to their various clients, and these days
that includes providing compute power for startup AI companies, but
you know, that's another story for another episode. The company

(06:14):
introduced Amazon Prime in two thousand and five, so at
the time, for seventy nine bucks a year, customers could
sign up and receive unlimited two day shipping on their orders.
Amazon was busy building out distribution centers around the world
in order to make this a possibility. So the company
was hard at work streamlining supply chains and making sure

(06:35):
that goods were really close to where they would be needed.
And knowing so much about customers through the process of
like data mining and stuff, Amazon could actually anticipate the
sorts of things that were needed in different areas and
move things to where they needed to be proactively and
be able to deliver on that two day promise in

(06:56):
lots of different regions. So we have this big company
that's based out of Washington State, and it has distribution
centers and data centers all over the place. It is huge.
By twenty seventeen, the company employed more than half a
million people. Now, of course, only a fraction of those
were working at the corporate headquarters in Seattle, Washington. Many

(07:19):
people were working in things like warehouses and stuff like that.
But the company's growth was insane, and the higher ups
decided that what was needed was a second corporate HQ,
potentially one on the opposite side of the United States
of America. So on September seventh, twenty seventeen, Amazon released
a statement alerting the world that the company was looking

(07:42):
to establish a secondary headquarters HQ two, and this would
be equivalent to the home operations in Seattle, Washington. The
company issued an RFP that stands for request for proposal,
and essentially this was Amazon saying, hey, y'all, we're looking
to build ourselves away real nice operation someplace. It surely

(08:02):
will bring a whole message jobs to your doorstep, and
getting us on your map is certain to put a
big old feather in your political cap. So if you're interested,
send us your thoughts, hugs, and kisses. Amazon. Clearly I'm
paraphrasing here. USA Today's Elizabeth Weiss wrote that at the
time of Amazon's announcement, the Seattle HQ was the workplace

(08:26):
for around forty thousand people. Now that's hard for me
to even imagine. I have only ever worked in offices
where there were fewer than two hundred people there, and
usually most of those offices it was actually fewer than
one hundred people. Why said the Amazon's workforce took up
nearly twenty percent of all the office space in the

(08:46):
city of Seattle. So imagine that. Imagine you live in
a city and you run into someone who's dressed up
in say, business attire, and you figure there's a one
out of five chance they work for Amazon. That's crazy. Anyway,
everyone seemed to take it at face value that Amazon
of course needed to build a secondary corporate HQ. The

(09:08):
operations of the company had grown so large and so
complex that there was really no doubt that expansion was
required and that it made more sense to move away
from Seattle, not because Seattle is not a good location,
but because Seattle was getting tapped out for things like talent,
So you wanted to locate this partly because it would

(09:29):
also mean if you say, had a location on the
East Coast, you would have operating hours that would span
more of the day, right because the East coast of
the United States is three hours ahead of the West coast.
So that seemed like that was a good idea. But
who was going to get this and in fact, who

(09:50):
was going to throw their proverbial hat into the ring
for consideration. Well, actually, let's answer that second question first,
like who got involved, because, as it would turn out,
the answer was a whole bunch of cities and various
other regions that were begging for consideration. In fact, Amazon
received two hundred thirty eight submissions to their RFP. That's

(10:14):
a lot of responses, and the applicants included cities in
the United States as well as in Canada. From October nineteenth,
twenty seventeen, to January eighteenth, twenty eighteen, the team at
Amazon began to whittle the list down to a group
of just twenty finalists, and I'm going to tell you
what they were. So the finalists for Amazon's HQ two,

(10:37):
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,
Los Angeles, California, Miami, Florida, Montgomery County, and Maryland. As

(11:00):
they say in seventeen seventy six, Nashville, Tennessee, Newark, New Jersey,
New York City, New York State, a region in northern
Virginia called Arlington County, Philadelphia, Pennsylvania, Pittsburgh, Pennsylvania, Raleigh, North Carolina, Toronto, Ontario, Canada,

(11:20):
and Washington, DC. Those were the contenders who would win. Well,
that would be something of a surprise. I'll talk more
about that, but first, let's take a quick break to
thank our sponsors. Okay, before the break, I mentioned a

(11:45):
list of twenty regions that had kind of made the
short list for Amazon. But even before that list was announced,
there was this crazy period in which various cities and
regions that were trying to pull out all the stops
in an effort to cox Amazon into choosing them for
the location for HQ two. And it got pretty absurd

(12:07):
and more than a little gross, or at least it
was gross if you find some aspects of capitalism to
be icky, you know, like how some cities will spend
way more money in an effort to lure businesses into
them than they would spend to do stuff like, I
don't know, address infrastructure problems, or fund schools or address

(12:29):
housing crises. And yeah, we'll have more to say about
that later because that becomes a big critical point when
we talk about New York City. So through the first
half of twenty eighteen or so, you would occasionally see
news about some city or another making outlandish promises or
ridiculous public displays in an effort to stand out among

(12:51):
the other candidates. For example, the city of Tucson, Arizona,
which I'm sure you'll notice was not on that list
of twenty on the short list, Tucson sent a plant
to Jeff Bezos. Not just any plant. It was a
twenty one foot tall saguaro cactus. Amazon News responded to this,
saying the company was not allowed to accept gifts, so

(13:15):
instead it had donated the cactus to a desert museum
in Birmingham, Alabama. The city put up three giant Amazon
delivery boxes around town and encouraged citizens to go out
and take selfies with the boxes, and then to tweet
their selfies using the hashtag that read bring a to

(13:36):
b which is cute, but in the end it didn't
really move the needle. Here in Georgia, to our great embarrassment,
the city of stone Crest was vying to become the
new home of Amazon HQ. This was seen as a
long shot, as stone Crest itself is not a very
large city. It's actually kind of in the metro Atlanta area.

(13:57):
It's outside the perimeter. The perimeter, by the way, for
those not in Atlanta, that's a highway called two eighty five,
and two eighty five encircles all of the city of
Atlanta and some of the outlying metro areas. Stonecrest is
outside of that. It's a little less than a half
hour drive from downtown Atlanta. The traffic's not bad, but anyway,

(14:17):
Stonecrest's proposal included the chance for Amazon to essentially have
its own city within Stonecrest itself. Stonecrest would continue to exist,
but the city of Amazon would be carved out from
a space within Stonecrest's holdings, with Stonecrest apparently handling all

(14:39):
the utilities and municipal things that would be required for
Amazon to operate. But people figured that Stonecrest didn't really
have a chance because Atlanta had its own proposal into Amazon,
and as we would see on that short list, Atlanta
would end up making it on the list, Stonecrest did not. Now,
other places were taking a less gimmicky approach, but no

(15:03):
less effective. New Jersey offered tax breaks amounting to around
five billion buckaroos. That's a princely sum, if ever there
was one. Now, this was figured because the deal said
that the state would offer up to ten thousand dollars
per job created within New Jersey per year for an

(15:25):
entire decade. Now, Amazon was pitching the HQ two as
a project that would ultimately bring in fifty thousand jobs
to whichever area the facility would be located in. So
if you take fifty thousand jobs, you multiply that times
ten thousand dollars, then you multiply that times ten years,
and you get five billion dollars over that ten year period.

(15:46):
Other cities offered their own incentives, all eager to convince
Amazon to pick their location for HQ two. Now, this
would ruffle feathers in more than a few places. There
were critics who were arguing that peticians seemed far more
eager to cater to one of the world's richest human
beings rather than actually use their powers to make the

(16:07):
lives of their constituents better and safer. Many people were
worried that should their own city actually win the bidding,
it would mean a net loss for the region, that
whatever benefit Amazon's arrival would bring wouldn't be enough to
offset what the area had given up in order to
get Amazon there. I feel this distinctly because living in Atlanta,

(16:33):
there's still people at least of my age or older
who are wincing over the Summer Olympics of nineteen ninety
six because Atlanta bent over backward in order to get
the Olympics to our city and spent an awful lot
of money in order to make that happen. And while
many of the facilities that were built were repurposed after

(16:56):
the Olympics, so they didn't like just go to waste
or anything. There were a lot of questions as to
whether or not it ultimately was worth the expense that
was paid to get the Olympics there. That's a matter
for another time, but I mean this is a common thing,
like within cities where you'll hear about cities that are
trying to coax a company or other organization into the city,

(17:20):
and that sometimes the things they're using to coax the
company end up costing more than any benefit you see
from the company actually going there. That was a real
fear in a lot of places. Now this gets complicated
because many times the actual deals that were being proposed
were covered by non disclosure agreements, which means they were

(17:42):
not public knowledge. People were not allowed to talk about
what was actually in the deal. So we had cases
where people just didn't know what the cities were agreeing
to and you wouldn't know until Amazon made its decision.
And if it shows your city, then presumably at least
some of the information would become public and maybe you

(18:03):
wouldn't agree with it. But at the time you weren't
being told anything, which obviously was not helping with trust issues.
And you know, some cities were really worried about how
Amazon would have a big impact on their communities, like
in New York. I mentioned that earlier. In New York City,

(18:23):
there were lots of critics who were bringing up questions
about this, that Amazon's impact on the city would be
so severe and meanwhile, it would be off the hook
for paying for that stuff, that all of that burden
would go to citizens instead. So in New York that
became a huge conversation about how, Yeah, according to the brokers,

(18:48):
it's not like they were taking money away from one
project and giving it to Amazon. The brokers were saying,
we're not doing that. We're not taking money away from
anything that's in our budget. We're doing is we're offering
incentives to Amazon. But the critics were saying, sure, but
if Amazon takes you up on it, and they build

(19:09):
this facility and they use that facility, they are going
to put more stress on our infrastructure, whether that's in
the school systems, in the roads, in the public transportation,
whether it's just in all these other things that might
or might not be intangible. They're going to put a
strain on that. And meanwhile, through these tax incentives, you're

(19:30):
not going to require Amazon to pay for them, but
it has to be paid. Someone has to pay for that,
so that ends up falling on all the other citizens.
So what you're essentially doing is giving Amazon a free
pass and making New Yorkers pay for it. That was
like the big conversation that was happening in New York,
And honestly, I think that there's a lot of merit

(19:51):
in those criticisms. Now, in some cases, the incentives that
were being offered in these deals would turn out to
be the ones that didn't have any actual legislative backing. So,
in other words, the people who were responsible for putting
the proposal together didn't actually have the authority to make
the offers they were making. They were doing what some

(20:15):
salespeople often do. This is based upon my own personal
observations in that some salespeople will make really big promises
in order to land a sale, particularly salespeople who were
on commission. They will make promises to the moon and
back in order to get the ink on the dotted line,

(20:36):
and once that ink has dried, they shift to the
next deal, and meanwhile someone else is left holding the
bag figuring out how do I deliver upon the promises
that were made by the salesperson. That stinks. It's not
the salesperson's job necessarily to deliver upon those promises. They're
already doing something else. It's your job that sucks. I

(20:58):
have been that sucker more than once and it is
no fun. But yeah, there were cases in which Amazon
was dealing with people who did not have the authority
to make the deals they were offering. So the next
step if Amazon had picked those places would be that
the brokers would have to turn to the legislation and
say our legislative body rather and say, hey, can we

(21:20):
agree to make this a law? Because I already kind
of told Amazon it could have a puppy, so we
kind of got to get it a puppy. Sorry by then.
In the end, Amazon did not choose a single place.
It chose two places. However, as we'll get to Amazon
would subsequently hit the eject button on one of those

(21:41):
two choices and ultimately just go back down to one.
Now Further, some would argue that Amazon's choices would reveal
that the company had always had its future destinations in
mind and had never really seriously considered any other potential location.
So this is not, you know, verified, But there are
skeptics who said, oh, Amazon always planned for these two

(22:05):
locations to be the answer. They just said they were
accepting proposals because it created a bidding war. Like if
you already know where you're going to move, but you
also know that your move is something that a lot
of people are going to look at as a desirable thing,
like they want you to move into the location, why

(22:26):
not create a bidding war so that you get the
sweetest deal possible. Right, Yeah, you know you're already going
to go there, but they don't know that. So what
you say is, hey, we're thinking about going someplace. We
haven't made up our mind yet, what are you going
to do to convince us to come to your neck
of the woods. That was the kind of allegation or

(22:47):
accusation or suspicion. Suspicion is probably the best word for it.
A lot of people held that Amazon had already had
in mind where it was going to go, they just
hadn't told anyone because it was a way to wheedle
out the best possible deal. Now, I'm not saying Amazon
actually did stack the deck from the start. However, there
are other people who don't have a problem floating that possibility.

(23:11):
For a long time, it actually seemed like Atlanta, Georgia
was out in the leite Like all the way up
to almost the end, people thought Atlanta was seriously in
the running. There was a time when most folks figured
that Amazon was going to go to Atlanta, to the
point where bookies in Vegas were giving Atlanta the best
odds of being the city to become HQ two. But

(23:34):
that is not where Amazon chose to go. In the end,
Amazon sort of chose to divide and conquer. Now, part
of that might have been because it turned out to
be a lot harder to find a single location that
would have access to fifty thousand or so tech workers
that the company was looking to fill out these offices
over the course of like a decade. There just weren't

(23:56):
very many great single locations that could handle that kind
of demand, and so Amazon instead chose to split the
HQ two into two locations, one in New York City
specifically Long Island City in Queens, and the other in
Arlington County in northern Virginia. As we will see, that's
not exactly how things would turn out. But first let's

(24:20):
take another quick break. We're back. So Amazon announced their
decision in November twenty eighteen. The backlash happened almost instantly. Now,

(24:41):
to be clear, there were plenty of critics who had
lots to say about how Amazon had conducted the whole
search in the first place, and then there were even
more critics about how the various areas that were under
consideration had tried to outdo one another in publicity stunts
and incentive packages that were s with NDA's. But when

(25:02):
Amazon said, yeah, we're actually spliting this up and neither
of the choices include the cities that were thought to
be in the top of the running, folks kind of
flip their lids right Like people were just already assuming
that Atlanta was going to be the location, for example,
or maybe Miami, Florida. But when it turned out not
to be the case, a lot of folks were saying, well,

(25:24):
that makes no sense. You must have had this planned
out from the beginning. Now, it did become clear that
in New York, the city had offered truly massive tax
breaks more than a billion dollars tied to job creation.
And remember this is half of the jobs that the
HQ two was to hold. Right, the original concept was

(25:46):
a single campus that would house around fifty thousand jobs.
Instead we're looking at two campuses, each capable of holding
around twenty five thousand employees. Now, some of the folks
who brokeered the deal really defended it. Like I said,
they argued that they weren't taking money from other projects,
so this was not a net loss in any way,

(26:08):
shape or form for the city. But then, as I mentioned,
critics were saying, well, yeah, it's not like you took
money out of the school budget to give to Amazon,
but you are offering Amazon the chance to occupy a
large part of Long Island City, not paying taxes, and
meanwhile being a burden on taxpayers in the city, And

(26:31):
that was something you couldn't just dismiss. Now, that was
an ongoing issue, largely brought by AOC Alexandria Arcasio Cortes,
who had just recently been elected to the House of
Representatives in New York, and she was making a very
strong and passionate argument against the deal that was being

(26:53):
offered to Amazon. She was not the only one like
there were Republicans who also disagreed with the deal that
was being offered. So, as I mentioned before, this was
something that people across both sides of the aisle had
agreement upon. They just felt that this was an unnecessary
gesture to a company led by someone who again was

(27:14):
frequently in the running to be the richest person in
the world. Things in Virginia were a little bit similar,
but you know, they had promised more than half a
billion dollars in cash grants, again tied to job creation
within the region, but in Virginia, resistance was a bit
more muted. It wasn't nearly as passionate as what was
happening in New York. Also, Virginia had facilities that needed

(27:38):
to be filled. There were these large campuses of buildings
that at one time or another belonged to defense contractors,
but those companies had gone out of business or moved away,
and so there were some pretty significant office space areas
that were vacant, and the idea was that, well, we
need to fill that space up. It's not doing any

(28:00):
good right now. So that became part of kind of
the deal to Amazon. There were more than enough questionable
decisions going around. However, for example, in Virginia, according to
an article I read by Casey Newton in The Verge,
the deal brokers had agreed to make sure that Amazon
would actually receive written notice of any Freedom of Information

(28:21):
Act public requests in advance, so that the company would
have kind of a head start to figure out how
best to protect itself before you know, something potentially nasty
becomes public information. And many of the folks who had
tried to land this deal had, as a matter of course,
done all this, like I said, in secret, so that

(28:44):
truly undermines citizen trust, like when you find out your
leaders are secretly making these deals that have huge benefits
to a company and allowing the company to operate by
a completely different set of rules than the rest of
us do. Like I think most Americans have an understanding
that there are different judicial systems, and those systems depend

(29:06):
heavily upon how influential and wealthy you are, and the
more influential and the more wealthy you are, generally speaking,
the better off you are, and the less repercussions you
will face if you are ever cold in front of
the court. And sometimes you know, laws just don't apply
to you. That's not always the case. If you steal
from other rich people, for example, you can still be

(29:29):
sent to you know, prison for a long time. See
also Sam Beateman freed. But for the most part, if
you're really wealthy and influential, you don't have to worry
as much. Well, that seemed to be the feeling people
were having with these kind of deals with Amazon, that
Amazon was giving this preferential treatment that no one else
in the region would receive, and that rubs people the

(29:50):
wrong way because it's inherently unfair. In New York, politicians
on both sides raised questions and resistance to the plans,
and just a few months after Amazon announced its intention
to move into the Big Apple, the company changed course.
In February twenty nineteen, Amazon said, you know what, on
second thought, we're not going to build an HQ in

(30:11):
Long Island City and they canceled those plans even then,
like there had been some money, time and effort spent
on preparing for this, so that was a waste. But yeah,
Amazon pulled out, and the brokers in New York called
it one of the biggest tragedies they had ever seen.
Now keep in mind they said that in twenty nineteen.
All they needed to do was wait a single year

(30:34):
and then they would see what a real tragedy actually is,
because trust me, the pandemic was way worse than a
big company deciding against moving into town anyway. At that
point in twenty nineteen, Virginia would become the one and
only site for HQ two, or maybe HQ one point five,
because it wasn't as big as HQ was going to be, right,

(30:57):
it was going to be twenty five thousand people, not
fifty thousand. So Amazon would also open some supplemental offices,
one of which would be in New York, one that
would be in Nashville, Tennessee. They just wouldn't be on
a scale of an HQ two. So those financial deals
that Virginia had made, keep in mind, those were tied

(31:19):
to job creation. But then between Amazon's announcement of the
HQ two locations, which ultimately would just become Virginia, and
when HQ two would actually be ready to open, which
was in the summer of twenty twenty three, we got
the pandemic and boom, Suddenly people were not going into
offices at all, even offices that were going to be

(31:42):
State of the art and the result of huge political
and financial deals would remain largely empty. Heck, I mean
the construction work on offices would stop for quite some
time because of lockdown and things of that nature. So
Amazon was not ready to open the Virginia facility until
the summer of twenty twenty three, which, as I'm sure
you've noticed, came after the pandemic hit. And perhaps this

(32:06):
is one of many reasons why Amazon has pushed so
hard for a return to office, because again, the company's
financial incentives in Virginia are tied to job creation within
the region, and Amazon just has not been hitting those numbers.
They have not been on track at all. In fact,

(32:26):
Tao Armas of The Washington Post reported in April of
this year that the number of people employed in the
Virginia office actually shrank last year. The HQ two as
it stands right now, includes a pair of high rise
buildings and has a capacity for around fourteen thousand employees. Now, remember,
the goal ultimately is to hit twenty five thousand, and

(32:49):
originally the idea was to hit twenty five thousand by
the end of the twenty twenties. And while it has
the capacity for fourteen thousand in its existing facilities. Right now,
it's more like eight thousand people work there. That's according
to the most recent estimations I could find. It may
not be exact, it may be more or less, but
somewhere around eight thousand, so slightly more than half capacity.

(33:13):
And again there are issues with the remote work. Plus, Amazon,
like many other tech companies, has held a few rounds
of layoffs in recent years that has impacted the hiring
in Virginia. They've had hiring freezes and layoffs. That's really
part of the problem. That's why the numbers have shrunk.
And some of this is to do with the pandemic.

(33:34):
A lot of it is, in fact, because during lockdown,
a lot of tech companies in particular went into kind
of a hiring extravaganza. But then once things calmed down,
when the pandemic began to ease off a little bit,
there were more hands on deck than we're needed, and
so companies began to cut back again. We've seen this
with Meta, We've seen it with Google, We've seen it

(33:54):
with other places. Elon Musk positively eviscerated staff numbers over
what used to beat Twitter. So in some ways you
could argue Amazon was a little more gentle with their layoffs,
which is a weird way to put it. I don't
think getting laid off is ever really gentle. It stinks.
But Amazon maintains that it still wishes to get to

(34:15):
those twenty five thousand jobs on the books in Virginia. However,
it may take a little bit longer than they initially
anticipated when they were brokering these deals in the late
twenty tens. So according to the company's VP of worldwide
Economic Development, a woman named Holly Sullivan, the plan is
to reach the twenty five thousand job milestone in Virginia

(34:38):
by around twenty thirty eight, so another fourteen years. Ough.
So the pandemic has really changed things, and you do
have companies like Amazon that are passing return to office mandates.
But the reality is that a lot of companies have
found that remote work works. That's a pretty tough pill
to swallow when a lot of your strategy has centered

(35:01):
around the procurement of significant office space. It's tough for
leaders who envisioned their towns turning into like a city
of the future, filled with people who are working and
living and playing in these high tech community centers. Tastefully
landscaped and designed for ultimate pedestrian maneuverability. Instead, we're getting

(35:23):
these large office buildings that are dramatically underutilized, with companies
paying huge bills for rent and electricity and water and stuff,
and meanwhile only a fraction of employees are even going
in there. In some ways, I think it's understandable why
company leaders are pushing back against remote work. They have

(35:44):
heavily invested in some really expensive stuff, and if no
one is going to the office, it's hard to justify
those hefty expenses to your stakeholders, whether they're shareholders or
private investors. And if people can work from remotely, they
might not even live in places like Virginia where leaders

(36:04):
expect you to deliver upon your promise to bring tens
of thousands of jobs to the region. What if the
people working for HQ two actually don't live anywhere close
to Virginia because they don't have to. They can just
log in remotely and work, well, then you're going to
have problems trying to get those cash guarantees that you
are banking on when you brokeer these deals back in
twenty eighteen. So that's a big problem. Now there are

(36:27):
other reasons why some bosses want folks to return to office.
It's not all cynical stuff like justifying the office space
or improving the optics, because you know, no one wants
to have a client visit a practically deserted office floor
that doesn't look good. You want the office to look
busy and vibrant. So there are those reasons, and those

(36:48):
are fairly shallow reasons for requiring employees to come back
to the office. But there are at least some studies
that have shown that for certain types of jobs, collaboration
is the most effective when people are working within close
proximity of one another, particularly with regard to mentoring. So
that's not the case for everybody, but for engineers, for example,

(37:12):
coder's computer scientists that kind of thing, they tend to
benefit from working within proximity to others, particularly if you're
talking about people who are kind of entry level into
the position. They receive more frequent and higher quality feedback
on their work from their peers who happen to be
working within the same office space than if they would

(37:33):
if everyone was working remotely. Like, people still get feedback
on their work when they work remotely, but it doesn't
tend to be as frequent or as high quality. So
there are some use cases where a return to office
has been shown to improve the overall quality of output.
So I don't want to suggest that the only reasons
any leaders ever want folks to go back into an

(37:56):
office are shallow. I don't believe that's the case. I
do think it's something that has to be considered carefully
because there are so many other factors that affect your employees.
For example, cost of living. Right like, there's so many
tech companies that are in the San Francisco area, but
I'm sure a lot of you are aware the price

(38:18):
to live in San Francisco is so high that it's
prohibitive for a lot of people. So remote work gives
the ability to get one of those great salary jobs
but potentially live someplace where it's a much lower cost
of living. Your dollars go much further, So that makes
a lot more sense. Being forced to come back into
the office might mean that you have to relocate. It

(38:41):
may mean that it's honestly unrealistic that you cannot do
it because you can't afford to work at the place
if you have to live there. So like I said,
it's a delicate thing. It's nuanced, and the problem is
that corporate policy as a rule doesn't do well with nuance.
It does broad brush strokes. Anyway, that is what has

(39:03):
happened to Amazon's HQ two so far. It is a
work in progress. Clearly, to hit that goal of twenty
five thousand jobs, Amazon is going to need to build
even more office space in order to accommodate those extra bodies.
They only have room for fourteen thousand. But before they
do that, they still have six thousand empty desks to
deal with at the existing facilities. I think all those

(39:25):
cities that previously had bid upon the honor of having
Amazon come to their town should probably pat themselves on
the back for having dodged a bullet, unless, of course,
people have found out more details about those proposals that
the city had offered to Amazon, then there might be
some more tough questions to answer. But that's a follow

(39:46):
up on the story of Amazon's HQ two. There's obviously
even more than that, and there are a lot of
complicating issues that I didn't really touch on. But I
think that that would require almost a full mini series
to dive into everything from the polytical intrigue to you know,
I didn't even touch on the fact that Amazon has
famously been dealing with a lot of resistance from employees.

(40:10):
A lot of employees in not just office spaces, but
employees in like the warehouses, have been working toward unionization,
and how Amazon has opposed that, sometimes to a degree
that has been questioned as being potentially criminal. All of
that plays a part into these kinds of stories, but
again that would probably require its own mini series to

(40:32):
get into real depth. I just wanted to give kind
of an overview of how things had turned out because
I was just looking back on old Tech Stuff episodes
and I thought, oh, here's something I feel I should
probably update, because when I recorded the first one, New
York was still very much going to be one of
the locations for Amazon's HQ two, and then just a
few months later that was off the table. Well that's

(40:54):
it for this episode. I hope all of you out
there are doing well, and I'll talk to you again
really soon. Tech Stuff is an iHeartRadio production. For more
podcasts from iHeartRadio, visit the iHeartRadio app, Apple Podcasts, or
wherever you listen to your favorite shows.

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Jonathan Strickland

Jonathan Strickland

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