Amazon insiders: HQ2 campaign driven by Bezos’ ego, subsidy envy

Secrecy and broad scope compromised relationship-building

TRD NATIONAL /
Feb.February 04, 2020 10:04 AM
Amazon CEO Jeff Bezos and Tesla CEO Elon Musk with Long Island City (Credit: Getty Images, Wikipedia)

Amazon CEO Jeff Bezos and Tesla CEO Elon Musk with Long Island City (Credit: Getty Images, Wikipedia)

Early in Amazon’s search for a second headquarters location, the company had a list of 25 cities that could support 20,000 new employees. But instead of narrowing it down, CEO Jeff Bezos decided to go big and brash — with unfortunate results, Bloomberg reported Monday.

A year after Amazon’s Valentine’s Day breakup with Long Island City amid opposition by local politicians, Bloomberg’s in-depth examination revealed that much of the HQ2 selection process was driven by envy of incentives handed out to other big companies, as well a misguided belief that the internet retailer would be welcomed anywhere.

“This entire thing was an ego exercise that blew up in Jeff Bezos’s face,” said one of the 12 sources interviewed.

In particular, a $1.3 billion incentive package that Nevada provided to Elon Musk in 2014, after Tesla pitted five Western states against each other in a competition to host a gigantic battery plant, was frequently on Bezos’ mind. So was the $8.7 billion that Amazon’s home state of Washington handed to Boeing in 2013.

Some employees expressed concerns that openly demanding tax breaks — when local governments were often already happy to hand out such incentives — would expose the company to criticism. The dissenters were soon reassigned to other projects.

Besides incentives for HQ2, Amazon reportedly also targeted another $1 billion in tax breaks for other projects, although the company disputes this.

The scope of Amazon’s HQ2 search eventually ballooned to 238 bids from cities across North America, then was trimmed back to 20 finalists which largely overlapped with the original 25-city list, plus a few smaller cities like Indianapolis and Columbus for appearances’ sake. The scale of the search ultimately compromised efforts to build relationships with local stakeholders.

In addition to a politically oblivious approach to negotiations — described within the firm as “F*** you. We’re Amazon” — an emphasis on secrecy further alienated communities.

“I was angry because something so massively important had been decided and no one had bothered to tell local elected officials or anyone else who had a big stake in this,” Long Island City Council member Jimmy Van Bramer said. “We had been excluded from the process.”

Mayor Bill de Blasio and Gov. Andrew Cuomo also came under fire for underestimating opposition to the proposed Amazon campus in Queens, although polls showed a modest majority of New Yorkers supported it.

Amazon has defended its record of working with local governments, noting that it has invested $270 billion in 40 states and created more than 500,000 jobs.

“We partner with hundreds of communities across the country to bring them new jobs and investment,” the company said in a statement. “Like many other companies, we are eligible to access incentive programs created and regulated by cities and states to attract new investors.” [Bloomberg] — Kevin Sun


Related Articles

arrow_forward_ios
Michael Gianaris (Photography by Sasha Maslov)

The Closing: Michael Gianaris

Amazon CEO Jeff Bezos and Rentar Plaza at 66-26 Metropolitan Avenue in Queens (inset) (Credit: Getty Images and Rentar Development)

Amazon signs 300K-sf lease in Middle Village

The Lord & Taylor building at at 424-434 Fifth Avenue and Amazon CEO Jeff Bezos (Credit: Google Maps, Getty Images)

Amazon mulls buy of WeWork’s Lord & Taylor building

It’s a good time to be an industrial broker. Just ask them. (Credit: iStock)

Why all the kids suddenly want to become industrial brokers

The Real Deal interviews TF Cornerstone's Tom Elghanayan at REBNY's 124th annual banquet.

TF Cornerstone exec: How I got over Amazon dumping LIC

A photo illustration of Michael Gianaris and Jeff Bezos (Credit: Getty Images, Wikipedia, iStock)

Gianaris wants to reform NYC tax credit programs that drew Amazon

(Illustration by Neil Webb)

One year later, Amazon Effect still felt in LIC, citywide

27-34 Jackson Avenue and Rockrose's Justin Elghanayan

Rockrose plans a $100M resi tower in LIC

arrow_forward_ios
Loading...