Amazon’s HQ2 List is Down to 20 Cities: Here Are the Ones Most Likely to Win

It was huge news last fall when Amazon announced it would be building a second company headquarters somewhere in North America. Of the more than 200 cities which applied to be chosen for "Amazon HQ2," the ecommerce giant has now whittled the list down to 20 contenders: Toronto, Columbus, Indianapolis, Chicago, Denver, Nashville, Los Angeles, Dallas, Austin, Boston, New York City, Newark, Pittsburgh, Philadelphia, Montgomery County, Washington (D.C.), Raleigh, Northern Virginia, Atlanta and Miami.

It's an enormous opportunity expected to bring with it as many as 50,000 jobs and tens of billions of dollars' worth of investment, but in reality only a handful of areas are best suited to be chosen by Amazon. That's according to Matt McIlwain, managing director at Madrona Venture Group, the most active and largest VC firm in the Seattle area and an early investor in Amazon. He has been investing in machine learning, AI and intelligent apps lately including several co-invests with Bezos Expeditions, Paul Allen's Vulcan Capital, Amazon and Microsoft. Oh, and one of the managing directors at Madrona sits on the Amazon board. Here are McIlwain's words on which locations are most likely to make the final cut.

Several Centers of Excellence

Overall, I continue to believe that an Eastern time zone location is the most likely location should Amazon pick one location for their HQ2 city. With that in mind, I believe Washington, D.C., Boston and Atlanta are the top three contenders. However, it still seems more logical to me that Amazon will chose to have three to four "Centers of Excellence" cities where they may commit to 10,000 to 15,000 employees per city and pick those cities for certain areas of deep talent and expertise. If that proves to be true, then Toronto, Dallas, Austin and Pittsburgh become prospects for the "Centers of Excellence" cities.

Washington, D.C., Area

Amazon picked three of the 20 finalists in the greater Washington, D.C., area, which has a long history of telecommunications depth, government work, AOL and international talent. There are three major airports in the region and while traffic is troublesome there is good mass transit. There is also the growing importance of government relations and public policy in the technology world. In addition, Amazon Web Services has one of their largest and most frequent testing regions in Northern Virginia along with their Government Cloud efforts. Finally, it doesn't hurt that Jeff Bezos is remodeling a large home in Washington, D.C., and owns The Washington Post.

Boston

This region has very strong technical talent and a positive (from Amazon's perspective) supply and demand imbalance of deep technology (robotics, AI/ML, systems technology) capabilities.  Many of the largest technology companies that once headquartered in Boston (DEC, EMC, Lotus) are gone and even the newest "anchor tenant" GE is potentially getting much smaller. The infrastructure (one airport, older mass transit) is not as good as other cities and the taxes are comparatively high. But, the current governor is pro-business and strategic on trying to attract such a larger and impactful company. Finally, Amazon already has a good presence in robotics and AI/ML in the area.

Atlanta

Atlanta has a very interesting mix of executive talent with companies like Delta Airlines, UPS, Coca Cola and Home Depot and CNN/Turner all being based there. There are substantial strengths in transportation, logistics and technology from these companies and large regional or US headquarters for other corporations (Dallas can make a similar claim). Research institutions like Georgia Tech, Emory and others nearby also help.  Atlanta has a world class airport and strong public transportation although they struggle, like these other finalists, with rush hour traffic. Finally, Georgia has a pro-growth and investment governor and the Atlanta civic leaders have become increasingly strategic on growing their ecosystem. While I wrestled with whether Atlanta or Dallas (and Texas is even more pro-growth with no state income tax), the preference for an Eastern time zone city led me to Atlanta on the short list.

If they go with more than one city, I do think the other four finalist cities above have a strong chance of being included. I just don't see them picking Toronto if it is truly the HQ2. The one out of those that could surprise me as the sole HQ2 is Dallas.

How Dallas Is Trying to Become the Smartest City in the Country

The City of Dallas is well known for Cowboys and corporate headquarters and but historically it is not been known for tech innovation innovation. 

If all goes according to plan, that last part will change.

Dallas is in the middle of a huge effort to become a smart and connected city. The project is currently in its second phase and when it is complete, it will include features such as free public Wi-Fi, a water conservation and leak detection project, and a smart parking pilot, which will let people use a mobile app to find optimal parking spots. One of the major reasons why Dallas's smart city effort is notable is because the city has incorporated startups and entrepreneurs in its plans. 

Dallas Innovation Alliance Executive Director Jennifer Sanders and Trey Bowles, co-founder of the Dallas Entrepreneurship Center (DEC), understand startup and built the smart city effort with the intention of engaging entrepreneurial companies in the coalition of more than 30 public and private sector partners.

Sanders says, "We are building something that didn't exist before - a Living Lab - that is very much a startup in city government. It is essential to have entrepreneurs at the table. They think differently and react in real time. When you need to make quick decisions in an environment with compressed timelines, constricted resources with an uncertain future, it is critical to have small business owners on the team."

Who's on the team

Park Hub and EB Systems are two companies that are on the team and are integral to the success of Phase 2 of the project.

Park Hub is a parking technology company that has a niche expertise in moving vehicles in volume for large-scale events. They have serviced the past six Superbowls in addition to hundreds of concerts and sporting events. Their hardware solution, Prime, makes it easy for attendants to accept payments. Their backend system, Portal, provides data to the operator such as volume counts and payment flow.  

EB Systems uses a three-part app, beacon and cloud platform to collect, secure and parcel data collected by the Living Lab to serve local retailers and restaurants. For example, they are able to show that revenues from the District have increased 17 percent year over year, proving that the infusion of capital, talent and resources in the area creates positive returns.

It wasn't a massive Request For Proposal (RFP) that gave the incentive for Park Hub or EB Systems to participate. The DIA is intentionally creating smaller, more nimble pilot projects. This allows them to test things ahead of time and get results, that then inform a larger RFP process. 

How a smart city stays nimble

1. The Alliance Does the Leg Work 

Being able to plug into a city-approved technology platform is a big win. Smart city projects often require companies to work in the public domain (i.e. they need to access sidewalks, streets, lighting systems and/or pole attachments) in order to access connectivity. Which means they have to navigate a complex web of permits and policies that are different in every city. 

When dealing with smart city technology projects, these bureaucratic processes often hamstring innovation. Dallas wisely circumvented this challenge by building a compressed corridor that gave startups a base foundation on which to build their technology. This ability to test within the Living Lab with full access to wifi and wireless networks promises supersonic progress that is very appealing to smaller companies.

2. Collaboration with Corporations

Sanders says big, global companies are key to the project. She notes, "Powerhouse corporations not only have vast resources, they also have experience deploying technology on a large scale all over the world."

Learning from these experiences as well as learning how to work with multinational corporations can be of great value to smaller companies. In addition, they are able to showcase their technology to decision makers that could be a lead to future business.  

3. Writing a Better RFP

Park Hub and EB Systems are each doing their part in helping to move the bigger pieces forward, avoiding costly delays from poorly written technical or project specs. By contributing their expertise to these smaller parts of the process, they help the city ask smarter questions. In the long run, this creates a better base of knowledge to build a larger public-works project.

Startups and smaller firms have a big role to play in not only the creation of smarter cities. This inspires a ripple effect throughout the community, proving that innovation is contagious. Sanders is hoping that this kind of activity will invite more companies to build solutions in and for the City of Dallas.

The Smarter the City, the Greater the Potential

Think about it, if you're a startup with a new technology, you'll probably choose to invest your time in a city where there is a clear path and open invitation as opposed to one that forces you to wade through a confusing morass of red tape. This is the brilliance of the DIA's approach which other city leaders would be wise to heed.

Farewell to New York

This piece was authored with my associate Stephen Mulvey, who decamped to London after a year in New York City and reflected on his experiences in the Big Apple.

"I still love you New York..." Ryan Adams said it best. Sang it best. Willingly but wearily. Intoned with fondness. But also with the telltale fatigue of a man whose expectations have been firmly reset by a deluge of days in the concrete trenches.

New York City. I love you like my banged-up Uncle Scott with the gambling problem. And Scott, each time you come a-stumblin' back from the brink I'll offer you a seat at the table and a firm embrace, but ...you're not getting my money anymore.

New York - the band whose hits are so overplayed and glassy to fans that to hear them now, to really hear them, you've got to sift through old half cooked b-sides. These are the nooks of the outer Aves and sprawling boroughs that offer the best clues to the city's character. Dive bars and greasy bodegas and sleepless diners...Crumbling near-gentrified hoods freshly spray painted, dripping character.

Me? Well I don't have familial ties. I skated in from afar and just as soon as I'd finished being taken in by the glitzy tat (quite soon it turned out), I wanted to know what was happening below. So this past year when I wasn't busy working I was busy wandering.

And yeah my expectations were reset too. But the shock of a grossly overstuffed subway car, a searingly cold February morning or a $30 bill for what really ought not cost $30 - you numb to these trivialities. You tune in to the little asides. The moments the city peels back and relents. The times it all came together. And it really sometimes did...and mostly didn't...but when it does...

And I love the New Yorkers. I love watching them navigate it. Their trusty weaponry: snow boots, air cons, caffeine and cream cheese. I loved being a part of it in the early AM. Sliding into the bustle and discovering you could keep pace. And maybe we're fools, every one of us. Maybe we should pack our stuff and retreat, return upstate, or the midwest or Ireland, or Asia or any place. Many of us will. But I doubt we'll look back in anger or regret. We'll simply declare that that was then and that was New York.

It was silly frivolity (brunch), profound beauty (sunsets across the east river), cultural deep diving (vegan Ethiopian food anyone?) and the full spectrum of humanity. It was too much. But muchness is the point. Let's get stupid just a little trippy here. We're human and we humans feel the need to matter. Not just individually but as a species, as a thing. So, on our lonely planet we've declared a rock called Manhattan the center and faithfully cultivate upon it a screaming ball of us. And maybe just maybe the noise and the color will carry up and away - away across the universe. And some distant other will hit upon it in some distant time on some device, and look on down and through and know. They'll know and they'll marvel and think, you know...pizza...that's a great idea.

In the Search for Amazon’s Next Headquarters, Everyone Wins

In the race for Amazon's second headquarters, there are no losers.

Although 218 cities failed to make the final cut to host the e-commerce giant's second headquarters this month, analysts suggest the cities themselves may prosper from having thrown their hats into the ring. As Amazon potentially considers setting up new warehouses and distribution centers in the coming years, these cities may resurface--ushering in a bevy of new jobs in the process. To wit, just around 40,000 of the company's total 540,000 global employees work from the company's current Seattle headquarters, with many working from the more than 300 warehouses and shipping centers that Amazon operates across the U.S. 

That point was echoed in a recent statement from Amazon's head of economic development, Holly Sullivan: "Through this process we learned about many new communities across North America that we will consider as locations for future infrastructure investment and job creation." Among other examples, CEO Jeff Bezos' interest was reportedly piqued by a local initiative in Kansas City, Missouri that helps military veterans transition to civilian jobs. Similarly, Montreal's emphasis on attracting foreign talent through the region also drew interest, the New York Times reported this weekend. (Neither of these cities made the top 20.) Denver, meanwhile, provided an elaborate breakdown of the number of students who graduated with technical degrees in Colorado between 2014 and 2016, in its bid that has been made publicly available. 

Amazon too has benefited from the municipal-level data it has collected on infrastructure, talent and local initiatives proffered by the participating cities. During the process that began last September, Amazon has received a flurry of positive press, while bolstering relationships with economic development centers across the country. In the meantime, these centers have shed light on just how far some communities are willing to go to support Amazon: The city of Detroit, for instance, offered to let the company operate for as many as 30 years without paying real estate, personal property and a variety of other local taxes, according to several reports.

Never one to look a gift horse in the mouth, Matt McIlwain is hardly surprised by Amazon's employ of city-specific data. The Seattle-based investor with Madrona Ventures meets frequently with executives at Amazon. He has long suspected that the company's hunt for a second headquarters might have dual goals. "There's a question of cooperativeness with local governments," McIlwain told Inc. in January, referring to the project called HQ2. Now, thanks to the troves of data the company has collected from metro regions across the country, "There's a lot more hope there could be a better long-term relationship with Amazon," McIlwain said.

Others say the data game isn't over, and that the final 20 cities are likely still being squeezed for information. Jeremy Bodenhamer, the founder of a Santa Barbara, California-based logistics company, ShipHawk, who is somewhat familiar with the company's thinking, anticipates that negotiations are underway: "By keeping L.A., New York and D.C. on the list, those places will have a lot of benefits that they can toss around and take back to Atlanta and Austin and get [things like] tax breaks," he said.

Madrona Venture's McIlwain, for his part, is still convinced that Amazon won't pick any one location for its next headquarters. "My provocative point of view is that they don't pick one HQ2 and decide to have 3 or 4 'Centers of Excellence," he added. "I still contend that is the most logical thing for them to do."

Why Atlanta Is Amazon’s Most Likely Pick for Its Second Headquarters

Amazon seems to agree that Atlanta has it going on. And although the city is too busy to hate, it may soon draw envy--and lots of it.

Atlanta has the best odds of being selected to host Amazon's second headquarters, according to new research published this week. The demographic data firm Sperling's BestPlaces based its predictions on factors including cost of living, access to transportation, infrastructure and education, updating its analysis as the e-commerce giant continues to tease new information about the massive project, called 'HQ2.'

"Experts are clearly favoring Atlanta," noted Bert Sperling, the firm's founder and CEO, in a recent statement, nodding to the city's comparatively low cost of living, international air hub and ability to potentially absorb tens of thousands of new workers. While he added that Boston and Chicago are close behind, Amazon may very well make an unexpected pick for their new HQ2. 

It's not surprising that as many as 238 cities submitted formal bids to the e-commerce giant, with some metro areas going so far as to offer elaborate gifts--and, in the case of Stonecrest, Georgia, to re-name themselves 'Amazon.' The company has said that the headquarters will bring more than 50,000 high-paying jobs, and an investment of more than $5 billion. Last week, it unveiled a list of 20 finalist cities that included Atlanta. 

Analysts note that the benefits are likely to extend well beyond the office. "The corporation will influence and trickle all the way down to the local coffee shop and local government," suggested Jeff Holdman, general manager at the New York-based real estate investment firm Intoo, in a phone call with Inc. last week. "Amazon is a shining example of how the economics of this country actually work."

Of course, Atlanta is attractive for a number of reasons. The city is already a known logistics hub; UPS has its headquarters there, for instance. There are also droves of young, technical talent stemming from Atlanta area schools including Emory and Georgia Tech. Matt McIlwain, the managing director at Seattle-based investment firm Madrona Ventures, further suggests that the city's overall attitude is in line with how the company operates: "It has a very can-do, growth-oriented attitude, which aligns with the Amazon culture," he said.

To be sure, no one place has everything that Amazon has said it wants: A steady stream of technical talent, access to mass transit and an international airport, among many other factors outlined last September. As Sperling puts it: "Finding a metropolitan area that meets all [the] criteria is not only difficult, but impossible."

For his part, McIlwain suggests that the company won't choose one city but rather spread its bets across multiple. "I would not be surprised at all if they choose to focus on 10,000 to 15,000 folks per city and pick some centers of excellence," McIllwain tells Inc. 

Small Businesses Brace for $15 Minimum Wage Hike

Starting this week, millions of minimum wage workers will start receiving fatter paychecks.

On Jan. 1, 18 states and 19 cities across the country increased their minimum wages--many of them going up to between $12 and $15 an hour.

The left-leaning think tank Economic Policy Institute estimates that around 4.5 million workers, particularly those in low-wage occupations such as retail, restaurant, or healthcare services stand to benefit. The federal minimum wage has been just $7.25 an hour since 2009. 

Local legislation and voter-approved ballot measures as well as inflated prices of consumer goods have contributed to the wage hikes in places such as Seattle, Minneapolis, and Flagstaff, Arizona. In coastal cities where the cost of living has soared, wage campaigns--such as the Fight for $15 that striking fast food workers began in 2012--have helped build momentum for the increases. (Additional worker-driven wage campaigns are under way in at least 14 cities and three states this year.)

Proponents of the increases--including companies such as Allstate, Aetna, and First Green Bank, all of whom support a $15 minimum wage--argue the extra income may boost economic growth and help address inequality. After all, especially in coastal cities, the cost of living continues to rise faster than worker pay. 

In high-priced Silicon Valley--where even a six-figure salary is now considered low-income, according to the U.S. Department of Housing and Urban Development--both Sunnyvale and Mountain View adopted a $15 minimum wage, effective this week, with overwhelming public support. The response from small business owners in these communities, however, is more complicated.

Regina Chan, who owns Prolific Oven, a family-run cafe and bakery that has been around since 1980, says that the wage hike puts her in a difficult position.The cafe currently has three locations--Palo Alto, Santa Clara, and Sunnyvale--but closed a fourth Fremont location last week in part due to the wage hike.

"I definitely understand where this necessity for this hike is coming from...I pay rent, I know exactly how expensive it is. Of course I want the best for my employees," says Chan, who refers to her employees as "family." "I think it's important they work and live in the same areas, instead of being forced to live outside. So I understand, being a resident."

But, just last weekend, she and her family were discussing the future of Prolific Oven. "We are struggling. A change like this is going to make it hard to keep our doors open," she says. "It seems unfair for the employees to lose money, but the big picture is that I need to keep the doors open because if I don't, everyone gets laid off." 

Chan says she thought about putting a surcharge on everyone's bill, but instead, she decided to tell her customers the truth: that the high costs will possibly put her out of business this year. She wants to hear what they think before she decides what to do next.

Betty Jo Toccoli, president of California Small Business Owner Association, predicts the higher labor costs will force many area business owners to reduce the number of workers. In addition, students and entry-level workers are likely to see fewer job opportunities, she says, because businesses can't afford to pay $15 an hour for employees with little to no job experience. 

Rahul Nair, manager of The Oxford, a modern gastropub and restaurant in Sunnyvale, CA, says he plans to spend the next three months analyzing the nitty gritty details of his business strategy. "We are trying to use information to most effectively use our man hours," he says. An example he gives is designing the menu to use labor more effectively, meaning possibly reducing the number of menu offerings at certain times depending on what the data shows. Still, he says, "I think this is going to add stress on to business, as this increase in minimum wage will create a huge impact on payroll."

In Silicon Valley at least, Nair says the higher wages are likely to worsen a unique challenge that restaurant owners have already been dealing with for years--competing with tech companies who can attract restaurant workers with much higher pay to staff their in-office cafeterias. 

"We can't stand a chance with them," he says.

San Francisco, Berkeley, and New York City are among the cities expected to follow suit in 2018 by bumping their minimum wages to $15.