Amazon's HQ2 Semifinalists

Brian Gongol

Amazon has released its list of the 20 semifinalist cities in the running for its new HQ2. The list is painfully predictable, when ordered by metro area size:

Five quick takeaways:

Lots of smaller communities got duped into showing their cards. In asking for cities to tell Amazon what they'd be willing to do to get "HQ2", cities were also tipping their hands as to what they would do to get lesser Amazon facilities. It's hard to walk back from promises you've already made -- that's a well-known tactic in social engineering. It's self-evident that Amazon wasn't interested in anything less than a top-50 metro, so any smaller communities that offered the sun, moon, and stars is now swimming naked when the tide rolls out.

Houston is the only top-ten metro not on the list. One wonders whether that has anything to do with Hurricane Harvey.

The odds are on something around Washington, DC. When three of the top 20 semifinalist candidates are in one area, you can bet that something about the area has what Amazon wants. In all probability, Amazon is wild about having access to a big workforce of highly-educated people -- and they probably like the idea of being so proximate to the center of government, since a lot of the company's future is going to depend on future regulations -- over everything from sales taxes to import tariffs to delivery via drones and self-driving vehicles.

Don't count out Nashville or Raleigh. If there's one lesson Amazon should have learned from being in Seattle, it's that there's nothing wrong with being a giant fish in your own pond. In Seattle, they implicitly have to compete for talent with Microsoft -- which is probably better than being in Silicon Valley and having to compete with everyone else, but it still means they're not the sole 800-lb. gorilla in town. If they're truly going to employ 50,000 people at this new facility, then Amazon would be by far the biggest employer in or around Raleigh, with access to a whole lot of talent to draw from the surrounding Research Triangle. And if one of the cities at the bottom of the list (in terms of population) thinks it's still in the running, it may be willing to sweeten the deal in ways that voluntarily turn itself into a classic "company town".

Urbanization is irreversible. Every one of the metro areas on the list has grown since 2010, except Pittsburgh. Miracle projects like this aren't going to land in smaller metros (clearly, Des Moines, Omaha/Council Bluffs, and Cedar Rapids weren't anywhere close to being in the running), and they're certainly not going to happen in places even smaller than what we have to offer here in Iowa. While we might have had a shot at the giant $1.6 billion Toyota/Mazda plant that's going to be built in Alabama, there's little reason to believe that we're going to land any giant needle-movers from outside sources -- unless and until we have much bigger cities to offer, and that's not likely to happen in this generation or even probably the next. Meanwhile, those top-50 cities that were real contenders for HQ2 are also probably going to be contenders for smaller (but still really large) projects for which we won't be in serious contention. But remember: Amazon is only a little over 20 years old. My advice to my fellow Iowans: Let's focus on laying the foundation for the next generation of startups to take root here, since it's pretty evident that we're unlikely to land the companies that are already big.

To be clear: I do think we have to put in our bids and show up to play, so to speak, when these rare projects come around. But I think we ought to be cautious about just how much we're willing to offer in order to land them. The offer really has to be measured on a cost/benefit basis -- and we have to consider whether the same incentives might do more good if channeled into homegrown projects rather than used to lure big outsiders.