What do Jeff Bezos and his lieutenants look for when they’re in an expansive mood? That’s a key question in the multibillion-dollar contest to attract Amazon’s second headquarters, and the Blue Origin space venture – Bezos’ other multibillion-dollar enterprise – may well offer clues to the answer.
Over the past few years, Blue Origin has gone through not just one, but two high-profile nationwide searches for expansion sites.
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In 2015, the company chose Florida’s Space Coast for a 750,000-square-foot rocket manufacturing facility and an orbital launch pad. This June, Blue Origin tentatively tapped Alabama for a 200,000-square-foot engine factory.
The scale of Amazon’s HQ2 project will be much bigger: An estimated $5 billion in investment and about 50,000 jobs are at stake for the host city – as opposed to $205 million in investment and 330 high-tech jobs for Blue Origin’s Florida operation, and $200 million and 350 jobs for Alabama.
Nevertheless, it’s not unreasonable to think that at least some of the calculations behind Bezos’ HQ2 process will be similar to those that drove Bezos’ Blue Origin process.
Here are some of the strategies you can expect Amazon to follow, based on how Blue Origin’s expansion plans have unfolded:
Keep things quiet
Although Amazon has been open about what it’s looking for and the timetable for getting it, don’t expect the company to be so forthcoming about who’s in and who’s out. Blue Origin kept mum about who was in the running for its New Glenn rocket factory until Bezos made the big reveal at Cape Canaveral, Fla.
Two years later, Blue Origin’s Scott Henderson told Florida business leaders that the field was gradually winnowed down from 12 sites, to seven, to five, and then to three finalists: Georgia, North Carolina and Florida.
Look for community support
Henderson also told the Floridians that support from the business community was key. “Frankly, if not for the efforts of many people in this room … I could very well be giving this speech in Atlanta, or Raleigh,” USA Today quoted him as saying.
Bezos emphasized the same point last year when he discussed the selection process for the BE-4 engine manufacturing facility, which ultimately went to Alabama. “You want to go someplace that’s welcoming, that actually wants the company,” he said.
Leverage existing talent pools
Amazon’s request for pitches made clear that HQ2’s home base should have a huge pool of talent to contribute to filling 50,000 jobs. That meshes with Bezos’ view that a “talented workforce” is the second key factor for Blue Origin site selection. “Those jobs are today are very sophisticated jobs, so that’s part of it,” he said.
In retrospect, it made total sense that Bezos put his rocket factory close to NASA’s prime spaceport, and his engine factory close to the place where NASA builds and tests its own engines.
Does Bezos merely want a Seattle clone for HQ2, or is he looking for something specific when it comes to talent? For example, might he favor the Midwest for distribution expertise? The East Coast for roboticists, AI experts and other researchers? California for proximity to Silicon Valley and Hollywood? Once we get more of a sense of HQ2’s mission, the choice could well look similarly sensible.
Weigh financial incentives
No doubt about it: Tax breaks and other incentives will be a big deal in the decision. In the run-up to the decision on the BE-4 engine factory, Blue Origin executives pleaded with Washington state to give space ventures the same business incentives that were created for you-know-who in the airplane industry. (Lawmakers didn’t follow through.)
Florida state and local governments came through with around $40 million in incentives for the New Glenn factory. Alabama officials delivered what could amount to $50 million, depending on whether Blue Origin actually goes through with the project. (It’s not a done deal unless United Launch Alliance buys the BE-4.)
If you multiply that out on a per-job or per-investment-dollar basis, you get into billions of dollars in potential financial incentives for landing HQ2.
Politics creeps in
Purely political considerations aren’t likely to be cited as the determining factors, but in Blue Origin’s case, it doesn’t hurt to have Sen. Bill Nelson, D-Fla., in its corner for orbital spaceflight – or Sen. Richard Shelby, R-Ala., on its side for engine development. Both those senators exercise outsize influence over space policy.
Similarly, if Amazon’s HQ1 is located in one of the nation’s bluest states, it wouldn’t hurt to have HQ2 in a red-state stronghold. But the calculations could support different strategies: For example, Bezos could favor a Baltimore-Washington-Richmond play to have a base that’s close to the nation’s political center (as well as his second home and his favorite newspaper). Or he could go with a Canadian city to hedge against any unwelcome developments on immigration or trade.
Whether or not Bezos intends it that way, the political implications of the HQ2 choice could say as much about America’s future as it does about Amazon’s.
Update for 2:55 p.m. PT Sept. 11: When it comes to the HQ2 speculation, former White House aide and SpaceX spokesman Phil Larson sides with The New York Times’ analysis of potential sites. “If you look at the RFP requirements, Colorado is positioned well to be the launch pad for Amazon’s growth into the future,” Larson told me in an email. But what else would you expect him to say, considering that he’s now working for the University of Colorado at Boulder?