Amazon’s splashy announcement that it plans to build a second North American headquarters has stirred debate across the nation, and that includes the upper echelon of Seattle’s tech scene.
During a panel about venture capital at the Cascadia Innovation Corridor conference, a meeting in Seattle this week meant to further connections between tech and civic leaders in Seattle and Vancouver, B.C., the topic of Amazon’s big announcement came up.
The panel featured heavyweights in the Seattle and Vancouver tech scenes, with the Seattle side including Tom Alberg, Madrona Venture Group managing director and Amazon board member; Redfin CEO Glenn Kelman; and tech investor Heather Redman, managing partner at Flying Fish Partners and incoming chair of the Seattle Metropolitan Chamber of Commerce.
Kelman called Amazon’s move to open a second headquarters “inevitable,” and he said he was surprised it took this long. Because of Seattle’s explosion as a tech hub, the cost of recruiting and retaining talent has risen sharply, and companies are starting to look at lower cost areas, Kelman said.
At Redfin, for example, the company used to pay engineers fresh out of school about $80,000 annually. That number has spiked to $120,000 to $130,000 thanks to all the competition for talent.
“The main problem is we have become a victim of our own success; the cost of labor has gone through the roof,” Kelman said. “Even if you can pay, the sheer ability to hire that many people in this region and house those people has strained the region. I think for Amazon just to scale it needs another place in North America.”
Redman though, was puzzled by the co-headquarters or “HQ2” portion of the announcement.
“I haven’t heard another company saying ‘I want to have co-equal headquarters,’ and to me that was saying our home is no longer our home, our home is now maybe here, maybe somewhere else,” Redman said.
While she agrees that opening a big office elsewhere makes sense for accessing a new pool of talent, Redman sees the co-headquarters idea as inefficient.
She posited that Amazon’s assertion that the new $5 billion campus will be a “full equal” to the company’s existing operations in its longtime home of Seattle indicates that it is not happy with the business climate here in its hometown.
That goes beyond government policy and rhetoric and extends to those in the community who choose to blame Amazon for all of Seattle’s woes.
“For us, it’s a moment of introspection in terms of understanding what are we communicating out to companies that are homegrown, and are hugely successful in impacting the world,” Redman said. “Are we communicating to them that we want them to be headquartered here forever and we want to support their success and we want to work hand in glove with them? Or are we communicating that are we viewing that success as a mixed bag at best and are somewhat hostile to continued growth.”
Is some hostility from the community enough to make Amazon alter its growth trajectory here in Seattle? Kelman didn’t think so.
He came here from San Francisco, a place that was much more anti-business than Seattle and got taken over by companies like Twitter and Salesforce.
Kelman acknowledged that Seattle has become a less business-friendly city in recent years, and that is something to keep an eye on, but there’s no comparison to the tension in San Francisco between the tech scene and everyone else.
“What I loved about Seattle when I came here is I felt like we were all on same team, and that business people cared about government issues and social issues and that government cared about the business issues,” Kelman said. “So I don’t want to make this a one-dimensional conversation about how we elected a socialist from Capitol Hill to the City Council and somehow hurt Amazon’s feelings, and that’s why they are leaving.”
That was a reference to City Councilmember Kshama Sawant, who last week called Amazon’s HQ2 announcement and request for financial incentives from cities that want to attract its second headquarters “reminiscent of Boeing’s ongoing efforts to ship jobs out of the Seattle area and hold us hostage.”
Madrona’s Alberg, the Amazon board member, pointed out something that will delight those afraid of another Boeing-leaving-town situation and disappoint those who might welcome Amazon’s wandering eye: the retail giant isn’t going anywhere.
“Amazon will keep growing in Seattle,” Alberg said. “It’s not going to stop in the short term, or medium term at least, and look at all these other companies that are growing. Redfin is growing.”
The main issue for Seattle’s continued success as a tech hub, Alberg says, is the need to import talent. Both Kelman and Redman agreed with this sentiment.
Seattle’s cadre of homegrown and out-of-town companies is enough to make any city envious, but the city needs to keep on bringing in more and more people to continue to feed Amazon’s appetite for growth, as well as the other companies in the area.
Getting back to the theme of the conference, Jeff Sinclair, CEO of Vancouver-based event-focused app company Eventbase, suggested that Vancouver make a run at HQ2, and with Amazon’s 2018 decision timeframe, next year’s Cascadia conference would make a great moment to share the news.
The rest of the panel eagerly agreed.
“Let’s win it baby; let’s win it for the Northwest,” Kelman said.