PITTSBURGH — In his 53 years on this planet and in this city, Bill Peduto has never seen a real period of growth in his hometown. He believes Amazon can change that.
“If they want to really be able to show to the world how their investment can benefit a community in the whole, if they want to be able to raise up the underserved and those that have been given no ladder of opportunity for a new economy, then they would look at Pittsburgh beyond any other city — because we did it,” said Pittsburgh’s mayor during an interview with GeekWire, referring to the Rust Belt city’s transition from steel to tech.
But there’s a catch. To make this happen, Peduto said, the tech giant and Pittsburgh would need to collaborate on a level that Amazon hasn’t achieved with leaders in Seattle. The secretive company’s growth has blindsided its home region, putting his counterparts in Seattle on their heels.
“We want to be able to partner with Amazon to be able to address the issues that have come up in Seattle and be proactive,” Peduto said.
“In Pittsburgh, we like to play offense,” he continued. “We have a great defense, but it’s really the offense that puts the points on the board. We want to address affordable housing before it becomes a crisis. We want to be able to address accessibility and mobility before the development occurs, and we want to be able to show Amazon that, by coming into a region, they can benefit the entire community and not just a single bottom line.”
It’s a compelling narrative — addressing concerns that Amazon’s second headquarters, wherever it ends up, could create the same type of economic disparity that has accompanied the growth of the tech industry in Seattle and Silicon Valley. But is it realistic?
Over the course of our hour-long conversation in Peduto’s office, we pressed Pittsburgh’s mayor on this question, and shared our own first-hand experiences witnessing and reporting on Amazon’s incredible growth in Seattle over the past decade. Through the discussion, we came to understand and appreciate Peduto’s perspective — while offering him a reality check on the scrappy tech company that has become a behemoth in our own backyard.
For now, in this city, the discussion is largely theoretical. Pittsburgh is an underdog among the 20 remaining contenders for Amazon’s HQ2, a $5 billion second headquarters that promises to bring 50,000 jobs to the chosen North American city.
But as the mayor explained, the intensive process of developing the region’s proposal has already been an important exercise that puts Pittsburgh in a better position to fuel new economic growth, with or without Amazon HQ2. Pittsburgh is home to engineering centers for tech giants including Google, Uber and Microsoft, and Peduto told us he’s also interested in making a play to land Apple’s new campus.
In a broader sense, the conversation with the mayor was a window into the challenges facing former industrial cities, and their aspirations to fully realize the benefits of a new economic age, enabled by technology innovation.
Some academics and policy experts caution that the HQ2 winner could end up giving away more to Amazon in tax credits and other financial incentives than it gets back in economic growth. Pittsburgh is preparing to go to court to keep its HQ2 proposal and incentives under wraps for now. Without providing details, Peduto insisted in our interview that the proposal provides incentives in a way that benefits the city as a whole.
Peduto has been instrumental in Pittsburgh’s continued resurgence as a tech hub in recent years, winning the respect of business and technology leaders in the city, despite some recent hiccups in the city’s deal with Uber to test self-driving cars in Pittsburgh. Andrew Moore, dean of the School of Computer Science at Carnegie Mellon University, called Peduto a “rock star.”
Pittsburgh residents we’ve spoken with are mostly enthused about the idea of landing Amazon HQ2, although some express concerns about the potential for further gentrification of existing neighborhoods and rising costs for longtime residents.
The two sides of Amazon
Right or wrong, Amazon HQ2 has become a beacon for Pittsburgh and other cities seeking economic revival. Amazon’s corporate personality in its HQ2 RFP is open and inviting — a company that puts smiles on doorsteps around the world and wants to find “a city that is excited to work with us and where our customers, employees, and the community can all benefit.”
This is not the Amazon we know at home. Until recently, the company and the city of Seattle had largely stopped communicating, making it much more difficult to work together to address the Seattle region’s massive traffic problems, housing affordability crisis, and growing socioeconomic disparity — illustrated by tech workers zipping to the office in electric cars past people sleeping on benches and under bridges.
Both the company and the city have played a part. Jeff Bezos and Amazon have been focused on building their empire. Seattle has had three mayors in less than a year.
Peduto is well aware of the problems in Seattle.
“It’s part of the conversation that’s happening in all 20 cities right now,” he said, explaining that the HQ2 contenders are all asking themselves, “Look at what happened in Seattle. Do you want that to happen in your city?”
The situation may be starting to change. The company is now engaging with the community — putting a homeless shelter in one of its new Seattle buildings, for example, and seeking to reset its relationship with the city’s new leadership. Maybe Amazon is ready for a new chapter.
“I hope so,” Peduto said, making his case for Pittsburgh as a place to turn the page.
“We were Seattle, in 1921,” he said. “We were Seattle, where the disparity between the workers and those that owned and operated the mills was the greatest disparity in American history. We were the Seattle that had living conditions that were not even qualified as basic human needs. We went through that in the 1930s and the 1940s. We organized in the mines and the mills. We not only built this country, we built the middle class. And we went through the hard lessons.”
“For West Coast companies — not just Amazon but in particular Silicon Valley — for a sustainable economic future you have to realize that those things are not externalities. They are essential parts of the economics of your company. Where better to learn than in a place like Pittsburgh?”
But elements of the HQ2 process are still classic Amazon, including asking Pittsburgh and other cities to sign non-disclosure agreements to keep their discussions out of the public eye. We asked Peduto if he’s concerned that Amazon might want to exploit its HQ2 city for its tech talent and land, seeking to control what happens in its new home.
Peduto, a Democrat who has been Pittsburgh’s mayor since 2014, responded by referencing the newspaper that Amazon CEO Jeff Bezos purchased for $250 million in 2013.
“I don’t know Jeff Bezos’ politics,” he said. “But I read The Washington Post almost daily, and I read an opinion that is very much in line with a Western Pennsylvania ethos. Maybe as Democrats we have not given a clear picture of hope, where a lot of our brothers and sisters outside the city have a place in a new economy. When given the option of false hope and nothing, people will gravitate toward false hope. So for much of Western Pennsylvania, you’ll see people moving towards Trump. But when I read those editorials, I can read an underlying theme of valuing the worker, of valuing the environment, of valuing community. And if those ethos are part of Amazon’s leadership, they would find a home in Pittsburgh.”
Skeptical that the Washington Post editorial page actually reflects the Amazon founder’s personal politics, we pointed out that Bezos has been called libertarian by longtime associates, and he’s believed to have chosen the Seattle region as Amazon’s original home in part because Washington state doesn’t have an income tax.
We broke the ensuing silence by jokingly asking the mayor if we’d inadvertently convinced him to withdraw Pittsburgh’s bid for HQ2.
“I would say, obviously, we are looking for somebody who can partner with us,” Peduto said. “We’re not looking for a company to come in that would change what we already have. We’re pretty happy with where this city has been able to get to, but it hasn’t just gotten there. It has been through sacrifice and hard work. We’re not willing to give that up.”
“I would assume that there would be a lot of people in the C-suite at Amazon that would be interested in changing this narrative that you’re telling me about,” he said.
Amazon’s Pittsburgh connections
That may well be true. Jeff Wilke, CEO of Amazon’s Worldwide Consumer business and an influential Amazon leader, is a Pittsburgh native who wears flannel shirts to the office in the fourth quarter of every year in tribute to the people working long hours for the holidays in the company’s fulfillment centers.
Wilke is careful not to publicly display any preference for his hometown, but his roots in manufacturing could make it especially gratifying for him to see HQ2 revitalize a Rust Belt city. Amazon says it will give executives and employees the option of working in either the original or new headquarters city.
Discussing the HQ2 search at the GeekWire Summit last fall, Wilke was both pragmatic and idealistic, making it clear that he wants the company’s second headquarters to benefit both Amazon and its chosen community, wherever it may be. “I hope we choose a city that has focused on STEM education, particularly in computer science in public high schools and middle schools in the area,” Wilke said.
Pittsburgh happens to be an education technology powerhouse making significant investments in STEM (science, technology, engineering and math) education, through programs including the Chevron Center for STEM Education and Career Development at the Carnegie Science Center in Pittsburgh’s North Shore area.
This is part of the region’s long-term effort to address its labor shortage, which could be one of the challenges for Pittsburgh’s HQ2 bid. A report released last week predicted that Western Pennsylvania could face a shortage of 80,000 workers by 2025, part of the ongoing implications from the implosion of the U.S. steel industry. That shortage could be viewed as a drawback for Pittsburgh’s HQ2 bid, but Peduto pitched it as an opportunity.
“It’s a city that has room to grow,” he said. “We were a city of over 700,000. Today we’re a city of over 300,000. We were a county of 1.6 million. Today we’re a county of 1.2 million. What we want to be able to do is retain our culture, retain our affordability and enhance things like workforce development and mobility as a part of making that happen.”
At that scale, an influx of 50,000 Amazon employees could have a huge impact on Pittsburgh’s culture — much more than on Los Angeles, New York, Atlanta, Denver or other large cities also in the running for the project.
We’ve been seeing the cultural differences between Seattle and Pittsburgh first-hand. With Amazon’s intense focus on secrecy, its workers can be careful and secretive even when talking casually about the company to outsiders, concerned about saying something they shouldn’t, exemplifying the notorious “Seattle Freeze.” We’ve only been in Pittsburgh for a few days as part of our month-long GeekWire HQ2 project, but it’s already clear that the people here are consistently warm and welcoming — more Midwest than East Coast in their approach.
The mayor himself exuded these traits, inviting us into his office and taking us straight to his scale model of Pittsburgh. As he talked about the city, he described that corner of the office as one of his favorite places in the world, up there with his mom’s kitchen.
We assumed we’d get a half-hour with Peduto, at most, but when the head of PNC Financial Services called, the mayor invited us take a quick tour of the floor and resume our conversation when he was done with the call.
James Hill, executive assistant to the mayor, regaled us with tales of Pittsburgh leaders past as he showed us down a hall of mayoral portraits, then into an archival room where the city still stores its original book of ordinances, along with more recent bills dating all the way up to the present day. The ornate building, constructed more than a century ago, was in sharp contrast to the high-tech Amazon Spheres that Bezos opened earlier this week.
Back in his office, we asked the mayor, would the cultures of Amazon and Pittsburgh really mesh?
Peduto said he believed they would, pointing to the Amazon’s Pittsburgh connections. Wilke isn’t the only high-ranking Amazon executive with ties to Pittsburgh. Amazon’s chief financial officer, Brian Olsavsky, a native of Hershey, Pa., attended graduate school at Carnegie Mellon University’s Tepper School of Business. Olsavsky’s wife is a Pittsburgh native.
Before we left, we made one last effort to get Peduto to reveal some previously unreported details of Pittsburgh’s Amazon bid. He paused for a moment and smiled. “One part of our proposal that I think will completely stand out is, I never understood why we have a river named Ohio in Pittsburgh,” he said. “If Amazon comes, we will be willing to change the name.”
The Amazon River? It took a second to realize he was joking. It might take a few more days for us Seattleites to get in tune with Pittsburgh’s sense of humor. Fortunately they seem to be patient, and we’ll be here all month.