What Bay Area can learn from Amazon’s failure
The Bay Area and the tech industry have much to learn from Amazon’s New York headquarters debacle, which ended last week when the tech giant backed out of the deal to put its HQ2 in Queens.
The main lesson: When it comes to major developments of this nature, it’s all about relationships. Especially in an era when housing costs are spinning out of control.
As tech firms continue their expansion plans — including Google’s effort to build an urban village that would bring 20,000 jobs to downtown San Jose — it’s imperative that communities and tech firms build healthy relationships that carry reasonable expectations, recognize each other’s needs and work together to resolve differences. It’s hard work that requires patience, communication, compromise and trust, all of which were in short supply in the Long Island negotiations.
Amazon’s first mistake was a whopper.
Acting as if you’re God’s gift to the universe doesn’t work well in the dating world. Nor is it a good way to begin a business relationship.
Amazon spent a year shopping for a partner in the most public way possible, promising up to 50,000 new jobs and $5 billion in investments. Hundreds of jobs-hungry cities from across the United States responded, offering billions in giveaways. Amazon eventually decided to split its HQ2 between New York City and suburban Washington, D.C., after New York offered up more than $3 billion in incentives. New York Gov. Andrew Cuomo joked that he would change his name to “Amazon Cuomo” in order to gain the bid. That didn’t sit well with those living in the Queens neighborhoods who would be negatively impacted by the headquarters.
It led to a backlash from local politicians and labor leaders who were more interested in killing the project than finding a way to make it work.
The contrast between the Amazon-New York deal and San Jose’s agreement with Google couldn’t be sharper.
Google did not seek any incentives for its downtown San Jose megaproject. Nor were any provided by the city. Google is paying full freight for the land and future infrastructure costs.
Google has already agreed to be a full partner in building the city’s long-desired transit village in the Diridon station area. If all continues as planned, the area will be a gathering place for all, with a mixture of retail, entertainment, public spaces and housing that will benefit the entire community. Google has also agreed in principle to a package of community benefits that will include affordable housing.
It’s still possible that the relationship could unravel. Nearly 200 protesters jammed City Hall and eight were arrested when the City Council approved the sale of more than $100 million in land to Google in December. Critics fear the project will push vulnerable people out of the city. It will be important that Google and the City Council continue to engage the community as they try to reach agreement on the specifics of what the community benefits package should include.
As with any relationship, expect disagreements. How issues that arise are approached will make all the difference. Amazon and New York City provided a model for how to make a worthy project turn into a full-blown debacle.