Feb 1 2018

What Denver Should Do When Amazon Doesn’t Choose It For HQ2

Ian Hathaway, my co-author for my next book – Startup Communities 2: The Next Generation – has a great blog post up titled The Amazon Bounce Back.

Colorado, specifically Denver, is in the final 20 cities bidding on Amazon’s HQ2. This open bid process is an absolutely brilliant move by Amazon for a variety of reasons.

  • Enormous branding: Everyone, everywhere, is talking about Amazon. Amazon Amazon Amazon. We love Amazon.
  • Absurd market information: The amount of data about each city that Amazon is getting out of this is incredible.
  • Visibility into what cities are willing to offer: Amazon knows where its future leverage points are when negotiating with individual cities.

While I’m glad Denver approached it the way they did, focusing on strength and resources of the community rather than by throwing dollars at Amazon, our state government still provided plenty of financial incentives.

Amazon HQ2 could qualify for huge Colorado tax incentives. From the article:

“Colorado’s main tax incentive used to lure “Amazon HQ2” could add up to at least $458.9 million rebated back to the Seattle-based retail giant over several years and could top $860 million if the company’s HQ2 campus were to grow fast enough. The figures are based on the pay scale Amazon predicts at HQ2 and the formula for Colorado’s “Job Growth Incentive Tax Credit” program.”

Since I think the chance of Amazon actually choosing Denver is 0.0001%, I have a suggestion for the Colorado state government for when Amazon chooses someplace else.

Give 100% of the benefit (economic and otherwise) you are offering to the Denver-based business community, with special focus on high growth scaleup companies.

Steve Case has a brilliant Memo to the Cities Amazon Passed Over. Julie Lenzer explains how everyone can have a trophy, or how to make the most of NOT getting Amazon HQ2.

In the context of be careful of what you wish for some economists are now weighing in: Amazon HQ2 finalists should refuse tax breaks, say nearly 100 economists, professors. There is only going to be one city that ends up with Amazon’s HQ2. For everyone else, especially Denver, use what you were willing to do to drive real long-term economic growth and health for your city, rather than retreat in defeat.


Also published on Medium.