Get in touch with technology with tech Stuff from how stuff Works dot com. Hey there, and welcome to tech Stuff. I'm your host, Jonathan Strickland. I'm an executive producer with How Stuff Works, and I heart radio and I love all things tech. And one of the really big stories in technology, really in tech business back in that being this year. It just feels like it was a decade ago. It focused on Amazon and its search for a second North America headquarters location, which has finally been decided and announced and talked about, but the search inspired cities across the continent to bid for attention with incentives and some with some pretty silly publicity stunts. At the same time, numerous journalists dove into the mix, speculating on how m Amazon might reshape a city, or, as it turns out, cities that it would pick for the honor of being the second headquarters, and also examining how Amazon has affected Seattle, the location of its main headquarters, and ultimately how Amazon's whole approach would affect cities not just the ones that it picked, but the ones that it named as contenders. So in this episode, I'm going to look at all of these things and talk about how technology can affect us indirectly, and why it's important we know about it. So let's get the basics down first. Let's set the ground here. Jeff Bezos founded Amazon dot Com back in as an online bookstore. The company managed to make it through some very very lean years, and that included the dot Com crisis. The company was not turning a profit when it went into the dot com crisis. The way that Bezos and his company were able to get through this was that Bezos had some very smart people working for him, and they were able to establish some critical financing for the company at various points during its early history, including just before the dot com bubble burst, before that crisis had really hit. So Amazon got an influx of cash when it would need it most, because, as it turned out, the the rug was pulled out from under the technology sector in general and the dot com sector in particular. You could also argue Amazon had positioned itself well by incorporating elements that later analysts would refer to as web two point oh features and I hate that term. It is useful in the sense that you can group together some basic components that were helpful for a lot of site. Remember in the early early days of the Worldwide Web, a lot of the web pages out there were static. There was no interaction. It was just a place you would go. You would read some stuff that would never be a reason to go back to that web page again because it would never change. But Amazon was one of the companies to incorporate stuff that was what people would call web two point oh would have user generated elements like reviews, So an Amazon web page would change over time as people left reviews for items, and you could interact with it. You could improve the performance of Amazon by giving your input, or at least improve the experience of people who were using Amazon to shop for stuff. And of course, the company expanded well beyond books to carry all sorts of different products. Today you can buy pretty much anything on Amazon. But Amazon's first really profitable quarter would not arrive until the end of two thousand one, which is interestingly right at the tail end of the dot com crash. So from when it was founded to two thousand one, the company was losing a lot more money than it was earning in sales, and the dot com crash had done a real number on Amazon's stock price, as it had for the stock price of numerous dot com businesses. So my point that I'm trying to make is that I don't think Amazon's survival was guaranteed by a long shot. You know, you can look at the success of the company today and the company's founder, who spoiler alert, is the richest man in the world. But I don't think that that success was a guarantee back in two thousand one. If it hadn't been for that financing just before the dot com troubles really took off, I think the company might have joined all those other web based businesses that fizzled out in two thousand two thousand one. Now, to be clear, the company wasn't profitable on an annual basis in the wake of two thousand one. It just had that one quarter that was profitable, and then in two thousand two it had another rough year. It had losses every single quarter until the final quarter once again, which might tell you that holiday sales make a huge difference for a company. Now, that profit wasn't offsetting the losses of the previous quarters. So two thousand two as a whole was not profitable. It wasn't really until the middle of two thousand three, and then into two thousand four that the company began to regularly post profits and turn the corner. There were also still a couple of very big dips, big losses. One happened in two thousand twelve, and there were a couple in two thousand fourteen. But if you skip over that and then you look at the final quarter of two thousand seventeen, it's astounding. The difference is night and day. Amazon ranked in an income of one point eight six billion dollars in the fourth quarter of two thousand seventeen. Not over the year, but in that one quarter. That is definitely a princely some Now. According to the online journal Courts, Amazon made as much money in that one final quarter of two thousand seventeen as the company had managed to make in the previous fourteen years combined. And this was helped not just by Amazon's business, which was doing legitimately really well, but also because the United States government had just passed an enormous tax cut that was a huge benefit to Amazon. In fact, that tax cut added nearly eight hundred million dollars to Amazon's earnings all by itself. So yeah, politics matter, guys. This is why we see these big companies lobbying very hard in politics in the United States because they can end up keeping so much money it nearly doubles their revenue for a quarter. All Right, So you've got Amazon, which is a company everyone knows it's it's it's omni present. Nearly one hundred million people in the United States holding Amazon Prime membership, so the company is regularly getting revenue from people, whether they're shopping or not. However, the average Prime member is shopping. Because the average Prime member spends about four hundred dollars on Amazon every year. The company's name is synonymous with online shopping. It's by far the most popular online store by a long shot. And as I said earlier, it's founder Jeff Bezos is, as of this recording, the richest person in the world. He pulled ahead of Microsoft founder Bill Gates a couple of years ago. Bezos is worth around a hundred twelve billion dollars and that blows my mind. Now. By two thousand seventeen, Amazon was really writing high as a company. It employed more than three hundred eighty thousand people worldwide, and about forty thousand of those employees work at Amazon's original headquarters, which are in Seattle. Washington. Amazon has a dominant presence in Seattle. That's putting it lightly. And I'll talk more about that in a little bit, but just to give you an idea of what I mean by a dominant presence, if you look at all of the office space in Seattle, Amazon occupies nearly twenty percent of it. So that means if you were to go office to office in Seattle, one out of every five visits would be to an Amazon office. So that's in ouible. And meanwhile, Amazon is a company is still growing, and the company needed more space to grow into, and it would also make sense to distribute itself somewhat, to locate some offices, perhaps in a different part of the country. Uh. And most people guessed it was going to be on the East Coast, and as they turned out, they were right. But we'll get to that. So on September seven, two thousand seventeen, when Amazon announced it was searching for a second North American headquarters, cities across North America paid attention and accorded to Amazon, the intent was to pick a location and invest up to five billion dollars in building out a new headquarters a new campus, establishing those offices and in addition to this new building, in this new campus, there would be lots of jobs to the tune of fifty thousand high tech position ends. According to Amazon, the estimated average salary for those jobs would be more than a hundred thousand dollars per year. The company also noted that this wouldn't happen instantaneously. It's not like they would build the building and then without fifty thousand job offers. Instead, they said this was a a long term process, that the the ramp up to fifty thousand employees would probably take between ten and fifteen years. But there was this really tempting promise there, so it was totally understandable that numerous city governments and business councils and business organizations jumped at this news. It would mean wealth would flow into the respective community, or at least it would flow into specific industries within that community. It would boost employment, there would be a new call for for new housing, for renovated housing. Uh, that sort of development could encourage other businesses to set up shop. We're talking stores, restaurants, entertainment options, all that other type of stuff that has to go around with growing communities. So, in other words, landing Amazon for your city looked like it would be a huge win, Like it would be knocking over an enormous domino that was set off to to start a chain reaction of prosperity. That was the general reaction. Now, Amazon created a formal request for Proposal, or an RFP in proposal speak. Interested in qualified communities were to respond to this RFP by October nineteenth, two thousand seventeen, so cities had about a month to put together a package to convince Amazon to select their home, their city, their community for this second headquarters. The RFP spelled out some of the requirements that Amazon had in mind for potential h Q two sites and the company stay that had a quote unquote preference for the following. It wanted a place that was a metropolitan area, so it had to be a place that was a city. It could not just be in the middle of a state. There had to be at least a million people living there. They wanted a business friendly environment, which is a very vague phrase. I think it's a nice way of saying, we want a place where they're going to be really good to us. We want incentives, we want tax breaks. You scratch our back will scratch yours that kind of thing. They wanted only locations that were urban or suburban locations with the potential to attract and retain strong technical talent. So in other words, there needed to be a place where they could draw a pool of talent from, and there needed to be places for those people to live. Preferably they would be moving into a city where they're already as a nice, healthy pool of tech talent, but if not, it needed to be a city that people were willing to relocate too. And it was also looking for quote communities that think big and creatively when considering locations and real estate options end quote, which might be code for we want to see some really nice places where we might be able to set up shop, and we don't want to to just point us at that disused car lot that used to be really popular but has been unoccupied for ten years. That kind of thing. In addition, Amazon said that HQ two could be but was not required to be an urban or downtown campus, So it could be located deep in a city or maybe not. It could be similar to layout to Amazon's existing Seattle headquarters, but maybe not. It could be a development prepped site the company said, quote, we want to encourage states, slash provinces and communities to think creatively for viable real estate options while not negatively affecting our preferred timeline end quote. So again, this puts the onus on the responding community rather than Amazon the messages. We have the upper hand here, so don't waste our time by showing us substandard real estate than no one really wants. More specifically, the RFP said that the preference was to have a site that was no more than thirty miles outside the center of population for the community. It needed to be within forty five minutes of an international airport. It needed to be no more than two miles away from the closest major highway. There needed to be an access to mass transit at the site itself, so there needed to be public transportation that could go straight up to wherever the location was. The building requirements included an initial square foot requirement of five hundred thousand plus square feet for Phase one and up to eight million square feet for twenty twenty seven and beyond. I have more to say about this whole process in just a moment, but first let's take a quick break to thank our sponsor. The RFP listed more information for those interested in bringing Amazon to a specific city. But you can easily read the RFP for yourself if you want to. It's available online. It's only eight pages long, and it's not written in weird jargon or anything. It's very simple to understand. So if you want to know the full details, just pop online and search for the Amazon RFP. So in early September, Amazon sends out this RFP and gives the deadline for October nineteenth, seventeen for response, and by that time Amazon had received two hundred thirty eight proposals from cities in the United States and Canada. Even at this early stage, before Amazon had reached that deadline, reporters were gleefully writing about some of the more let's call them creative methods that communities were employing in order to get attention. Now, keep in mind, any city that responded likely had some hefty incentives wrapped up in those responses and lofty promises to boot. So all these cities were trying to outdo themselves. And now get more into that a little bit later. Now I know there was one city in Georgia that's technically part of the metropolitan Atlanta area, but no person who lives in the city of Atlanta would refer to it as being in Atlanta. I'm talking about stone Crest, Georgia. It's technically twenty miles to the east of the city of Atlanta. Now, if you were to travel down Highway by twenty from Atlanta to stone Crest, you'd see development along the entire fire way. It's not like it's a isolated community, but it is not inside the city limits by any stretch of the imagination. Stone Crest, however, was in contention for this consideration, and that made my eyebrows go up as a resident of Atlanta, because I already knew what the requirements were that Amazon was asking for, and I really didn't feel that Stone Crest necessarily met them. And this is just too specifically illustrate what was going on across North America. Not just to call out Stone Crest in particular, but one of the things Amazon was looking for was mass transit. That's a subject about which I feel very strongly. Here in Atlanta, there are busses that go from Atlanta to stone Crest on our metropolitan transit system. It's called MARTA. It takes about an hour to go from the closest Marta station to Stone Crest by bus, and that's a Martestation that's on the outskirts of Atlanta itself. If you're talking about moving from the center of the city, or Heaven help you from the airport, it will take you much, much, much longer than that. Now, my point is, I think a lot of cities that didn't really meet these criteria. We're throwing themselves hard into this arena and making a lot of promises like, oh no, we'll make sure that this is bolstered and it will meet your expectations. And they were offering up all sorts of things like huge tax cuts and other odd incentives in order to get Amazon's attention. So sticking with stone Crest for just a moment. One of those wacky incentives, one of the ones that was treated with more levity, was that the mayor of Stone Crest, Jason Larry, said he would lead a movement to d annex part of Stone Crest in order to rename that that section of the city Amazon Georgia up. And on top of that, he proposed having a special shipping distribution highway and calling it one thousand Jeff Bezos Parkway. So I suppose an appeal to vanity was his strategy. But Stonecrest, Georgia was just one applicant. There were lots of others that included some publicity stunts with their applications. So another one that got a lot of people giggling was from Tucson, Arizona, which shipped a twenty one foot saguaro cactus to Amazon. Bezos didn't accept it. He donated it to the Arizona Sonora Desert Museum and said his company could not accept gifts. In Birmingham, Alabama, the city built three installations that looked like enormous delivery boxes with the Amazon logo on the box. These were in various locations around the city. They were each about a story tall, so like ten twelve feet tall they were. They were huge. The years from Danbury, Connecticut and Washington, d c. Each separately made videos as part of their pitch to Amazon, and incorporated sort of a joke in which they asked Amazon's voice activated assistant Alexa, where the best place would be to locate Amazon's second headquarters, And of course, in those videos, Alexa's response was Danbury for the Connecticut video and Washington, d C. For DC's video. Also, the DC mayor pointed out that Bezos already had a home in the DC area and that he owned the Washington Post, suggesting that it made sense to bring the whole HQ two there after all Bezos already had a presence or In Chicago, Mayor Ram Emmanuel organized a council of business leaders representing some of the largest companies in the United States. In New Jersey, the proposal promised seven billion dollars worth of tax breaks over the course of a twenty year period. That this was to pennant upon a proposed law passing in the state legislature first. Other cities like Philadelphia, San Francisco, which was also partnering with Fremont and Oakland, Toronto, and Vancouver all applied as well. Not all the cities included outlandish overtures, but they were all trying to get noticed. On January two, thousand eighteen, Amazon announced it had narrowed its selection to twenty cities. So those twenty cities were in alphabetical order, Atlanta, Georgia, Austin, Texas, Boston, Massachusetts, Chicago, Illinois, Columbus, Ohio, Dallas, Texas, Denver, Colorado, Indianapolis, Indiana, Los Angeles, California, Miami, Florida, Montgomery County, Maryland, Nashville, Tennessee, Newark, New Jersey, New York City, New York, Northern Virginia. So not a specific city, but like the Arlington area, Philadelphia, Pennsylvania, Pittsburgh, Pennsylvania, Raleigh, North Carolina, Toronto, Canada, and Washington, d C. Over the next several months, Amazon officials visited with these various cities, explored the proposed campus sites. They evaluated the various features like you know, mass transit, highways, airports. They probably talked a lot about proposed tax incentives that would make the deal a little sweeter. I mean, the message was essentially, if we pick your city, we're going to contribute an enormous amount to your local economy. So make this easy for us and help us decide by sweetening the pot. Now, Amazon had said it would pick the new site sometime in ten but did not give a more specific timeline than that. So through much of the cities on that short list were kept waiting and wondering where things stood. That's how things went throughout most of I remember in the summer, there was talk about it getting narrowed down to just a few of those finalists. I think Atlanta and Austin seemed to be holding on for a long time, and then in September. On September, Jeff Bezos spoke at the Economic Club at Washington, d C. He said the company would announce a decision by the end of the year. A month later, in early November, Amazon announced that rather than pick a single location, they were going to pick two. H Q two would get split up between two locations. Now, initially, Amazon did not reveal where those two places would be, but on November that all changed. Amazon announced that New York City, specifically Long Island City, which is in a neighborhood in Queens and not confusingly in the area that most New Yorkers referred to as Long Island. It is on Long Island, but paradoxly not in Long Island, and Arlington County, Virginia, near Crystal City, would be the home of these two new headquarters offices. And here's a funny coincidence that happens to be two of the locations for Amazon's largest East Coast US offices that already exist. Also equally coincidental. I'm sure Jeff Bezos happens to own two really large, really lavish homes, one in uh in Virginia near Crystal City, one near Long Island City in Queens, New York. Probably just a coincidence. Now, some people living in the cities that were passed over felt a sense of relief at this news. They were worried about the impact Amazon might have on their communities. Others felt disappointment, particularly if they were penning a lot of hope that Amazon's agreement would mean the community would build out a lot of improvements to infrastructure, and that the overall community would be able to enjoy those improvements. In other words, things like, yeah, we built out our mass transit system, which is part of the deal we made with Amazon. But on the flip side, everyone can benefit from that. That would have been awesome. So some people were disappointed if their city wasn't picked. There have been several articles, mostly ones that are written from a local perspective, that revealed some of the details about the various proposals that failed to bring Amazon to respective cities. Pittsburgh had reportedly included up to ten billion dollars in financial incentives In their pitch. Maryland was right behind with eight and a half billion dollars, and Newark, New Jersey was, as I said, at seven billion. Dallas, Texas proposed building a new higher learning facility called Amazon University. Atlanta, apart from having this part of Stone Crest renamed Amazon Georgia, had even suggested perhaps Amazon would get an exclusive rail car on Marta trains, which would have infuriated me had it come to pass. I would have hated waiting for a train and realizing that the only car that wasn't completely full of people was exclusively for Amazon employees. Then uh, Atlanta also had suggested, by the way, that there could possibly be an exclusive executive lounge at the Atlanta Airport reserved just for Amazon executives and their guests. Again, this starts to get very elitist, and it tends to get my my rather liberal dander up. Now, how much did New York and Virginia offer? After all, they won the bids, right the Amazon ultimately chose New York in Virginia and there are these other cities that were offering incentives of billions of dollars. What did the two winning sites offer well? For New York. New York offered two point eight billion dollars in incentives, a princely some in itself, obviously, but still much less than some of the other cities. Virginia's promises were way more modest, at five hundred seventy three million dollars. Now, this has led some people to speculate that perhaps Amazon always knew where it wanted to go, that it had those destinations in mind the entire time, it never intended to really seriously consider any other location, and that the only reason the company released an RFP in the first place was because it would hit these locations against each other and they would be in competition with all these other cities that appeared to be legit candidates, and by that Amazon could put pressure on New York and Virginia, where they were already planning on going, and convinced them to cut better and better deals. Yikes. Well, I've got a lot more to say about this decision and what it means, but before we get into that, let's take another quick break to thank our sponsor. The news of Amazon's decision brought with it some other reports that raised a few eyebrows. There was one that is still kind of playing out as I record this. Condos sales in Long Island, New York increased dramatically after the news broke that Amazon was going to locate one of its headquarters facilities in New York City, and some Amazon employees had apparently been shopping around before the announcement had even become public. In other words, people who were in the know that this was going to be the new location started trying to purchase some real estate before the announcement because perhaps they knew the increase in demand was going to drive up costs, so if they could get in before the announcement and buy some condos, then they would be sitting pretty before all the prices jumped up. However, many percent this behavior, in turn began to fan the flames of fear among some New Yorkers that Amazon's arrival is going to bring with it rent hikes and landlords are going to start increasing those rent prices. People who had been living in those places for years would no longer be able to afford to do so. There are similar fears in the Virginia area that's very close to Washington, d C. In fact, you can easily get there on the Metro in d C. Many government staff who work at the Capital or the Pentagon they call northern Virginia home, and that's a concern that they too, are going to get priced out of the neighborhoods they currently live in, and that they'll have to move further and further out, which will increase commute times and have a negative impact on quality of life. That is not an unreasonable fear, because you just have to look at how things are going in Seattle. Now. The situation in Seattle is different because Amazon grew up in Seattle. It was not a multibillion dollar global corporation that then waltzed into Seattle and established itself. It grew slowly gradually, at least until seventeen when growth exploded. So the conditions in Seattle are not necessarily what will happen in New York and Virginia. In fact, I suspect we're actually gonna see dramatic differences, since now we're talking about a behemoth moving into an established neighborhood as opposed to growing up with it. Now. Amazon's growth triggered a series of changes in Seattle. For example, as Amazon bigger, I need to hire more talent including talent with high tech skills. That encouraged people with those skills to move to the Seattle area. People said, well, there's work to be had there. I can get a really good job with Amazon. Let's relocate. Tech firms began to build offices or even relocate to Seattle because that's where all the talent was going. If the talents all starting to gather in a place, then companies are saying, well, in order for us to take advantage of this, rather than have to lure them to move across country, let's set up a shop. Let's set up a presence in Seattle. So they were moving into Seattle as well. In order to take advantage of this growing talent pool, which feeds upon itself, more talent starts to move to Seattle. Amazon was creating opportunities. Those opportunities were attracting workers. Those workers were attracting other companies, and that created more opportunities for workers. This process actually has a name in the industry, it's agglomeration. Since twenty companies in the Fortune five hundred have opened up offices or R and D facilities in Seattle to take advantage of that talent pool that's there. That includes companies like Google, Facebook, and Apple. This is a pretty big positive benefit for people in that city on some level. On top of the forty thousand employees who work at Amazon's HQ one, Seattle has seen the creation of more than fifty thousand high tech jobs at these other companies. That's a pretty darn good development. With those jobs comes seventeen billion dollars in compensation that includes salaries, incentives, and benefits. It also includes an increase in tax revenue. There are a lot of things that you can say are positives because of this, and it's important to remember that Amazon's not wholly or solely responsible for this. Microsoft, which is in Redmond, Washington, it's not that far from Seattle, is also a really big reason why there's so much tech talent in Washington State. So Microsoft's presence is another anchor point for all of that talent, and in fact, Microsoft had been a source of agglomeration a decade before, more than a decade before Amazon was. Seattle has also seen housing prices increased dramatically as Amazon has grown. Gentrification and rent hikes have pushed a lot of people out of the city into suburbs, moving them further and further away from their jobs and the areas they're familiar with. It increases the commute times, it increases the amount of traffic that's in Seattle, and it decreases the quality of life for people who don't happen to hold a sweet gig at Amazon that allows them to afford to still live in the city. This, in turn has contributed to that massive traffic problem. So since Amazon's exponential growth, Seattle has gone from being a city that has typical traffic shoes but not you know, extraordinary ones, to landing in the top ten cities with the worst traffic in the United States. According to one source I read, it ranked as high as number three at one point, although most of the ones I see have it in the lower group of the top ten. On the other hand, Seattle has also seen a huge boom in new businesses, particularly restaurants. People have to eat somewhere, So it's not like everything is awful. I don't want to suggest that it is very complicated. It is dependent upon what you do in Seattle. Seattle has also seen incredible booms in construction. The last time I was in the city, you could not turn around without seeing a sky crane anywhere. In fact, according to wonder report I read, there were more sky cranes in Seattle than there were in San Francisco and New York combined. So there are good and bad things that go along with enormous companies making an impact on communities. And your question then, is what elements here matter the most for me? Is it ultimately good or bad for my own personal experience? And that ends up being a kind of a personal unique thing. I can't answer that for everyone. As for the cities that were left behind, the ones that were not chosen by Amazon, perhaps were never seriously in contention, there still may be a lasting effect of this whole competition, and some of those effects may not be totally beneficial. On the one hand, some of those cities have raised profiles, and some of them poured money into making improvements in infrastructure. That's a good thing, even if it didn't pay off with Amazon picking that city in the short term, because if you live in a city where the streets are filled with potholes, you're probably happy if those potholes get filled, and you might be less interested in the reasoning behind why it was finally done, unless, of course, you're just worried that the inverse structure is going to crumble again, and now that Amazon is not expressing interest, no one's ever gonna bother to fix the darned things. But in the short term, at least, infrastructure improvements are probably something that a lot of people are enjoying. According to Forbes, one of the other effects is that many of the HQ two rejects might see an increase in real estate prices. The leader of the pack is my hometown of Atlanta. Atlanta is expected to have a jump of more than thirteen percent in real estate prices in twenty nineteen, which could be great news if you happen to own a home, then you're looking to sell it for a tidy profit and maybe move somewhere further out of the city where you're still not having to pay the the higher prices. But for a lot of people it could mean increased hardship. They could get priced out of the areas in which they live. That would push them further out from where they work and where they're familiar. It's it's gentrification on a citywide scale, something that has been a problem in other places like San Francisco. San Francisco is notorious at this point for having incredibly expensive housing, to the point where average shmows, normal folks, people who are not high paid tech workers or executives, can't afford to live there anymore. The tech industry has been a really big part of this in many cities, and it's not unique to tech. It's not like there's something about tech that makes it inherently do this to communities. It's that we value tech. We place a high value on the products that the tech industry creates and the services, and that means the people who make the stuff are highly valued and they get paid a lot. So it becomes this kind of self feeding cycle, that agglomeration sort of process. But there's so many companies that need those skill are people who work in those industries will frequently hop between companies. So, in other words, just because you might work for Amazon doesn't mean you plan to work there forever. You might say, well, I'll work here until some other companies, some other tech company in the area gives me a better offer, and I'm gonna go work for them, and then I'll work for them for a while until I get a better offer. That is happening quite a bit in the tech industry doesn't happen in all industries, but in tech it does. So we tend to see concentrations of companies in these specific regions, and we're going to continue to see that happening. It's also another reason why Amazon picked New York and Virginia. Those are two regions that already have pretty healthy tech communities built up around them, and that's just going to increase with Amazon's presence there. It's gonna pull tech away from some communities towards d C in New York. Other cities that were on the HQ two shortlist but weren't selected are also expected to see increases in real estate prices in twenty nineteen. It has led to what Forbes calls the Amazon Effect. Now, in the end, what do I think about this? Largely, I think that Amazon was mostly playing everybody. I really do think that Amazon had their goal, their their ideal destinations picked out well ahead of time. It would not shock me at all to learn that they weren't seriously considering any of the other locations as a possible site for h Q two. Um I think they had always planned on splitting it into two. I think they had always planned on New York in Virginia. I think the fact that Jeff Bezos has homes in both of those places is not a coincidence. I'm not suggesting that Bezos wanted them there just so that they were convenient to his homes, but rather he chose homes in those locations for specific reasons. I think Virginia makes a lot of sense because it's also very close to the political capital of the United States. It's a place where am Amazon can end up having even more direct influence on politicians in order to create policies that are beneficial for the success of the company. Ultimately, Amazon is a publicly traded company, which means ultimately its purpose isn't to sell stuff to people. That's not its reason for existing. Its purpose as a publicly traded company is to increase its stock prices and reward shareholders for their investments, which means try and figure out how to make as much money as you can and hold on to as much of that as you can, and that way you can pay out your investors and they're happy. So it's a very cynical way of looking at things, but it's also realistic anyway. I realized that this doesn't deal directly in technology the way the show typically does, but I think it's a very important case study to look at an important event and to see exactly how things were manipulated, uh, the reactions to it, the impact of those actions, and the political implications. All of that's important because it plays into how tech and society merge together, and that's really the heart of what I try to do on this show. Now, ultimately Amazon's choices may be incredibly beneficial for Virginia and New York. It may be that once you weigh everything, measure for measure, as Shakespeare would say, or the Bible that's where that's phrases originally from, if you measure it all out, you may say, well, ultimately, the good that has been done far outweighs any negative impact. That is certainly a possibility. I'm not trying to suggest that that everybody has been hurt by this decision, but again, as with all things, I recommend using critical thinking to examine it, so you don't just read a headline and think, oh okay, think about things, think about what the implications are, what the impact happens to be. Uh. It will allow you to make better decisions. In your day to day life, probably not decisions as monumental as whether or not to locate a multibillion dollar companies headquarters, and you know, Virginia versus Atlanta, versus Raleigh, North Carolina versus Austin, Texas. But it's certainly an important skill to develop. That's it for this episode. If you have any suggestions for future topics of tech Stuff, whether it's a company technology, maybe that's an event in tech that you would like to know more about. Maybe there's someone I should talk to as have on as either a guest or to interview on the show. Let me know. Send me an email. The addresses tech stuff at how stuff works dot com, or hop on over to our website that's tech Stuff podcast dot com. You'll find other ways to contact the show. You also see a link there to our arrchandise store over at t public dot com slash tech stuff. Every purchase you make goes to help the show, and we greatly appreciate it, and I'll talk to you again really soon for more on this and thousands of other topics. Is that how stuff works dot com

Get in touch with technology with tech Stuff from how stuff Works dot com. Hey there, and welcome to tech Stuff. I'm your host, Jonathan Strickland. I'm an executive producer with How Stuff Works, and I heart radio and I love all things tech. And one of the really big stories in technology, really in tech business back in that being this year. It just feels like it was a decade ago. It focused on Amazon and its search for a second North America headquarters location, which has finally been decided and announced and talked about, but the search inspired cities across the continent to bid for attention with incentives and some with some pretty silly publicity stunts. At the same time, numerous journalists dove into the mix, speculating on how m Amazon might reshape a city, or, as it turns out, cities that it would pick for the honor of being the second headquarters, and also examining how Amazon has affected Seattle, the location of its main headquarters, and ultimately how Amazon's whole approach would affect cities not just the ones that it picked, but the ones that it named as contenders. So in this episode, I'm going to look at all of these things and talk about how technology can affect us indirectly, and why it's important we know about it. So let's get the basics down first. Let's set the ground here. Jeff Bezos founded Amazon dot Com back in as an online bookstore. The company managed to make it through some very very lean years, and that included the dot Com crisis. The company was not turning a profit when it went into the dot com crisis. The way that Bezos and his company were able to get through this was that Bezos had some very smart people working for him, and they were able to establish some critical financing for the company at various points during its early history, including just before the dot com bubble burst, before that crisis had really hit. So Amazon got an influx of cash when it would need it most, because, as it turned out, the the rug was pulled out from under the technology sector in general and the dot com sector in particular. You could also argue Amazon had positioned itself well by incorporating elements that later analysts would refer to as web two point oh features and I hate that term. It is useful in the sense that you can group together some basic components that were helpful for a lot of site. Remember in the early early days of the Worldwide Web, a lot of the web pages out there were static. There was no interaction. It was just a place you would go. You would read some stuff that would never be a reason to go back to that web page again because it would never change. But Amazon was one of the companies to incorporate stuff that was what people would call web two point oh would have user generated elements like reviews, So an Amazon web page would change over time as people left reviews for items, and you could interact with it. You could improve the performance of Amazon by giving your input, or at least improve the experience of people who were using Amazon to shop for stuff. And of course, the company expanded well beyond books to carry all sorts of different products. Today you can buy pretty much anything on Amazon. But Amazon's first really profitable quarter would not arrive until the end of two thousand one, which is interestingly right at the tail end of the dot com crash. So from when it was founded to two thousand one, the company was losing a lot more money than it was earning in sales, and the dot com crash had done a real number on Amazon's stock price, as it had for the stock price of numerous dot com businesses. So my point that I'm trying to make is that I don't think Amazon's survival was guaranteed by a long shot. You know, you can look at the success of the company today and the company's founder, who spoiler alert, is the richest man in the world. But I don't think that that success was a guarantee back in two thousand one. If it hadn't been for that financing just before the dot com troubles really took off, I think the company might have joined all those other web based businesses that fizzled out in two thousand two thousand one. Now, to be clear, the company wasn't profitable on an annual basis in the wake of two thousand one. It just had that one quarter that was profitable, and then in two thousand two it had another rough year. It had losses every single quarter until the final quarter once again, which might tell you that holiday sales make a huge difference for a company. Now, that profit wasn't offsetting the losses of the previous quarters. So two thousand two as a whole was not profitable. It wasn't really until the middle of two thousand three, and then into two thousand four that the company began to regularly post profits and turn the corner. There were also still a couple of very big dips, big losses. One happened in two thousand twelve, and there were a couple in two thousand fourteen. But if you skip over that and then you look at the final quarter of two thousand seventeen, it's astounding. The difference is night and day. Amazon ranked in an income of one point eight six billion dollars in the fourth quarter of two thousand seventeen. Not over the year, but in that one quarter. That is definitely a princely some Now. According to the online journal Courts, Amazon made as much money in that one final quarter of two thousand seventeen as the company had managed to make in the previous fourteen years combined. And this was helped not just by Amazon's business, which was doing legitimately really well, but also because the United States government had just passed an enormous tax cut that was a huge benefit to Amazon. In fact, that tax cut added nearly eight hundred million dollars to Amazon's earnings all by itself. So yeah, politics matter, guys. This is why we see these big companies lobbying very hard in politics in the United States because they can end up keeping so much money it nearly doubles their revenue for a quarter. All Right, So you've got Amazon, which is a company everyone knows it's it's it's omni present. Nearly one hundred million people in the United States holding Amazon Prime membership, so the company is regularly getting revenue from people, whether they're shopping or not. However, the average Prime member is shopping. Because the average Prime member spends about four hundred dollars on Amazon every year. The company's name is synonymous with online shopping. It's by far the most popular online store by a long shot. And as I said earlier, it's founder Jeff Bezos is, as of this recording, the richest person in the world. He pulled ahead of Microsoft founder Bill Gates a couple of years ago. Bezos is worth around a hundred twelve billion dollars and that blows my mind. Now. By two thousand seventeen, Amazon was really writing high as a company. It employed more than three hundred eighty thousand people worldwide, and about forty thousand of those employees work at Amazon's original headquarters, which are in Seattle. Washington. Amazon has a dominant presence in Seattle. That's putting it lightly. And I'll talk more about that in a little bit, but just to give you an idea of what I mean by a dominant presence, if you look at all of the office space in Seattle, Amazon occupies nearly twenty percent of it. So that means if you were to go office to office in Seattle, one out of every five visits would be to an Amazon office. So that's in ouible. And meanwhile, Amazon is a company is still growing, and the company needed more space to grow into, and it would also make sense to distribute itself somewhat, to locate some offices, perhaps in a different part of the country. Uh. And most people guessed it was going to be on the East Coast, and as they turned out, they were right. But we'll get to that. So on September seven, two thousand seventeen, when Amazon announced it was searching for a second North American headquarters, cities across North America paid attention and accorded to Amazon, the intent was to pick a location and invest up to five billion dollars in building out a new headquarters a new campus, establishing those offices and in addition to this new building, in this new campus, there would be lots of jobs to the tune of fifty thousand high tech position ends. According to Amazon, the estimated average salary for those jobs would be more than a hundred thousand dollars per year. The company also noted that this wouldn't happen instantaneously. It's not like they would build the building and then without fifty thousand job offers. Instead, they said this was a a long term process, that the the ramp up to fifty thousand employees would probably take between ten and fifteen years. But there was this really tempting promise there, so it was totally understandable that numerous city governments and business councils and business organizations jumped at this news. It would mean wealth would flow into the respective community, or at least it would flow into specific industries within that community. It would boost employment, there would be a new call for for new housing, for renovated housing. Uh, that sort of development could encourage other businesses to set up shop. We're talking stores, restaurants, entertainment options, all that other type of stuff that has to go around with growing communities. So, in other words, landing Amazon for your city looked like it would be a huge win, Like it would be knocking over an enormous domino that was set off to to start a chain reaction of prosperity. That was the general reaction. Now, Amazon created a formal request for Proposal, or an RFP in proposal speak. Interested in qualified communities were to respond to this RFP by October nineteenth, two thousand seventeen, so cities had about a month to put together a package to convince Amazon to select their home, their city, their community for this second headquarters. The RFP spelled out some of the requirements that Amazon had in mind for potential h Q two sites and the company stay that had a quote unquote preference for the following. It wanted a place that was a metropolitan area, so it had to be a place that was a city. It could not just be in the middle of a state. There had to be at least a million people living there. They wanted a business friendly environment, which is a very vague phrase. I think it's a nice way of saying, we want a place where they're going to be really good to us. We want incentives, we want tax breaks. You scratch our back will scratch yours that kind of thing. They wanted only locations that were urban or suburban locations with the potential to attract and retain strong technical talent. So in other words, there needed to be a place where they could draw a pool of talent from, and there needed to be places for those people to live. Preferably they would be moving into a city where they're already as a nice, healthy pool of tech talent, but if not, it needed to be a city that people were willing to relocate too. And it was also looking for quote communities that think big and creatively when considering locations and real estate options end quote, which might be code for we want to see some really nice places where we might be able to set up shop, and we don't want to to just point us at that disused car lot that used to be really popular but has been unoccupied for ten years. That kind of thing. In addition, Amazon said that HQ two could be but was not required to be an urban or downtown campus, So it could be located deep in a city or maybe not. It could be similar to layout to Amazon's existing Seattle headquarters, but maybe not. It could be a development prepped site the company said, quote, we want to encourage states, slash provinces and communities to think creatively for viable real estate options while not negatively affecting our preferred timeline end quote. So again, this puts the onus on the responding community rather than Amazon the messages. We have the upper hand here, so don't waste our time by showing us substandard real estate than no one really wants. More specifically, the RFP said that the preference was to have a site that was no more than thirty miles outside the center of population for the community. It needed to be within forty five minutes of an international airport. It needed to be no more than two miles away from the closest major highway. There needed to be an access to mass transit at the site itself, so there needed to be public transportation that could go straight up to wherever the location was. The building requirements included an initial square foot requirement of five hundred thousand plus square feet for Phase one and up to eight million square feet for twenty twenty seven and beyond. I have more to say about this whole process in just a moment, but first let's take a quick break to thank our sponsor. The RFP listed more information for those interested in bringing Amazon to a specific city. But you can easily read the RFP for yourself if you want to. It's available online. It's only eight pages long, and it's not written in weird jargon or anything. It's very simple to understand. So if you want to know the full details, just pop online and search for the Amazon RFP. So in early September, Amazon sends out this RFP and gives the deadline for October nineteenth, seventeen for response, and by that time Amazon had received two hundred thirty eight proposals from cities in the United States and Canada. Even at this early stage, before Amazon had reached that deadline, reporters were gleefully writing about some of the more let's call them creative methods that communities were employing in order to get attention. Now, keep in mind, any city that responded likely had some hefty incentives wrapped up in those responses and lofty promises to boot. So all these cities were trying to outdo themselves. And now get more into that a little bit later. Now I know there was one city in Georgia that's technically part of the metropolitan Atlanta area, but no person who lives in the city of Atlanta would refer to it as being in Atlanta. I'm talking about stone Crest, Georgia. It's technically twenty miles to the east of the city of Atlanta. Now, if you were to travel down Highway by twenty from Atlanta to stone Crest, you'd see development along the entire fire way. It's not like it's a isolated community, but it is not inside the city limits by any stretch of the imagination. Stone Crest, however, was in contention for this consideration, and that made my eyebrows go up as a resident of Atlanta, because I already knew what the requirements were that Amazon was asking for, and I really didn't feel that Stone Crest necessarily met them. And this is just too specifically illustrate what was going on across North America. Not just to call out Stone Crest in particular, but one of the things Amazon was looking for was mass transit. That's a subject about which I feel very strongly. Here in Atlanta, there are busses that go from Atlanta to stone Crest on our metropolitan transit system. It's called MARTA. It takes about an hour to go from the closest Marta station to Stone Crest by bus, and that's a Martestation that's on the outskirts of Atlanta itself. If you're talking about moving from the center of the city, or Heaven help you from the airport, it will take you much, much, much longer than that. Now, my point is, I think a lot of cities that didn't really meet these criteria. We're throwing themselves hard into this arena and making a lot of promises like, oh no, we'll make sure that this is bolstered and it will meet your expectations. And they were offering up all sorts of things like huge tax cuts and other odd incentives in order to get Amazon's attention. So sticking with stone Crest for just a moment. One of those wacky incentives, one of the ones that was treated with more levity, was that the mayor of Stone Crest, Jason Larry, said he would lead a movement to d annex part of Stone Crest in order to rename that that section of the city Amazon Georgia up. And on top of that, he proposed having a special shipping distribution highway and calling it one thousand Jeff Bezos Parkway. So I suppose an appeal to vanity was his strategy. But Stonecrest, Georgia was just one applicant. There were lots of others that included some publicity stunts with their applications. So another one that got a lot of people giggling was from Tucson, Arizona, which shipped a twenty one foot saguaro cactus to Amazon. Bezos didn't accept it. He donated it to the Arizona Sonora Desert Museum and said his company could not accept gifts. In Birmingham, Alabama, the city built three installations that looked like enormous delivery boxes with the Amazon logo on the box. These were in various locations around the city. They were each about a story tall, so like ten twelve feet tall they were. They were huge. The years from Danbury, Connecticut and Washington, d c. Each separately made videos as part of their pitch to Amazon, and incorporated sort of a joke in which they asked Amazon's voice activated assistant Alexa, where the best place would be to locate Amazon's second headquarters, And of course, in those videos, Alexa's response was Danbury for the Connecticut video and Washington, d C. For DC's video. Also, the DC mayor pointed out that Bezos already had a home in the DC area and that he owned the Washington Post, suggesting that it made sense to bring the whole HQ two there after all Bezos already had a presence or In Chicago, Mayor Ram Emmanuel organized a council of business leaders representing some of the largest companies in the United States. In New Jersey, the proposal promised seven billion dollars worth of tax breaks over the course of a twenty year period. That this was to pennant upon a proposed law passing in the state legislature first. Other cities like Philadelphia, San Francisco, which was also partnering with Fremont and Oakland, Toronto, and Vancouver all applied as well. Not all the cities included outlandish overtures, but they were all trying to get noticed. On January two, thousand eighteen, Amazon announced it had narrowed its selection to twenty cities. So those twenty cities were in alphabetical order, Atlanta, Georgia, Austin, Texas, Boston, Massachusetts, Chicago, Illinois, Columbus, Ohio, Dallas, Texas, Denver, Colorado, Indianapolis, Indiana, Los Angeles, California, Miami, Florida, Montgomery County, Maryland, Nashville, Tennessee, Newark, New Jersey, New York City, New York, Northern Virginia. So not a specific city, but like the Arlington area, Philadelphia, Pennsylvania, Pittsburgh, Pennsylvania, Raleigh, North Carolina, Toronto, Canada, and Washington, d C. Over the next several months, Amazon officials visited with these various cities, explored the proposed campus sites. They evaluated the various features like you know, mass transit, highways, airports. They probably talked a lot about proposed tax incentives that would make the deal a little sweeter. I mean, the message was essentially, if we pick your city, we're going to contribute an enormous amount to your local economy. So make this easy for us and help us decide by sweetening the pot. Now, Amazon had said it would pick the new site sometime in ten but did not give a more specific timeline than that. So through much of the cities on that short list were kept waiting and wondering where things stood. That's how things went throughout most of I remember in the summer, there was talk about it getting narrowed down to just a few of those finalists. I think Atlanta and Austin seemed to be holding on for a long time, and then in September. On September, Jeff Bezos spoke at the Economic Club at Washington, d C. He said the company would announce a decision by the end of the year. A month later, in early November, Amazon announced that rather than pick a single location, they were going to pick two. H Q two would get split up between two locations. Now, initially, Amazon did not reveal where those two places would be, but on November that all changed. Amazon announced that New York City, specifically Long Island City, which is in a neighborhood in Queens and not confusingly in the area that most New Yorkers referred to as Long Island. It is on Long Island, but paradoxly not in Long Island, and Arlington County, Virginia, near Crystal City, would be the home of these two new headquarters offices. And here's a funny coincidence that happens to be two of the locations for Amazon's largest East Coast US offices that already exist. Also equally coincidental. I'm sure Jeff Bezos happens to own two really large, really lavish homes, one in uh in Virginia near Crystal City, one near Long Island City in Queens, New York. Probably just a coincidence. Now, some people living in the cities that were passed over felt a sense of relief at this news. They were worried about the impact Amazon might have on their communities. Others felt disappointment, particularly if they were penning a lot of hope that Amazon's agreement would mean the community would build out a lot of improvements to infrastructure, and that the overall community would be able to enjoy those improvements. In other words, things like, yeah, we built out our mass transit system, which is part of the deal we made with Amazon. But on the flip side, everyone can benefit from that. That would have been awesome. So some people were disappointed if their city wasn't picked. There have been several articles, mostly ones that are written from a local perspective, that revealed some of the details about the various proposals that failed to bring Amazon to respective cities. Pittsburgh had reportedly included up to ten billion dollars in financial incentives In their pitch. Maryland was right behind with eight and a half billion dollars, and Newark, New Jersey was, as I said, at seven billion. Dallas, Texas proposed building a new higher learning facility called Amazon University. Atlanta, apart from having this part of Stone Crest renamed Amazon Georgia, had even suggested perhaps Amazon would get an exclusive rail car on Marta trains, which would have infuriated me had it come to pass. I would have hated waiting for a train and realizing that the only car that wasn't completely full of people was exclusively for Amazon employees. Then uh, Atlanta also had suggested, by the way, that there could possibly be an exclusive executive lounge at the Atlanta Airport reserved just for Amazon executives and their guests. Again, this starts to get very elitist, and it tends to get my my rather liberal dander up. Now, how much did New York and Virginia offer? After all, they won the bids, right the Amazon ultimately chose New York in Virginia and there are these other cities that were offering incentives of billions of dollars. What did the two winning sites offer well? For New York. New York offered two point eight billion dollars in incentives, a princely some in itself, obviously, but still much less than some of the other cities. Virginia's promises were way more modest, at five hundred seventy three million dollars. Now, this has led some people to speculate that perhaps Amazon always knew where it wanted to go, that it had those destinations in mind the entire time, it never intended to really seriously consider any other location, and that the only reason the company released an RFP in the first place was because it would hit these locations against each other and they would be in competition with all these other cities that appeared to be legit candidates, and by that Amazon could put pressure on New York and Virginia, where they were already planning on going, and convinced them to cut better and better deals. Yikes. Well, I've got a lot more to say about this decision and what it means, but before we get into that, let's take another quick break to thank our sponsor. The news of Amazon's decision brought with it some other reports that raised a few eyebrows. There was one that is still kind of playing out as I record this. Condos sales in Long Island, New York increased dramatically after the news broke that Amazon was going to locate one of its headquarters facilities in New York City, and some Amazon employees had apparently been shopping around before the announcement had even become public. In other words, people who were in the know that this was going to be the new location started trying to purchase some real estate before the announcement because perhaps they knew the increase in demand was going to drive up costs, so if they could get in before the announcement and buy some condos, then they would be sitting pretty before all the prices jumped up. However, many percent this behavior, in turn began to fan the flames of fear among some New Yorkers that Amazon's arrival is going to bring with it rent hikes and landlords are going to start increasing those rent prices. People who had been living in those places for years would no longer be able to afford to do so. There are similar fears in the Virginia area that's very close to Washington, d C. In fact, you can easily get there on the Metro in d C. Many government staff who work at the Capital or the Pentagon they call northern Virginia home, and that's a concern that they too, are going to get priced out of the neighborhoods they currently live in, and that they'll have to move further and further out, which will increase commute times and have a negative impact on quality of life. That is not an unreasonable fear, because you just have to look at how things are going in Seattle. Now. The situation in Seattle is different because Amazon grew up in Seattle. It was not a multibillion dollar global corporation that then waltzed into Seattle and established itself. It grew slowly gradually, at least until seventeen when growth exploded. So the conditions in Seattle are not necessarily what will happen in New York and Virginia. In fact, I suspect we're actually gonna see dramatic differences, since now we're talking about a behemoth moving into an established neighborhood as opposed to growing up with it. Now. Amazon's growth triggered a series of changes in Seattle. For example, as Amazon bigger, I need to hire more talent including talent with high tech skills. That encouraged people with those skills to move to the Seattle area. People said, well, there's work to be had there. I can get a really good job with Amazon. Let's relocate. Tech firms began to build offices or even relocate to Seattle because that's where all the talent was going. If the talents all starting to gather in a place, then companies are saying, well, in order for us to take advantage of this, rather than have to lure them to move across country, let's set up a shop. Let's set up a presence in Seattle. So they were moving into Seattle as well. In order to take advantage of this growing talent pool, which feeds upon itself, more talent starts to move to Seattle. Amazon was creating opportunities. Those opportunities were attracting workers. Those workers were attracting other companies, and that created more opportunities for workers. This process actually has a name in the industry, it's agglomeration. Since twenty companies in the Fortune five hundred have opened up offices or R and D facilities in Seattle to take advantage of that talent pool that's there. That includes companies like Google, Facebook, and Apple. This is a pretty big positive benefit for people in that city on some level. On top of the forty thousand employees who work at Amazon's HQ one, Seattle has seen the creation of more than fifty thousand high tech jobs at these other companies. That's a pretty darn good development. With those jobs comes seventeen billion dollars in compensation that includes salaries, incentives, and benefits. It also includes an increase in tax revenue. There are a lot of things that you can say are positives because of this, and it's important to remember that Amazon's not wholly or solely responsible for this. Microsoft, which is in Redmond, Washington, it's not that far from Seattle, is also a really big reason why there's so much tech talent in Washington State. So Microsoft's presence is another anchor point for all of that talent, and in fact, Microsoft had been a source of agglomeration a decade before, more than a decade before Amazon was. Seattle has also seen housing prices increased dramatically as Amazon has grown. Gentrification and rent hikes have pushed a lot of people out of the city into suburbs, moving them further and further away from their jobs and the areas they're familiar with. It increases the commute times, it increases the amount of traffic that's in Seattle, and it decreases the quality of life for people who don't happen to hold a sweet gig at Amazon that allows them to afford to still live in the city. This, in turn has contributed to that massive traffic problem. So since Amazon's exponential growth, Seattle has gone from being a city that has typical traffic shoes but not you know, extraordinary ones, to landing in the top ten cities with the worst traffic in the United States. According to one source I read, it ranked as high as number three at one point, although most of the ones I see have it in the lower group of the top ten. On the other hand, Seattle has also seen a huge boom in new businesses, particularly restaurants. People have to eat somewhere, So it's not like everything is awful. I don't want to suggest that it is very complicated. It is dependent upon what you do in Seattle. Seattle has also seen incredible booms in construction. The last time I was in the city, you could not turn around without seeing a sky crane anywhere. In fact, according to wonder report I read, there were more sky cranes in Seattle than there were in San Francisco and New York combined. So there are good and bad things that go along with enormous companies making an impact on communities. And your question then, is what elements here matter the most for me? Is it ultimately good or bad for my own personal experience? And that ends up being a kind of a personal unique thing. I can't answer that for everyone. As for the cities that were left behind, the ones that were not chosen by Amazon, perhaps were never seriously in contention, there still may be a lasting effect of this whole competition, and some of those effects may not be totally beneficial. On the one hand, some of those cities have raised profiles, and some of them poured money into making improvements in infrastructure. That's a good thing, even if it didn't pay off with Amazon picking that city in the short term, because if you live in a city where the streets are filled with potholes, you're probably happy if those potholes get filled, and you might be less interested in the reasoning behind why it was finally done, unless, of course, you're just worried that the inverse structure is going to crumble again, and now that Amazon is not expressing interest, no one's ever gonna bother to fix the darned things. But in the short term, at least, infrastructure improvements are probably something that a lot of people are enjoying. According to Forbes, one of the other effects is that many of the HQ two rejects might see an increase in real estate prices. The leader of the pack is my hometown of Atlanta. Atlanta is expected to have a jump of more than thirteen percent in real estate prices in twenty nineteen, which could be great news if you happen to own a home, then you're looking to sell it for a tidy profit and maybe move somewhere further out of the city where you're still not having to pay the the higher prices. But for a lot of people it could mean increased hardship. They could get priced out of the areas in which they live. That would push them further out from where they work and where they're familiar. It's it's gentrification on a citywide scale, something that has been a problem in other places like San Francisco. San Francisco is notorious at this point for having incredibly expensive housing, to the point where average shmows, normal folks, people who are not high paid tech workers or executives, can't afford to live there anymore. The tech industry has been a really big part of this in many cities, and it's not unique to tech. It's not like there's something about tech that makes it inherently do this to communities. It's that we value tech. We place a high value on the products that the tech industry creates and the services, and that means the people who make the stuff are highly valued and they get paid a lot. So it becomes this kind of self feeding cycle, that agglomeration sort of process. But there's so many companies that need those skill are people who work in those industries will frequently hop between companies. So, in other words, just because you might work for Amazon doesn't mean you plan to work there forever. You might say, well, I'll work here until some other companies, some other tech company in the area gives me a better offer, and I'm gonna go work for them, and then I'll work for them for a while until I get a better offer. That is happening quite a bit in the tech industry doesn't happen in all industries, but in tech it does. So we tend to see concentrations of companies in these specific regions, and we're going to continue to see that happening. It's also another reason why Amazon picked New York and Virginia. Those are two regions that already have pretty healthy tech communities built up around them, and that's just going to increase with Amazon's presence there. It's gonna pull tech away from some communities towards d C in New York. Other cities that were on the HQ two shortlist but weren't selected are also expected to see increases in real estate prices in twenty nineteen. It has led to what Forbes calls the Amazon Effect. Now, in the end, what do I think about this? Largely, I think that Amazon was mostly playing everybody. I really do think that Amazon had their goal, their their ideal destinations picked out well ahead of time. It would not shock me at all to learn that they weren't seriously considering any of the other locations as a possible site for h Q two. Um I think they had always planned on splitting it into two. I think they had always planned on New York in Virginia. I think the fact that Jeff Bezos has homes in both of those places is not a coincidence. I'm not suggesting that Bezos wanted them there just so that they were convenient to his homes, but rather he chose homes in those locations for specific reasons. I think Virginia makes a lot of sense because it's also very close to the political capital of the United States. It's a place where am Amazon can end up having even more direct influence on politicians in order to create policies that are beneficial for the success of the company. Ultimately, Amazon is a publicly traded company, which means ultimately its purpose isn't to sell stuff to people. That's not its reason for existing. Its purpose as a publicly traded company is to increase its stock prices and reward shareholders for their investments, which means try and figure out how to make as much money as you can and hold on to as much of that as you can, and that way you can pay out your investors and they're happy. So it's a very cynical way of looking at things, but it's also realistic anyway. I realized that this doesn't deal directly in technology the way the show typically does, but I think it's a very important case study to look at an important event and to see exactly how things were manipulated, uh, the reactions to it, the impact of those actions, and the political implications. All of that's important because it plays into how tech and society merge together, and that's really the heart of what I try to do on this show. Now, ultimately Amazon's choices may be incredibly beneficial for Virginia and New York. It may be that once you weigh everything, measure for measure, as Shakespeare would say, or the Bible that's where that's phrases originally from, if you measure it all out, you may say, well, ultimately, the good that has been done far outweighs any negative impact. That is certainly a possibility. I'm not trying to suggest that that everybody has been hurt by this decision, but again, as with all things, I recommend using critical thinking to examine it, so you don't just read a headline and think, oh okay, think about things, think about what the implications are, what the impact happens to be. Uh. It will allow you to make better decisions. In your day to day life, probably not decisions as monumental as whether or not to locate a multibillion dollar companies headquarters, and you know, Virginia versus Atlanta, versus Raleigh, North Carolina versus Austin, Texas. But it's certainly an important skill to develop. That's it for this episode. If you have any suggestions for future topics of tech Stuff, whether it's a company technology, maybe that's an event in tech that you would like to know more about. Maybe there's someone I should talk to as have on as either a guest or to interview on the show. Let me know. Send me an email. The addresses tech stuff at how stuff works dot com, or hop on over to our website that's tech Stuff podcast dot com. You'll find other ways to contact the show. You also see a link there to our arrchandise store over at t public dot com slash tech stuff. Every purchase you make goes to help the show, and we greatly appreciate it, and I'll talk to you again really soon for more on this and thousands of other topics. Is that how stuff works dot com