Amazon's Search for HQ2 Proves That Location, Location, Location Is Still What Matters Most
Even if your customers can be anywhere in the world, your company has to be somewhere your employees want to live.
Just last month, Amazon announced its plans to establish a second headquarters in North America. The multi-billion dollar company has already received 238 proposals from cities, states and regions across the continent. How can Amazon possibly choose between so many different locations -- and why does it even matter?
Where will Amazon choose?
When Amazon announced that it would be accepting bids for its "HQ2" location, it didn't provide a ton of requirements for applicants. It really only mentioned three factors:
- A metro area with more than 1 million people
- A business-friendly environment
- A place that's appealing enough to attract and retain top talent
With such loose guidelines -- which are intentionally loose -- it's no surprise 238 proposals came in. Amazon asked people to "think big and creatively" and that's exactly what they did.
As Forbes reporter Kurt Badenhausen notes, "New Jersey offered $7 billion in potential tax credits for Amazon to plant its 'HQ2' in Newark. Kansas City Mayor Sly James bought and reviewed 1,000 products on Amazon to make the case for his city. Tiny Stonecrest, Ga., located outside of Atlanta, voted to rename the city Amazon if the retailer located there."
All of these are intriguing little PR stunts, but Amazon isn't going to be swayed by clever gestures. In a world where most businesses are putting all of their energy and focus into online branding, Amazon -- which is ironically an ecommerce company -- still values physical location in a digital world.
The physical location of a business is important for a variety of reasons, but Amazon has touched on one of the most significant factors: people. If you want to attract and retain top talent, you need a location that attracts people. No offense to Stonecrest, Georgia (which is only half an hour outside of Atlanta), but it's much harder to attract top talent here than in, say, Austin or Chicago.
Then, there's the cost factor. With different tax rates and state-specific economic incentives, Amazon could save billions of dollars by choosing one city over another. Even for a massive company that some value at nearly half a trillion dollars, that's a significant amount of money.
While not quite as important as talent and cost, there's also the branding factor. The location Amazon chooses will say something about the company. The brand will naturally be connected with the city for years to come -- as it will likely become the largest private employer in the area -- and Amazon wants to choose a place it believes in.
So there you have it -- talent, cost, and reputation. Each of these factors plays a big role in where Amazon will choose to plant its HQ2. And in a business world that seems to be prioritizing digital location more than physical location these days, Amazon is proving that the latter still has tremendous value.
How to Find the Right Location for Your Business
Whether you're launching a startup and looking for a place to establish your company, or you already own a business and need to move or expand, finding the right location is an important challenge that you need to face head-on. And while you probably can't ask for proposals and convince cities to woo you with fancy perks, you can do the following to ensure you find the right location.
1. Consider your industry.
What industry are you in? Are there specific cities that are more conducive to your niche? This is becoming less important in a digital world, but it does still matter. For example, if your startup develops software, then you probably want to be somewhere near Silicon Valley.
2. What can you afford?
"Places like New York and San Francisco are great for founders who are looking to raise funds from venture capitalists, but they're also two of the most expensive cities in America," entrepreneur Elliot Tomaeno mentions. "When vetting potential locations, consider everything from the cost of office space to the cost of personal accommodations to the cost of top-talent in the area (and the pay that talent expects)."
If you can't afford a certain location, it doesn't matter how attractive it is. Affordability is a very real issue and one you can't just gloss over.
3. What do you need and what do you want?
You're the one who is going to move your family to a new city (or raise one there). Think about your own needs and wants when choosing a location. If it doesn't mesh with your personality, then you might want to look elsewhere.
Location, Location, Location
In a business world that's overwhelmingly digital, physical location remains important. Amazon has proved this much already in its calculated and extensive search. As a business owner or entrepreneur, make sure you're giving just as much weight to your own site selection.