How close was Raleigh to actually landing Amazon’s hyped-up search its second headquarters, or HQ2, just a few years ago?
Closer than North Carolina officials were led to believe.
The general sentiment is that the Triangle always was a long shot, and it never stood a chance against its larger East Coast neighbors that ultimately landed the massive project: New York City and Washington, D.C.
And while the Triangle did indeed lose out, author Brad Stone’s new book about the e-commerce colossus, “Amazon Unbound,” reveals the Triangle initially made a list of three “top-tier” cities that Amazon should pick from.
The detail comes from internal memos Stone obtained while writing “Amazon Unbound,” his second book about Jeff Bezos and his company, which takes in around 40% of online sales in the U.S., according to eMarketer.
Stone’s new book, published Tuesday by Simon & Schuster, covers the last decade at Amazon, a 10-year span in which the company became one of the dominant economic players in the country and Bezos became the world’s wealthiest individual. It’s Stones second book about Amazon.
The search for HQ2, which promised 50,000 new Amazon employees, began in 2017 and stretched throughout the majority of 2018. Hundreds of cities threw their hat in the ring, ready to offer Amazon whatever it wanted.
North Carolina, a state always focused on corporate recruitment, was no exception.
“Amazon whips up the country, really North America, in a frenzy,” with this search, Stone said in a video interview with The News & Observer.
Amazon has not yet responded to a request for comment on the book or the passages about HQ2.
The Triangle region, Charlotte, Hickory and the Triad all sent submissions. Bezos read all 238 final pitches for HQ2, colleagues tell Stone in the book.
But when the list was narrowed down to just 20 cities, only Raleigh remained.
Christopher Chung, head of the Economic Development Partnership of North Carolina, which helps recruit companies like Amazon, said he wasn’t aware that Raleigh initially ranked so high.
But just being among the 20 finalists was “a win for the region,” he said in an interview.
“It sends a signaling effect to companies about where other firms believe the talent to be,” he said.
How HQ2 finalists were picked
At the time of the search, Amazon officials said they would judge the cities on a strict set of criteria, like population, educational attainment rates and transportation. Stone’s book notes that the search team wanted to be objective as possible.
“We genuinely thought we were working on the most important economic development project in a generation and were going to change the lives of hundreds of thousands of people,” an anonymous member of the search team is quoted as saying.
Once 20 finalists were picked, Amazon’s search team hit the road from February until April. The Triangle’s visit came in March, and the trip homed in on downtown Raleigh and Research Triangle Park, The News & Observer previously reported. Amazon, specifically, was most interested in a site called Spring Hill between Dorothea Dix Park and N.C. State University’s Centennial Campus.
After the visits, the search team compiled a six-page report to the “S-Team,” Bezos’ innermost circle of executives at Amazon, Stone writes. The report, written in June 2018, placed the 20 cities into three categories: “top tier,” “hotly debated” and “not viable.”
Austin and Denver were dismissed, Stone writes, because Amazon officials believed local sentiment might be hostile to Amazon.
Atlanta was placed in the “hotly debated” category, though it was hurt by its traffic congestion and a move by Georgia Republicans to strip Delta Air Lines of a tax incentive after the airline cut ties with the National Rifle Association, according to the book. Nashville wasn’t “ready for an investment of our size,” the memo stated.
The “top-tier” locations, according to the memo, were: Chicago, Dallas, New York City, Northern Virginia, Philadelphia and Raleigh.
But the search team narrowed down the list ever further, picking three cities the company should focus on: Chicago, Philadelphia and Raleigh.
“There was a consensus that actually Raleigh was the most impressive smaller city (on the list) by leaps and bounds,” Stone told The N&O, noting that its presentation to Amazon official was well received. “They were impressed by the city’s economic health and population growth, and they saw not just an opportunity today but the future.”
Concerns were raised over the now-repealed House Bill 2, which prohibited local governments from enacting anti-discrimination protections for LGBT people and required people in government facilities to use bathrooms matching the gender on their birth certificates. The N&O previously reported state officials said HB2 gave Amazon “heartburn.”
“But the positives really outweighed the negatives,” Stone said.
The memo, based off months of visits, data crunching and conversations with officials, was only considered as a suggestion however.
The S-Team pored over it, and ultimately came away with its own preferences, according to the book. And that didn’t bode well for Raleigh.
Chicago’s government was often in conflict and credit agencies rated it financially unstable. Philadelphia was not home to enough engineering talent.
And Raleigh, while it “was business-friendly, had a low cost of living and little traffic,” the book reports, was considered too small for Amazon.
Instead, Stone writes, these cities made the S-team’s list of finalists: Dallas, Los Angeles, New York City, Northern Virginia and Nashville.
Raleigh was off the list.
The book reports that initial priorities had changed for HQ2, moving from a hunt for the largest incentives packages to a focus on the largest cities with the best recruitment opportunities.
That change, the book theorizes, came because of Amazon’s souring relationship with its hometown Seattle, which had recently introduced a new payroll tax targeting Amazon. In response, Amazon canceled construction and new hiring plans in Seattle, a move that eventually helped kill the tax.
But the damage was done, and Amazon took the lesson to mean more employees would have to go to HQ2, Stone writes. That led to Amazon deciding it needed to split HQ2 into two cities, which ultimately became New York City and Washington, D.C.
When Amazon ended the suspense Nov. 13, 2018, by announcing Northern Virginia and New York had landed the massive headquarters, North Carolina officials told The N&O that meaningful conversations between the company and the state had stopped in March.
For such a transformative project, one that would permanently alter the Triangle, North Carolina was prepared to pay at least $2.2 billion in incentives for HQ2 — its largest incentives package ever, The N&O previously reported.
Eventually, Amazon pulled out of the New York City agreement after facing community and political backlash. The Arlington, Va., campus is expected to eventually have 25,000 workers, Amazon said. Already, it has 1,600 workers with the company saying this week it hopes to ramp up hiring of 1,900 employees.
“Amazon arguably blundered because they went to New York,” Stone said, “and the same political storm that was hitting them in Seattle, hit them in Queens.”
In North Carolina, the HQ2 search brought together disparate partners onto the same team, Chung said, including Raleigh and Durham’s chambers of commerce and the region’s public and private universities. When Amazon visited, for instance, they took part in a roundtable with the leaders of the Triangle’s local universities.
“It was an interactive conversation by design to show how (the universities) all work together on different talent initiatives,”he said, “ultimately with the goal of showing Amazon how the power of a state’s higher-ed system work together to fulfill your talent pipeline.”
It’s a conversation that several companies have now witnessed.
Now, just a few years after missing HQ2, the Triangle region is now sitting on a string of economic development wins, most notably landing expansions from Google and Apple, which the state will give a record-breaking incentive package worth around $1 billion.
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate