
The frenetic race to build Detroit's Amazon HQ2 bid - rmason
http://www.crainsdetroit.com/article/20180114/news03/650046/the-frenetic-race-to-build-detroits-amazon-bid
======
mabbo
Preface with the usual "I just work here and don't speak for the company", but
from my point of view it always just comes down to numbers with Amazon. Make
the presentation as pretty or splashy as you want but you're only doing that
for your own sake, not Amazon's. You could have sent a handwritten letter with
the same information.

Somewhere in the company will be a database. In it, there will be one column
for every property of a city, one column for each property of the bid received
(tax breaks included of course). I'll bet there will be hundreds of columns.
And then there will be a very large formula that takes every property, assigns
it a value to Amazon over the next 25 years, and adds it all up.

It's probably quite a complex formula. I have a friend with a master's degree
in computational geometry who used to work on fulfillment center placement
optimization. Lots of software dedicated to that I hear. Amazon is a data-
driven company- it would never leave such problems to human intuition.

Once the data entry was done, and probably a few dozen formula updates were
made as new factors were realized and added in, the decision would have been
made automatically. The only problem left would be announcing it at the best
time to further profit Amazon- another factor the formula probably spit out.

My guess is that we'll know when Q4 results are published. I'd love it to be
my home city of Toronto, but I think the lack of tax breaks offered may push
it down in the formula's ranking.

~~~
ghaff
I agree as a matter of general principle. But these kind of decisions are hard
to completely automate. Even if the final output is a number, you need to make
judgement calls that go into the number. What's the value to Amazon to the
goodness and population of schools within X distance vs. walkability vs. tax
breaks? And then, what are the real deal-breakers?

You can certainly use numbers to cull the field. But you probably end up with
a few cities that all look good on paper and on the numbers but have different
strengths and weaknesses that are more qualitative.

~~~
pqh
Correct me if I'm wrong, please. Doesn't any sufficiently-complex non-linear
optimization problem degenerate into heuristic trial and error? There's a
progression of better and better solutions. With the unpredictability of the
real world, and the low number of trials they'll get (this is their second
HQ), I wonder greatly what they've got going on.

~~~
ghaff
I studied some of this stuff at one point and have been involved in
evaluations of different system architectures and the like as an analyst. You
can assign weights, impute values to qualitative variables, define "must
haves," etc. to create a somewhat quantitative analytical framework. This has
the virtue of at least being consistent and ostensibly objective.

But once you get beyond the tax breaks and the cost of living and whatever
decisions Amazon has probably already made about geographical dispersion, it
will probably come down to Bezos making a call. This isn't siting a new
Marriott hotel or a distribution center.

------
curiouscat321
As somebody who grew up in the Metro Detroit area and moved away, I’m
unbelievably impressed by the bid Detroit put together.

The entire region is so completely disfunctional. The idea of getting the
neighboring counties (which have the money, education, and talent) to work
together was unheard of.

I do think the Metro Detroit area is consistently understated as a potential
tech hub. It has one of the largest cohorts of STEM people in the nation
(albeit in more traditional engineering roles).

I don’t think the tax breaks will be sufficient enough because Michigan only
seems to care about manufacturing plants. I hope Detroit gets the HQ2 bid or
at least can use this process to start getting good tech jobs in the area.

I know I (and many of my hometown friends) would move back if the job market
was closer to Seattle.

~~~
rmason
I can't speak for other states. But I do know there is an incredibly large
number of people raised in Michigan that would move back in a heartbeat if the
opportunity was there.

In fact Detroit has an annual event where they invite back successful people
who were born in the city and try to woo them to return or to invest in the
city.

[http://www.crainsdetroit.com/article/20170914/news/639081/de...](http://www.crainsdetroit.com/article/20170914/news/639081/detroit-
train-station-gets-a-homecoming)

------
rmason
The smartest thing in my opinion the mayor of Detroit did was to turn
everything about the bid over to Dan Gilbert. He's received a ton of criticism
for it.

But using the talents of a billionaire entrepreneur gives Detroit a leg up in
my opinion. Every other city's pitch was built inside city hall.

Detroit may not get the winning bid but no one is going to be able to say they
didn't try harder than everyone else.

~~~
curiouscat321
I actually think everybody has been quite happy with Gilbert leading the bid.

Dan Gilbert is basically the entirely driving force behind the large growth
happening in Detroit.

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emodendroket
It's kind of a sad spectacle to see mayors across the country abase themselves
in the hopes of currying favor with Amazon.

------
agibsonccc
I'm usually a critic of my home state for a variety of reasons but I have to
say it's been impressive to watch them change over time.

Whatever folks think of Ford and Quicken Loans as companies, it's great to see
the public sector being open to new ways of doing things like this (within
reason of course)

I still hate the weather among other things there, so I won't likely be
returning but it's heartening to see this change taking place! Even if they
don't get the bid, I hope they continue this kind of thinking.

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gedy
The irony is Amazon is helping put a lot of small retail out of business, and
that should be of more concern to these mayors - there's way more local
employment in retail than this HQ can offer.

~~~
wickawic
True, but the HQ will go somewhere, right? In fact retail will probably do
pretty well near wherever the campus is built.

~~~
toomuchtodo
If it’s going to go somewhere, why compete to give away tax breaks Amazon
doesn’t need? It’s on par with competing to get a sports stadium.

~~~
nordsieck
Amazon is a giant vacuum cleaner that sucks up talented software developers
from all over the country and spits them out into the local ecosystem after 2
years. That seems like a pretty valuable thing to have.

~~~
toomuchtodo
You’re assuming having a concentration of highly paid workers is a net
positive, yet it’s worked out terribly for tech hubs. It drives up the cost of
housing and strains infrastructure, with marginal tax base benefits.

~~~
wickawic
It is difficult to evaluate. In some sense a city is either growing or
shrinking, and shrinking very negatively impacts municipalities because it is
hard to 'scale down' the local bureaucracy. On the other hand too much growth
makes the city less desireable for current residents--lots of new
infrastructure gets built but most of it isn't for current residents. (Or in
the case of SF no infrastructure gets built and the housing market becomes a
knife fight in a phone booth.)

In the long term I think that density is too valuable to large cities, and
passing up an opportunity to increase density is short-sighted.

------
lsiq
Wonder why PaddyPower does not have Detroit even on their (long)list:
[https://www.goo.gl/p55Loa](https://www.goo.gl/p55Loa)

~~~
Apocryphon
Seems like they have a flawed understanding of what's going on. Silicon
Valley, or even NorCal in general, should be the last place for an HQ2.

~~~
ghaff
That seems an odd list. I would probably have named San Jose as one of the
least likely places among the cities submitting bids.

As for Boston, Amazon is admittedly already adding a sizable facility in the
Seaport but costs for an HQ2 and cost of living in the city would seem to
disqualify.

Personally, I'd put my money on a major city that isn't a current tech hub but
could become more of one.

~~~
joejerryronnie
Forget about what the RFP ranks as important criteria, the only thing that
really matters is Amazon's ability to hire 50,000 high-end tech industry
workers (from new grads to seasoned tech executives). There is only one
location in the world that can supply this kind of tech talent without
draining the rest of the ecosystem and that's Silicon Valley (not including SF
or Oakland here).

Google is already planning it's future growth in downtown San Jose (8 million
square foot "Google Village"), Adobe is expanding it's downtown SJ presence
with a fourth tower, Apple and Microsoft are planning new campuses in north
SJ, and Amazon is already expanding it's South Bay presence significantly. As
more companies look to expand to urban, transit oriented sites, Downtown SJ
will emerge as a premier location for tech company HQs.

~~~
Apocryphon
The Bay Area is already incredibly glutted, and is the site of most of
Amazon's competitors. They already have a presence there that can be gradually
expanded upon. There is no reason to build an entire second headquarters there
unless they wanted to bring about even further hatred and rancor on the part
of those who detest growing CoL. They would only fan the flames of anti-tech
discontent. It also makes the entire HQ2 contest completely pointless, as the
mayor of San Jose has already rejected it to begin with:
[https://www.cnbc.com/video/2017/10/05/san-jose-mayor-no-
swee...](https://www.cnbc.com/video/2017/10/05/san-jose-mayor-no-sweetheart-
deal-for-amazons-hq2.html)

~~~
joejerryronnie
Yes, the CoL (housing in particular) is a significant issue for the entire Bay
Area but that hasn't stopped the rest of the industry from continued local
expansion. I would argue for a strong regional authority to tackle this issue
but that's another discussion. Also, San Jose's mayor has not rejected the
Amazon HQ2 proposal, only the notion of providing major financial/tax
incentives to any corporation as he feels the civic benefit does not outweigh
the cost.

~~~
Apocryphon
Expansion is one thing, bringing in tens of thousands of employees with a
whole new headquarters is another. Traffic alone it would be nightmarish. And
the contest format would be a terrible charade; why give hope to non-tech hub
communities at all if your plan was to flock to Silicon Valley like everyone
else?

~~~
ghaff
Yeah, if you've already reached the IMO very misguided conclusion that the
only rational place to site a large tech HQ/HQ2 is the Bay area, why on earth
would you go through the motions of this whole process? Hope that some Bay
Area city is going to be so desperate for you to move in that they'll shower
you with incentives? Possible but unlikely. And it's not like some previously
unknown pool of engineering and other professional talent is going to suddenly
spring up somewhere.

I'm often pretty cynical (and Amazon will certainly be looking for sweetheart
deals) but this seems a legitimate effort to find a location that may not be
an obvious choice.

------
bluedino
What does Detroit really have to offer?

If Amazon did setup shop there, it would be a blow to rust belt companies as
they start a salary war trying to their keep talent.

~~~
Apocryphon
As talent enters an area, couldn't it lead to other tech companies following,
then VCs, thus creating a new ecosystem and industry hub?

~~~
vnchr
Google and Microsoft already have footprints downtown and in the suburbs.
Detroit’s startup community needs maturity, and this will only help.

~~~
curiouscat321
Those are sales offices with little if any engineering presence.

------
mozumder
When is the final decision expected to be announced?

------
electricslpnsld
Why doesn't Amazon just buy up a block of NYC like all the other big tech
companies?

~~~
gumby
Expense. Amazon is cheap. It’s one of their virtues.

~~~
smt88
Won't any city be cheap because the city is subsidizing the deal? Isn't the
whole point of these theatrics to get Amazon a great deal anywhere?

~~~
gumby
Indeed. However the question I was responding to was “why not NYC?”

------
tomji
Who would want to work in Detroit? Employees won’t want to work late.

~~~
domparise
Why do you say this?

~~~
smt88
It's a reference to the perception of Detroit as a dangerous place to be after
dark.

~~~
rmason
That is outdated information. Downtown is fine after dark, especially if
you're in Dan Gilbert's security zone. He's got cameras and security people
all around his buildings 24 hours a day.

Now as I tell many others there are parts of the city I wouldn't visit in
either the daytime or at night. But there are very few good reasons to ever
visit those neighborhoods.

------
weirdkid
This is great stuff, but the decision will likely be made based on where
Amazon execs in Seattle can get a break from Seattle weather. That ain't
Detroit.

~~~
ghaff
Greyness aside, there aren't a lot of places in the US that have
uncontroversially better weather than Seattle other than California. Sure, if
hot/dry or hot/humid + moderate are your goals, there are places. Las Vegas
isn't clearly better weather than Seattle for a lot of people. Austin
certainly isn't. Maybe some mountain locations. But, really, Seattle doesn't
have bad weather in the scheme of things and Amazon isn't going to establish a
new location in prime California real estate.

~~~
smt88
This is risking a flame war, but I'd suggest anyplace with so little sun has
"uncontroversially" terrible weather. It literally causes health issues.

Also, a city doesn't need good weather all year to have better weather than
Seattle.

All that said, I personally doubt weather (and execs' preferences about it)
will factor directly into the decision.

~~~
ghaff
It depends on what people value. Seattle (like Portland) does have gloomy
winters--as does a lot of the northern tier of the US. But it doesn't get big
snowfalls, bitter temperatures or--in the summer--long stretches of hot, humid
weather or blisteringly hot and dry weather. The summer in Seattle tends to be
about as pleasant as anywhere.

I can certainly see someone preferring Phoenix or Las Vegas, say, to Seattle
in terms of weather but I wouldn't personally.

(I do agree that weather is perhaps one of the least relevant factors to this
decision.)

