Ever since Amazon announced that it will seek a second U.S. headquarters facility – dubbed HQ2 – there has been plenty in the business press about it. The Boston Business Journal, among other things, ran a big series of reports about it, including the great deal of taxpayer money the company has received over the years, and the cover story of their October 13, 2017 issue was about that.
One interesting story I came across in the past week was this column by Promoboxx CEO and co-founder Ben Carcio. It’s a quick read, and it brings up a good point, which is that landing Amazon HQ2 would not come without trade-offs. In Boston, there is on particular one that Carcio is concerned with.
While I agree that there would be trade-offs – indeed, pretty much everything in life has trade-offs – I respectfully take a different viewpoint from there.
I understand his concern about the startup ecosystem if Amazon chooses Boston for HQ2. His concern is not with those who would start companies – if that was the case, we would have a larger disagreement – but rather, with workers who will be part of those companies. His thinking is that more workers will choose to work for Amazon than a startup, and it’s not entirely unfounded.
Certainly, Amazon can offer some great benefits and can pay employees pretty well. They will likely have to considering Boston is not a big city in terms of land area but has numerous well-known companies along with being the best city for startups according to the U.S. Chamber of Commerce Foundation. The city is getting more and more jam-packed all the time, and all of these companies are going to compete for workers, especially in high tech.
Harvard Business Review has done some work on how big companies are paying employees more, and you can understand why. Big companies have resources and economies of scale that smaller companies lack, so they can manage that, especially if they believe someone to be a very capable performer. Smaller companies have other advantages, especially if they are well-funded, but from a pay and benefit standpoint, a company like Amazon is likely to have an advantage. Having worked for a couple of big companies and small ones alike – in fact, I once went from a company of over 50,000 employees to one with less than 70 – I have seen it.
Working for a startup is not for everyone, though. Because there is a little more risk, and because even non-management roles at such companies tend to call upon employees to do more than their job description might imply, there’s an added challenge to it. Many like the idea of it, though, especially if they are on board with the company’s mission – there’s a draw that more pay or benefits won’t top, unless there is a large difference. They like the potential of being part of something they help build, and if they get some form of equity, all the better. While this tends to be more the case with founders/co-founders, it isn’t far off for someone who likes the idea of working at such a company.
It’s like a calling – it isn’t exactly that, but it’s along that line.
Not just anyone wants to work for a startup, either, and some of that also comes from the reality that information on them can be hard to come by. There are now more resources for that, but if you go to a networking meeting full of people who are unemployed, and the subject of target companies comes up, chances are you will notice a pattern: most, if not all, of the companies people mention will be bigger or more well-known companies, with very few, if any, startups mentioned. That may change as information becomes a little easier to come by, though it won’t happen overnight.
In light of this, I suspect that if Boston is chosen for HQ2 by Amazon, it will not be bad for startups. Those who are wired to work at startups are not easily lured to big companies like the Amazons, Facebooks, Googles and Apples of the world. My sense is that an Amazon HQ2 in Boston is more likely to cannibalize other existing businesses, from midsize to other big companies.
That isn’t to say it will have no impact on startups, as it surely will. However, the biggest impact it may have could be in the startups that the company later buys, such as Andover-based Blink, who Amazon bought in December. That, however, is a fate I suspect anyone at a startup can live with. Amazon may also have new innovations that help startups grow; AWS is used by plenty of startup success stories.
So I am certainly on board with the idea that an Amazon HQ2 in Boston will have trade-offs. I think it won’t be a big hit to the startup ecosystem, though; that should continue to thrive almost unabated barring a major change in the business conditions in the area.