Amazon’s Dual Headquarters Is Bad News For Investors – Forbes

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I am not an investor in Amazon shares and after learning about its plans for dual headquarters, it made me feel bad for those who are.

That’s because operating out of two headquarters locations is bound to create confusion when it comes to making decisions and carrying them out.

But before getting into that, let’s look at Amazon’s September 7 announcement regarding the second headquarters. According to the New York Times, Amazon is soliciting bids for its so-called HQ2 location from North American cities with populations over 1 million and “a diverse population, good schools and malleable lawmakers” to host a second headquarters that will employ 50,000 people making six figure salaries.

Why would Amazon want an HQ2? With 19% of Seattle’s prime office space and “housing prices skyrocketing, the competition for tech industry talent getting more fierce and traffic choking the roads,” Amazon does not think Seattle can handle its growth plans, according to the Times.

To meet its needs, Amazon wants “on-site access to mass transit, a commute of 45 minutes or less to an international airport, easy access to a major highway or arterial road — no more than two miles, evidence of fiber optic internet connections, a coverage map showing strong cellular phone service at the location, traffic congestion figures, lists of universities and statistics on the qualifications of local workers,” noted the Times.

My hunch is that if there was an obvious city that could satisfy all these criteria, Amazon would not have made a public announcement about this — it would have quietly negotiated a deal. But the simple reality is that the cities that satisfy Amazon’s requirements — specifically the supply of talent and the rest — already have most of Seattle’s problems — the high housing prices, the congested roads and infrastructure, and the long commutes.

Toronto, Boston, Washington, Atlanta, Dallas or Denver are the “options,” according to Bloomberg. While these cities already have many corporate headquarters, the places that host declining corporations and therefore have lower housing prices and less crowded roads might be willing to offer the most attractive investment incentives for Amazon — but then they would again be too dependent on one company that could ultimately hurt the city were it to move or decline.

Regardless of where Amazon ends up locating HQ2, I think it’s bad news for investors. That’s because I think having two headquarters will slow down decision making and execution unless each location has completely non-overlapping responsibilities. If not, people from both headquarters will need to coordinate — possibly from different time zones — before making decisions and while executing them.

My guess is that this coordination will take longer than it takes when Amazon now. What’s more, HQ1 will need to invest management time and other resources to make sure that HQ2 has the same culture and processes as HQ1. If Amazon is not expecting that to be a challenge, it will be in for a surprise.

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