- Musk secured $1.3 billion from Nevada in 2014 for a battery plant
- Jeff Bezos noticed it
- In September 2017, Amazon made plain that it was looking for handouts
When Elon Musk secured $1.3 billion (roughly Rs. 9,200 crores) from Nevada in 2014 to open a gigantic battery plant, Jeff Bezos noticed. In meetings, the Amazon.com chief expressed envy for how Musk had pitted five Western states against one another in a bidding war for thousands of manufacturing jobs; he wondered why Amazon was okay with accepting comparatively trifling incentives. It was a theme Bezos returned to often, according to four people privy to his thinking. Then in 2017, an Amazon executive sent around a congratulatory email lauding his team for landing $40 million in government incentives to build a $1.5 billion air hub near Cincinnati. The paltry sum irked Bezos, the people say, and made him even more determined to try something new.
And so, when Amazon launched a bakeoff for a second headquarters in September 2017, the company made plain that it was looking for government handouts in exchange for a pledge to invest $5 billion and hire 50,000 people. The splashy reality-television-style contest generated breathless media coverage, attracted fawning bids from 238 cities across North America and ended with Amazon deciding to split the so-called HQ2 between New York and Virginia. Then progressive politicians attacked the $3 billion in incentives offered by New York, and Bezos pulled out.
Amazon was widely ridiculed for its failure to court New York politicians. To understand why that happened, Bloomberg interviewed 12 people familiar with Amazon’s effort. Their story, outlined here for the first time, depicts a team that became the victim of its own hubris. Bezos’s frustration with what he deemed meager government largess prompted executives to scrap lessons learned through the years in favor of an unapologetic appeal for tax breaks and other incentives.
Employees with experience negotiating deals around the country anticipated problems, but their red flags were ignored by those eager to please Bezos with a new playbook for a big win. Secretive and walled off from the rest of the company, according to people familiar with the situation, the HQ2 team members marinated in the headlines and hoopla and persuaded themselves Amazon would be welcomed anywhere.
That blinkered assumption continues to resonate today, not least among city officials across the continent who felt manipulated by Amazon, according to people familiar with their thinking. Meanwhile, a bipartisan group of state lawmakers is considering a non-aggression pact to halt the kind of tax-incentive bidding war unleashed during the HQ2 process. “This entire thing was an ego exercise that blew up in Jeff Bezos’s face,” says one of the people.
In an emailed statement, Amazon said the company has invested $270 billion in 40 states and created more than 500,000 jobs with competitive wages, benefits and employee training. “We partner with hundreds of communities across the country to bring them new jobs and investment. Like many other companies, we are eligible to access incentive programs created and regulated by cities and states to attract new investors – as they know that these investments pay a long-term dividend in the form of jobs, new economic opportunity, and incremental tax revenue.”