How Would An Amazon HQ2 In Boston Change The Area's Tech Scene?

Oct 2, 2017
Originally published on October 2, 2017 5:31 pm

Amazon has been on the hunt for a second headquarters. And cities across the country, including Boston, are desperately trying to lure the giant tech company to their own neighborhood. Part of Amazon’s appeal is the promise to bring up to 50,000 “high-paying” jobs.

But in Boston, tech CEOs and venture capitalists said there’s already a massive labor shortage.

“Hiring is the No. 1 problem for every portfolio company we have. And we have over 200,” said Sarah Downey, who works at Accomplice, a Cambridge venture capital firm that invests in early-stage tech companies. “Everyone’s trying to hire engineers. Everyone’s trying to retain engineers.”

There are roughly 17 job openings for every one computer science college grad, according to the Massachusetts Department of Higher Education.

So, logically, you might think an influx of 50,000 additional tech workers would further constrain the local labor market. But in multiple interviews across the industry, tech leaders and venture capitalists said an Amazon HQ2 might actually help alleviate the labor shortage.

And even if it did make their own hiring more difficult in the short run, they all insisted it was worth it, saying an Amazon headquarters would be a huge boost for the city’s tech ecosystem. (Note: The Boston-based e-commerce company Wayfair, which might be in more direct competition with Amazon for jobs, declined to comment for this story.)

Downey said Amazon is a net positive even though she has a slight fear — a sort of dystopian vision — that Amazon might come to Boston and crush its competition. She explained her “worst-case scenario” this way.

“I worry, and I think a lot of us have been worrying, there will be a brain drain, that Amazon’s just gonna come in here and steal all of the engineers,” she said. “And all of the other companies that have been here before are gonna be in even more trouble with hiring than they already are.”

But, even as she described those fears, she admitted that scenario is unlikely.

“If you’re the kind of person who wants to go be an engineer at Amazon, at least at that stage in your life, you’re probably not the same person who wants to work for a small startup,” Downey explained.

Plus, she said, Amazon could actually boost the startup ecosystem. After all, look at Silicon Valley. Plenty of people spend a few years at Google or Facebook and then go on to launch their own companies.

Amazon Could Be ‘Healthy’ For Boston’s Tech Environment

In general, the logic is that talent begets talent.

“I think having a big name like Amazon will help draw more talent to the area,” said JD Sherman, president and chief operating officer at HubSpot. “I think it would be healthy for the tech environment here.”

For Sherman, one of the major benefits of a large, well-known tech company planting roots in the city is the potential to increase the talent pool.

Colin Angle, CEO of iRobot, said he agrees.

“I don’t view it as a zero-sum game competing for the same talent pool,” said Angle. “I view it as a big enough statement that the entire ecosystem is raised.”

Angle described Amazon founder Jeff Bezos as a “mentor” to him in the early 2000s before iRobot went public. He said knowing how smart Bezos is, he’s certain Amazon would make Boston a more attractive tech city.

Angle pointed out that every year thousands of students graduate from Boston-area colleges and then move away. He thinks Amazon could help convince those graduates to stay, and essentially offer the city a stamp of approval.

“It’s not about [Amazon] taking jobs away from the tech community. It’s about the impact — the very positive impact — they can have on the tech community,” said Angle, who insisted an Amazon HQ2 in Boston would be “unambiguously positive” even if it made iRobot’s hiring decisions more difficult in the immediate aftermath.

The idea that some mid-level tech companies might have additional challenges hiring workers in the short-term is a belief executives at both Carbonite and HubSpot supported but seemed to dismiss.

“It would certainly be more competitive for positions,” Sherman agreed. “[But] that’s gonna happen anyway, because I think the Boston tech scene is getting more and more vibrant,” he said.

Sherman said HubSpot has already realized it needs to compete on more than just salary to attract software engineers. The company has been trying to promote opportunity and growth to prospective employees.

Developing Homegrown Talent

One way for Amazon to solve the talent problem is to help import and retain people, but Mohamad Ali, CEO of Carbonite, said an Amazon HQ2 could also be an opportunity for the state to invest in developing talent.

“If we use the Amazon relocation here to develop talent then it’s a win-win for everyone,” said Ali. He would like to see a focus on improving tech education in high schools and colleges throughout the state to train those with an aptitude for the subject already studying in Massachusetts.

“What we can’t do is, you know, bring Amazon here, provide massive tax incentives, don’t educate our population,” he said. “And then what we have is just massive competition for talent, and it’s just the limited few that benefit. That is not a good outcome.”

A “good” outcome for Ali would benefit all Bostonians, including those folks who have historically been overlooked in the knowledge economy.

Challenge Of Remaining A Top City For Innovation

Regardless of whether Boston has the talent readily available, tech executives insist the city could quickly adapt and incorporate new hires into the workforce more easily than other places and without the risk of becoming a company town.

Approximately 300,000 people currently work in the Bay State’s tech sector, according to Tom Hopcroft, president of the Mass Technology Leadership Council. He said last year the state added 10,000 workers to the tech economy.

“If you assume that we continue adding jobs at least at the rate we did last year, about 10,000 a year. Over 10 years that’s another 100,000,” said Hopcroft. “So, you’re layering in the 50,000 Amazon jobs on top of those kinds of numbers.”

In other words, the possibility of 50,000 new workers over the next few years isn’t unreasonable given the current growth rate in Boston’s tech economy.

Tech leaders say Boston has been experiencing a tech renaissance. And, in fact, that’s why the city can’t afford to bypass Amazon, according to Russ Wilcox, a partner at Pillar Venture Capital. He co-founded the company that commercialized the electronic ink used in the Amazon Kindle. He said the world is entering a new era in which cities cannot afford to constrain growth in the innovation economy.

“We are either one of the top three cities in the world for innovation, or we are irrelevant,” said Wilcox. “I think Boston has a choice to be one of the world’s greatest cities for innovation … We are winning right now. I don’t think we can sit back and relax.”

He argued that if Boston wants to remain a leading innovation city, it needs to bid — and bid strongly — for Amazon HQ2.

For Wilcox, talent is no concern. He said it’s still easier to hire workers in Boston than in San Francisco. And, regardless, he sees competition to hire talent as a sign the tech ecosystem is strong.

“We are graduating 150,000 per year. We have an enormous talent advantage,” said Wilcox. “We clearly have a long way to go before we’re overheated.”

Talent, he insisted, is not the problem.

“It is housing that is holding us back,” he said.

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