Best Practices

RoundUp: Economic Development after Amazon’s HQ2

Published Mar 01, 2018 by Rob Williams

Economic Development after Amazon’s HQ2
So your city didn’t get picked to host Amazon’s second headquarters, HQ2.

You’re in good company. Birmingham, Charlotte, Detroit, Houston, Las Vegas, Minneapolis, New Orleans, Portland, Rochester, Sacramento, Salt Lake City, San Antonio and Tucson were also passed by for what is undeniably a big jewel in any economic development crown. The promise of Amazon HQ2 will bring an estimated 50,000 jobs and $5 billion in investment, and along with it, an irresistible lure for other tech companies and talent.

While landing a giant like Amazon to your backyard would make for a nice ribbon cutting, it’s important that developers understand why entrepreneurs and small business owners are more important for most local economies in the long run.

According The Review of Economics and Statistics, “new businesses account for nearly all net new job creation and almost 20 percent of gross job creation.”  And a report from the Kauffman Foundation bolsters the significance of supporting startups: companies less than a year old have created, on average, 1.5 million jobs per year over the past three decades.

A new jobs report powered by SourceLink, We Create KC, has even helped Kansas City analyze how many jobs have been created by its startups down to the metro level. Just one amazing insight: from 2012 to 2016, the cumulative job-creating impact of Kansas City’s first-time employers resulted in 84,011 jobs (take that Amazon!).

Some 238 cities sent proposals to the retail giant to woo them to their city with initiatives and promises. Mayors, city planners, entrepreneur thought leaders and entire economic development organizations analyzed their cities and assets, bringing entire regions and states together.

During this time, many cities and regions discovered how to tout their strengths and when those were a bit lacking, they created partnerships to leverage collective, regional assets.

And the smart regions? They got really honest about their strengths and weaknesses: in developing and networking next gen talent, in how they have (or haven’t) built a diverse economy and workforce and in assessing the gaps in their entrepreneurial infrastructure.

Those economic developers spent their pitch process asking entrepreneurs, corporations, civic leaders and government officials the hard question: “What do we need to make our community more compelling for any business, not just Amazon?

We curated a few articles below to help you answer that question. Maybe you pitched for HQ2, maybe you didn’t, but the introspective process—taking the time to identify your assets, your strengths and your gaps—is well worth the time.

So check out the articles below. Read them, share them, be inspired, and then join our network of ecosystem builders who work every day to enhance communities that champion real job creators where they play, work and live.

Everyone Can Have a Trophy, or How to Make the Most of NOT Getting Amazon HQ2
Julie Lenzer, 01/2018, USA Today
Julie Lenzer is a longtime friend of SourceLink and we love her piece on investing in entrepreneurship.

In this article, she lends great advice on how to turn an Amazon disappointment into a victory for your entrepreneurial community. For many cities, the proposal to Amazon came with corporate commitments as well as civic incentives. Her first suggestion: take the promises you made to lure Amazon HQ2—the pledged incentives, the money found in the “community couch”—and invest them in your entrepreneurs.

“Investing in a strong entrepreneurial ecosystem, along with what makes a community a great place to live and work, will ensure that everyone gets to bring home a trophy — no matter where Amazon ends up.”

Click through to see some creative examples she’s seen other cities implement to supercharge their entrepreneurial ecosystems.

Steve Case: A Memo to the Cities Amazon Passed Over
Steve Case, 01/2018, Fortune
We’re big fans of Steve Case here at SourceLink and the role he and Rise of the Rest have taken to help grow entrepreneurship in middle and make our innovation economy more dispersed.

This quote tells you why:

“I understand you are disappointed that Amazon—and its estimated 50,000 jobs—is not coming to your city, but you can still get many of those jobs if you redirect your efforts to strengthening your startup community. Indeed, supporting dozens of startups—one of which could end up being the next Amazon—is likely the better strategy anyway.”

How do you support dozens of startups? You build an entrepreneurial infrastructure, much like the processes and systems you’ve likely built around attraction and retention approaches of economic development.

The first step there is to honestly assess your entrepreneurial assets, network density and connectivity. If you find your community is lacking in those areas, take a note from Case’s playbook and look beyond your own borders: cross-city, cross-county, cross-state and even cross-border collaborations can help attract resources startup founders need.

The Right and Wrong Ways to Pitch for Amazon Headquarters HQ2
John Reale, 10/2017, Forbes

Reale pushes cities to continue to aim for the ideal ecosystem that Amazon requested. It’s a good exercise in vision building that will benefit your community for the long-term.

The question to answer, what can your community do today to not only win the next Amazon, but also to create it: “...how do we continue to grow our ecosystem to launch the next Amazon?”

Use his pitch process (and case study for Houston) as a catalyst to commit to a culture of entrepreneurship and innovation.

Instead of Courting Amazon, Cities Should Do More to Support Local Startups
Marco Zappacosta, 10/2017, Venture Beat

Zappacosta urges cities to change the question from “Will you bring jobs to my city?” to “How can I help create jobs in my city.”

Cities understand that without small business there is no business; however, they often don’t show this in their policies and strategies. Marco talks about what small businesses need from our city’s policyholders.

 “[W]hat do small businesses, the increasingly ignored “backbone” of our economy, need? Our survey found that while the answers are a little different in each place, the themes are consistent: make local rules easier to understand and comply with, put information online so business owners can focus on growth rather than trips to city hall and give small businesses the same respect and support that large companies receive.”

Beyond “Amazon Idol” toward a Real Regional Growth Strategy
Mark Muro and Amy Liu, 10/2017, Brookings Institute
Muro and Liu cut to the chase as they critique the Amazon pitch competition and how it distracts us from thinking strategically about the nation’s gaping regional prosperity divides: “[T]here is something amiss about a phase of America’s history in which the greatest nation on earth seems content, as Matt Yglesias has put it, to leave its long-term development trajectory to the locational whims of a few high-tech CEOs.”

In true Brookings Institute fashion, they break down what policymakers need to do to bridge our country’s economic gaps and divide. Take a few minutes of your day and do a deep dive on this article, and come to our Summit to meet Mark Muro in person.

What Amazon’s HQ2 Wish List Signals about the Future of Cities
Mark Muro and Amy Liu, 09/2017, Harvard Business Review
Same authors as the Brookings Institute article: however, Muro and Liu look toward the future of how cities can attract and retain innovative companies and high growth startups.

“Amazon’s wish list is an unusually public confirmation from one of the most recognized corporations in the world of the factors that make a local ecosystem relevant in today’s innovation economy.”

Get your pens out. How do you rank on the ecosystem checklist?

How are you taking the lessons from HQ2 forward for your community?

Let us know on Facebook We’d love to share your thoughts and insights with our network of 2,000 entrepreneurial champions.


Rob Williams
Rob Williams is the director of SourceLink where he puts the “serve” in customer service, always available as support to SourceLink clients who are often the unsung entrepreneurial champions in their communities.