Pivot - Hot Take: Amazon HQ2 breaks up with NYC

Episode Date: February 15, 2019

Kara and Scott pop back into the studio to give their hot takes on Amazon pulling out of their HQ2 deal with New York City.  Learn more about your ad choices. Visit podcastchoices.com/adchoices

Hey everyone, this is Kara Swisher here with a special bonus hot take mini episode. And as soon as we got out of recording, pivot news dropped that Amazon is taking HQ2 out of New York City, Long Island City specifically in Queens. I'm going to give you my take on what it means for Amazon in a second. But first, Scott apparently had other things to do today and wasn't in the studio, but he did send in his hot take. Let's play a message I got from Scott late last night in the studio, but he did send in his hot take. Let's play a message I got from Scott late last night in the middle of the night on my phone. No, he sent it in talking about HQ2 and Amazon's pullout of New York City. HQ, no, the shit show con, not contest that is HQ2 appears to be in its seventh inning with Amazon taking its three billion balls and going home.

What a shocker. Representative Ocasio-Cortez and unions are difficult to deal with. Wow, that took a lot. Anyways, the winners and losers and maybe some predictions and hopefully some deeper takeaways here. Big winners, New York City Councilman Jimmy Van Bramer, and State Senator Michael Gianaris. Also, someone who I thought outlined the argument most articulately was Assemblyman Ron Kim. Assemblyman Kim, I am going to keep my eyes on you, boss. I thought you were fantastic and really spelled out some of the better issues or some of the more compelling issues against Amazon here. Other winners, Virginia and Nashville. Why? Because the devil is in the details. And as Amazon shows up with its army of lawyers and negotiators to iron out the finer details,

what it means to have a job created, what it means in terms of tax breaks, they likely were going to muscle around any civic official, and Virginia and Nashville's hand just got a lot stronger, as Amazon's not going to want to pull out twice, if you will. The biggest loser, I would argue, is HQ2 in general. This whole shit show really has a bad or left a bad taste in people's mouth. You have a city that was awarded an HQ and has decided to basically say no, And now we're left with Nashville, which was always sort of the girl flirting with the guy or the guy flirting with the girl such that she could say, hey, so-and-so wants to take me to the prom. And then there's, of course,

Virginia. And word has it the governor there, Governor Northam, who had a big hand in this and also kind of wrote the check. Word has it, or the rumor is, he doesn't have great judgment. Anyways, look for that to be in the news more. Another loser here is Bezos. Simply put, he just doesn't need another reason to be in the news. Other winners, the 445 municipalities that aren't the five that account for 25% of the growth of which DC and New York are two of those five. A lot of our municipalities aren't growing. A lot of our municipalities need these organizations and the cost to attract a big corporation just went down a little bit as when the deal on the penthouse and your co-op falls through because

the price is too high. The price in every co-op comes down a little bit. And that's probably a good thing here. People that would argue entities or entities that people would argue are losers but probably aren't are Amazon. They won't even feel this. It's not a big deal for them. People argue that New York City is a winner and or a loser. It's probably neither. Would this have been good for New York City in the long term? Probably. We'll see. The deeper conversation we need to have here is should America adopt similar legislation as the EU and ban these types of contests? As studies show that organizations don't locate their headquarters based on subsidies. They base it

on economic growth and access to talent. And speaking of economic growth, there's no correlation between these subsidies and growing jobs in a civic area. This is nothing but a transfer of wealth from municipalities to larger organizations. We have an externality here. The idolatry of innovators coupled with the short-term election cycle has resulted in a very negative outcome here. These things probably should come to an end. And the ultimate irony that we will begin discussing more comes from Jeff Bezos' letter to David Pecker, where he said, if I can't stand up to this bullying, who can? Well, Mr. Bezos, we here in New York City feel you. If the city with the greatest concentration of grit, character, and creativity ever assembled can't say no to Amazon, who can?

Back to you, K-Swish. By the way, another prediction, a final prediction. Who will Kara have on her show the next two weeks when I am out of town? I'm going to guess one, it's a billionaire. And the other guess, somebody who hates billionaires. Let's hope they get the scheduling right, such that we don't end up with a dead rich man bludgeoned to death by someone with a fresh air tote bag. I thought of that myself. Back to you, Case Wish. All right, Scott. Jesus, as usual, completely tasteless and just horrible in some fashion. Anyway, I have a lot of thoughts on this. I did actually predict it. As you know, I finally made a great prediction. I really felt like the noise that New York was making and the people who the activists who opposed this HQ2 in Long Island City were going to drive Amazon crazy and they weren't interested in

deal making and as you know Jeff Bezos is a tough customer and it was interesting that Bill de Blasio who I think is a loser here he liked the deal until he didn't like it I voted for it until I didn't vote for it kind of thing he was he was very supportive of it and then when Amazon pulled out very suddenly apparently he he was was like, well, they couldn't take it. It's too tough in New York for them. They have to be tough to be in New York. And that's just crap because Amazon is really tough. I noted that in my New York Times article that just came out, an opinion column about this, where I think I pretty much sum it up, which was that the departure of Amazon headquarters from New York is no victory.

The problem is it's also no defeat either. And what I noted was, to use a big Apple term, it's meh, just another indication that tech has completely lost its charm to many and that they're just businesses like others. And people don't want to give them tax breaks. They don't want to give them gimmies. They don't want to give them things that are perceived gimmies. Now, in some ways, it's hard to tell if these jobs would have been good for the city or not. Now, New York has plenty of tech compared to many other parts of the country. Lots of headquarters.

Google is expanding. There's all kinds of different startups here. So it has a very vibrant tech scene compared to most of the country. So I don't know if it's an enormous loss. Actually, the economic situation here is very robust. But the question is it could have created a great thing to have Amazon here. At the same time, we don't know if the tax breaks would have been helpful. We don't know about the stress on the system. And especially at a time when people are worried about these cities and

the infrastructure crumbling, the idea of giving one of the world's most powerful and richest corporations tax breaks seems disturbing. And I think that's really where it ended up. And Amazon didn't want to fight that fight publicly with anybody. And that's why they did the deal so quietly with the governor and Bill de Blasio, but Governor Andrew Cuomo, who is another loser here, who seems to be the worst poker player on planet. And he sort of slapped at the city officials and the local officials for this and sort of threw a little tantrum yesterday because his secret deal didn't go down as planned. And he's, you know, there's, when the issues is, there's no black and white here on these issues. It's very complicated. I think one of the things I noted that you can't really, you can sort of compare it to San Francisco,

which gave a lot of tax breaks to internet companies to locate in the city. And if anyone has visited San Francisco lately, it is a hellscape. And I think tax incentives do not address the really serious problems that are happening. And the question is, can we get these companies to locate in these cities and not pay them for it and maybe contribute to the body politic to contribute to the civil nature of a city? Back in the day, a lot of big corporations did that, whether it was Wells Fargo in San Francisco or Bank of America, helping the city become a better place to live. But a lot of corporations did have a sense that they were part of the civic fabric of a city,

and that's the question. Was Amazon thinking that way? Could it have come in and offered some solutions? It did not. It was just a basic tax break, which makes people feel like it's just another corporation looking for something in order to locate somewhere. Lastly, I think the biggest loser here was the idea that this was in any way anything but a marketing ploy. It was this idea of a contest was a circus.

It debased a lot of mayors around the country. because it debased a lot of mayors around the country. The issue was that there was a winner, or several winners, and lots and lots of losers, so nobody feels good about the process. And it was embarrassing. There was a great SNL skit about this, where these city mayors came in and gave up all kinds of silly things, from food to other things to Jeff Bezos. And I think the concept of that, of giving things to the world's richest man,

even if it did benefit New York in the end, which was still unknown, just is not a good look these days. The winner? Nobody. I think that's it. Anyway, all right, Pivot listeners, thanks for giving us a little extra time today to keep talking about Jeff Bezos. I think we're going to not talk about him next week. I'll be back next week without Scott. I'm not going to tell you, Scott, who I'm going to have, but they're much better than you.

Sorry, that's just the case. I'm bringing back someone who I had a very good podcast with previously and some other people, and I think you'll really like them. So you know Pivot's going to be great. See you then.