Amazon HQ2 failure

Take people on a journey

There has been written a lot about Amazon’s HQ2 contest and their decision to go to New York and then pulling out again. I think it has been analyzed from every angle. The arguments from both sides have validity in their own right. I am not here to debate that.

It reminded me of something else. If you want to make a big change, you need to take people on a journey. If you go to quickly, people resist. Many people do not like change and their natural tendency is to resist big changes. This is exactly what happened here.

It is better to go slow. If Amazon decided to open up an office in LIC with a few thousand people without a contest, the level of resistance would have been much lower. They probably could have expanded that campus easily to 25,000 people in 5 years or more. Given the way incentives are given out by the city, I am also confident that they could’ve gotten those as well.

By coming in strong, Amazon lost a good portion of local support which bolstered local politicians to stand up. A David and Goliath fight resonates very well and granted Amazon does not need those incentives to run its business, but on the other hand, LIC can use the investment. It is a difficult discussion.

Seattle has many more Amazon workers and their campus is bigger, but they grew into it together. There is resistance now but they are already there and they keep expanding. Arguably, Seattle is a smaller city so the Amazon impact is even bigger in that city. Because they grew incrementally, they could take it much farther than if they would have said they were hiring 50,000 people in just a few years.

With Shapeways, I learned that if you need to increase pricing, you know where you want to be, but if the leap is big enough you take small incremental steps to get there. You need to take your customers by the hand and bring them along. The interesting thing is that you even learn a lot along the way and it allows you to mitigate any problems you did not think of.

Whenever I contemplate a big change, I try to think about how to break it down in smaller steps. It avoids change resistance and you can adapt along the way. Landlords know this game very well. If you increase the rent by 7% every year, you double it in a decade. 7% is not a lot to take year-over-year, but doubling the rent from one year to another because you passed the decade is going to make everyone upset.

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