Last week, I read this article in the New York Times about Amazon’s search for a second North American headquarters, being dubbed HQ2. For both large and small, tech and non-tech companies, where you put your headquarters is a key strategic decision. It helps you attract, hire, maintain and train talent. It helps you be close to distribution and travel hubs, close to customers, and it may help better place you politically or improve your regulatory and tax outlook.
So, for example, if you area tech company looking to recruit young talent: you want to be close to universities with quality students, and you want to be located where qualified talent want to live when they’re done with college or when they start raising a family. If you think it’s cheaper to build your headquarters in the boondocks, then you are going to have to pay your team more, and keep paying them more each year to retain them.
Just think about the wars between Google, Apple and Microsoft to entice the best talent. It’s a competetive world.
All of these issues are what Amazon is thinking now. The article lists the leading contenders, and happily for me, among the 20 finalists there are three sites – Northern Virginia, Washington DC, and Montgomery Country MD – all within the Washington Metropolitan Area where I am from. The area has great universities, lots of diversity, domestic and international airports, an urban setting, and is the nation’s capital.
Similarly, I read today in TechCrunch that Google will open its AI headquarters in Paris, France. Paris is a great urban setting for young professionals, has access to universities and business schools, is the center of French political power, but more importantly as mentioned in the article:
In recent years, Google faced a huge $1.3 billion fine for tax noncompliance in France. A court in Paris canceled the fine in July 2017. But it’s clear that France represents an important market and a regulatory risk for big tech companies. Hiring people in France, investing in France and “training” people about Google’s services is a great way to lobby the French government using a bottom-up approach.
That is smart politics especially when the Europeans are giving U.S. tech companies the stink-eye.
Finally, if I were looking for inexpensive, quality developers, I would be focusing on smaller cities in Spain. Spain is full of great young talent who are willing to stay local if the opportunities are right. They are also much cheaper than other EU nationals and likely easier to manage than their counterparts in developing markets. Plus Northern Europeans are looking for any excuse to move to Spain. They just need a job. If I were the regional government in places like Zaragoza, Murcia, Alicante or Valencia, I would be bending over backwards to find the right incentives to bring tech employers to my neck of the woods.