Amazon’s HQ2 Is Destined For The Most Powerful City On Earth

Influence related to future regulation will weigh heavily on Amazon’s decision. (Photo By Bill Clark/CQ Roll Call)

Most of the predictions of where Amazon will place its second headquarters, its HQ2, have focused on the strengths and weaknesses of given cities. Airports, railways, engineers per capita, culture, hipness: all of them have been scrutinized as if each one is a critical part in a fantastically complicated algorithm whose selection will bestow 50,000 jobs upon the winning city.

The New York Times sifted all of this and predicted HQ2 would go to Denver. Some prognosticators have said that things are far simpler than this, that it all comes down to where Jeff Bezos wants to live, or from what city can Amazon elicit the most generous tax relief.

Denver’s economy has been sprinting upward, and Colorado is a fine place to ski, but it doesn’t possess the one thing that Amazon most needs. Ignore the chatter around taxes and where Bezos might already own assets. This contest can be reduced to the one thing that truly matters to almost any company, but surely an ambitious publicly-traded company: growth.

Part of my role as consultant to private equity companies is to determine what might limit a potential acquisition’s growth. That requires taking both granular views of the company’s operations and a wide view of the company’s ecosystem. Most analysts haven’t gone wide enough when examining Amazon.

What does Amazon need to grow? Engineers: yes. Smart people by the thousand: sure. Great public transit and a dense city center: only if they help snare the former two items, which they may.

Above all of this, however, Amazon’s ambitions require power. They require influence.

The limiting factor on a company that has grown into the most consequential retailer of not only stuff but also of computing power, information storage and the speed at which we can access said things isn’t smart people, developers, tax codes or cityscapes.

It’s regulation. Regulation—or the lack of it—will determine how large Amazon can get.