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Amazon's HQ2: How it could dramatically transform the Twin Cities tech scene

"Amazon is pushing the boundaries in just about every direction," one local tech leader said.

The promises Amazon attached to its nationwide search for a second headquarters site are towering. 

Mountains of money will be spent building the new HQ2 facility, a glimmering modern campus for the horde of Amazon employees who will spend workdays there, earning an average salary in the six figures.

But beyond the economic impact, a handful of local tech leaders say the presence of a new Amazon headquarters could bring with it a powerful surge of talented workers and cutting-edge thinkers – transforming the Twin Cities tech scene into a high-profile hub of technological creativity.

What is the Twin Cities known for right now?

"We have had a tech scene for a long time, but our tech scene has been a growth tech scene over the last number of years," Margaret Anderson Kelliher, president and CEO of the Minnesota High Tech Association told GoMN.

She called the Twin Cities tech scene "healthy," pointing to figures from the Milken Institute that rank Minnesota at No. 7 overall for technology and science.

While the region has some specialties – including interactive consumer-facing experiences and medical device work – there isn't a "center of gravity" that significantly differentiates the Twin Cities from other markets, said Adrian Slobin, Chief Strategy and Operating Officer at The Nerdery, a digital consultancy of strategists, designers and engineers.

"I don’t think that this marketplace is known for any one particular corner of the technology space as a destination in the U.S. or even internationally to go," Slobin continued, while stressing this is purely anecdotal.

There are about 132,000 people working in tech occupations in the Twin Cities, according to the most recent figures from CompTIA's Cyberstates rankings. Not all are at tech-specific companies however.

"As opposed to maybe Austin, maybe parts of Chicago, and certainly Silicon Valley where there's a lot of startup activity and the startup tech is really strong, I think the tech scene in this area is more: really good tech but for big, big enterprises like General Mills and Target and Best Buy," said Mark Hines, VP of delivery with GoKart Labs, a digital design and marketing company in Minneapolis. 

Hines has spent more than two decades in technology in the Twin Cities, the last five with GoKart.

"I feel like we have a lot of tech talent. It's very good," he said of the region. "It's just pointed at different problems."

"They’re probably thinking about applying those skills at Facebook or Amazon or Google, or any of the thousands of other – perception-wise – frontal technology companies.” –Mark Hines

That's not to say there aren't talented people doing interesting things, like in the commerce space. But as Slobin asked, Is it "differentiated" or "cutting-edge" the way Seattle is perceived?

"Aside from those industry verticals, I don’t think that we have enough of a center of gravity if you will," he said.

Here's how Hines put it:

"I think the challenge is, a tech guy coming out of Yale or Stanford or MIT – when they think about applying their skills, they’re probably not thinking about applying them in insurance at UnitedHealthcare. And they’re probably not thinking about applying those skills at Target or Best Buy. They’re probably thinking about applying those skills at Facebook or Amazon or Google, or any of the thousands of other – perception-wise – frontal technology companies.”

Amazon could be transformative

“We expect HQ2 to be a full equal to our headquarters,” Amazon CEO Jeff Bezos insisted when announcing the open competition.

In practical terms that means a site as large as 8 million square feet (that's about 4 1/2 U.S. Bank Stadiums), employing as many as 50,000 people in a decade.

Beyond the potential economic impacts – which are complicated and far-reaching – there's a reputation piece. An Amazon headquarters would put the Twin Cities "on the map as a place that was sort of worthy enough, if you will, for Amazon," said Chad Collins, CEO of supply chain software company High Jump

In the eyes of young, ambitious programmers or computer engineers, the Minneapolis-St. Paul area could immediately become a more desirable destination.

"Scale is one thing, but Amazon is pushing the boundaries in just about every direction. Not only what they’re building but how they’re building it," Slobin said. "It's because of the kind of technology they're doing that it would have to create that attractive force."

That wouldn't come without issues

Amazon needs workers – lots of them. A July report by Glassdoor found the Seattle area had the largest gain of any U.S. metro area in software job postings from 2012-17 – jumping 6.7 percent. And the region now has 187,000 people working in tech occupations, with software and web developers by far the highest concentration.

While an HQ2 in the Twin Cities would attract some top-flight talent from around the country, the local industry would be tapped significantly.

It's like Hungry Hungry Hippos – there are a finite number of pieces to eat, and Amazon's got the hippo with the biggest mouth. 

"I think there’s no doubt there obviously would be some changing around and there would be people who would be employed by Amazon who are here today in Minnesota," said Kelliher. "But there are also going to be people moving here from other places that are going to come to Minnesota and be relocating, be attracted to Minnesota because of this."

That could mean fierce competition for everyone in the region, whether it's the large stalwarts or companies like GoKart, High Jump and The Nerdery.

Hines said it's already a competitive talent market, and even though GoKart isn't huge, they've lost out on candidates to places such as Spotify and Optimizely.

That battle could be more hard-fought with Amazon nearby.

"I think there's some risk in the near future of them pulling a little bit of talent," High Jump's Collins said. His company already does "aggressive" campus recruiting, he said, targeting the University of Minnesota, UMD, MSU-Mankato and the private St. John's, St. Tom's and St. Ben's.

""I think there’s no doubt there obviously would be some changing around and there would be people who would be employed by Amazon who are here today in Minnesota." – Margaret Anderson Kelliher

Those institutions last year granted anywhere from 50 (UMD) to nearly 800 (U of M Twin Cities) degrees in tech-related majors such as computer science or engineering, providing some injection of skilled workers. Kelliher imagines part of Minnesota's proposal to Amazon will discuss how the different education systems could work together to fill the anticipated need.

"It is going to take an effort by higher ed and K-12 education to ramp up and respond as well," she said, while crediting local universities for already increasing tech graduates in recent years.

Long-term, Collins isn't concerned.

"Initially if [Amazon] were trying to fill a number of positions here, it could consume a lot of the talent in the near future," Collins said. "But I'm quite confident that more talent would move in, more talent would be developed through the universities and over time, it would be a benefit for all the technology companies."

The Twin Cities: A startup haven?

Let's jump ahead to a version of 2027. Amazon's HQ2 is humming along in the Twin Cities, recruiting the best and brightest to the region – like the "kid coming out of Carnegie Melon," Hines said.

But not everybody gets the job of a lifetime with one of the world's biggest companies. Amazon won't capture the entirety of the flood of talent that flows in.

"In addition to people that will presumably have a long and fruitful career at Amazon, some people will have a short and fruitful career at Amazon and then go off and do something else here locally," Slobin said.

That sets the Twin Cities up to become a hotbed for innovative startups.

"I think it’s just a function of how many people are in technology in the area as to how many companies are going to start up," Collins said. "It's pretty common for folks to work in tech, then either decide they don't like who they're with or come up with the next brilliant idea, and start a company. So I think the more tech workers, (the) more likely it is that there’d be more tech startups."

Slobin described this as "barnacles" forming off of HQ2, creating a large halo effect.

Hines thinks the missing ingredient right now is venture capital – firms that are aggressively investing in tech startups. There isn't much of that in the Twin Cities at the moment, he said. But his "hunch is anywhere Amazon goes, anywhere they drop that HQ, there is going to be venture capital."

That's still the big question: Where will this Amazon HQ2 go?

Minnesota's Department of Employment and Economic Development is working with Greater MSP to craft the pitch. Minnesota cities had until Sept. 22 to send them possible sites for consideration, since Amazon wants one proposal from each region. 

Mike Brown, vice president of marketing and communications with Greater MSP, told GoMN they're staying tight-lipped about the submissions, since they're wary of the competition.

The project manager is now going through the suggestions to see which ones actually fit what Amazon is asking for, and they'll submit the final proposal to Amazon by the Oct. 19 deadline.

Until we get an answer (which Amazon expects to have in 2018), this tantalizing future – where the Twin Cities becomes one of the country's great technology hubs – will only be a projection. A best guess.

"This is the whole idea, that you have more people in close proximity to each other, sparking the ideas together," Kelliher said, referencing the medical device industry in the Twin Cities. "We have parts of this right on and ready to go, and if we had this entrance with Amazon HQ2, I think it sort of flips the switch fully on totally. That really makes it happen in a way that you can work for years and years – maybe even centuries – to try to make your community get this. And you could never make it happen without something like this."

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