The secret HQ2: How Amazon quietly raised a Bay Area army of engineers

When Amazon created a contest for cities that wanted to host a second headquarters, or HQ2, the Bay Area turned in 160 pages arguing why it should win.

It didn’t. And though northern Virginia ultimately won a promise of thousands of new tech jobs, it didn’t much matter. The Bay Area already has more high-paying Amazon jobs than anywhere besides Seattle.

Call it a stealth HQ2. With a quiet presence stretching back decades, Amazon says it now has 7,000 white-collar workers in the Bay Area, which makes the region home to a third of its North American workforce outside its hometown. That’s three times as many employees as the next largest center, northern Virginia, according to Amazon. It is also hiring more actively in the Bay Area than anywhere else but Seattle.

Amazon has pledged to bring at least 25,000 additional jobs to a site in Virginia, where a new office near National Airport will greatly increase its presence in the region. But that project is years from completion.

Meanwhile, several key initiatives, from Kindle e-book readers to Twitch streaming to online ad technology, are run out of the Bay Area. Where Amazon seeks to compete most directly with other tech giants, it has tapped their workforce and planted offices in their backyards.

“Even when they go to another place and call it their second headquarters, you wonder if it really is,” said Jim Wunderman, head of the Bay Area Council, a public policy group that worked on the regional headquarters bid.

 The secret HQ2: How Amazon quietly raised a Bay Area army of engineers

Amazon shows no sign of slowing its recruiting in the Bay Area, according to Thinknum, a data analysis startup that scours job listings to find hiring trends.

Thinknum did a custom analysis of Amazon’s hiring at The Chronicle’s request. In early April, Amazon had more than 1,700 job openings in San Francisco, Sunnyvale, Palo Alto, East Palo Alto, Cupertino and Santa Clara — roughly the number of positions in New York and northern Virginia combined. Amazon is still hiring most aggressively in Seattle, with 10,675 job openings, according to Thinknum.

“The Bay Area has an incredibly talented and highly educated workforce, with a strong culture of innovation,” an Amazon spokeswoman said in an email. “We look forward to continuing to hire locally for exciting roles in a number of fields.”

 The secret HQ2: How Amazon quietly raised a Bay Area army of engineers

When Jeff Bezos founded Amazon.com as an online bookstore in 1994, he didn’t consider California. At the time, retailers shipping across state lines didn’t have to collect sales tax, so California’s large population ruled it out. He opted for Seattle instead, for its lower taxes and proximity to a big West Coast book distributor. Bezos did make frequent trips to the Bay Area — to raise $8 million from Menlo Park venture capital firm Kleiner Perkins, for example — and to snap up Bay Area startups, typically moving the companies wholesale to Seattle.

Amazon established a small presence in San Francisco in 1999, when it acquired Alexa Internet, a San Francisco maker of website measurement tools (not responsible for the virtual assistant also named Alexa). At founder Brewster Kahle’s insistence, it remained in San Francisco, a rare exception.

“We were pretty consolidated in the Seattle market. That was home base,” said Paul Capelli, an Amazon spokesman from 1998 to 2000. He remembers when the company could fit into a single auditorium for its all-hands meetings. Today, Amazon’s worldwide corporate workforce could fill Levi’s Stadium eight times over.

When Amazon made an acquisition, it was “buying both the technology and the people” behind it, Capelli said.

It folded those startup teams into the Seattle campus to tap their brainpower — and to make it harder for Silicon Valley employers to poach from them, he said.

It wasn’t until Amazon got into direct competition with search engines Google and Yahoo that it put down roots on their turf. In 2003, Amazon created a company, A9.com, working on search tools, and rented a large office in Palo Alto, where it could fish talent from other employers.

A year later, a group of Amazon hardware engineers set up shop in a Palo Alto law library to create the first Kindle device. It was the start of Amazon’s hardware research and development team, Lab126.

The poaching fears were justified: Of A9’s founding team, CEO Udi Manber went to Google; business chief Owen Van Natta went to Facebook; and engineering head Bill Stasior left to run Siri at Apple.

That was the trade-off of entering the Bay Area’s cutthroat market for talent: The same executives and engineers Amazon courts have more options than they might in Seattle, where Microsoft is the only other tech giant.

“I look at the massive amount of talent in the Bay Area, and the thing is, Amazon is not going to be the biggest player in town,” said James Thomson, who worked as a business development lead at Amazon from 2007 to 2013. “There are players who are equally able to steal talent away.”

 The secret HQ2: How Amazon quietly raised a Bay Area army of engineers

Being here is about more than access to highly skilled workers, according to AnnaLee Saxenian, a professor and dean of the School of Information at UC Berkeley, known widely for her research on Silicon Valley. “It’s also keeping your finger on the pulse,” Saxenian said.

She pointed out that Nokia sold half of all smartphones in 2007, the year Apple introduced the iPhone. But with its headquarters in Helsinki, the distance from Silicon Valley may have contributed to its ultimate demise. “If they had had a bigger presence here, they wouldn’t have been so blindsided by Google and Apple, who innovated and created a mobile internet,” Saxenian said. “Not being here has been a risk for those companies.”

Though software employment in other regions is on the rise, the Bay Area added nearly 34,000 tech jobs last year, according to a study by the Computing Technology Industry Association — far more than any other metro area.

And Amazon is trying to hire more software engineers in the Bay Area than any other job category, according to Thinknum.

In San Francisco, Amazon Web Services, the company’s fast-growing cloud division, has hundreds of job openings. Twitch, Amazon’s video-game-focused YouTube competitor, is hiring dozens. In Sunnyvale, near Apple’s home turf, Lab126, Amazon’s gadget-design unit, wants to hire hundreds of hardware engineers.

What Amazon doesn’t have is a central presence in the region like Salesforce Tower, Apple Park or the Googleplex, or even Microsoft’s long-standing campus in Mountain View. Instead, its workers are spread between San Francisco skyscrapers and low-slung office parks in Silicon Valley.

The company has an estimated 16 office leases covering 1.5 million square feet in the Bay Area, according to real estate data firm CoStar. In San Francisco, Amazon leases more square footage than Airbnb, Twitter and Square, which are headquartered in the city.

Jesse Gundersheim, a market economist at CoStar, said he’s not surprised Amazon is stretching out in San Francisco, even as other local governments “bend over backwards” to bring Amazon to their doorsteps. In recent months, Virginia agreed to pay $750 million and Arlington County chipped in another $23 million in incentives for the company to build its second headquarters in Crystal City. Amazon doesn’t always win these fights: A plan for another huge Amazon office in New York was scrapped after it was criticized for being bad for residents and taxpayers.

Amazon’s quiet growth in the Bay Area, amid other tech giants, hasn’t drawn similar attention or controversy.

An A to Z guide

to Amazon

in the Bay Area

Amazon is now in a range of businesses, from video streaming to hardware. Here’s where it’s hiring in the Bay Area.

A9.com, a maker of search and advertising tools for Amazon and other clients

Alexa Internet, a web analytics company that tracks internet traffic; confusingly, this predates and is not related to the voice service Amazon also owns

Amazon Web Services, a vast array of cloud services that lets businesses run their applications on Amazon servers

Goodreads, a social media site that helps readers find and share books they love

Lab126, a hardware lab that developed the Kindle and Echo

Twitch, a popular online service for watching and streaming video games

Source: Chronicle research

“Their presence in San Francisco and their desire to locate in a top tech city,” Gundersheim said, “is not predicated on receiving additional tax breaks from city government.”

The legions of software engineers, a workforce unmatched elsewhere, are incentive enough.

Melia Russell is a San Francisco Chronicle staff writer. Email: melia.russell@sfchronicle.com Twitter: @meliarobin

Article source: https://www.sfchronicle.com/business/article/The-secret-HQ2-How-Amazon-quietly-raised-a-Bay-13796775.php

This entry was posted in SF Bay Area News and tagged . Bookmark the permalink.

Comments are closed.