Amazon to Houston: “And you’re Done!”

AM-1

The world according to Amazon — Newark yes, Houston no

On January 18, Amazon released its short list of 20 candidates still under consideration as the location of HQ2.  Among the 218 losers pared from the list of hopefuls were such metropolises as Leominster, MA, Stonecrest, GA, and Scarborough, Maine.  Oh yes, and Houston, TX, the fourth largest city in the country.  The last time Amazon so publicly humiliated Houston was last January, when Alexa was overheard boldly predicting that the Houston Texans football team would be “publicly executed” by the New England Patriots.  Maybe I should start doing my Christmas shopping on eBay!

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For those not keeping track, Amazon invited the cities of North America to submit bids to become the site of their second headquarters.  Besides the prestige of being the home (or second home) of one of the most successful companies on earth, there would be tangible benefits for the winning city as well, as Amazon predicted an influx of 50,000 jobs and $5 billion in construction investment.  It is no wonder that 238 cities submitted their applications, demonstrating how they met the stated criteria:

Among the criteria were:

  • A metropolitan area with a population over 1 million
  • A stable and “business-friendly” environment (with adequate tax givebacks and other incentives)
  • Within 45 minutes of an international airport (with direct flights to Seattle, New York, San Francisco, and Washington)
  • Proximity to major highways
  • Access to mass transit routes
  • Initially 500,000, eventually up to 8 million square feet of office available space
  • Opportunities for a green headquarters, incorporating recycled materials and renewable energy
  • A cultural and community fit, including a diverse population, with excellent institutions of higher education
  • Quality of Life – “a community where our employees will enjoy living, recreational opportunities, educational opportunities, and an overall high quality of life”.
AM-2

How it went down, as best we understand it…

Houston submitted its application (along with everybody else) and seemed like a shoo-in for, if not the victory, at least easy advancement to the next round.  After all:

  • We’ve got close to 7 million people in the metro area
  • There’s no state more “business friendly” than Texas
  • We have TWO international airports (by the way, did you know Houston has the first/only airport outside of the Arabian peninsula that has non-stops to all six inhabited continents?)
  • You want highways? We’ve got highways!
  • 33% of workers in downtown Houston use mass transit
  • An “Innovation Corridor” was proposed between downtown and the world renowned Medical Center, which had the space required
  • Texas leads the nation in wind-generated electricity
  • Houston is often cited as being the most diverse city in America
  • As far as institutions of higher learning, the greater Houston area has 14 of them, including Rice University, University of Houston, Texas Southern University, South Texas College of Law, Baylor College of Medicine, and University of Texas Health Science Center
  • And as far as quality of life is concerned…I love living here. Ask me about it some time!

Plus…it was just a rumor, but the word on the street was that Amazon preferred a location in the South or on the East Coast…We offer both — a coast, in the South.  Slam dunk, no?

But then came January 18, and the bad news.  Houston had not survived the cut.  Edging us out of the list of finalists were places that we rarely even think about, such as Pittsburgh, Indianapolis, Columbus, Raleigh, and Newark.  The Houston Chronicle stated that “Amazon’s heavily hyped search for a second headquarters city is the worst black eye our city has suffered on the corporate relocation front since Continental Airlines executives decamped to Chicago”.  Self-analysis of our failings began, with our local politicians calling this a “wake up call”.

AM-3

Did every city receive the news this way?

So what were our failings?  Last October the economic consulting firm Moody’s Analytics did a study to evaluate each of the applicants and predict Amazon’s eventual short list (check out their findings here).  They estimated that Houston would rank as only 52nd on the list, while placing Austin, TX first.  According to Moody’s, Houston lost points largely due to two shortcomings: an inadequate mass transit system and a “low quality of life”.  But that can’t be enough to drop us 51 places, considering that Austin is just as mass transit challenged as we are, and Austin’s quality of life (as measured by the number of arts, entertainment and recreational establishments per capita) is not that far ahead of Houston’s.

There has to be something more.  Some analysts pointed out that the unpreparedness that we showed during the Harvey disaster was certainly an ill-timed advertisement for the city.  Or that our state’s political reputation does not play well on the coasts (but then both Austin and Dallas had no problem making the short list).  Or that maybe our public schools are not the best (actually many of them are).

But I think one of the best arguments for our low ranking is found in this analysis in the Chronicle:  “Houston likely was excluded because it doesn’t have much of a startup ecosystem. It ranked 39th in the country in venture capital activity, even though it’s the fourth-largest U.S. city.”  And even though Houston has an incredible technical ecosystem – Houston workers have 350,000 STEM degrees compared to 125,000 in Austin – we have the wrong type of engineers.  While we have plenty of the engineers that put a man on the moon or invented an untold number of medical devices or brought oil up from thousands of feet below the ocean’s surface, we don’t have enough of the engineers that Amazon needs (or relates to – and remember, Amazon likes renewable energy, not a petroleum economy).  Meanwhile 6,000 tech companies call Austin’s home, and Dallas hosts the headquarters of tech giants such as Texas Instruments and AT&T.

Bob Harvey, president of the Greater Houston Partnership (and instrumental in Houston’s proposal to Amazon) recognized this when he said “While we are the number one market in the country for STEM talent, we need to bolster our pipeline of digital tech talent that is relevant to tomorrow’s digital economy.”

AM-4

Too many of those engineers…and not enough of these…

What they say is probably true.  Many of the attempts to build a startup culture in Houston have failed to gain traction.  Surge Accelerator – the energy-themed tech accelerator where I got my initial inspiration to create CloudCalc – closed its doors in 2016.  Start Houston, a great coworking space where I presented at a Demo Day a few years back, is no more.  The Iron Yard, the coding boot camp where my daughter fell in love with software development is gone as well.  But there are always others gamely trying to fill their shoes — such as Station Houston (the startup community of which CloudCalc is currently a member) or TMCx (the tech accelerator associated with the Texas Medical Center) — but in Houston, digital engineering still takes a far back seat to traditional engineering.

Too many of “our type” of engineers, and not enough of “their type” of engineers seems to be the problem.  Well here at CloudCalc, we’re trying to bridge that divide.  Yes, we‘re a startup in the software industry, but our backgrounds, our training, our work experience, and our customers are all in firmly rooted in that other type of engineering that made Houston great.  We’re hoping we can do our part to help build the Houston tech community – by tapping into the other great STEM resources that this city has — to the point that when Google – or Facebook – or Uber come calling, it truly will be a slam dunk.

Are you one of “our type” of engineers?  Then you probably ought to be using CloudCalc — the collaborative, scalable, cloud-based structural engineering software.  Or are you one of “their type” of engineers?  Then come to Houston, and help us build a technical community.  We’ve got everything that makes a city great, except you!   www.cloudcalc.com – Structural Analysis in the Cloud

By Tom Van Laan

Copyright © CloudCalc, Inc. 2018

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