Boosting Philadelphia for Amazon’s HQ2

Online commerce colossus Amazon revealed on Sept. 7 its planned HQ2, the company’s second headquarters, which will be built in North America. Amazon expects to invest more than $5 billion in the construction of HQ2 and create as many as 50,000 high-paying jobs, as well as tens of thousands of additional jobs and billions of dollars of investment in the surrounding community.

Amazon invited North American cities, states, counties, and provinces to submit a request for proposal for its second headquarters, which are due on Thursday, Oct. 19. Places large and small are pitching their locales, including Grand Rapids, Mich.; Atlanta; Gary, Ind.; Denver; San Jose, Calif.; New York City; Toronto; Chicago; Boston; and Camden, N.J.

Philadelphia Mayor Jim Kenney wrote on Twitter on the day of Amazon’s announcement that he believes Philadelphia “would be a PRIME location for Amazon that would make people SMILE,” and said he looked forward to submitting a proposal.

Penn is supporting the city’s all-out efforts to show Amazon that #PhillyDelivers through direct outreach to CEO Jeff Bezos from Penn President Amy Gutmann, who wrote a personal letter to Bezos touting the merits and virtues of Philadelphia. Gutmann also enthusiastically signed a letter promoting the city from the Greater Philadelphia Chamber of Commerce, where she is a board member, and one from regional college presidents.

In addition, Executive Vice President Craig R. Carnaroli is part of the Amazon HQ2 in Greater Philadelphia Business Engagement Committee, which is advising on specific tactics and plans to bring the headquarters to the city.

The Wharton School has helped out, too, with two different student pitch competitions. 

In a partnership with the Philadelphia Commerce Department, the Wharton Communication Program presented the Wharton-Amazon Writing Competition.

All Wharton students—undergraduates, MBAs, executive MBAs, and Ph.Ds.—were invited to enter the business-themed challenge in which they were required to write a 500- to 750-word memo persuading Amazon to choose Philadelphia as the home for HQ2. 

More than 140 students entered the contest; submissions were due Oct. 5. Judges, made up of journalists, evaluated proposals on logical structure, strong supporting arguments, engaging style, and overall persuasiveness.

Finalists had their memos reviewed by the proposal team at the Commerce Department, and their ideas could be included in the formal proposal Philadelphia submits to Amazon.

Lisa Warshaw, director of the Wharton Communication Program, says the competition fits in with its real-world, innovative, and current thinking and focus. 

“It’s a really wonderful opportunity to expose the city to our really smart students, and for the students to give back to Philly and Penn, and to promote both Philly and Penn,” she says.

The Commerce Department will choose two winners in the next few days—an MBA winner and an undergraduate winner—who will be invited to a city-submission event at the Barnes Foundation.

While the Writing Competition began to take shape, Wharton undergraduate students approached vice deans at the school about creating a complementary contest that would dig deeper into data and provide a more technical analysis. 

The students came up with the Amazon HQ2 to Philly Case Competition, which was open to Penn undergraduate, graduate, and MBA students, who were tasked with analyzing why Amazon should locate HQ2 in Philadelphia.

Devised by Sign.al, an independent Wharton student publication, and MUSE, a Penn marketing club, the contest involved teams of two to four members addressing one of four topics: Financial and tax incentives, talent base and employee life incentives, strategic tech-focused incentives, or current and new legal incentives.

Submissions were due Oct. 4. Judges were Wharton’s Susan Wachter, a professor of real estate and finance; Gad Allon, a professor of operations and director of the Jerome Fisher Program in Management & Technology (M&T Program); Saikat Chaudhuri, a professor of management and executive director of the Mack Institute for Innovation Management; Sara Jane McCaffrey, a professor of management; and Robert Inman, a professor of finance, real estate, and business economics and public policy. 

Finalists for the Case Competition were feted at a ceremony in Wharton’s Hoover Lounge on Oct. 13, which was attended by student presenters, Mayor Kenney, and Wharton deans. 

Lori Rosenkopf, a professor of management at Wharton and vice dean and director of the Wharton Undergraduate Division, says the Case Competition was a “fantastic opportunity” for students that incorporated experiential learning and applied problem-solving. 

“[Amazon] is a company that people are really excited about because it’s a major part of our economy, and it’s tech, and it’s an area that students are very interested in,” she says. “To have a chance to work on these sorts of problems, and then get to communicate their findings to city officials who their findings may very well influence, that’s a wonderful opportunity.”

Team Delphi, made up juniors Jeffrey Cheng, Tanmay Chordia, Ameya Shiva, and Johnathan Chen, all dual majors in the M & T Program, submitted a winning proposal for “Strategic tech-focused incentives.”

“Our proposal basically highlighted a few technologies, the most important being that Philadelphia is uniquely positioned to work with Amazon to become the first smart city,” Shiva says. “A smart city is basically a city where all the public services are managed by sensors that provide real-time data and allow everything to be optimized, and we saw Amazon bringing the unique technological capability and the computing power to handle that.”

Shiva says Philadelphia is a hub for smart city development, and has first-class technological capabilities. 

“Another major idea is that Amazon uses robotics a lot and Philly is a big hub for robotics,” he adds.

Wharton juniors Tiffany Chang and Adam Domingoes, who made up the two-person Team Meseeks, won the “Talent base and employee life incentives” portion of the Case Competition. Both are minoring in computer science at the School of Engineering and Applied Science, and are interested in the intersection of business and tech.

Meseeks’ proposal was called “Capturing the value of Philadelphia’s unparalleled talent,” and pointed out that the city’s high-quality talent and robust retention creates a high employee lifetime value.

Chang says Philadelphia is dense with collegiate talent and research, with three top-notch universities in a three-mile radius—Penn, Drexel, and Temple—and four others within a 30-mile radius—Haverford College, Bryn Mawr College, Swarthmore College, and Princeton University.

She says Philadelphia also has a strong case for talent and retention, offering millennials the lowest average rent across major U.S. cities, an extensive public transportation network, and a large populace in a metropolitan area. 

“It’s a place that’s very attractive for people post-graduation,” Chang says. “A lot of millennials look at specific areas and what they have to offer before deciding to move there.”

Domingoes says Philadelphia has, when compared to other large cities such as New York and Denver, on average, a longer tenure for employees, which leads to increased job performance and efficiency, and reduces turnover and costs associated with training and integrating new employees.

“Amazon’s headquarters will be about 50,000 people, so the net benefit is somewhere on the order of $1 billion, which is pretty incredible,” he says.

Amazon will make its final decision on HQ2’s location in 2018.

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