The Secret HQ2: How Amazon Quietly Raised A Bay Area Army Of Engineers

Source: San Francisco Chronicle, Melia Russell
Photo: While the Bay Area didn’t win Amazon’s official “HQ2,” it already has the second largest concentration of technical employees outside the company’s Seattle headquarters. (Paul Chinn / The Chronicle)

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.

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.”

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, said Capelli, who is now vice president of public affairs at the Federal Reserve Bank of Philadelphia.

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.

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