HQ2 in Arlington: 4 Benefits of the Amazon Effect, and 7 Ways Small Businesses Can Compete
Books, clothing, electronics, pet supplies, groceries… Amazon offers basically everything a person could want or need—and much more. If you live in the Baltimore–Washington metropolitan area, you can now add “employment” to that list.
Yes, Amazon is opening its second headquarters (AKA “HQ2”) in Arlington County, Virginia—a move that will generate tens of thousands of jobs in the area. Additionally, the company plans to invest $2.5 billion, occupy 4 million square feet of office space, and spur “associated investments from the Commonwealth” such as “infrastructure updates, public transportation improvements, and new access to Reagan National Airport.”
All told, the region is likely to transform as we know it. Whether the changes are positive or negative depends on one’s perspective. Economic development and jobs are welcome. Rising home prices, not so much.
Then there’s the impact on the local business community. Many business owners worry the e-commerce and computing juggernaut will price them out of the market, siphon their key employees, or upend their relationships with customers, clients, and vendors. These concerns are particularly pronounced among the region’s technology firms and government contractors. Amazon Web Services (AWS), Amazon’s cloud infrastructure platform, positions the company as a powerful resource for federal projects. In fact, as of this writing, Amazon appears to be a frontrunner (next to Microsoft) to receive the Department of Defense’s coveted Joint Enterprise Defense Infrastructure (JEDI) contract.
On the other hand, it’s equally important—and certainly more productive—to consider the upsides of the Amazon effect and the many opportunities HQ2 will bring. If you’re a business owner, here are a few reasons to be happy about the new player in town:
- Your talent pool may grow. While many employers fear Amazon picking off their talent, the reverse can happen as well. There’s no reason not to anticipate some spillover from those 25,000 jobs, especially with today’s high rates of employee mobility. Smart companies are already preparing to attract members of the skilled workforce who will soon move to the region.
- Your intellectual property could increase in value. Your trademarks, copyrights, patents, and trade secrets provide you with a competitive advantage. If you have something Amazon does not, your IP is about to grow even more valuable—so it’s a good idea to start developing plans to protect it.
- Amazon could be your next big customer. Speaking of IP, why not license yours to one of the largest companies on Earth? From patent holders to food truck operators, countless local businesses have products, services, and tools Amazon (and its partners and suppliers) may be willing to buy for a premium.
- M&A activity may continue to flourish. Business transactions in the Mid-Atlantic have reached a fever pitch over the past 18 months. Amazon’s new headquarters and the ensuing economic impact could very well cause this trend to continue, as companies consolidate to level the playing field.
What can you do right now to prime your company (pardon the pun) for the Amazon effect? Here are some initiatives and tactics to consider:
- Review contracts with key employees and vendors.
- Review your current IP portfolio and protection measures.
- Focus on employee retention and its contributing factors—such as benefits, compensation, flexibility, and career development opportunities.
- Focus on customer service—make it personal, responsive, and extraordinary.
- Get your brand out there by getting active in your community.
- Join a network of local business professionals.
- Review (or create) a business exit plan.
For assistance with any of the above, talk to your legal advisor. An experienced business attorney can help your organization maintain its most valuable assets and position it for success in the new market.
ABOUT MIKE MERCURIO
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Michael N. Mercurio is a leading attorney in the field of mergers and acquisitions (M&A). He serves as outside general counsel in buy-side and sell-side M&A, as well as in all business law and real estate law matters. As a strategic partner to firm clients, Mr. Mercurio regularly counsels entrepreneurial individuals and assorted entities on the many challenges, issues, and opportunities companies face throughout the business lifecycle—from start-up to eventual exit.
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