Amazon has threatened to halt job growth in Seattle while the City Council debates a new tax on big businesses. But the company is already less reliant on its hometown than ever before, with about a fourth of its white-collar workforce in regional R&D hubs across the country.
PITTSBURGH — Call it HQ everywhere.
Most of the attention paid to Amazon’s half-million-strong global workforce centers on the company’s mammoth headquarters, its dozens of warehouses, the ongoing search for a second headquarters city, or, recently, its threat to stem job growth in Seattle.
But amid all that hiring and planned hiring, the retail giant has also built a network of research and development hubs across North America that account for about a fourth of the company’s white-collar workforce.
Amazon’s 17 largest satellite offices in the U.S. and Canada collectively employ about 17,500 people — more than the combined workforce of Airbnb, Netflix, Twitter and Zillow. Just in the last year, the company announced plans to add 10,000 more, most recently with leases in Boston and Vancouver, B.C.
The scale highlights the breadth of Amazon’s ambitions in a wide range of areas. It includes engineers and salespeople working on cloud computing in suburban Washington, D.C., television producers near Los Angeles, and machine-learning researchers in Pittsburgh.
The proliferation of offices adds another layer to Amazon’s profile in the United States. A company that grew into a major employer nationally with blue-collar warehouse jobs is, increasingly, a major regional employer of technologists and corporate salespeople, too.
And, as Amazon threatens to halt expansion in Seattle while the City Council debates a new tax on big business, it is also a reminder that a company that grew up in Seattle is already less reliant on the city than ever before.
“Instead of trying to convince people to relocate to Seattle — which is a great place, and a lot of people do want to relocate — there’s local talent that has roots and doesn’t want to move,” said Mike Carr, an Amazon vice president. “Instead of trying to grow in one place, we can grow in five or six in parallel.”
The career arc of Bill Kaper, a software engineer and western Pennsylvania native, illustrates Amazon’s shifting preferences for where and how it hires workers.
Kaper joined Amazon in 2011 after his wife convinced him to return a recruiter’s call, moving with his family from Pennsylvania to Seattle to work on experimental shipping programs tied to Amazon’s Prime membership program. Few of those first projects saw the light of day, but Kaper stuck around.
The environment “was just so busy,” he said. “You walk outside and see a bunch of Amazonians elsewhere.”
Most of the retailer’s corporate functions then were handled from its growing Seattle headquarters, which today is home to more than 45,000 employees. The concentrated approach was, in part, a side effect of Amazon’s effort to avoid charging sales tax and maintain an advantage against brick-and-mortar rivals.
Retailers in the U.S. are required to collect tax on purchases in states where they have a physical presence. Amazon kept its footprint small, and incorporated its then-handful of satellite offices and warehouses as separate legal entities to avoid triggering that rule.
Amazon reluctantly agreed to begin collecting sales tax — often in arrangements that exchanged pledges of investment for a tax holiday — in a series of deals that accelerated in 2012.
Free from its self-imposed isolation, and hungry for employees to pilot new and expanding ventures in cloud-computing, television and machine learning software, Amazon went on an office shopping spree.
The company opened a new corporate outpost in Dallas in 2014, and in Atlanta and Austin, Texas, in 2015.
That year, Amazon also consolidated two Pittsburgh startups it had acquired into a new office. Kaper was tapped to return home and lead the new Pittsburgh team.
“Everything came together,” he said.
Risks of corporate sprawl
Amazon’s decentralized approach echoes moves other technology giants made when they expanded beyond their hometown. IBM, based in New York state, for decades has relied on researchers spread around the world. Microsoft, which concentrates research and development at its Redmond headquarters, operates a handful of large offices elsewhere.
Google made waves in Pittsburgh’s local tech scene when it set up a research office near Carnegie Mellon University in 2006.
Most Read Business Stories
- T-Mobile's brash CEO sprints to top of best-paid leaders at Pacific Northwest companies
- Boeing faces largest quarterly loss in its history after a $4.9 billion financial hit due to 737 MAX grounding
- Northwest CEOs saw a lopsided bump in equity pay
- Runaway executive pay is distorting the economy and aggravating inequality | Jon Talton
- Toys R Us is back from the dead, but its new stores are unrecognizable
“Amazon was late to the party in some respects,” said Alon Lavie, a former CMU professor and expert in machine translation whose startup, Safaba, was one of the two firms that became Amazon Pittsburgh.
Lavie said he probably wouldn’t be working for Amazon unless they came to him. He never intended to leave academia in the first place, and wasn’t interested in following tech titans to Silicon Valley or Seattle. “I really believe in the ecosystem here in Pittsburgh,” he said.
There are risks that come with corporate sprawl.
Communication breakdowns can lead to duplicated work or lapsed deadlines. Videoconferencing and email can help make up for a lack of proximity but don’t always replace casual hallway encounters or joint hands-on-keyboards sessions.
Steven Sinofsky, a former Microsoft executive who oversaw the thousands of workers building Office, and later Windows, recalled in a blog post the difficulty of getting groups based in different buildings in Redmond to collaborate effectively together, much less across time zones and countries.
“It was work to force people across these boundaries,” he said.
Amazon is aware of that challenge.
Carr, who is based in Seattle and oversees teams across the globe that manage digital systems underlying much of the company’s online retail sites, several years ago helped lead a class for Amazon managers on how to avoid the pitfalls of managing a distributed workforce. The company ran into problems in the past, he said, when teams at headquarters created subordinate units in other offices to handle grunt work they didn’t want to do.
“It’s important for each team to have its own charter of what they own, what they’re responsible for,” Carr said. “What you don’t want is two people in Seattle, two people in India, trying to coordinate product reviews over a 12-hour time difference. That’s a nightmare.”
That emphasis on focus and autonomy sometimes leads to consolidation. Early last year, Amazon eliminated a Dublin, Ireland, group that had been working on machine translation, transferring a few engineers to Pittsburgh.
The outpost here, located in a mixed-use development at the site of a former steel mill, is largely indistinguishable from offices in Amazon’s home in Seattle. An open floor plan is interspersed with Spartan, glass-walled, two-person offices. Whiteboards abound.
Free bananas sit in the kitchen, a nod to the banana stands in Seattle’s South Lake Union.
The office, called PIT10 in Amazon’s airport-code-based naming scheme for technology hubs and logistics depots, is focused on machine translation and the Alexa voice software.
An interior area, separated from the main workspace by a windowless door with a key-card reader, hosts work on the software that makes Alexa wake up and start listening for further commands.
One of the newest outside-Seattle hires is Siegfried “Jimmy” Kunzmann, a bearded, bespectacled, Ph.D.-bearing computer scientist who spent decades in his native Germany working on the technology that helps machines understand human speech.
Kunzmann last year decided he wanted to come to the United States. An Amazon offer for a job in Pittsburgh was an easy sell. He had crossed paths with CMU researchers for years. “We just knew each other,” he said.
Amazon’s HQ & HQ2
- Amazon names 20 finalists in search for HQ2
- A not-so-short HQ2 shortlist, and other take-aways from Amazon’s finalists
- 2 kinds of cities made list of finalists for Amazon HQ2
- See how the 20 Amazon HQ2 finalists compare, and vote on your choice
- Amazon receives 238 bids for its second headquarters
- Cities are free to discuss Amazon HQ2 bids, but many won’t
- Amazon’s surprise plan for HQ2 is a bold experiment
- Thanks to Amazon, Seattle is now America’s biggest company town
- Read more about Amazon and its HQ2 plans.
Today, part of his time is devoted to projects to shrink Alexa’s basic functions onto the size of in-car computers or small devices, functionality aimed at making sure the software can recognize basic commands even if internet connectivity is lost.
Impact of HQ2
Excluding employees of Amazon-owned Whole Foods and workers in the warehouse network, one in four Amazon employees in the U.S. now works outside of its Seattle hometown. That portion may grow when Amazon starts hiring employees in 2019 in whichever of 20 finalist regions it selects for its second headquarters, or HQ2.
Journalists and city officials have studied Pittsburgh and other Amazon hubs around the country for clues about the company’s preferences for an HQ2 city. It’s unclear, though, what the startup of Amazon’s second headquarters sometime next year will mean for the regional development hubs.
“We’ve hired a lot of people, and we have strong teams,” said Carr, whose e-commerce services division has employees in Asia, Europe and the U.S., including new groups started in the last year in Pittsburgh, Minneapolis and Austin. “The proliferation of new sites might slow down [after HQ2], but I don’t see any reason why this would affect existing offices.”
Indeed, since launching a public search for HQ2, Amazon has continued to announce expansion plans, often wrapped with quotes from politicians and company officials emphasizing Amazon’s hiring muscle. It’s a counter to critics who charge that Amazon and e-commerce more broadly have harmed brick-and-mortar retail and small business.
Just a few weeks after Kunzmann landed in Pittsburgh, Amazon said it planned to nearly triple the size of that office, from 65 people to 190 in the coming years.
“I came here,” he said. “And I’m not alone.”