STUMP » Articles » The Amazon Escape: On Negotiation and Leverage » 18 February 2019, 05:16

So, I am just fine with Amazon ditching a Queens office, and I would like New York (city or state) to desist from offering these deals.

I am sure Amazon will be just fine with not having a bigger footprint in NYC, and just incrementally adding to their NYC office space that already exists.

But the funniest part of this brou-ha-ha are the activists who scared Amazon away. They don’t get it:

I talked to councilman Van Bramer after his rally. He was stunned by Amazon’s decision to pull out of Queens, even with the fierce opposition that he and other local Democrats were posing. "I never thought [AMAZON] would actually do this…I thought they would offer concessions.”

— Alex Heath (@alexeheath) February 14, 2019

So…why did you expect it? Do you understand your leverage versus Amazon’s?

NEGOTIATION BASICS: BATNA

Everybody who has been been to business school (or has taken the Personal MBA route) is familiar with the concept of BATNA: Best Alternative to Negotiated Agreement.

I’m not going to do a deep dive (this is a central point in learning about negotiating, so there are loads of resources on this), but here is the basic concept:

People can walk away from a negotiation.

Whether you have a name for it like BATNA, whenever you’re dealing with a negotiation, you know you can’t push it too far. If you make it clear to the other side that any outcomes you will negotiate for are worse than that side’s BATNA, they will walk away.

Let me make it more concrete: say you’re early on in a romantic relationship… and if you want it to continue a long time, you shouldn’t make demands of the other party beyond what they can stand. They do not necessarily have to put up with your shit.

And Bezos did not need to put up with shit from the various activists.

So he walked away.

Amazon doesn’t need an HQ2 in NYC, and not specifically in Queens. It already has employees in NYC, and already has Manhattan office space.

Amazon may have desired a bigger footprint in NYC, but it’s not crucial to its future success.

Long Island City, on the other hand, may have needed a high end employer. More than Amazon needed it.

In many cases, big companies can tell activists to go piss off (especially in a place like Chicago, where the aldermen are little kings who are the real power centers), but in NYC, and in New York state, there are no kings. Money can help influence things… but there are multiple money interests.

THE PROBLEM IN NOT BEING SATISFIED WITH NEGOTIATED RESULT

The main problem was that the deal, such as it was, was supposedly already in place. To be sure, these activists weren’t part of the package that the governor/mayor/other elected officials put in place to entice Amazon.

What was occurring was something that’s the opposite of selling past the close. Amazon thought the deal was wholly in place.

And then they ran into this:

When you’ve got a supposedly closed negotiation that keeps getting re-opened… and note, Amazon (aka Bezos) was crystal clear after months of bitchery that the people trying to re-negotiate the deal would keep doing this, especially if they were given anything past what he was originally willing to concede.

I’ve been in a situation like that before — many times. I was part of group decision-making, where we supposedly came to a final decision as a group. But there was one person who never took the group’s decision as final. They did not think the process was over until they got the result they wanted. So supposedly closed questions would keep getting re-opened. This was incredibly frustrating… and I left that group a long time ago. I do not put up with this crap. I am willing to compromise, but that works only if other people are willing to accept compromise as well.

You can’t negotiate with people who think “I will keep bitching until I get what I want, no matter what. And when I get what I want… I’ll ask for more.”

I don’t let my kids behave that way, and I do not deal with people like that.

COVERAGE AND COMMENTARY

Here is a pretty broad net thrown – I have said my piece, and here are other people’s opinions (or coverage as news):

• CNN: How Amazon blew its chance in New York
• Joel Kotkin: Twilight of the Oligarchs?
• NY Post: De Blasio rips into AOC’s Amazon opposition: Working people ‘want jobs’
• NBC: ‘That’s pretty firm’: Why Amazon is done negotiating with New York
• Powerline: HOW DUMB IS OCASIO-CORTEZ?
• Second City Cop: How Much Money Wasted?
• North Salem Daily Voice: Amazon Pullout Sent ‘Shockwaves’ Through Business Community, BCW Says [note: I live in North Salem]
• Ace of Spades: WAR: ANDREW CUOMO RIPS ALEXANDRIA DONKEY-CHOMPERS FOR WRECKING AMAZON DEAL
• Simple Justice: Punishing Amazon, The Bad Corporate Citizen
• Slate: Amazon and the End of the Growth Machine
• Megan McArdle at WaPo: The only clear winner from Amazon’s New York pullout
• CNBC: Amazon says it will not build a headquarters in New York
• NY Sun: The Progressive Civil War
• Hot Air: “I’ve Never Seen Anything Like This”: NYC Dem Carolyn Maloney Slams Opposition To Amazon Deal
• North Salem Daily Voice: Ocasio-Cortez ‘Thinks It’s A Good Idea To Lose Jobs, Revenue,’ de Blasio Says After Amazon Exit
• Babylon Bee: Ocasio-Cortez Declares Victory Over The Modern-Day Equivalent Of Slavery: Jobs [note: Babylon Bee is a satire site]
• Kevin Williamson at National Review: Capitalism’s Cold War
• Vox: Amazon scrapped its New York City plans. Some residents are elated — others are disappointed.
• Mike Pesca at Slate: I’m Really Upset About Losing Amazon’s HQ2
• Mercatus: Mercatus Scholars Respond to Amazon’s Announcement
• The Street: Reactions to Amazon Dropping HQ2 In NYC: Investors, Politicians and More
  
• Op-Ed by de Blasio in NYT: Bill de Blasio: The Path Amazon Rejected
• Bloomberg: Amazon’s Escape From New York
• Huffington Post: Alexandria Ocasio-Cortez Won’t ‘Settle For Scraps’ Post-Amazon
  

Addressing that last “demand”:

via GIPHY

AOC thinks she has leverage here. She does not.

In her speech this weekend, Ocasio-Cortez told New Yorkers they “do not have to settle for scraps in the greatest city in the world.”

“We deserve more and we can ask for more, and if people don’t want to negotiate, that’s their problem, not ours.”

Yes, you can ask. What will you get?

Before you ask, you need to know that the other side may have more options than you do.

MODEST PROPOSAL

I think my enticement to Amazon to go to Hartford still looks pretty good.

Just think about it, Amazon. You could make Hartford like it was in the Gilded Age, when Mark Twain and Harriet Beecher Stowe were neighbors — Hartford is not cool now, but Amazon could make it cool again.

Just think about it.

via GIPHY

NEEDING AND GETTING

I believe I used this video before, but I’m going to use it again, because I like the song, it’s a cool video, and it’s very relevant to this story: