Answering HQ2's Call, With Or Without Amazon

SMITH BRAIN TRUST – If Amazon.com chooses to plant its second headquarters, or HQ2, here in the Maryland, Virginia and Washington, D.C., region, the area will need a plan to nurture innovation and entrepreneurship, to help grow the technology companies that might otherwise be lost in Amazon’s shadow.

And if Amazon chooses somewhere else, well, the DMV will still need to have a plan, but for very different reasons, says Jonathan Aberman, a faculty affiliate at the University of Maryland's Robert H. Smith School of Business. In that case, people will worry the region isn't innovative enough. Aberman has been working to change that perception, whether Amazon comes or not.

Last week he announced the launch of the Tandem Product Academy, a free educational program that brings together business school experts and prominent entrepreneurs to give local tech product company leaders the skills they need to grow their businesses. Its focus is on technology businesses, most likely software, that have a product they are offering for sale, but have not yet mastered the challenge of growth. The academy is intended to provide training for businesses that have graduated from regional startup programs, including programs like the ICorps program at Maryland Smith's Dingman Center for Entrepreneurship.

But it's not a program for startups. “We are looking to help the companies that others have helped start to grow up and go from that first $500,000 in revenue to $5 million and from five employees to 50,” Aberman says.

Aberman, who teaches strategy and entrepreneurship, is a venture capitalist and innovation strategist. He founded Tandem Innovation Alliance, a community of more than 5,000 innovators, entrepreneurs and their backers from around the region. He works to help governments and economic development organizations figure out how to support their business community and grow the innovation economy.

He says the new academy fell almost effortlessly in place, with swift support from leaders in Virginia, Maryland and the District of Columbia, and from corporate sponsors.

Aberman will teach some of two-hour seminars himself, with Maryland Smith’s Oliver Schlake and Jeffrey Kudisch teaching other courses. The academy will select 25 companies to participate, free of charge, each term.

The project is funded by Aberman’s existing innovation business Amplifier Ventures, a grant from Fairfax County and corporate sponsors, including AARP. “We wanted there to be as little friction as possible because we don’t want entrepreneurs who might benefit from this program to not apply because it will cost them something,” Aberman says. There is no requirement that participants provide equity to the academy or other financial consideration. “The program is paid for by the funders, not the participants,” added Aberman.

He says he’s thrilled to get the academy up and running. The project, which dovetails with other Maryland Smith startup programs, such as Dingman Center for Entrepreneurship, is exactly what the region needs, he says, and Amazon’s yearlong search for a second home base has proved that.

“Our research has shown that our region, although it’s one of the leading regions of technology innovation in the world, excels at consultant services. And that is really great.” The problem, he says, is that the world of innovation and technology is “moving further and further away from delivering innovation as a consultant and more and more along the lines of doing it by product. It’s the idea of selling something I can sell to many other people at the same time.”

And when it comes to technology product companies, the DMV has too few. “We are never going to be known as a great technology product region unless we have a lot of great technology product companies,” Aberman says.

“I’m an entrepreneur. And entrepreneurs, when they find an opportunity and they are bothered enough by the status quo, they act. That’s what we teach at the Smith School,” Aberman says. “So, I went to the dean, and told him what I wanted to do. He immediately agreed, and offered Smith’s help. We said, ‘Why don’t we just put together a program to teach people who are already in business how to grow a technology product company?’”

When Amazon announced its search for a place to build its second headquarters – a massive project dubbed HQ2 – it had local leaders in places across North America scrambling, setting off an intense competition for the affections of the ecommerce behemoth. A full year later, Amazon still has not announced where its second headquarters will be. (But Maryland’s Montgomery County, Washington, D.C., and Northern Virginia remain finalists for the campus that could encompass 8 million square feet and employ as many at 50,000 people.)

The DMV has been working hard in recent years to woo both Amazon and Apple, which is also reportedly looking for a second HQ. Policymakers are looking to those companies, and ones like them, to bring high-paying, value-added jobs to the region, to ensure economic growth and a secure tax base. “When companies visit this region, they often don’t appreciate how innovative we are,” Aberman says. “Many of them, they think we are a bunch of bureaucrats. So whether we get Amazon or not, whether we get Apple or not, we need to have a program or a series of programs that tell the story that this place is one of the digital innovation capitals of the world. Because we are.”

An economist by training, Aberman worries about the region’s long-term prospects without entrepreneurial investment. The recent tax cuts, he says, will eventually create “a permanent structural deficit,” one that will worsen as interest rates rise.

“And as long as the dogma of one of the major political parties is that you can’t raise taxes, at some point the government will have to shrink,” he says. “So if I had to place a bet on where future job growth is going to come from, I would not bet on government spending.” Government spending, historically, has been the economic engine for the region. It’s time, he says, to diversify.

“If we don’t get Amazon’s HQ2 in this area, people are going to wonder, ‘What happens next?’ I want to create a program that answers that question. And the answer is: We all get back to work and we build great companies,” he says. “We help build tech product companies.”