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Wharton MBA Students Lend Brain Power to Philly Bid for Amazon HQ2

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Philadelphia is one of dozens of cities wooing Amazon with bids designed to entice the Seattle-based e-commerce giant to build its second headquarters in their backyards. Today is the deadline to get those bids in.

Some cities—like Austin and Albuquerque—chose to highlight their 300+ days a year of sunshine as a lure. Others—like Louisville and Denver—played up their booze, Kentucky bourbon and craft beer respectively. The City of Brotherly love played to its strengths as well, turning to the super-smart business school students of the University of Pennsylvania’s Wharton School as it honed its pitch.

Wharton Amazon HQ2 Case Competition

To help distill the best and brightest ideas, Penn student publication The and Penn marketing club MUSE hosted a case competition, inviting teams of two to four students each to pitch proposals to Philadelphia Mayor Jim Kenney. Competing teams—comprised of Penn undergraduate, graduate, and MBA students—could enter under one of four subtopics: financial and tax incentives, talent base and employee life incentives, strategic tech-focused incentives, and current and new legal incentives.

In all, 24 teams entered and four finalist teams—one for each subtopic—advanced to an October 13th final round, where they got to pitch their ideas directly to Mayor Kenney, who was in attendance. A panel of Wharton faculty judges—including Gad Allon, professor of operations, information, and decisions; Robert Inman, professor of finance, economics & public policy, and real estate; Saikat Chaudhuri, adjunct associate professor of management; Sara Jane McCaffrey, senior fellow and lecturer; and Susan Wachter, professor of finance and real estate—named two teams co-winners.

Team Wharton Prime

A team made up of four first-year MBA students from Wharton—calling itself Team Wharton Prime—won for its proposal for financial and tax incentives. Team members included Joe Ammon, Chris Fletcher, Katie Miller, and Gavin Yerxa. Among the ideas proposed by the team as part of the case competition were a full income tax repeal that would involve expanding existing industry-specific tax exemptions—currently applicable to banking, insurance, and telecom firms—to include Amazon, amounting to a lifetime exemption value of $13.5 billion.

Wharton Amazon HQ2
MBA student Team Wharton Prime with Philadelphia Mayor Jim Kenney; Photo courtesy of Wharton.

The proposal also called for additional property and rent incentives—including a 99-year ground-lease at free or reduced rent, a 10-year property tax abatement to begin at the delivery of each building, and waived sales tax on construction materials—to total another $380 million in potential savings for Amazon. Beyond these significant tax incentives, the team also proposed the appointment of an Amazon Happiness Officer to help the company navigate the permitting process, the development of a new “Philly Tech” engineering center to enhance the talent pipeline, and land use improvements that would allow developers to quickly build to meet a surge in housing demand.

Team Delphi

A second team, made up of four dual engineering/Wharton (M&T) undergraduates, also won for its proposal for strategic tech-focused incentives. This team, calling itself Team Delphi, included Jeffrey Cheng, Tanmay Chordia, Ameya Shiva, and Johnathan Chen, all members of the undergraduate Class of 2019. Team Delphi’s proposal called for using the Philly-based Low Range (Lo-Ra) protocol—a standard that enables low-power applications on easy-access radio spectrum—to help address Internet of Things (IoT) challenges. This would strategically position a Philly-based Amazon to leverage its AWS platform to provide cutting-edge analytics capabilities to the largely-untapped IoT space. It also highlighted Penn Engineering’s General Robotics, Automation, Sensing and Perception (GRASP) Laboratory and startups it has helped launch, which could be prime acquisition targets for Amazon as it seeks to implement computer vision for automated shelving, unmanned delivery robots, or artificial intelligence for drones, for example.

Wharton Amazon HQ2
Undergraduate student Team Delphi with Philadelphia Mayor Jim Kenney; Photo courtesy of Wharton.

Which, if any, of the MBA student team’s ideas for business and tax incentives made it into the actual Philadelphia proposal submitted to Amazon today is unknown. Kenney unveiled the final proposal—much of which is detailed on a public website—to an enthusiastic crowd at Philadelphia’s Barnes Foundation this morning, but tax incentive figures were not publicly disclosed at the event. The city also sent Amazon a private, password-protected component of the site with details on the various incentives, as well as specs for four physical sites being proposed to serve as HQ2’s home, Philly reports.

While the MBA students on Team Wharton Prime will all have long-since graduated by the time Amazon’s HQ2 is a reality, whether in Philadelphia or elsewhere, Wharton certainly stands to benefit from having a huge and coveted MBA employer take up residence in its hometown. Of course—as the Philly proposal made clear—there would also be some pretty significant benefits to Amazon in calling Wharton a neighbor.

For more on the Wharton Amazon HQ2 case competition, click here.