Tech Cocktail was cofounded in 2006 by former blogger and AOL product strategist Frank Gruber and former Feedburner employee Eric Olson. The site, which has its headquarters in downtown Las Vegas, said it will use the funding to hire more employees, including VegasTech organize Gabriel Shephard and DC Tech organizer Justin Thorp.

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Sound ambitious? That’s because it is. Members of Hsieh’s Downtown Project are being asked to get rid of their personal cars and start using the Project 100 transportation mobility system app when it becomes available later this year or next. They’re starting an invite-only beta program in the coming months, and when the transportation system is fully deployed it’s supposed to hit all those 100 numbers.

Here’s how it works. A Project 100 member opens the mobile app and is offered a number of choices based on their location and the location of the nearest transportation option. A member could see:

• 1). An on-demand Tesla Model S that can be driven to you and pick you up. Like an Uber but with a subscription and a Model S.
• 2). A bike parked near you that you can unlock and pedal to an appointment that’s several blocks away.
• 3). A bus shuttle stop near you for longer trips.
• 4). A neighborhood (slow and low range) electric vehicle that you can unlock and drive and park at your desired location.

Details are scarce about how much this would cost to build or how much the monthly subscription would cost users. The customer pricing will be based on zones in Vegas and tiered plans.

The Downtown Project calls its plan “the ultimate in collaborative consumption,” and the FAQ says that the team looked at currently available options like Uber, Zipcar, and public transportation, but wanted to build an entirely new option. That’s in keeping with the spirit of the Downtown Project, which is using the clean slate of downtown Vegas to create a new type of community and urban living system.

Project 100 is working with a startup called Local Motion, which is out of Stanford and is building the software and hardware to share the bikes and cars and manage the reservation system. Local Motion is also working with Google for fleet sharing on its campus. Originally Local Motion was developing the electric vehicles that fleets would share (in addition to the software) but it looks like the company has moved more away from that model.

Isolated and defined communities are the optimal places to try new, outside-the-box, and just plain wacky new forms of urban transportation. San Francisco has actually been a pretty good place to launch an alternative transportation startup in recent years, due to the city’s early adopters and lack of parking and good public transportation. Scoot Networks has been building an electric scooter sharing network here, and Ridepal has been developing Google-style commuter buses for companies (both Greenstart companies).

Better Place has focused on Israel for its electric car sharing and battery swapping network, and found mixed success (to put it politely). Masdar City has built electric public transportation pods, though I’ve also heard that not many people use these. New transportation doesn’t always catch on. Downtown Vegas and Project 100 could be an interesting option, though success will be based on how attractive the service is for the customers and how much the network ultimately costs.

Check out our coverage of the tech revitalization of downtown Vegas:

• An inside look at the high-tech awakening in Las Vegas
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• 5 Las Vegas startups you need to know

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Apple and the horrible, no good, very bad Maps app

The Amazing iOS 6 Maps Tumblr

The September launch of the iPhone 5 was marred by the disastrous reception Apple’s new Maps app received. Parody social media accounts popped up within hours, as disappointed users complained of poor or missing location data. CEO Tim Cook felt compelled to make a public apology, and it’s thought that the episode was the last straw that caused Cook to send SVP Scott Forstall packing. To rub extra salt in the wound, Google’s own Maps app for iPhone was greeted with the Twitter equivalent of a Hallelujah chorus when it arrived last week – and was downloaded 10 million times in 48 hours. – Erica Ogg

Google’s media player that never got a chance to play

Google surprised many in June when it announced the Nexus Q, a wireless digital content player dubbed as “the first social streaming media player.” But not all surprises are good ones. The small orb-shaped device launched at an introductory price of $299, triple that of the more capable Apple TV. And aside from the high price point, the Q offered no media services save Google’s own Play store for movies, television shows and music. The unique DJ function — allowing anyone’s Android device on the same network to mix the music — was hardly enough to justify the Q, which Google suspended indefinitely in July. — Kevin C. Tofel

Facebook’s troubled IPO

The initial public offering of the world’s largest social network was supposed to be the tide that lifted all technology boats, but the IPO instead turned into a stock-market train wreck and crushed the hopes of many other tech-stock hopefuls in the process. Thanks to a combination of mismanagement by the NASDAQ stock exchange (which used a new trading system for the issue) and a misreading of the initial demand by Facebook and its brokers — which resulted in an over-supply of stock — the company’s share price tumbled by more than 50 percent in the days and weeks following the offering. The company still wound up raising more than $16 billion, but the episode gave the tech darling a black eye as far as some investors were concerned, and likely set the market for tech-stock issues back by months, if not longer. — Mathew Ingram 

Two words: HP and Autonomy

The $11.1 billion purchase of Autonomy by Hewlett-Packard may have been announced in 2011, but the enormity of the screw-up didn’t fully surface till 2012. In May, HP management booted former Autonomy CEO Mike Lynch, and in November the company asked authorities in the U.S. and U.K. to look into Autonomy’s accounting practices prior to the buyout. That process is ostensibly now underway. Nevertheless, after airing all this dirty laundry in the November earnings call, HP CEO Meg Whitman asserted that HP remains “100 percent committed to Autonomy.” For the record, HP took a loss of $6.85 billion for the full fiscal year ended October 31, 2012 — most of that from an $8 billion writedown related to the Autonomy business. — Barb Darrow 

Nate Silver’s an idiot and Romney wins in a landslide

Except…Nate Silver isn’t and Mitt Romney didn’t. Silver, the founder of the New York Times‘ popular FiveThirtyEight politics blog, and several other notable statisticians mathematically predicted Barack Obama’s reelection with perfect or near-perfect accuracy. Meanwhile, Karl Rove sputtered through election night on Fox News, futilely defending his prediction like a child trying to convince a teacher a dog ate his homework. Maybe there’s something to this data analysis after all. Go figure. – Derrick Harris 

Amanda Palmer crowdfunding fubar

Alt-rock fave Amanda Palmer experienced the downside of social network savviness in September after she raised $1.2 million on Kickstarter to fund her new CD — then solicited musicians to play for free on her subsequent concert tour. Reaction was heated and Palmer quickly regrouped, saying she would pay more than beer, hugs and “merch” for the help. The alternate theory is that this was all a massive publicity stunt — in which case, it was hugely successful. (Palmer has since cancelled her 2013 tour to help a friend deal with cancer.) — Barb Darrow 

Twitter gags NBC Olympics critic

What do you when someone says mean things about your friends? You shut them up; at least, that’s what Twitter did during the London Olympics when it suspended the account of journalist Guy Adams, who tweeted snarky things about the TV coverage of Twitter’s corporate partner NBC. Twitter blamed an internal communications snafu and restored the journalist’s account two days later. Still, the incident became Twitter’s first full-blown PR crisis and a reminder of its growing shadow over our media lives. — Jeff Roberts 

The Western Mail’s caption fail

Tweeters celebrate epic #fails on an almost minute-by-minute basis. And for digital media aficionados, ye olde newspaper sub-editing and caption errors rank high on that dreary list. But there was none more epic in 2012 than Welsh newspaper the Western Mail, which committed what was labeled “the worst caption fail of all time” when it identified a photo of an airport manager, who died when the plane he was travelling in hit a mountain, with “LOL.” Although British prime minister David Cameron may think the acronym stands for “lots of love”, everyone else knows not to “laugh out loud.” The internet was not amused. Nor was Western Mail publisher Trinity Mirror, which responded, “We apologize for any offense this error may have caused.” – Robert Andrews

AT&T’s face-off over FaceTime

Trying to convince your customers, the public and your regulators that you’re just a big, cuddly carrier without an anticompetitive bone in your body? Maybe blocking a wildly popular app that happens to compete directly with your core service isn’t the best way to score points. Oh, but wait, AT&T didn’t block FaceTime over its cellular networks. You could use Apple’s video chat app to your heart’s content if you signed up for one AT&T’s (more expensive) family share plans. It’s not every day that a carrier stifles competition and jilts its customers for more money in a single brush stroke, but Ma Bell is a very efficient painter. Eventually consumer protests and the threat of the FCC involvement caused AT&T to backtrack. It offered FaceTime over cellular to more subscribers, and sheepishly claimed it was just protecting its customers from the inevitable network overload FaceTime would bring. Okay, but if AT&T’s new fangled 4G networks can’t handle video, what was the point in building them? Email and Twitter updates? — Kevin Fitchard

Bravo’s Silicon Valley startup trainwreck

Silicon Valley has been abuzz with Randi Zuckerberg’s Bravo reality show “Start-Ups: Silicon Valley,” which attempted to portray the craaaazy lives of startup founders and their companies in the Wild West. However, the show has been widely panned by techies and journalists in the Valley, who are obviously underwhelmed by shots of people in the pool with iPads and dialogue like ”Silicon Valley is just…balls to the wall.” Of course there’s an element of hilarity to the shenanigans associated with tech startups in the Valley, but it doesn’t appear that Zuckerberg’s show will be the one to effectively dramatize it. And now that the final episodes are being downgraded to a 4 PM PST time slot, looks like the show’s on its way out. – Eliza Kern

J.K. Rowling’s unreadable book

Getty Images

J. K. Rowling fans who’d preordered the ebook edition of her hotly anticipated new novel, The Casual Vacancy, were in for a surprise on September 27: Thanks to improper formatting by publisher Hachette, the ebook was literally unreadable, with a choice of two type sizes — microscopic or massive. Hachette pushed out a new file later in the day, but this was one of the biggest books of the year, and in 2012 there’s no excuse for failing to test an ebook before you release it. – Laura Owen 

VeriFone copies Square’s user agreement

VeriFone launched its mobile payment acceptance system Sail to compete with Square. But it went a little too far in emulating Square when it copied big chunks of wording from Square’s user agreement. When called on it by GigaOM, VeriFone cut about a third of its user agreement out to eliminate the copied text. – Ryan Kim

So who didn’t suffer a data breach?

Shutterstock/deepspacedave

So much for consumer confidence. In 2012, several of the biggest names in tech were forced to ask for users’ forgiveness after hackers gained access to customer records. In January, Zappos CEO Tony Hsieh apologized after hackers accessed names, email, billing and shipping address and scrambled passwords for potentially 24 million customers. And, in June, Yahoo, LinkedIn , Last.fm and eHarmony followed up with confessions of their own after a spate of hack attacks that compromised user passwords. In April, electronic transaction processing provider Global Payments also confirmed a data breach of 1.5 million credit cards. – Ki Mae Heussner

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That’s what coworking is betting on, as the movement sells itself as providing ideal environments for serendipity, relationship building and nurturing the creative spark. But it’s not just spaces for entrepreneurs and independent pros that are adopting these ideals. “The future, I believe, is that corporate offices are going to become coworking offices,” Harvard-trained designer and ParallelCities.com founder Sidi Gomes told GigaOM in the run up to this year’s Global Coworking Unconference (GCUC).

Zappos for one is already embodying this change. The company’s new downtown Las Vegas base is “a great extension of coworking ideals,” another GCUC participant, architect Jerome Chang, told GigaOM. “Zappos is looking to build a whole mini-city community by having encouraged a lot more people to live, work and play all in the same area as their office. The surrounding community becomes the campus itself,” he explained.

But don’t take Chang’s word for it. Recently, Zappos CEO Tony Hsieh laid out his own thinking about his company’s $350 million investment in Las Vegas at Venture for America‘s Summer Celebration, giving a presentation explaining just what the company is up to in the city. The plan includes $50 million for local small businesses, $50 million for technology startups, $50 million for education and $200 million in real estate. Business Insider has posted the entire 60-slide presentation.

Or for the short and sweet round-up of Hsieh’s thinking look to Las Vegas Weekly, whose reporter J. Patrick Coolican met with Hsieh recently and was converted from his previous skepticism about Zappos’ plans. “Is he building a Burning Man encampment Downtown?!” Coolican wondered, but after speaking to the Zappos boss, he understands there are pragmatic business reasons for the company’s hefty investment in Las Vegas as well as philosophical ones. Coolican writes:

Zappos considered building a new suburban mega-campus, like Apple or Google. These campuses have creature comforts to induce workers to never leave, and/but they can be very isolating.

Hsieh had a radically different idea: Downtown, because he believes, he knows, that workers in cities are more productive. He thinks Zappos will be more profitable Downtown.

Here he leans on the work of Harvard economist Edward Glaeser, who notes that per-capita productivity increases by 4 percent as population density rises by 50 percent.

It’s not entirely clear why this is true, but Glaeser calls cities “machines for learning.” Humans have succeeded because of our ability to collaborate, and cities are the best geographical mechanism for doing so. Hsieh refers to “serendipity,” the chance encounters between technologist, thinker, social entrepreneur, artist and venture capitalist to create the new.

More human interaction means more serendipity and happiness, which therefore means higher productivity and profits.

Does this equation seem sensible to you? 

Image courtesy of Flickr user Moyan_Brenn_I’M BACK NOW. 

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I recently visited the headquarters of two Las Vegas startups, Romotive and Walls 360, that are busy making their own stuff. It was eye-opening to see to see how hardware and physical goods are made in an increasingly software-centric world. You can read more about what these companies are up to, or just check out this slideshow of what daily life looks like.

Eat, sleep, build robots

For Romotive, one of the startups that Zappos’ CEO Tony Hsieh has lured to Las Vegas, life is definitely interesting right now. The company, which is less than a year old and just raised $1.5 million from some prominent angel investors (including Hsieh), spent the month of February building around 2,000 mobile-phone-powered robots by hand in two apartment units that serve as both living and working space. When I stopped by, the apartment was packed with parts and shipping boxes, and marketing head Zach Buchanan told me there was more to come. On average, he said, it takes about 20 minutes to build a single robot, although the team assembles them in stages rather than doing one at time from start to finish.

Team Romotive. Credit: Andrew Seid.

The big order was the result of a successful CES outing, where it sold 80 of its $99 robots, which offset the cost of its booth space and generated some positive press. For the Christmas season, Co-Founder and CEO Keller Rinaudo told me a few days earlier, Romotive only had to build about 100 robots. Buchanan said the company was selling about 6 robots a day online before CES, but now is selling about 26 per day.

Romotive plans to move out of its apartment and into a co-working space Hsieh is building in downtown Las Vegas, but I was left wondering if shared space will suffice if the company scales as its investors think it can. Rinaudo suggested that a change in the company’s focus, which is now split about 50-50 between hardware and software, might change its need for space.

“We’re defining this new market of smartphone robotics,” he told me, and as the hardware part becomes commoditized and new form factors spring up to do new things, Romotive could be in the position to serve as the platform powering them. It wants to “bring the app store to robots,” he said, where Romotive apps would serve as the brains for whatever physical robots consumers want to buy.

Where artists and mechanics meet

The decision to come to Las Vegas was a little different for Walls 360, which creates high-resolution, stick-on wall art on special fabric that can be removed and replaced up to 200 times. It didn’t need Tony Hsieh’s money — Guy Kawasaki and a who’s-who of graphic arts already invested in its angel round — but it did need cheap space and lots of expertise in large-format printing. Las Vegas gave it both.

Tavia Campbell, avatar-style

Co-founders Tavia Campbell and John Doffing have actually been at this for a few years, previously working out of San Francisco and then Philadelphia, but when they decided last year to stop outsourcing and start printing their own products, they had to make a new business model and find a new home. Las Vegas has proven to be a great decision, Campbell told me, because the company’s only real costs now are administrative, ink and fabric — rent in the industrial sector (its neighbor is a crankshaft repair shop) is practically a non-factor — and the city actually has a great mix of artists and printing professionals that honed their skills working on projects for casinos and trade shows.

Walls 360′s other co-founder, Yiying Lu, lives in Australia. She’s best known as the graphic artist who designed Twitter’s infamous “fail whale.”

Right now, Walls 360 makes most of its money from partnerships like those with EA around its video games, from contract printing jobs for conventions and other events, and from individual sales of its custom prints. However, because individual orders are printed on demand, Campbell said the plan is to let customers upload their own images and have Walls 360 print them. She said Walls 360 is also thinking about leveraging cheap storefront space in downtown Las Vegas to open its own store, possibly doubling as a gallery where artists could display and sell their work as Walls 360 prints.

Life is a little more complex for startups when they have to account for stuff as well as staff, and when delivering a product means the workers — not their servers — have to deliver the goods. But it also creates some unique go-to market opportunities and might make it easier to convince consumers to buy a product. Apps are great, but there’s nothing quite like forking over some cash and having a new something in your hands.

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Las Vegas might not be the ideal place to try and build a technology hotbed, but that doesn’t mean it can’t be done. As I reported previously, Zappos CEO Tony Hsieh is investing an impressive amount of money — $350 million — to help revitalize the city’s urban core and create a community of tech startups, and he already has some key pieces of his puzzle in place. And while it’s easy to be skeptical of Hsieh’s grand vision, the companies that have moved to the desert are confident they made the right decision, in part because Las Vegas isn’t Silicon Valley.

It’s not Silicon Valley. That’s a good thing.

Members of the Las Vegas startup community who’ve had experience in places such as Silicon Valley and Seattle relish their new home because it’s not those places. The path to success in Silicon Valley follows certain patterns, both Habit Labs Co-Founder and CEO Jen McCabe and Romotive Co-Founder and CEO Keller Rinaudo told me, but Las Vegas gives them the opportunity to blaze their own trails and actually help shape whatever process ultimately results from Hsieh’s experiment.

Actually, Rinaudo said, being in Las Vegas has been a huge advantage for Romotive. Software developers hold all the cards and there are lots of well-funded companies looking to grow their staffs, so he can’t hire the people he wants just by waving money at them, there has to be something more. Rinaudo says Las Vegas gives Romotive the opportunity to sell potential employees on being part of a tight-knit tech community and, perhaps, the birth of something great.

Team Romotive (Rinaudo second from left). Credit: Andrew Seid.

And when companies get the employees they want, being in Las Vegas should make it easier to keep them. There’s not Google, Facebook and Palantir acqui-hiring the people or technologies they want, McCabe said. There’s nothing wrong with building a company where the ideal exit or career path is quick absorption by a dominant force, but people who want that won’t come to Las Vegas, she added.

There’s also the benefit of being a big fish in a small pond. Romotive got a magazine cover in Las Vegas, Rinaudo noted. There’s no way a several-month-old company that hadn’t even announced funding could have got that treatment in San Francisco.

Zappos’ Zach Ware, one of Hsieh’s close associates, takes a particularly astute stance on this issue. Business-wise, he says, California actually has bigger obstacles with taxation and regulation than does the relatively lax and tax-free Nevada. Las Vegas’s biggest problem is “quality of life for the creative class,” but that’s exactly what Hsieh is spending a fortune to build.

Live together, work together, play together

When it comes to selling new companies and employees on the Las Vegas culture, Hsieh has put a unique system in place. If one really wants to call Hsieh’s Las Vegas startup effort an incubator, it’s only in the loosest sense. Yes, startup employees will tell you, Hsieh and his close associate Zach Ware are always there for advice. Yes, there is a lot of networking. And, yes, Hsieh will gladly chip in with funding. But he’ll also give companies a place to live in one of the dozens of units he owns in a downtown condominium complex that overlooks the forthcoming Zappos headquarters.

Presently, a handful of startups have taken Hsieh up on the offer, and they live in close proximity on the building’s 17th floor. Jen McCabe, co-founder and CEO of personal-health-platform Habit Labs, compares the experience to college. Doors are always open, she said, and the companies do community dinners in the evenings. For leisure, almost everyone goes indoor rock climbing together.

The companies also work together, from their apartments, as they await the completion of a nearby co-working space Hsieh and his Downtown Project are opening. No one hesitates to walk 30 feet down the hall and ask each other business- or technology-related questions, McCabe said. Romotive, which moved to Las Vegas shortly after forming in Seattle, is presently building about 2,000 of its iOS- and Android-powered robots from its apartment, meaning nearly every free inch of space is covered with stacks of components and shipping boxes.

Jen McCabe

McCabe, something of the group sage given her relatively high 32 years of life experience, admits the experience takes a certain type of individual and company. She’s one of those people: she visited Hsieh over Thanksgiving in 2011 and her team had relocated by the end of the month. But if you’re an early-stage company hellbent on changing the world, she told me, you’ve already assumed a high level of risk.

Shaun Swanson of Ayloo.net and Counterless actually grew up in Las Vegas (as did the company’s other founders), but, he told me, “I left when I was 18 and wanted to get as far away as I could.” After completing his bachelor’s degree at Carnegie Mellon University and briefly studying at Caltech, Swanson has now been back in town just more than three months. “I’d never been downtown before I left,” he said, but he got excited about what was going on with the Downtown Project, and now he lives downtown.

Reality check

Blue is where people moved; downtown is in the center. Credit: Data Pointed

Despite the optimism of the startups that now call Las Vegas home, though, there are some very real institutional challenges. For the greater Downtown Project that funds these companies, redeveloping the city’s urban core is rife with hurdles relating to zoning, mass transportation, and a population that lives and works in the suburbs or on the Las Vegas Strip and often doesn’t spend enough time downtown to know or care about what’s going on there. For the startups, a major challenge will be finding new employees to grow their companies.

In Silicon Valley, for example, Stanford and UC-Berkeley pump out candidates well-versed in computer science and the business of entrepreneurship. For companies headquartered in Las Vegas to hire without having to convince candidates to up and move to a new city, the University of Nevada, Las Vegas might have to become the city’s own feeder system.

There certainly are qualified graduates — Zappos employs many of them, and Romotive just hired a UNLV student they hope can grow into an integral part of the company — but the unique aspects of launching startups and some of the high technology required aren’t part of UNLV’s DNA just yet. One member of venture capital firm Originate told me he’s had trouble finding qualified engineers in Las Vegas to help the firm’s portfolio companies build their businesses, and all of the startups I spoke to acknowledged that hiring might be a challenge.

The times they are a-changin’

As Ware explains it, computer science students might get pretty much the same education anywhere, but it’s the understanding of how to use those skills and the access to investors and industry knowledge that sets some universities apart. Ware said the Downtown Project and Zappos, generally, are interested in helping foster degree programs at UNLV around the convergence of technology and business. They also think it could be helpful to locate certain university buildings downtown, or to hold classes there, so students can get more integrated into the technology scene. As it stands, the UNLV campus is about 5 miles from the new Zappos headquarters.

Las Vegas’s newest startups are getting proactive, too. Habit Labs’ McCabe said her company intends to reach out to relevant medical-school and computer science faculty to integrate the idea of personal health platforms into their curricula. Romotive wants to start younger, Rinaudo told me — when the company moves into a more-permanent facility, it wants to start holding robotics classes for teenagers to get them interested in the technology.

Apart from the efforts coming out of the Zappos ecosystem, Las Vegas-based technology companies might also get help from the city’s other IT powerhouse, Switch Communications. The operator of the SuperNAP data center and, soon, millions more square feet of data-center space in the city intends to unveil in March a series of educational and entrepreneurial efforts under the INNEVATION banner. Among those efforts is a plan to open a cloud-computing facility on the UNLV campus.

In the end, said Habit Labs’ McCabe, she views the effort to build a technology scene in Las Vegas as analogous to a mission to colonize Mars, but the history of Silicon Valley isn’t that different. With enough ideas and enough desire, she thinks Hsieh and those who sign on to his vision can create a technology hotbed out of the desert dust.

Feature image by Derrick Harris; Las Vegas population map courtesy of Data Pointed.

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Unemployment currently resides at 12.7 percent. If you’ve asked me how I like it here, I’ve probably replied that, for myriad reasons, I don’t all that much. But maybe there’s hope on the horizon thanks to, of all things, online shoe retailer Zappos.

A view of the soon-to-be Zappos headquarters from Hsieh's 25th-floor apartment.

You might have read one of the handful of stories that have been written about Zappos CEO Tony Hsieh’s Downtown Project, but it’s hard to do his $350 million investment justice if you haven’t been here and don’t know the hurdles he’s facing. The abandoned city hall that Zappos is slated to move into is hardly the Googleplex cozied away in Mountain View. In fact, it’s even miles away from the glitz and glamor of the Strip. And in a city full of transients, where concrete-block walls surround nearly every house, there isn’t much sense of community to speak of.

When it comes to the technology startups that Hsieh wants to bring here to help spur innovation and diversify the gaming-centric economy, well, Las Vegas is not Palo Alto. UNLV is a fine school, but it’s not Stanford. But Hsieh has a plan.

Building a tech scene, one dollar at a time

When you talk to anybody involved with the burgeoning technology scene in Las Vegas, a recurring comment is that companies have been around for awhile, scattered throughout the expansive city, but they existed in silos. None really knew the others existed. This is where Hsieh and the Downtown Project come into play.

Wanting to give Zappos employees a true and affordable live-work-play area in a city dominated by suburbs and strip malls, and inspired by Edward Glaeser’s book Triumph of the City, Hsieh and his team set out to fill the Fremont Street District, largely devoid of good restaurants, shops, recreation (non-gaming) and housing with just those things. Anyone who cares to contribute an idea can weigh in on what downtown Las Vegas needs.

If they’re particularly ambitious, perhaps they’ll ask for a piece of the $50 million Hsieh has set aside to fund small businesses in order to make their business a reality. Zach Ware, a Zappos employee tasked with developing its new campus, and Hsieh’s righthand man on the Downtown Project, said about 15 to 20 businesses have already received funding. Now, when Hsieh pitches Las Vegas to out-of-town companies and influential community members, he can legitimately point to the promise of a real community where innovators can live, work and play among each other and live in a diverse population of downtown residents.

A view of the future co-working space (center, mid-rise) from Hsieh's apartment.

Some parts of Hsieh’s plan are coming together faster than others. He’s already helped establish a technology library called usr/lib that houses a growing number of books on all things tech and that currently serves as a co-working space of sorts for tech-minded folks. The Downtown Project just signed a lease on an old mid-rise building that will soon provide 21,000 square feet of legitimate co-working space. In the meantime, a handful of Hsieh-funded startups live and work out of the apartments Hsieh has provided for them in a downtown condominium complex.

Zappos has also sponsored two Startup Weekends in Las Vegas, and Hsieh’s team is a big supporter of other startup gatherings around the city. One weekly event, called the Jelly, happens every Thursday night and sometimes features presentations on everything from coding to how to sign a term sheet. Other things are happening, too, including a handful of Ignite events and a hacker space where hardware hackers can get together and mess around with machines. There’s even a web site, VegasTech.com, that keeps track of everything that’s going on.

I’d be remiss to give Hsieh and his Downtown Project all the credit, though. Although its epicenter is about a mile and a half from the Fremont Street District, Las Vegas does have a growing arts district that played a pivotal role in helping build a sense of community around Fremont Street. Amid the decades-old casinos, no-tell motels and abandoned buildings sits a block of hip bars, a coffee shop and an art gallery that one might expect to see in the arts district. The latter two actually share the same building, and the technology-focused usr/lib has its space on the second floor.

At any given time, walking into the coffee shop, called The Beat, is like walking into a who’s who of the Las Vegas art and tech scene. The Ogden, where Hsieh, many Zappos employees and some of his funded companies call home, sits right across the alley and towers above the two-story building.

The Emergency Arts building houses The Beat and usr/lib. The Ogden towers in the background.

Who calls Vegas home (and how to get Hsieh’s money)

However, as Zappos’ Ware pointed out, Hsieh wanted to build an organic tech hub, which means that people — not places — come first. That explains the funding process, which is far from the formal venture capital experience. Typically, companies will come to town and visit, staying in one of the condominiums Hsieh owns inside the Ogden — he bought the top three floors and all other open units. They learn about what’s going on here, attend a Jelly and meet the rest of the startup community, maybe even presenting on their business.

If they’re willing to commit to being part of that community and helping it grow, Ware said, promising startups can get a piece of the $50 million Hsieh has earmarked just for building startups. Hsieh’s team thought about doing an incubator, he added, “but we’d rather build a city that is an incubator.”

Romo, Romotive's $99 phone-powered robot.

So far, he’s lured in a couple of impressive startups in the  form of Habit Labs and Romotive. The personal-health-focused Habit Labs came from Silicon Valley, where it was a Y Combinator graduate and raised an angel round from Dave McClure, Founders Co-Op, Rick Webb and Apricot Capital. Romotive, a TechStars alum that builds mobile-phone-powered robots, came from Seattle. After raising $115,000 via Kickstarter, Romotive just closed a $1.5 million round that included investment from Hsieh, as well as, according to CNET, “the Stanford University endowment, Lerer Ventures, David Cohen of TechStars, and a number of prominent angel investors.”

Hsieh, along with several other Zappos executives and a local gaming executive, also poured $500,000 into Rumgr, a mobile app for buying and selling used goods that was founded by three former Zappos employees.

Other startups in Las Vegas include Walls360 (which counts Guy Kawasaki among its investors), Ayloo.net, Tracky and GarageGames. Counterless, a brand-new startup that grew out of the last Startup Weekend in November and includes members of the Ayloo team among its eight founders, has a particularly innovative iPhone app that lets bar, coffee shop and nightclub patrons order and pay for fare from their phones without waiting in line.

Indeed, something is brewing in Las Vegas, and it’s just getting started. It has everything to do with Hsieh’s vision and, as we’ll see, a lot to do with the fact that — for better or for worse — Las Vegas is not Silicon Valley.

Up next: Why startups are moving to Las Vegas, why they love it and how they plan to overcome the city’s technological shortcomings.

All photos by Derrick Harris.

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While during a demo, startups have to explain what their offering is and how it works, that’s only one part of a successful pitch. “There’s been a lack of focus on distribution,” said Marc Andreessen, founder of Netscape and now the head of a $300 million venture fund. “The typical path a lot of startups take is they launch their product and no one finds out about it.” They also need to do a better job explaining how they’re going to catalyze the industry. As Zappos CEO Tony Hsieh’s put it after viewing demos, “I didn’t see anything where I thought ‘Oh wow, I think this will change the world.’”

When it comes to social networking, Facebook may have already done that, noting this week that it now has 300 million users worldwide. Robert Scoble, a known enthusiast of the space, said social media-focused companies should be looking to integrate Facebook Connect or OAuth into their services. But one startup, Stribe, is trying to reinvent the wheel by developing a technology that lets publishers build social networks around their web sites. While Stribe’s technology is impressive, it provides a service we could happily live without.

As for those that are looking to build their business around the likes of Facebook, Twitter and other social networks, they need to offer something unique and something that adds value to those companies’ existing features. For example, Radiusly has developed a web-based service that lets companies create authorized profiles for Twitter and manage their accounts. A company profile would offer, say, links to its employees’ profiles. But Twitter already offers verified accounts for well-known executives and there’s a host of startups, such as CoTweet and HootSuite, that are focused on helping companies manage their Twitter accounts.

RedBeacon, a web site that connects people to local services and apparently hit all the right notes with its pitch, was crowned the winner of the event. On RedBeacon, people can post jobs they need done, such as house cleaning or gardening, and local service providers can bid on how much they’ll charge to do the job and when they’ll complete it. The San Mateo, Calif.-based company, founded by three ex-Googlers, is the startup to keep on your radar this year.

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