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Why Las Vegas needed a lot more than Tony Hsieh’s cult of personality

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As a Las Vegas resident, I’ll say this about Zappos CEO Tony Hsieh and his Downtown Project: There are better places to eat, drink and shop downtown now. Within a certain radius of the epicenter of Downtown Project activities, I feel I’m in less danger of getting stabbed than I was a few years ago. The Container Park outdoor mall he built is a beacon of family-friendliness in an area otherwise dominated by adult (sometimes X-rated adult) activities.

As for the “tech utopia” he was building — highlighted most recently in a feature series this week on Re/code — I’d long been skeptical. I don’t think the rest of the city was really buying it, either. Actually, I don’t think the rest of city really cares about any of it. Unless you’re young and/or hip, and fairly well-to-do, Hsieh’s downtown might as well be a world away.

Breaking news on Tuesday seems to reinforce this notion. First, Las Vegas Weekly magazine reported of massive layoffs at the Downtown Project — primarily in non-revenue-generating aspects of the project — and some serious dissension in the ranks. Then Re/code itself reported that Hsieh himself is stepping down as the project’s boss and his handing over control to his lawyer.

David Gould, a former University of Iowa professor who moved to Las Vegas to join the project (and whose story is highlighted in the Re/code series), resigned on Monday night and wrote an open letter to Hsieh that included the following accusation:

“Business is business” will be the defense from those you have charged with delivering the sad news. But we have not experienced a string of tough breaks or bad luck. Rather, this is a collage of decadence, greed, and missing leadership. While some squandered the opportunity to “dent the universe,” others never cared about doing so in the first place.

The news isn’t terribly surprising if you live in Las Vegas. Much of the local press on Hsieh and his efforts — at least the pieces I find myself reading — don’t just focus on its awesomeness or the cool ways it’s going to engineer connectivity and collisions. They tend to focus on issues such as how real estate sales are pushing low-income residents out of affordable, if substandard, housing; how signs are popping up (including the abrupt shutdown of manufacturing startup Factorli) suggesting Hsieh and his cohorts were getting desperate or falling victim to poor civic planning; and how the cult-like atmosphere surrounding the Downtown Project has rankled and even worried non-affiliated business owners.

A wall of Downtown Project ideas, on Post-It Notes, in early 2012.
A wall of Downtown Project ideas, on Post-It Notes, in early 2012.

The thing is, when you live here, save for the occasional and not-always-glowing story on public radio or in the newspaper, Hsieh, the Downtown Project and the tech scene they’re trying to incubate don’t have much of a presence outside the small area they’ve decided to make their own. It’s just so insular — a few hundred people in a metropolitan area of nearly 2 million, holed up in and around a high-rise condo complex, with a few dozen small businesses catering to their desires for co-working spaces, craft beer and bacon-infused doughnuts.

Once the new downtown residents (the ones that remain, I guess) finally get their grocery store in October, they won’t even have to schlep across town to buy food.

But it’s not just the numbers (they could grow), it’s also the message. A message that — if Hsieh’s mission involved anything or anyone beyond the entrepreneurs and hangers on who bought into his vision — is tone deaf to the community that surrounds it.

In a city with high unemployment, scores of service-industry employees with families to raise and 24-7 jobs, and a police force that has killed dozens of citizens in the past few years, nobody wants to hear endlessly about innovation, entrepreneurship, growth hacking or “collisionable hours.” We — myself included — want to hear how all of this activity and all of the deals with local government around zoning, development and the like are actually going to help improve the quality of life across the city.

The giant, flame-throwing mantis outside the Container Park mall was kinda cool. Will it also be short-lived?
The giant, flame-throwing mantis outside the Container Park mall was kinda cool, but not enough.

The reality right now is that the Downtown Project and its related business generate precious little tax revenue because Nevada taxes business very little, and employees nothing. It doesn’t generate a particularly high number of jobs — tech or otherwise — and it’s hard to imagine many of them, especially those at new bars and restaurants, are particularly high-paying. Tech jobs usually pay well, but a growing number of startups funded by Hsieh’s Vegas Tech Fund aren’t even headquartered in Las Vegas, and many are hiring for positions in those other cities rather than here.

Located in a relatively poor part of the city that’s part of the fifth-largest school district in the country, in a state with one of the worst education systems in the nation, the Downtown Project has built a new-age, entrepreneurism-centric charter school. It serves infants through kindergarteners, and the full-time program for kindergarten costs $15,750 a year.

The Downtown Project recently nixed the word “community” from its mission statement. Here’s part of the rationale:

With a name like “Downtown Project”, we’ve found that a lot of people no longer view us as another business or developer that will co-exist amongst many other businesses and developers, but instead there are a lot of people that seem to expect us to address and solve every single problem that exists in a city (for example, homelessness, substance abuse, and mental health).

No, they expected the Downtown Project to help. 

The Downtown Project offered some glimmers of hope for a better downtown, where the gaudy Fremont Street Experience (above), was previously the only thing happening.

Without even getting into the serious questions about urban planning, a lack of tech talent (or good ideas) and whether serious entrepreneurs would ever really buy into the infantilized lifestyle the Downtown Project pushes, the community matters. A couple thousand Zappos employees and a few hundred implanted entrepreneurs (in a city full of implants to begin with) cannot be self-sustaining.

The only thing that can save the Downtown Project is the endorsement of locals that something really good is happening. Community, in my experience, has never really been the name of game in Las Vegas, but damn if it isn’t an exciting prospect.

Las Vegans have our own set of problems to deal with. If we can’t see what’s in the Downtown Project for us, we’ll just go back to our subdivisions, malls and casino movie theaters without batting an eye.

“Tony Who?”

Correction: This post was updated to reflect the accurate size of the Clark County School District. It is the nation’s fifth-largest, not second-largest.

10 Responses to “Why Las Vegas needed a lot more than Tony Hsieh’s cult of personality”

  1. The main issue you and other well-meaning Vegas “community” supporters neglect is this: Tony had the option to build a Zappos campus/castle walled off from the rest of the world like HP, Google, Apple, Microsoft, Amazon, etc, but decided to build an “outward, integrated” headquarters similar to NYU that spreads its employees into the neighboring streets for a mixture of work and play. In order to do that he had to buy the real estate himself and seed the area with businesses that his employees would support (mostly bars, naturally…), and make the new HQ a place that current and future employees would be attracted to. All the marketing words about community (i.e., non-Zappos community) were just there to gain support/buzz from the “others” like you to join in the Zappos party hosted by Tony. Marketing words should always be taken with a large grain of salt — hopefully, not accompanied by another shot of fernet…

    -Russ (former LV’er)

  2. Ursula Kazarian

    The question I’ve been mulling over is whether community has factored into the equation or is still the intention at all, at least for a while now. From what I understand, the mission has changed from prioritizing a “return on community” to a more vague focus on promoting “connectedness.” Overall, the Las Vegas community, or at least some parts of it outside of the immediate vicinity of the Fremont East District, will need to be (re?)incorporated into the formula if the area is to become anything beyond a (questionably sustainable) bubble of restaurants and shops geared primarily for DTPers/Zappos folks. It’s certainly possible to involve the larger community more, and I hope to see things move in that direction. In case it’s of interest I wrote a brief open letter about just that yesterday. Thank you for delving in to the subject matter at more depth, it’s refreshing to read.

  3. Nathan Atkins

    Like most ideas they start with a spark and they need nuturing to become long lasting flames. A restructure isn’t imploding. Las Vegas has its share of issues like most cities in transition. As we continue to grow we will become a downtown project, downtown summerlin, a place for new businesses to establish, a tech hub, an educational research center, and many more things. Regardless of the impact a specific project has on your focus or neighborhood we need to support the positive development of all projects. I challenge Mr. Harris’s notion we will just go back to our lives without batting an eye.

    I submit that everyone was a buzz about the Downtown project (positive, negative and neutral) and we will figure out how we can keep the project moving forward into what it can and/or will become. The project make take a new or many new forms but imploded…I think not. Downtown will continue to grow, prosper and become a section of the city many Las Vegeans will live, work, play and enjoy!

    • Derrick Harris

      Thanks for the comment.

      I agree that downtown development will continue to be important, but I don’t think the Downtown Project has to be the biggest part of that. If it’s only restaurants, bars and a few shops, and if it’s generating ill will (or apathy) among members as well as the community, then it won’t be anything world-changing for sure. Not for entrepreneurs and not for the surrounding neighborhoods.

      It will just be another place to go out for lunch or the evening, along with developments in Summerlin, Henderson and the Strip.

  4. Chandler Marrs

    Well, not everything is imploding and certainly DTP is only a part of the story. Our organization, a 501c3, run entirely by volunteers who themselves are also entrepreneurs, is going strong and hosting our 3rd Annual SciTech Hookup on October 30 at MEET – Las Vegas, We have no funding from the high flyers in town that get all the headlines and we’re not nearly as hip and cool, but make no mistake, the companies involved in SciTech contribute mightily to the tax base and to the educational base, with most employing folks with advanced degrees. There is a significant science and technology base in Southern Nevada, you just have to know where to look.

    • rick passo

      Yes, I can attest that Chandler & her volunteers are tireless in advocating, promoting & building new vision & new science & technology resources for the entire Las Vegas Valley, not just downtown.
      And, Mr. Harris is much too pessimistic & cynical about the prospects for downtown, which is retrenching not disappearing. In fairness, here is the Downtown Project’s response:
      I truly admire Dave Gould whose insights & counsel have been invaluable to me. It pains me to feel his pain.
      But, do not count Downtown Las Vegas out; it’s story of renewal is just getting started.

    • Derrick Harris

      I don’t think anyone is arguing DTP is the only thing going in town — just the biggest and most hyped. Its success or failure has little bearing on whether other businesses or industries succeed here.