The Las Vegas Downtown Project: What Happened?

In my last role with Zappos Labs, I spent every week commuting from Portland to San Francisco or Las Vegas. Labs is based in San Francisco, and Zappos, itself, is based in Las Vegas. A year or so ago, Zappos moved from Henderson, a Vegas suburb, to downtown Las Vegas, into the old city hall. I flew out for the opening of the new office. It was an exciting day with a huge celebration.

The move was all stated to be part of Tony Hsieh’s vision to integrate Zappos into downtown Las Vegas and (somehow) take advantage of one of his oft-quoted ideas, taken from the book Triumph of the City, that while companies become less productive, cities productivity-per-person increases by 15% when they double in size. It seemed, less altruistically, to also be related to the availability of large swaths of urban land and regulatory flexibility resulting from the combination of downtown’s decay and the general malaise in the real estate market, particularly in Las Vegas. Tony and/or the Downtown Project (DTP) now owns more than 60 acres of downtown.

In my time in Las Vegas, I was never clear on how this would happen. Zappos is a for-profit business and a subsidiary of Amazon, which is based in Seattle. How was it possible that this one category of entity, an e-commerce business, would become like a wholly different type of entity, a municipality, and moreover, do so at the behest of someone like Tony?

Cities typically form around geographical features– San Francisco has its bay, Chicago has Lake Michigan, New York has the Hudson River. Las Vegas has hot, sand, and gambling. To the degree that it has succeeded, it has done so against the odds, so to speak. Tony’s plan was to force the city to grow on the basis of his personal investment in a utopian millennial society. My impression was always that things like lack of water or diversity in the economy were just hand-waved away. Build it, and they will come.

As for Zappos, there was much talk of “collisionable hours”, which were meant to refer to the time that employees spent mingling with others in the city, hopefully encountering new ideas and “serendipitously” becoming more creative and productive. But would this happen after work hours? Was it now required that employees remain in the urine-and-hot-tar scented downtown bar region on their personal time? What about their families? How was an e-commerce software developer’s professional productivity supposed to benefit from spending their evenings getting drunk next to remarkably tattooed downtown bartender?

To be clear, though, DTP was not all about Zappos. To some degree, Zappos has just been used as the seed to achieve a much greater vision– a bustling desert technology hub. The Vegas Tech Fund (VTF), a related group, set about attracting entrepreneurs who bought into the ground floor vision that DTP represented. These entrepreneurs were probably also attracted to the relative ease of acquiring funding were they to agree to relocate to downtown Las Vegas. For some, it seemed like one last big gamble. Leave everything; move to Las Vegas.

When Romotive, one of the highest profile VTF-funded start-ups in downtown, received funding from Sequoia, they took the opportunity to move to San Francisco. While DTP tried to make the best of Romotive “launching” from Vegas, clearly the downtown strategy doesn’t work if everyone leaves as soon as they have the dough.

re/code has been doing a series on The Downtown Project and the dramatic developments in recent days– including large layoffs and Tony Hsieh’s stepping down as head of the project. It does a good job covering the odd combination of fear and loyalty that exists downtown. The people working on DTP sincerely believe in making downtown Las Vegas a better place, but speaking out about the weaknesses and inconsistencies in the whole idea simply isn’t done. The emperor looks good in his new duds. Period.

The unfortunate reality is that Las Vegas can’t escape its geography or its history. Walkability in a typical neighborhood includes reasonable weather and safety to enjoy grocery stores, schools, parks, and neighbors. Downtown is mostly dense with bars, drunk tourists from Fremont Street, and the stifling heat and sudden cold of the desert. Only recently has the need for even a grocery store been addressed.

While I wish the best for everyone involved in The Downtown Project, I don’t believe that keeping silent and ignoring reality will make the project more successful. In fact, were DTP to address some of the issues of targeting a very narrow demographic that teeters between attendees at a TED talk and a college bar crawl, they might begin to attract the diversity that such a community needs. By stifling dissent and focusing on displaying happiness and unity at all costs, the project will continue down its current road to becoming less the realization of a vision of a new urban utopia and more a standard, albeit audacious, real estate development project in the middle of the desert.

EDIT: Note here from Tony and The Downtown Project.

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