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

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.