Sun photo illustration
By Joe Schoenmann
Zappos.com CEO Tony Hsieh
From his condo on the 23rd floor of The Ogden in downtown Las Vegas, Zappos CEO Tony Hsieh is overseeing a takeover of the surrounding area with a mix of capitalism and philanthropy.
First came the plan to lease City Hall as a new headquarters of the online shoe and clothing retailer. But that was just the beginning.
Hundreds of his employees are donating time to brainstorm ideas for new music venues and restaurants. They’re looking at ways to improve schools — a key to convincing families to live downtown — and attract tech companies, with the unspoken goal of developing a mini-Silicon Valley near City Hall.
(To that end, Hsieh led a $7 million round of financing and joined the board of JetSuite, a private jet commuter service that could efficiently cart tech execs who might relocate to Las Vegas.)
Hsieh and co-investors have purchased the rights to First Friday, the monthly downtown arts scene celebration. And Hsieh has given $2 million to the Smith Center for the Performing Arts and is helping fund “/usr/lib,” a community tech library planned for the Emergency Arts building at 6th and Fremont.
If the 70 or so sticky notes on his living room wall are any indication — each bears a name or description of a different business or project: bookstore, yoga studio, cafe — it is just the beginning. So is anyone getting a weird feeling about this Zapposification of the area? Is there any resistance to the company and its allies’ takeover of downtown Las Vegas?
So far, the answer is no.
Given downtown’s struggles, that might be like asking a drowning man if he has any complaints about the color of the life preserver being tossed his way.
Indeed, city officials gush at the mention of Hsieh’s name. It makes sense. Zappos and Hsieh prevented City Hall from becoming a homeless shelter until its eventual demolition. And although the recession slowed city redevelopment plans as it hammered southern Nevada, Hsieh has brought buzz back with money and plans.
Downtown business owners, at least those other than the casino clones under the Fremont Street Experience canopy, pinch themselves with happy disbelief at Zappos’ pending arrival. Residents of high-rises and homes within a mile or two of Fremont Street wonder if this is where and how the real estate turnaround and the rebirth of Las Vegas begins.
Asked about the Zappos tide that’s set to roll in, Hsieh answers in the calm fashion for which he is known. Questions don’t rattle him, or if they do, he doesn’t let it show.
“It’s not just me or Zappos,” he says. “It’s many more people. I’m just helping out.”
What Zappos envisions for downtown Las Vegas probably couldn’t be done in any other city of similar stature. The zoning laws or political patronage machines or entrenched interests or real estate prices or any number of other impediments would make talk of such sweeping change laughable. But in downtown Las Vegas, Hsieh and like-minded business operators might have an ideal urban tabula rasa.
Jody Sherman, CEO of ecomom.com, a Santa Monica-based Internet retailer, talked of his company’s expected move to downtown Las Vegas.
Why Las Vegas?
“Because I hate the beach,” Sherman joked while spending time at The Beat coffeehouse last week. He added that he sees the financial benefit of fewer taxes. But he also foresees the benefit of other tech/Internet-driven companies populating downtown, allowing them to share and feed off one another. That’s good for business, he said.
“Tony’s vision for downtown is exciting,” he said. “This area is ripe for redevelopment, and having an anchor like Zappos is going to draw a lot of young companies to the area.”
Others seem to agree. Consider the recent uptick in interest in the area: Insert Coin(s), an arcade and bar, has opened on Fremont Street; a Thai restaurant is soon to open across the street.
Some 2,000 Zappos employees will move into City Hall in 2013; more than 10 acres that come with the lease will allow the company to grow by at least another 8,000 employees over the next 10 years.
Due to the depth and expense of his downtown Las Vegas moves, it’s not easy to find a model with which to compare it. Some see the late billionaire Howard Hughes as the only local comparison.
Hughes arrived in Las Vegas on Thanksgiving 1966 and within months began to buy property and casinos, and to begin investing.
Over the next two to three years, Hughes purchased more than $100 million in casinos and property. In addition, he purchased regional airline Air West. Politicians praised him for boosting the state’s economy, which was in the dumps. Gov. Paul Laxalt in 1967 declared that Hughes “has put the Good Housekeeping stamp of approval” on Nevada. The governor in 1969 averred that Hughes’ “involvement here has absolutely done us wonders.”
Geoff Schumacher, author of “Howard Hughes: Power, Paranoia and Palace Intrigue,” sees much the same thing happening due to Zappos’ and Hsieh’s investment. “It was a lot of energy materializing, and that’s the same thing happening with Zappos.”
Of course, Hughes’ arrival — in secret — speaks to a big difference between he and Hsieh. Hsieh is visible, social, accessible and typically greets anyone with a slight smile. Indeed, Hughes’ first investment, purchasing the Desert Inn resort for $13.25 million, only came about because hotel management wanted him to vacate his suite on New Year’s Eve 1966 to make room for a party.
And Schumacher notes that Hughes made some missteps that seemed to divert his attention away from development. If he took one thing away from Hughes’ story, it was “to steer clear of politics, because all you can do is get burned.”
“If any legislator had the audacity to challenge him, Hughes would want to destroy that person,” Schumacher said. “That’s what can come with absolute power.”
Not that Schumacher, who lives in Iowa now but for years worked as a Las Vegas reporter and editor, sees Hsieh or Zappos doing the same thing.
“I think he’s doing fantastic things,” he said of Hsieh. “He’s got a pitch-perfect ear when it comes to whatever he decides to become involved with.”
Hsieh smiles at being compared to Hughes.
Hughes “did it alone and I’m doing it with — I’m not even doing it really, but other people are doing it,” he said.
Plus, “here’s how little I know about local politics,” he added. “I didn’t even know they were moving out of City Hall. Someone had to tell me.”
In little more than a year, City Hall will be synonymous with Hsieh and Zappos. Maybe downtown Las Vegas will, too.