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Tuesday, Oct. 18, 2011 | 2 a.m.
Zappos.com CEO Tony Hsieh
Sun Archives
- Zappos.com CEO Tony Hsieh named the ‘smartest’ in town (9-5-2011)
- Zappos CEO envisions a new community downtown (3-17-2011)
- Goodman: Zappos move a ‘watershed moment’ for downtown Las Vegas (12-1-2010)
- City of Henderson taking departure of Zappos.com in stride (12-1-2010)
- Zappos views Las Vegas City Hall as perfect fit for new headquarters (11-29-2010)
- Local, national Web retailers looking for Cyber Monday boost (11-29-2010)
- Henderson’s Zappos.com listed among best places to work (1-22-2010)
- From upstart to $1 billion behemoth, Zappos marks 10 years (6-16-2009)
- Henderson-based Zappos earns honors for ethics (4-13-2009)
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.
Who are they kidding?
I'm not too sure why everybody is making such a big deal about Zappos helping the Las Vegas economy. Vegas has bent over backwards for this company, from great interest rates on city loans for a lease that is making us NO money. All over what? Having the headquarters here...I ordered some boots from Zappos last Friday, they are being shipped from Louisville, KY. I tell you what, you give great deals on a lease when they move ALL operations to Vegas. Please stamp 'suckers' on the Welcome to Las Vegas sign.
When will Vegas ever get it..Vegas is a gambling town. Business will never locate here, never. Not because of the gambling but because we are an island to the rest of the United States when it comes to location.
Want to help the economy? Knock down this huge Wynn type casinos, and go back to the days of cheap food, drink, rooms and entertainment. Then with the extra money, tourists will do what is needed in Vegas...GAMBLE!!!
Good for Tony, his vision is normally right. Read his book and some of you naysayers might shut up. He needs a mecca party place also because his Condo ain't going to be able to accomodate 8000 employees.
Steve_Cain - thank you for an early morning chuckle...just when I think the world is a negative place you bring us a vision of idoicy that is pure, childlike and comedic.
Good luck with your new boots...
Let go of the 60's Steve... they ain't comin' back!
It should make for some good news stories as we see how well existing hotel-casinos, small businesses, current residents, city politicians, and other entrepreneurs work with Tony and his vision.
I hope it goes well, but we have a history of not playing well with each other.
We have two choices here.
Listen to a man that has built a Multi-Billion Dollar company from the ground up or listen to the Haters that post here that have nothing to show for their lack of efforts.
Seems like an easy choice! ;-)
So far Mr. Hsieh's moves have been good for downtown and that is what is important here. Good luck to him in the future. He has EARNED IT.
Thank goodness Tony Hsieh is a capitalist, otherwise none of this would be possible.
And I'm not being sarcastic.
Steve_Cain - the idea here is not for the city to make a bundle off of a large company. The idea is that by "making us NO money" (as you put it), the city is bringing 2000 NEW, NON-TOURIST bodies into the downtown area...every day. That means that the restaurants, the dry cleaners, the drug stores, all will see more foot traffic. More foot traffic means more sales. More sales means more revenues. More revenues mean more hires for the downtown businesses and more taxes generated for the city.
Consider the rate the city is getting on the lease as a loss-leader...it's like a grocery store selling brand name sodas for 50 cents...they lose money on the soda, but know you'll also buy some chips, maybe some dip and a few other things, where they'll make up for the loss on the soda. Bring in more people, and businesses in the area will survive and thrive.
Steve_Cain does have one good point. The cost of having in fun in Vegas does need to come down a bit. The days of cheap fun are coming to a close on the strip.
Back to the subject of downtown and Tony, it's nothing but positive. I'm currently in SoCal with my Social Media business but plan on making the move to downtown Las Vegas. I believe that making this move and hiring some high tech employees in downtown. The vision of having a mini-silicon valley in Vegas is great!!! We can do it with positive energy and a little bit of money (Tony). So, enough with the negative bs and let's get cracking at making Las Vegas great!
Steve_Cain: The reason that Zappos ships from Kentucky is because Shepherdsville (the location of Zappos' Fulfillment Center) is right next to the UPS WorldPort hub in Louisville. The reason Zappos is able to provide their next-business-day shipping (a pillar of our service) is because of the proximity to said hub.
Full disclosure: I'm a Zappos employee.
This would be like Cupertino, CA complaining about Apple.
You have countless examples of companies locating in a city and more or less stamping their identity on the locale.
I would rather accept Zappos-ification over MGM-ification or Glitter Gulch-ification.
Full disclosure: Who cares???
I don't need a nanny, back-rub, cheering section or any other touchy-feely garbage; therefore, I don't work for Zappo's.
I wish Tony well but, come on, why aren't the 99%'ers going after HIM. He is a zillionaire too!
Welcome, Mr. Hsieh, to the heart of Las Vegas. Thank you for having vision and insight, and for providing leadership -- a rare commodity lately. Downtown 3.0!
It's great when someone actually cares about and enjoys their city!
Tony Hsieh is renting his apartment at the Ogden, he bought nothing. Amazon owns Zappo's now and will make the final decision to renovate and move into the 40 year old city hall that the city said could not be renovated (to justify building their new $147MM city hall on Main Street). Wait and see if Amazon and their tavern building developer really decide to spend $40-50MM to renovate old city hall to move their staff into. If they do, they will force the city to give it to them for free or next to nothing before they are done. Sticky notes on a wall can't get financing and build projects in the 4th year of the great recession. Take a breath, Tony is not the only person redeveloping downtown folks.
@777
Zappo's is owned by Amazon, but Zapo's retains the right to operate independently of Amazon-hence why Hsieh still runs the day-to-day operations.
If you were paying attention, then you would know Zappos is pretty much getting a great deal on city hall.
@TeamSG1,
You don't like Las Vegas, please leave. Just leave, you are unhappy. We feel sorry that you hate your life so much, but there is a Greyhound bus leaving town every day.
STOP OVER SELLING THIS!! This is not the same as the investments in Las Vegas made by Howard Hughes. This is an incentivized deal made by politicians with the hope it will turn out well for the area and the business owner. So was Neonopolis and the hood in the hood. It doesn't need ridiculously composed news articles to shape its future. Before you write this trash, check and see how many people actually know their Las Vegas history.
Short of atomic's strangely childish comment I think it would be prudent to be cautiously optimistic. In the 16 years that I've been in Las Vegas I've read year after year about how the Arts District was going to be a new Soho or Chelsea. First Friday was supposed to be the "it" event that would turn the area around. Progress has been slow and there have been many set backs. Galleries opened and were praised and everyone danced down Commerce Street and then the galleries were out of business in six months.
Hseih clearly has imagination and a lot of money and knows a lot of people with money. However, it's sad that one man is spearheading this. My only concern is what if people in general don't like his ideas or his taste? A thriving Arts District and Downtown needs lots of voices and variety. Tony may find himself in the same boat that a lot people have over the years, frustrated because of a general lack of enthusiam and pessimism on the part of Las Vegans. This city is really negative and doesn't have a lot of imagination. Without community support and a willingness to patronize the area all the money in the world won't amount to a hill of beans.
I think, also, the most telling part of this article is Tony feeling the need to improve schools before he can convince talent from other states to move here. Downtown's struggle has always been because we've put the cart before the horse. Shops, bars, coffee houses, etc. are great but if you don't have good infrastructure i.e. schools, medical care, a police force that doesn't shoot you because you scratched your nose, you'll never convince the right sort of people to move here. Let's face it, malaise has hit the entire city and people love to play here for a few days but for the most part just don't find it a good place to settle.
Exciting changes but there are many hurtles to cross to get there.
Some clarifications. Zappos is not leasing from or buying from the city. The deal was done with the same owners of the Lucky Lady -- you know, the big empty, dark, hotel/casino. It was a stupid political deal, by a stupid political city council.
Zappos isn't a shoe company. It is an internet retailer that provides outlets to actual, physical retailers. It is owned by amazon which has a notorious record of not wanting to pay taxes which is partly why they have such a big presence here besides zappos. They say they'll expand to 8000 employees, well, if it such a good company, why did they have so many layoffs a few years ago. Why don't they pay their employees better? Why are they so secretive about what they actually are.
The thing that mr. hseih is really good at is promoting himself; almost to cult status. Personally, some of the videos of zappos and mr. hseih are a bit creepy but demanding conformance to stupid cultural rules is typical for vegas, from the largest operators to the smallest.
Compare mr. hseih to howard hughes? Ridiculous, but anyway, look around town and find hughes legacy. No, it is not summerlin; that's part of the hughes corporation legacy. Everything he bought and did in vegas disappeared not long after he left, and he had no cultural impact on the city except keeping the papers filled with stories about what he was, or wasn't doing.
Turn east freemont into austin or san diego? Well, good luck. I suppose as long as the city keeps waiving license fees and streamlining the process for investors, it will work out -- provided they take care of the parking problem. Charging less for parking at neonopolis? Um, personally, I don't want to pay for parking at all, particularly with all the new traffic and hassle going into the area. Anyway, east freemont is a long way from other cities. So does this mean more redevelopment down to boulder hwy, or just push the blight eastward and make room for more niteclubs and bars? The thing about austin and other cities is that it's a relaxed atmosphere for everyone and I don't get that from the direction the street is going.
To the focus of the article I think that this is a common thread in a lot of places where the downtown area was rehabilitated. It seems that one person or a very small number of people are willing to take huge risks to make things happen, so the majority of us who wish we could have a great downtown, have a great downtown. I know that I will take advantage of as much as I can of all the growth that will spoke out from the hub that Tony is trying to build. If done correctly what will happen is in a generation or so the spokes will generate their own hubs and we will see a very impressive and stable neighborhood that has enough diversity in what is offered that when one part goes bad it won't bring down the whole area.
With all of that said, I do have only one comment, I see one thing consistently missing from the Downtown Vegas 3.0 movement. Grocery Store(s). The area needs one mid-sized grocery that serves the community. Something that has a good product balance of processed and non-processed items.
Other then that, I think today I am going to go downtown and have dinner. Cheers!
Though I wish cities across America would stop giving away all of our stuff, I am (along with a lot of downtown folks) excited to have a large group of ,hopefully, creative types downtown. I look forward to downtown becoming a truly vibrant spot past the two blocks of Fremont East and the 18b district expanding to a 7 day a week experience.
May I make a big shout out to good old fashioned made it the American way capitalism? I loathe the plunderers like BofA but have nothing but respect for folks who worked hard and made it!
One minor gripe, I wish downtown businesses would stop sucking up so obviously to Zappos with the signs in their windows. It looks sorta desparate like a divorcee who's tops are too low. If you have a good product and excellent customer service, they will come.
Viva Downtown!
I agree that East Fremont feels nothing like Austin.
I lived in Austin for a few years in the 90s and worked on 6th Street (Diamond Jim Karaoke and also as the barker at the Velveeta Club for those who many have been there.)
Austin has a special magic, not just on 6th Street but throughout the whole city. It is so laid back that most of the rest of Texas says it is really a part of California. Even the cops on 6th Street are cool unless you really provoke them.
East Fremont just doesn't fit the bill in my mind for something similar.
Its a step in the right direction. He's bringing more employees downtown who will spend money downtown. There's an abundance of love for this guy, but overall anytime you bring business here its a good thing. Granted these are not the high paying jobs you might like to see, but they are jobs. This is a good step. Anyone thinking differently..if you have a better plan, name it.
@TomD1228-"Its a step in the right direction"
Exactly-And better this is led by private enterprise than govt. bureaucrats who brought us spectacular failures such as Neonopolis and the almost sure fire failure to be: the downtown Mob museum.
logic, uh, use some. The City bent over backwards to make this deal.
Same City that thought Neonopolis was a great idea.
@Heretic--Much different from Neonopolis. I really don't have the time or energy to explain the details to dullards. Too bad you can't see the difference.
Mr. Jackson, downtown is far from a "dump," and while I'd offer to take you on a tour and show you why, it's clear from your posting history that there is no convincing you.
I do think that people who hate Las Vegas would be better off moving out of town instead of sticking around merely to complain and find negative things to say, while doing absolutely nothing productive to enact positive change. Every time a hater leaves, Las Vegas gets a little more livable, and that is a great thing.
Touche' James P Reza.
I've visited Vegas a few times and I'm telling you that this place is not going to attract companies at all, based on numerous factors. Unless certain things change, I doubt this place will ever become an economic hotspot. It's a desert, for starters. Then there is the unsavory element that is around this city. Vegas is what it is.
logic, If you think I am a dullard, you should reread the post I criticized.
Either way it makes no difference to me. Think what you will and get all excited about a guy who treats his workers like they are in kindergarten.
Here's the fallacy of this whole Zappos argument. These employees are not going to support downtown, nor revive it. Look at how many people work downtown now...are they spending any money or time afterwork at the local businesses? Very few.
Unless Zappos employees plan to move from where they live now (very unlikely) to downtown, it's not going to make much difference. Zappos has an employee dining room that is stocked with good food and drink....so why would they leave for lunch? Maybe a few will, but not enough to make a difference. Does the city really think they're going to stick around after an 8 hour workday to hangout and spend time/money around the area? Yes, a few may do that, but again...not enough to make a difference.
Will a pizza place or sandwich shop or coffee shop or bar feel the "Zappos Effect"? Sure, they might....but it's not enough to revive a blighted downtown area.
What's the incentive for tech companies to move to Vegas? No taxes? Corporations still pay taxes, there's just no state income tax....Employers don't pay that anyway. Lower lease or rent? Is that worth moving away from No Cal where the hub of tech companies, entrepreneurs, and uber-rich investors are located? I don't think so.
I'm also in the camp that thinks that First Friday and all of the other so-called arts district businesses are a 2nd rate attempt to try and build something downtown.....give it 10 more years and if it can sustain and grow over that time, maybe....just maybe it will become something worth going to. Right now, it's lame and after 2 trips to First Friday, it's boring and worthless.
A lot of good points. I do agree that putting "Welcome Zappos" in shop windows is a bit like the nerdy kids hoping a pretty girl will notice them. It really smacks of desperation and riding on the coattails of someone else's brand. My fear is that many see this as the last chance at life for the area and if a yellow brick road doesn't get paved overnight they're all going to simply give up and let the whole area turn back into a giant Bail Bonds outdoor mall (which it sort of is already).
Hseih is Vegas's Apple brand. People think they're cool just by saying his name and pretending as though they actually know him. And, heaven knows, the Downtownies for years have jumped up and down and begged to be looked at as sophisticated urban hipsters every time someone threw up on the sidewalk and called it art. Hseih's interest in it now must be like the Second Coming. But, again, I'd be cautious. Let's not forget we've got two million-dollar phallus, uh I mean, paintbrush shaped lampposts serving as the "Gateway to the Arts District" that have done absolutely nothing for the area and was a complete waste of money. Let's see a longterm master plan with real names and dollars attached to it and then we'll see what's really what.
@Heretic--Zappos is a very different type of company. I've been on a tour of their operation. You can do that too. The company is successful and the employees appear happy. Nothing wrong with that.
Downtown seems to be moving in the right direction and the addition of Zappos can only accelerate progress there.
If you want people to come to downtown, get rid of charging people for parking!
Oh, and turn Neonopolis into one big parking garage. It might even improve it's (the buildings) apprearance.