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September 1, 2014

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Zappos putting its stamp on downtown Las Vegas

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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.

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  1. 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.

  2. 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.

  3. 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.

  4. Thank goodness Tony Hsieh is a capitalist, otherwise none of this would be possible.

    And I'm not being sarcastic.

  5. 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!

  6. 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!

  7. 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.

  8. 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.

  9. Touche' James P Reza.

  10. If you want people to come to downtown, get rid of charging people for parking!

  11. Oh, and turn Neonopolis into one big parking garage. It might even improve it's (the buildings) apprearance.