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August 20, 2014

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Zappos CEO buys motel, strikes deal to bring young talent downtown

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Joe Schoenmann

Tony Hsieh purchased the Motel 6 property on 707 E. Fremont for $5.2 million.

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Tony Hsieh purchased the Motel 6 property on 707 E. Fremont for $5.2 million.

Zappos’ efforts to remake downtown Las Vegas take another step forward with a real estate deal and plan to lure more young talent to the area.

The Downtown Project, founded by Zappos CEO Tony Hsieh and other investors to spearhead revitalization efforts, will announce today a partnership with Venture for America to bring new college graduates for two-year stints to help startup businesses get off the ground. The hope is participants will make their move downtown a permanent one.

“There’s a good chance they’ll be inspired by the startup and want to stay with that business,” said Zach Ware, campus/urban/startup development leader at Zappos and the Downtown Project. “It’s great exposure and experience for them.”

Founded a year ago, Venture for America is a nonprofit that describes itself as “a pathway for young, talented grads to become business builders and job creators in areas of need.” In August, 50 graduates selected by the group will join startup companies across the nation, including in Las Vegas.

Ware called the organization “a natural partner for us.”

“Their fellows will be a valuable part of the community we are developing,” he said, adding that he appreciates the nonprofit’s focus on job creation. “We’re going to create thousands of jobs here in downtown Las Vegas over the next five to 10 years.”

The deal echoes Zappos and Hsieh’s donation of $1.5 million to Teach for America , which trains teachers to work in schools that serve children from households in poverty. One reason behind the donation was a hope that the teachers will consider working and living downtown.

Meanwhile, the Downtown Project, funded with $350 million from Hsieh and others, recently closed on the $5.2 million purchase of the Motel 6 property at 707 E. Fremont St. The building will be demolished to make way for a yet-to-be determined facility.

Ware said a number of options were weighed, including renovating the building, before the decision was made to demolish it. Demolition will take place within 30 days.

The purchase continues a high-profile buying spree by Zappos and its affiliated groups: the Downtown Project’s recent purchase of the former 7-Eleven building at Las Vegas Boulevard and Fremont Street for $4.1 million; the acquisition of between 40-50 condos at The Ogden high-rise, where it houses people considering moving their business to Las Vegas; and, of course, the deal to move Zappos’ headquarters into the old City Hall.

Exactly what will go into the Motel 6 space isn’t known yet, Ware said, adding that the group is still discussing different ideas. Some of those include affordable residential units and retail space made out of large storage containers similar to those transported by railroad and tractor-trailers.

The $350 million invested into the Downtown Project includes $200 million for commercial and residential real estate, $50 million for tech startups, $50 million for local business and $50 million for education.

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  1. It is truly exciting to see the actions that Tony Hsieh is taking in making the downtown area a mini-Silicon Valley. Ultimately, it'll help make this area a vibrant place filled with professionals who will ultimately make the downtown area a desirable place to live and work in.

  2. @Feldling

    I hope there are enough "young professionals" in the Vegas Valley that are qualified.

    <<In August, 50 graduates selected by the group will join startup companies across the nation, including in Las Vegas>>

    Wonder how many came from Las Vegas.

  3. Wow, this guy and his company are whirlwinds of activity and doing what seems to be great things for DT LV. So much for the naysayers who delight in flogging all corporations as being "greedy" bloodsuckers. Seems like Zappos doesn't quite measure up to their "the glass is half empty" rhetoric, does it?

  4. What's the story here? Hsieh buys an old Motel 6 for $5.2 mil and demolishes it with no plans for it. How does that help Downtown? There's too much hype and not enough substance. There's a lot of "what if's" built into the Zappos downtown plan and the economics are very questionable. The perception that he's building a mini-Silicon Valley here is ridiculous. He's not attracting startup tech-companies...so far, all I've seen are startup restaurants and fringe companies. Why would a tech company come to Vegas? There's not enough young, talented college grads to support their work force.

  5. The naysayers were there 20 years ago went this process started, and they'll still be there 20 years from now. But Downtown 3.0 keeps on moving forward.

  6. I'm excited and believe the downtown transformation will be a success for one single reason. Tony Hsieh has his personal money at stake and not some form of government subsidy payed for by the taxpayers.

  7. Tony Hsieh(Zappos), Ben and Jerry's(Ice Cream), Starbucks, 10,000 Villages and many other Corporations while in business to make money, still show tremendous Social Responsibility. I fully support All of them and hope everyone else does also. Downtown Las Vegas will be a far better place thanks to Tony. His alliance with Political leaders their shared vision will be a benefit to all.

  8. Apparently sinatra711 and others have not been downtown in a few years. All the "non-activity" is a big improvement over what was not really happening.

    The problem a lot of the nay-sayers have is that all this is being done without the need of Obama or his thugs. It's private money and the money is actually creating real jobs and real opportunity.

    I would bet Tony Hsieh and Zappo's have created more real jobs in Las Vegas, in less time than your messiah has nationally.

    So stop reading this website (with Internet backup most likely provided by a company Hsieh helped locate to Las Vegas, and go see what's happening downtown. I mean, really look.

  9. Another point to Sinatra711 "There's not enough young, talented college grads to support their work force."

    True point, but I do believe that Steve Jobs was not a college graduate and look what that dropout did...

    So I would look at the talent pool, not the fancy degree pool...

  10. <<The Downtown Project, founded by Zappos CEO Tony Hsieh and other investors to spearhead revitalization efforts, will announce today a partnership with Venture for America to bring new college graduates for two-year stints to help startup businesses get off the ground. The hope is participants will make their move downtown a permanent one>>

    It is a great and noble idea, but remember: It's Vegas. Known for casinos and gambling. Start up companies are a good thing but will they stay? And so far none have been mentioned or even any ideas on what these companies would be.

    I'm all for revitalizing Downtown. I personally liked Downtown and if it can move up a few notches with other non-gaming companies, great. Make it like other downtown areas across the country. The first thing that should come downtown and forgive me for it not being a high tech company to draw young smart kids but the area needs an Albertsons or a Smith's. Downtown needs it's own specifically designed "strip mall" with everything within walking distance of the apartments, homes and places of work that are already there and what could be there in the future.

    You want and need the total package for downtown for it to draw professionals and non professionals to actually want to live and work in the area and not make the area totally reliant on tourism and gaming. A young smart person working at one of these future start up companies does not want to live in the cookie cutter neighborhoods of Vegas; they want to live in an area close to work and with a lot of variety. Heck the young and not so young who already work downtown may want to move closer to their work but don't want to live in an area where you STILL would have to drive your car to get groceries or a prescription filled or taking your clothes to the cleaners.

    Maybe he'll get lucky and be successful with this venture but I think it's going to take awhile. The area needs someone like him with youth vision and no relationship to any of the casinos. He has his work cut out for him.

  11. Thanks to both Sinatra711 & TeanSG1 for confirming my thoughts about "the-glass-is-half-empty" crowd.I have little doubt these two fine gentlemen have never invested a dime of their own into a business venture because that would mean taking a risk and they are "risk-adverse." I, on the other hand, have done it many times. Sometimes I won; sometimes I lost. That's what free enterprise is all about. So I salute Zappo's for taking risks, investing money and generally being a good neighbor. What Zappo's does with the property is strictly up to it. If Sinara711 or TeamSG1 can do better, then let them put their money where their mouths are. Don't hold your breath waiting for them to do so.

  12. @smartone618 - What did I DO FOR MY COMMUNITY TODAY? Since you asked...I spent 1/2 the day at my church sorting donated food and Easter baskets collected over the weekend to be distributed to needy families in the community. I volunteer on a weekly basis and my wife and kids do so as well. My kids actually prefer to volunteer during their summer, spring, and winter breaks rather than sit on the a$$ playing video games or screwing around at the mall. On the economic side, I spent money at the grocery store and ate dinner with my family at a restaurant today....Is that good enough for you? or do I have to burn stick figures and smoke pot downtown? What did YOU do to help your community today?

    @Jerry Fink - You have no idea what my personal situation is. I've started 3 companies with 2 of them failing miserably. The 3rd time was a charm and I'm doing very well now. I've also worked in a corporate environment and understand very well the economics of what it will take to revitalize the downtown area. I've also spoken to many entrepreneurs in So Cal and discussed the reasons why they don't move their businesses or startup their company in Vegas...their #1 answer is "Lack of college grads...young, cheap, smart workers who are willing to put in the time & energy to work in a startup environment".

    In California you have UCLA, USC, UCSD, SDSU, UC BERKELEY, UC DAVIS, STANDFORD, UCSB, and many more Universities & Colleges that are pumping out eager, smart, and low cost workers. They may not be graduates, but there's a larger pool to choose from. It's fact, I'm not making this up....

    Based on what I've seen, the stuff that Hsieh is doing isn't enough and doesn't have the right ingredients to make a big difference. Instead, I prefer the development of the new performing arts center...it's sorely needed and attracts people with money to the area. Along with the small stuff that Hsieh is doing, the burning man and First Friday events aren't good long term solutions. The hype machine that the local rags & media is putting behind this stuff is hilarious....

    It will be fun to watch this from a distance. 10 yrs from now, we'll see what the results are.

  13. It is very easy to get the crackheads out, buy the motels and slums they stay in. (Great Job, Mr Hsieh) I hope he buys the boarded up Western too! If anyone has played SimCity, you know that you can build anything you desire if you have enough capital (Mr Hsieh, build it and they will come).
    As for building a Supermarket, it is not needed. Too much parking spaces. Just build a Fresh & Easy or ask the mom & pop shops there to expand their products. (most products are actually cheaper in the mom & pop shops then at the suburban Albertsons, 3 of them even deliver to your house)
    Up until a month ago, I use to live downtown. I would see Mr. Hsieh everywhere I went. (jogging, The Beat, Thai Vegas, Gold Spike) He practices what he preaches, and he'll bring the right people along with him.