The Billionaire Who Wants to Remake Downtown Las Vegas

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Ethan Miller / Getty Images CEO Tony Hsieh

Tony Hsieh's downtown Las Vegas penthouse has commanding views of all of downtown, as well as the Strip, a few miles to the south, plus the Spring Mountains, a dozen or more miles to the west. On this evening the city is draped in angry rain clouds.

Inside his spacious digs there's a large, framed satellite image of the central city on one wall, and lots of multicolored Post-it notes on the other. Both hint at the new role the 38-year-old CEO of Zappos, the online shoe retailer, is trying on: city builder.

Boosters of downtown Las Vegas — that sketchy collection of crappy buildings, empty lots, dowdy old casinos and one tourist draw, the Fremont Street Experience — are waiting anxiously to see what Hsieh can do. Having sold Zappos to Amazon in 2009 for $1.2 billion, Hsieh is kind of like the big-name free agent a scrappy team hopes will put it over the top. The city is trying to diversify its economy, and symbolically, downtown is an important symbol of that effort, to let residents and prospective new businesses know there's more to this city than showgirls, poker rooms and Cirque du Soleil. Indeed, as Las Vegas slowly gains its footing and confidence in the economic recovery, downtown has emerged as a new driver for the reinvention of Las Vegas and is aiming to reclaim its place as the true heart of the city.

Hsieh moved Zappos from San Francisco to the suburban city of Henderson, Nev., in 2004, eventually caught the urban bug and now plans to relocate his company downtown into the old Las Vegas City Hall building, a move expected to take place in about 18 months. But he is dreaming much bigger than merely a vanilla HQ move. When he was thinking of building a dream campus for Zappos, he initially thought of modeling it after Nike or Apple or Google. "We realized those campuses were actually really insular and didn't contribute or interact with the community around them," he says. "We decided to turn it inside out, and rather than invest in the campus solely, let's invest in the community ecosystem, which will then feed upon itself and become a win-win-win for employees, for Zappos, for local businesses, for the city."

There's a certain Field of Dreams quality to Hsieh's presence downtown — when he builds it everyone will come — but the scale of his ambition makes this understandable. He plans to invest $350 million of his own fortune in a comprehensive, if still somewhat vaguely defined program: $50 million to nurture tech start-ups; $50 million for 100-200 small businesses to help build community; $50 million on education, including a proposed partnership with Teach for America. The remainder — $200 million — will go toward developing real estate to provide Zappos employees a place to live, work and play in one neat urban district.

Hsieh and the employees he's assembled to help shape a better downtown don't exactly have backgrounds in planning cities. Then again, he didn't know much about shoes or call centers or customer service when he took over Zappos, and that's turned out pretty well — the company continues to grow, and its fun, social culture routinely ranks among the country's best companies to work for.

Hsieh says his approach with Zappos, learning as he went, "gave us a little bit more freedom to do what we felt was right, rather than what everyone else was doing. The way Zappos is run it's really a lot more organic and bottom-up and culture driven." He likens a company's culture to a city's sense of community: "You can't really dictate it top-down." "How do we make the company behave more like a city?" Hsieh asks. "As cities get bigger, they get increases in productivity and innovation." Usually as companies get bigger they don't, he adds. "Part of the reason is the mayor can't tell the people what to do or where to live, so people are naturally more entrepreneurial or flexible. We want to try to figure out how to create this hybrid between the company and a city."

To understand the allure downtown Las Vegas has for Hsieh, it's best to hang out at the Beat — a coffee shop and restaurant tucked inside an old medical office building on East Fremont Street. It has enormous windows, good ambiance, good food, good music. It sits in a building that has been converted into a plethora of small and cheap gallery and studio spaces. Tech start-ups meet upstairs once a week. This is one of Vegas' few stabs at real authentic placemaking, a real local joint to hang out and meet your friends, take a date — and Vegas' urban cool crowd is holding on tight.

Hsieh likes that the bar owners on East Fremont hang out in each others' bars, that on any given visit to a place like the Beat he's bound to run into a friend (which is common occurrence for many who stop by). He loves turning people onto downtown by giving them the tour. "We talk about trying to maximize the number of serendipitous reactions, accelerating serendipity," he says, upstairs. "I think when you have those conditions, it just happens automatically, statistically."

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