First, some background on Hsieh himself. Born in 1974 in the San Francisco area, Tony Hsieh would eventually take his undergraduate degree from Harvard University. While at Harvard he was already an entrepreneur, selling pizza to his dorm mates from his self-founded Quincy House Grille. Upon graduation, he went to work for Oracle Corp. but soured on its corporate culture and left in 1996 to create dot-com startup LinkExchange, a network of banner ads. The latter was so successful that Microsoft purchased it in 1998 for $265 million.
Hsieh rolled that money into an Internet-investment firm called – on a dare from a friend – Venture Frogs. One of Venture Frogs' investments was an online shoe retailer: Zappos.com. Hsieh was soon appointed its CEO and by 2009 had grown revenues to $1 billion. That July, Hsieh sold Zappos to Amazon.com, netting himself at least $214 million in the process.
Signs of a downtown revival were apparent even before Hsieh's Downtown Project was launched. In January 2010, Downtown Cocktail Room owner Michael Cornthwaite and former gallery owner Jennifer Harrington leased the ex-Fremont Medical Center from the El Cortez (which had been planning to expand into the building), and quickly established it as a warren of offices, boutiques and – at the Beat Café – a place where you could get a jolt of coffee and buy some vintage LPs. Its next-door neighbor was the Burlesque Hall of Fame.
Nearby, multinational conglomerate Tamares Group was making some of its Las Vegas real estate available at tenant-friendly prices, drawing the popular Le Thai restaurant, for one. Hsieh, however, can claim to be have been the prophet for the urban renaissance, telling the New York Times in 2012, "Downtown Vegas will change dramatically for the better within five years."
In January 2012 (two years after the landmark Cornthwaite deal), Hsieh outlined an ambitious agenda, called the Downtown Project, and budgeted at $360 million. "In expectation of all these newcomers, the project has already set up at least 30 real estate companies, bought more than 15 buildings and broken ground on 16 construction projects," said the Times. Three years after Cornthwaite persuaded the El Cortez to lease him what would become Emergency Arts, Las Vegas was shedding its old City Hall and building a new one. Hsieh saw an opportunity to move his corporate headquarters from Henderson, and cut a very advantageous deal with the City of Las Vegas. He also urged company employees to move to The Ogden, a failed condo development that was being remarketed as apartments, at attractive prices.
"By 2013, new life was coursing through downtown," reported the Times. "A few upscale restaurants sprang up. Then came a complex constructed out of shipping containers [The Container Park] that is home to a salon, a bar, a toy store and a candy shop. Now there is an independent bookstore, a gourmet doughnut shop, a vegan restaurant, a sushi bar and a yoga studio." Hsieh moved out of The Ogden and into an Airstream trailer near the Container Park. That year, he also bought the Gold Spike hotel-casino and kicked all the gambling (and desserts) out of the property. Later, he extended his reach to the seedy Western casino, scratching one more gambling den from the Las Vegas map.
Not all of the businesses that sprouted downtown flourished, however. Insert Coins, a velvet-rope nightclub that mixed bottle service with video games, proved short-lived, as did other startups and a takeover of the venerable Bunkhouse Saloon live-music venue. In a major blow to Downtown Project morale, three entrepreneurs who'd heeded Hsieh's siren song committed suicide between January 2013 and May 2014. When Hsieh fired 30 percent of the Downtown Project support staff and abdicated leadership, academic and former Director of Imagination David Gould published an open letter that said, in part, "We have not experienced a string of tough breaks or bad luck. Rather, this is a collage of decadence, greed and missing leadership."
Gould then up and moved back to Iowa. Some startups, like robot developer Romotive, relocated to other markets after getting their seed capital to begin in Las Vegas. And while the early stages of the Downtown Project had envisioned Sin City as a new high-tech capital, it soon appeared that the retail, entertainment, and service industries would be the real growth areas. A private takeover of the First Friday monthly arts-and-lifestyle street fair by Hsieh and his cronies was almost a victim of its own success, drawing overwhelming crowds that numbered in the tens of thousands and--as it morphed into some kind of mini-EDC--seeming to lose sight of the original low-key concept to which it's now returning, post-Hsieh.
Also, it looked as though Hsieh's $360 million might not be enough to meet his goals. Property owners saw Hsieh and partner Andrew Donner honing in on their real estate and raised prices accordingly. The Dragon Hotel, which only occupied a third of an acre, went to Donner for $2 million. The Western cost him $14 million. Had Hsieh not broadcast his intentions so loudly, there's no telling how much less Donner would have had to pay for these fleabags. Also, the Downtown Project's goal of making Las Vegas less reliant upon tourism for its economic base sounds good on paper but the Project has been mostly good at helping small businesses that cater to downtown visitors and local-residents. "It’s like a lifestyle enclave. It’s not an innovation district yet, it's not like Pittsburgh, which has legitimate innovation," UNLV's Robert E. Lang told The Atlantic.
Hsieh's positive influence seemed largely confined to the eastern side of downtown. Glitter Gulch was a different prospect entirely. Texas restaurateur Tilman Fertitta had already reinvented the Golden Nugget as a destination hotel. Then entrepreneur Derek Stevens came from Detroit, snapped Fitzgerald's out of bankruptcy and reinvented it as The D, bought and expanded the Golden Gate, purchased and razed the old courthouse and turned it into the open-air Downtown Event Center, and rescued the Las Vegas Club from Tamares Group's neglect, although he's not yet said what he intends to do with the property.
Over on Fremont East, as the area of resurgence came to be known, Hsieh-funded startups and independents were creating a dramatic change of image. "We used to come downtown and you just never came into this area unless you were looking for crack or something — it was honestly, so absolutely unsafe," VegeNation restaurant owner Donald Lemperle told The Atlantic. Under the new regime, an independent bookstore, Writers Block, sprang up in the area, in a former tattoo parlor, and the opening of a new theatrical venue, Inspire, notched up another cultural conversion.
"On a much smaller scale, it does remind me of what Brooklyn was going through 15 years ago when nobody really wanted to live there — it was just the cheapest place. I really respect the visionaries behind it," said Writers Block co-owner Scott Seeley. "[Hsieh's] investments have really been the major investments in downtown over the last two-plus years. The Downtown Project has really given a surge of confidence to the downtown area," added urban planner Scott van Gorp.
Hsieh has also made a believer out of UNLV professor Mark Guadagnoli, who says of downtown, "Now it’s a really fun place to go. It’s a destination. Anyone who says the Downtown Project has not made a significant and lasting impact on Las Vegas is crazy." Downtown's revival was a wave that Hsieh caught as it was cresting, but he has not only ridden it but proven to be a useful symbol, patron, and figurehead for what's happening at the urban core of Las Vegas. When launched the Downtown Project was envisaged as a stimulus that was intended to turn a profit by year five, which is now, so while the social pros and cons remain subjective and somewhat nebulous, the balance sheet will speak for itself very soon and, according to a recent in-depth interview with Business Insider, Hsieh says they're on track to hit that target.
