Tony Hsieh's Contribution to Reviving Downtown Las Vegas Debunked
Tony Hsieh's influence in downtown Las Vegas transformed it from a depressing neighborhood into a walkable and lively cultural hub, much like it was in the 1950s. However, there were issues with the implementation of his utopian vision due to unchecked greed and mismanagement in his investment companies, as well as personal demons he faced.
I spoke to Brian “Paco” Alvarez, who worked with Hsieh at Zappos for four years from 2013 to 2017. Alvarez, native to Las Vegas and a 18-year resident of downtown, could be seen as an unofficial art and culture curator for the online shoe company. He now runs his own art consultancy and is a doctoral student at UNLV.
Tony Hsieh pledged to create a “community-focused large city in the world” around Zappos’ downtown headquarters in 2013. He founded a venture company called the Downtown Project (DTP), investing $350 million of his own wealth, which he earned by selling Zappos to Amazon for $1.2 billion in 2009.
By 2023, Hsieh was no longer present, and vacant lots and abandoned buildings still filled the Fremont East neighborhood where DTP focused its investments. A significant portion of the 45-acre land purchased by DTP was never developed.
As described by Alvarez, the area feels like a ghost town during the day. He recounted walking around with some European visitors a couple of weeks ago, witnessing a shooting at a nearby bar. Three entrepreneurs taking part in the DTP experiment ended their lives when their businesses collapsed.
DTP didn't fulfill its promise of creating a cultural utopia in downtown. The $350 million investment didn't change the landscape drastically. Container Park, an outdoor mall, play area, and concert venue built from stacked shipping containers and guarded by a fire-breathing Mantis from Burning Man, has become a popular tourist spot. Fergusons Downtown, a converted motel, has become a center for local music and art.
According to a 2017 Applied Analysis report, the Downtown Project created more than $200 million in economic output and 1,500 jobs, resulting in approximately $70 million in salaries. Despite this, the development didn't give birth to Hsieh's community-centric vision.
Hsieh's DTP purchased real estate, including Container Park, Fergusons, the historic Atomic Liquors building, and Zappos' former headquarters (the former Las Vegas City Hall). This is now being offered for sale by Hsieh's family, open to anyone with an idea.
When asked about the relocation of downtown residents to DTP's official buildings, Alvarez observed a disconnect between DTP and Zappos employees and the downtown community. He recalled employees stating that they would “bring art to downtown, bring culture to downtown”, but that it already existed in areas such as Downtown Cocktail Lounge, Griffin, Commonwealth, Insert Coins, Vanguard, Beauty Bar lounges, and Henri & Odette art gallery.
The initial excitement and publicity DTP generated attracted visitors from the suburbs, who mixed with the young tech crowd at establishments like Natalie Young’s Eat and Kerry Simon’s Carson Kitchen. However, millions of DTP’s expenditure were essentially wasted on initiatives such as a car-sharing program in an area that had insufficient parking or enough residents to support it.
Alvarez mentioned that Hsieh placed the wrong individuals in charge. Those with ideas were immediately funded, but Alvarez himself was cautious about expressing his opinions, fearing accusations of not belonging to the Zappos culture.
Alvarez argued that what downtown has lacked for years is more living spaces for lower and middle-income families and transitional houses for the homeless. However, DTP bought buildings, often for twice their value, and turned them into expensive studio apartments. Ultimately, the natural process of organically growing the area, attracting different kinds of people, and fostering various businesses would have been more beneficial to the neighborhood.
To demonstrate how regeneration is meant to occur, Alvarez mentioned downtown's art district, a previously run-down area that has been thriving for the past 20 years. He compared it to the well-known race between the tortoise and the hare, asserting that our winner was clear in this instance.
By accelerating what should be a natural process of urban development, DTP created a bubble that could only sustain itself with continuous capital inflows.
"It was insensitive to charge $13 for a fruit smoothie in a neighborhood where the average annual income is $32,000," Alvareh remarked. "Instead of investing in businesses already established down here, like the little florists on East Charleston or a few of the art galleries and bars in the arts district, they began building their own offerings. However, these weren't appropriate for the region."
Beloved and dirty punk clubs, as well as watering holes, were replaced by artisanal doughnuts, craft beer, and Bikram yoga. The Beat Coffeehouse & Records, opened in 2009 by Jennifer and Michael Cornthwaite, was Fremont Street's beacon before Hsieh's interference. However, it was eliminated due to market forces created by DTP in 2016 and replaced by the type of California-based chain that Hsieh despised.
Alvarez claimed, "The Beat, which was the heart and soul of Fremont Street, perished after we lost it. Fremont Street has never recovered."
Tony Is Out of the Picture
In 2014, Hsieh stepped back from DTP when it sacked a third of its 100-member staff. By 2020, he was compelled to leave Zappos of Amazons and decided to relocate to Park City, Utah, with a devoted following. Just like earlier, he continued to acquire real estate at costs higher than the market.
According to friends and associates, Hsieh's behavior worsened as a result of his frequent usage of nitrous oxide canisters. On November 27, 2020, he passed away at the age of 46, malnourished, from smoke inhalation during a shed fire at a house belonging to an ex-girlfriend in Connecticut.
Alvarez questioned, "How many people around here profited from Tony's millions through his ill-conceived activities and overpriced land purchases? It's almost unbearable, completely despicable."
Although remembering Tony Hsieh as the man who revived downtown Las Vegas might make for an intriguing narrative, it isn't entirely true.
"We can credit Tony for aiding in the revitalization of a lot more of Fremont Street," Alvarez stated, "but he wasn't the savior of downtown. Downtown would have recovered on its own."
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Source: www.casino.org
