What Happens in Vegas… Should Happen Everywhere
How entrepreneurial energy defies the stereotype of this desert city
She didn’t yell at me, but I could see I had touched a nerve. Sara Hill, the Director of Entrepreneurship at Work in Progress — a startup hub in the up and coming downtown area of Las Vegas—did not want me to call this article “The Silicon Strip.”
“We don’t want to be that,” proclaimed Hall. “We want to be what we are. We’re never going to be Silicon Valley, so why try to be? That’s not the best for this ecosystem.”
Wait, Vegas is an entrepreneurial hotbed? Since when?
Maybe I was so looped on Red Bull and vodka when I hit the town that I missed the action off the strip. Quantum physics theorizes that at the nano particle level, like attracts like. When you consider this, then the idea of being an entrepreneur in a town like Las Vegas makes sense only on a purely theoretical level. Energy attracts energy.
Entrepreneurs are attracted to Las Vegas because of its combination of unique features: A desert which acts as a blank canvas for idea-generation, an educated community of workers who can staff call centers, and a low cost of living with tax breaks to support it. It’s like Delaware, Macau and Monaco had an entrepreneurial baby. And far from the Strip, you have a culture of free-thinkers (the Burning Man vibe is prevalent), gamblers, and rebels (Running Rebels to be more specific).
But like life or relationships, when you push past the veneer of “what happens in Vegas…” there is some real substance lying underneath. It may not be Silicon Strip, but entrepreneurship is alive and well in Vegas.
Enter Tony Hsieh
Ten plus years ago, when I was trying to jumpstart a retro footwear brand called Pony, Tony and his team introduced Zappos to the footwear community at the world’s largest footwear trade show in Vegas. I specifically remember thinking to myself as I laughed the sales rep out of our booth at WSA, “If Nike can’t figure this out, what makes you guys think you can?”
He sold it to Amazon in 2009 for $1.2 billion and rolled part of that personal fortune into the Downtown Project in Las Vegas.
For context, Hsieh needed new office space for his Zappos call center, and he had grown beyond the constraints of his Henderson, Nevada office. As he studied the culture of corporate campuses, Hsieh recognized that a certain vibrancy and connection was missing. He wanted a community, a true live-and-work environment of innovators, not a contrived development.
For example, Nike has the energetic feel of a college campus on game day, but it’s not an organic environment. It’s designed to feel like a small city, and even features services like dry cleaning, a barber, and several cafeteria’s acting as themed eateries with food named after athletes. Hsieh wanted authenticity and creativity. A “campus only” model didn’t fit.
As Hsieh reflected on this, he saw something in a derelict section of downtown Las Vegas that resonated with him, and he set out to create something more impossible than sneakers mailed to your home — his own vibrant, mini-city for entrepreneurs.
The Downtown Project
Downtown Las Vegas became the perfect place to test one of Hsieh’s theories. After flipping his first company LinkExchange to Microsoft for $265 million, Hsieh and some other Internet friends occupied a large apartment complex in San Francisco. In his book Delivering Happiness, he notes: “We could create our own adult version of a college dorm and build our own community. It was an opportunity for us to create our own world. It was perfect.”
Cut to present day where reports of the Downtown Project are far from perfect. Hsieh has invested $350 million, and sliced it up into a real estate holding ($200 million), $50 million into the arts, culture, and education, $50 million into small business, and $50 million into the VegasTechFund. While some celebrate this experiment with names like “techtopia,” it’s easy to find an article (ok, lots of articles) about Hsieh’s lack of involvement, failed businesses, and other unsavory details of entrepreneurs who have flamed out. Hsieh stepped down in September, and since then, the rumor mill has gone full tilt complete with layoffs, assertion of unqualified project leads, and even multiple suicides. However, and despite all the controversy, the Downtown Project continues to challenge its detractors.
Knowing Vs. Walking
Zappos takes a tremendous amount of pride in its customer service team. Remember, Hsieh built his entire company on the platform of customer service, and it became his “killer app.” Zappos isn’t just a shoe company; Zappos is a customer service company that just happens to sell shoes. Hsieh famously tells the “pizza story” when he prophesizes the company’s unique culture. Indeed, a Zappos rep helped a hungry customer find late night pizza in Las Vegas over a telephone call.
Hsieh opens his book with my favorite quote from Morpheus in The Matrix: “There is a difference between knowing the path and walking the path.”
Hsieh embodies this ideology in two ways. For sure, he dropped a great deal of his personal wealth into the Downtown Project instead of a basketball team or an island. Go within yourself and examine your own values to decide what you would do with $350 million. Would you spend $350 million developing a community of innovators and entrepreneurs?
Creating something of tremendous value from something of no value — this is “walking the path.”
It’s clear in Hsieh’s Top 10 Reasons Why You Should Read This Book (written about Delivering Happiness: A Path to Profits, Passion, and Purpose) as to what led him to create this “utopia.” The shift in thinking in the 21st century business model means that entrepreneurs are striving to build something special, inspired by finding happiness in blending work and life. It’s the notion of building something with meaning, not just making money.
When I connected with George Moncrief, Entrepreneur in Residence at VegasTechFund, we spoke briefly of Hsieh and his movement, but it was obvious that “special and inspirational” is baked into the very tech fund he leads. While the media loves to celebrate the drama surrounding the Downtown Project (and there is plenty of it), the media has missed something special that is happening with this project. It’s not the fire breathing locust that greets you at the Container Park (Hsieh apparently saw it at Burning Man and fell in love with it), nor is it the pulled pork from Big Ern’s BBQ or the “Kickass” (an off the menu item the owner suggested) smoothie from Grassroots.
It’s something you can’t see from the street level, as it lurks slightly beneath the surface. It’s the Luke Skywalker “feel the force within you” kind of stuff and Moncrief might as well have been my Obi Wan as he broke it down for me.
Creating Community
“One thing that you’ll notice when you talk to entrepreneurs around here is that everyone has a bias toward collaboration and propping each other up,” he explains. Moncrief is both Entrepreneur in Residence and philosopher. He referenced the Japanese word hito which (loosely) translates into “person.” “It’s a pretty cool character, it’s like a leg falling down, but someone else propping him up. It’s just really looking out for your fellow man and helping each other out.”
Yes, he’s actually describing Las Vegas because this is all happening in Las Vegas. Clearly, it’s a “build it and they will come” situation because the entrepreneurs I met there had come for the Vegas buffet of low cost living (many escaping expensive L.A.) and the ability to quickly test ideas. But make no mistake, it’s still an “eat what you kill” kind of town.
Case in point is a showcase startup called OrderWithMe.
Sara Hill (Director of Entrepreneurship at the incubator) explains, “They’re blowing up. They were in China before coming here, and they were on their way to move to San Francisco. They stopped off here and they stayed. I think they came here with like 10 or 20 people, and they’re definitely over 40 now.”
While OWM is a brilliant concept — it helps small businesses aggregate orders to save money — it also helps connect suppliers to markets. OWM offers its software for free, and they take a cut of the order. They’ve raised a few million from VegasTechFund, and set up a totally unique office space in what was once a hotel. They even kept the numbers on the rooms.
But this isn’t about cool offices and foosball tables. The cool factor is that Hsieh invested in the concept to test a collaboration platform called ShopWithMe that allows customers to shop independent retailers, but purchase non-inventoried products via a touch screen. Customers get a fulfilling shopping experience, and indy retailers get to carry less inventory. ShopWithMe has game-changer written all over it, but more importantly, the DNA of both of these companies is evident in the pop-up shop test concept. Remember, iterate, then innovate? Well, they are doing it.
Hsieh is not only connecting, he’s curating, collaborating and investing.
The entrepreneurial fairy dust is still being sprinkled by George and his team at VegasTechFund, and they are stoking the bonfire to keep the “Kumbaya” going:
“It just naturally kind of evolved in the community, and I think that’s really the magic. When the startup scene started, we always had startups here and technological companies, but there really wasn’t a large startup community where everyone knew each other. There were lots of little silos essentially. But once everyone started coming together it just kind of magically happened.”
To help support the “city as an incubator” concept, the Work In Progress (WIP) space is located two blocks from Container Park. CP is known for three things: a family-focused and whimsical public space for community gatherings, short leases to facilitate quick-test retail concepts, and shipping containers turned in every which way that are chopped and welded into creative handmade local businesses. No chains.
Sara is quick to point out that this is straight out of Hsieh’s playbook. “A big part of making a thriving ecosystem (is) encouraging entrepreneurship and innovation.”
Put The F-u-n in Fund
The real magic happens when the WIP team creates weekly community dinners to inspire networking. The night I visited the space, I was allowed to sneak into a “Pitch Prep” where Powerpoints were tightened and advice delivered, rather directly, by peers.
I was able to listen to the CEO of Tealet describe her brand and business model. She told her story with confidence while one of her peers had merely delivered facts and a few ideas via Powerpoint. We could all feel the difference, and having been in her shoes before, you realize it’s not about raising money. It’s about connecting with your audience, letting them see into your soul to see if you have the chutzpah and the backbone to take a presentation and turn it into something real.
Similarly, The Mill is an accelerator within Work In Progress that jolts ‘wanna-be’ entrepreneurs with some quick strike cash, and “git-er-done here’s an office” energy headed up by Sara Hill.
Hill explained that the The Mill “helps inspire the entrepreneurially-minded because it shows people you don’t need to know everything about tech and raise hundreds of thousands of dollars. It makes it more accessible and that’s what we’re trying to do. It’s such a young, small ecosystem (and) tech scene. We’re trying to help stimulate it.”
The promise of $5k and two months of free office space at Work In Progress has attracted many businesses including a pickle juice brand, a B2B cannabis play, and a CRM for the freelance economy.
Entrepreneur 101: The Future Doesn’t Exist And The Past Doesn’t Define You
Here’s what Hsieh, Zappos, Work In Progress, Container Park, and VegasTechFund have shown me:
The future belongs to brands that learn to tell stories via collaboration and connection to each others success.
Look, competition is a beautiful thing. Hell, we’d all be talking on Blackberries and drinking over-roasted coffee if no one cared enough to take on the big guys. But the future of business is not about win/lose, it’s about win/win. Look at your environment and go forth and create. But before you do, be inspired and share that inspiration with your community and your customers.
But the secret sauce all you entrepreneurs, (you still out there?), is inspiration. Go read Hsieh’s list again. Brands that complete the “golden circle” are the brands that will kill it in the soon-to-be-eminent freelance economy which is also called “The Future of Small Business.”
If you are having difficulty establishing your brand in the market, dig deep into the life lesson the VegasTechFund is living out, real time, in 3-D.
Partner.
Share ideas.
Help each other.
Realize that no one has to lose for you to win.
Hsieh might focus on happiness, but the bridge that got him there is called inspiration. He hired for culture fit, and created conditions where people could thrive.
Find an example of this type of engagement in your own business. The “click to buy” is a decision made with the heart and head in partnership. You can’t automate that, but you can certainly help establish those connections with software.
You want conversion?
Want to see what it feels like to be in the middle of an environment of creativity with a talent pool of people who understand customer service?
Drive five hours into the desert, drive past the strip to a once seedy part of town, park your car, and look for a 90-foot locust breathing fire.
What happens in Vegas doesn’t have to stay in Vegas — it might actually benefit all of us.
