Can the Kingdom of Happiness be saved? Downtown Las Vegas in the post-Zappos Era.
Downtown Las Vegas is not the first city most urban planners would pick as the next Seattle. Then again, Seattle wasn’t an obvious choice either, when Bill Gates and Paul Allen moved Microsoft there back in 1979.
In The New Geography of Jobs, Enrico Moretti argues that Microsoft’s move to Seattle transformed it from a decaying industrial town to the tech powerhouse that it is today. As Microsoft grew, it attracted other tech companies like Amazon, spun off Expedia, and home grew Zillow, Tableau, Zulily, and many others. Paul Allen has personally played a huge role in Seattle’s growth by buying up over 60 acres of land in the South Lake Union neighborhood and transforming it from a neglected industrial area to a gleaming mixed use neighborhood that houses Amazon’s new headquarters.
I don’t know whether Tony Hsieh consulted with Paul Allen or read Moretti’s book before moving Zappos to downtown Las Vegas in 2012. He surely has read Aimee Groth’s insightful book, The Kingdom of Happiness, which provides an inside look at Hsieh’s efforts to transform downtown Las Vegas by building a tech and creative ecosystem around Zappos. Hsieh formed the Downtown Project, an organization whose stated mission is to turn downtown into
a place of Inspiration, Entrepreneurial Energy, Creativity, Innovation, Upward Mobility, and Discovery, through the Three C’s of Collisions, Co-learning, and Connectedness in a long-term, sustainable way.
Hsieh’s vision for downtown Las Vegas is closely intertwined with the culture of Zappos itself. He is a leading proponent of a management system called Holacracy, which essentially does away with traditional hierarchies and job definitions and distributes decision making authority across the entire organization.
“Research shows that every time the size of a city doubles, innovation or productivity per resident increases by 15 percent. But when companies get bigger, innovation or productivity per employee generally goes down. So we’re trying to figure out how to structure Zappos more like a city, and less like a bureaucratic corporation. In a city, people and businesses are self-organizing. We’re trying to do the same thing by switching from a normal hierarchical structure to a system called Holacracy, which enables employees to act more like entrepreneurs and self-direct their work instead of reporting to a manager who tells them what to do.”
Ironically, Hsieh was imposing a top down structure on downtown Las Vegas at the same time that he was implementing Holacracy at Zappos. The Downtown Project was very much created in the image of Zappos, and the company, as well as Hsieh personally, seemed to be the only economic force driving the redevelopment of downtown. When Hsieh’s self-imposed five year deadline was reached and the funds for the Downtown Project were turned off, the economic engine stopped. Since then, downtown has regressed. Stores and restaurants have closed. Now that Zappos is no longer stocking the pond with tech entrepreneurs and creative types, they have been leaving Las Vegas as well. Even many Zappos employees who had moved downtown have been returning to the suburbs, according to Groth.
A visionary tech (near) billionaire can’t bring a city to life single-handedly through sheer force of will. He can create a Kingdom of Happiness, but that kingdom will feel more like a hipster country club than a neighborhood. A vibrant downtown requires multiple economic and demographic drivers. Seattle had Boeing supplying talented engineers, University of Washington sponsoring tech research, and emerging food and music scenes in addition to Microsoft. Even with all of that, it wasn’t until the 1990’s, more than 10 years after Microsoft’s arrival, that downtown Seattle really took off.
Unlike Seattle, downtown Las Vegas doesn’t hold much appeal to the types of people that Hsieh was trying to attract. They were there because of him and the financial support that he provided. Downtown became an extension of a Zappos corporate campus, lacking in the diversity and messiness that make urban environments interesting and appealing. Downtown Las Vegas has never been a population center or a diverse business center. It was simply the gambling destination before casinos moved to the strip. Prior to the arrival of Zappos, the only reason to visit downtown was the Fremont Experience, an entertainment venue loosely based on “old time Las Vegas” that features the world’s largest video screen and a zip line. This is hardly the foundation for a new neighborhood.
Can downtown Las Vegas be saved? It certainly has more going on than before Zappos arrived. But the current trend is not encouraging. The city needs an economic driver that is more connected to the city’s core activities: gambling and entertainment. Orlando has an emerging tech scene centered on video games. Vegas may have better luck using Orlando as a model, rather than Seattle.
