Based on the number of weeks he’s in town, and the days per week and hours per day he’s free to wander, Tony Hsieh has calculated that he spends “1,000 collisionable hours” annually in downtown Las Vegas. Collisions, or serendipitous encounters, according to the Zappos CEO, are a good thing and he’d like to see more people in his company’s new headquarters’ community having them.
Hsieh is widely admired for having built an online retailer known for stellar customer service by nurturing a healthy corporate culture. At Techonomy 2013 in Tucson he described how he’s applying what he’s learned in 14 years running the company to transforming the Fremont East neighborhood surrounding Vegas City Hall—now Zappos central—into a “place of inspiration, creativity, discovery, and upward mobility.”
His so-called Downtown Project won’t just benefit Sin City, he hopes. Hsieh wants Vegas to be a model for urban renewal projects worldwide.
Inspiration came from his employees. A survey to find out what features they most desired in their new corporate campus put doggie day care on top. That led Hsieh to wonder how he could make life better not just for Zappos’s 1,500 staff, but for people in the surrounding community. The Zappos vision had long been defined by three C words: clothing, customer service, and culture, Hsieh says. But ever since hearing the maxim “a great brand is a story that never stops evolving,” he’d been thinking about adding a word. “Community,” he decided, would be the next C guiding the Zappos brand story.
From doggie day care, the idea snowballed. Hsieh and a few friends decided to personally fund a $350 million Downtown Project with ambitious goals: To make downtown Las Vegas the most community-focused large city in world, as well as the co-learning and co-working capital of the world. What makes the project so different from other urban revitalization projects, Hsieh says, is that “rather than maximizing short-term return on investment, we maximize long-term return on community.”
Also unique, Hsieh says, is that, like Zappos, the Downtown Project strives to “institutionalize return on luck.” By that, he means it enables those collisions among people in the community. Studies show that such random encounters increase innovation and productivity, he says.
The project’s budget includes a $50 million investment into at least 100 community-based small businesses. “Owner-operated and a unique first or the best at something” enterprises are prioritized. Among those launched to date is a breakfast and lunch joint run by a former casino worker who has tripled her initial revenue projections and is now mentoring other entrepreneurs; a “hangout place that sells clothing”; and an entire Downtown Container Park—the world’s largest—featuring 40 retail shops, restaurants, bars, galleries, play spaces, community meeting space, and a co-working facility.
The project promotes bicycling over driving, and Hsieh says the largest Tesla order ever placed the U.S. will establish its car-sharing program. It also revived the community’s monthly First Friday arts stroll; created an annual Life Is Beautiful arts, music, and food festival that attracted 60,000 people; established an early childhood center; set up a fashion incubator; launched an initiative to bring large scale art to Downtown Vegas; and leased 100 units in an apartment building that are offered free to VIP and “purposeful visitors” in exchange for public talks and the benefit of their “collisionable hours.” “Downtown Vegas is starting to become like a mini TEDtalk,” Hsieh says. The slogan, “Downtown Vegas makes you smarter (if you know where to look),” broadcasts that notion on a billboard in town.
Hsieh and his friends have also committed $50 million to investing in and luring tech startups to the neighborhood. The support was enough to entice a 20-person Chinese company recently to locate in Vegas instead of Silicon Valley, he says, adding that entrepreneurs tell him they are also attracted by the sense of community they detect in a one- or two-day visit to Fremont East, as well as the idea of being part of a larger startup than their own: The startup city. “How many times do you have the chance to help shape a city?” he asks.
In turn, urban development theories have come to inform Hsieh’s vision for growing Zappos. “When a city doubles in size, innovation increases by 15 percent,” he says. “But when companies get bigger, productivity goes down.” To avoid that destiny as Zappos expands, he aims to organize the company “more like a city and less like a large company” with densely populated workspaces, and, when it comes to navigating them, a preference for “collisions over convenience.” For instance, Hsieh closed off a skywalk that would let employees get from a parking lot to the office without walking through the neighborhood.
“Culture is to a company as community is to a city,” Hsieh says. And he now believes that the maxim about great brands forever unfolding applies to companies, cities, and communities, too.
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