romo robotIn January, we held our final dinner for donors to our September Charity:Water fundraising drive. In exchange for a $1,000 donation, Zappos CEO Tony Hsieh put donors up in Downtown Las Vegas, fed them a delicious meal, and gave them the opportunity to check out his grand and almost incomprehensibly altruistic mission to invest $350 million of his own money rebuilding the blighted community.

As usual at these dinners, I talked a bit about why I was moved by Charity:Water’s mission, and Hsieh talked a bit about his Vegas vision. But this time, he sounded different. I was struck by the fact that he sounded less big vision than he had in the past. He acknowledged that there wasn’t a lot to see on the ground so far of his dream, but that 2013 was the year that would really start to change.

Physically, that’s definitely the case. There are more restaurants going in, and both a fashion and startup co-working space have opened up. And every month I’m there, I see more investors and startup folks coming through to check things out. General Assembly, too, is opening up a Vegas presence. The plan is still grand, even if some early promises like parks and grocery stores have taken longer to turn into reality than many transplants would have liked. A few times Hsieh has acknowledged that building things in the physical world is decidedly more challenging and slower than building in the virtual world.

But while 2013 may be the year the real estate and small business part of the Downtown Project takes physical shape, it’s been less kind to the Vegas startup community. The first blow was the shocking death of well-known entrepreneur Jody Sherman and also the shocking decline and liquidation of his startup Ecomom. Today, the most high profile Vegas startup, Romotive, has very different news, but it’s a blow for Vegas nonetheless: It just informed the downtown community it’s moving to the Bay Area.

These were hands down the two most high-profile Vegas startups and usually the two listed in press reports about the venture.

Unlike the rapid decline of Ecomom, the news of Romotive’s move wasn’t a shock, at least to me. As regular readers know, my husband is building a photography community in downtown Vegas (funded by the Downtown project), so we are there every month. Since I first met the Romotive team, it’s been clear that they’ve struggled with whether or not they’d be able to stay — despite their love and admiration for Hsieh’s vision. As the company took off and needed more space, resources, and talent, most people Downtown assumed this was coming.

Ultimately, the affection for the project clashed with the needs of the company. From the email CEO Keller Rinaudo just sent to the Downtown community:

We came to Las Vegas in 2011 as a team of three founders with a vision to create the world’s first affordable personal robot. From our apartments at The Ogden we built, packaged and shipped thousands of robots. We developed, hacked, hosted community dinners and built a team. Thanks in part to our time in Downtown Las Vegas we’re a team of 20 people, we are closing retail orders, and last fall closed our $5 million Series A led by Sequoia.

This was a difficult decision for us because Romotive wouldn’t be the company we are without the constant support of Downtown Project, Tony, Zach, Fred, and many others. I can’t think of a place I would have rather built Romotive over the last two years than downtown Vegas. We’ve been able to focus on building a space and culture that are geeky and unique. In fact, several of the investors on this list have slept on air mattresses in our apartments here ;).It’s also been meaningful to be part of something bigger than ourselves, and we believe deeply that Tony will succeed in building the downtown area into a vibrant tech ecosystem. The Vegas Tech Fund has invested in almost 20 innovative companies that have moved to Vegas since making its initial investment in Romotive. And excitement about the buildings and spaces that are currently under construction here is tangible.

Ultimately, our goal at Romotive is to build the world’s first affordable personal robot. It’s my responsibility to make sure that Romotive is located where we are most likely to achieve this vision. As we scale over the next few years, our focus will be on working in close proximity to strategic partners and hiring brilliant senior talent. That’s the reason that we have decided to move to the Bay Area.

I reached out to Vegas Tech Fund partner Zach Ware for comment and, via email, he emphasized the positive: That the company’s traction proved that you could create a promising startup in the Downtown Vegas ecosystem. “While here they’ve grown from a team of 3 to 20, closed a huge round with Sequoia and written their largest order via a connection made in downtown Las Vegas,” he wrote. “So we think it demonstrates that Downtown Las Vegas is an awesome place to launch and build a company. Romotive has special needs and we support Keller’s decision to relocate the company to be closer to strategic partners, that’s the right decision for them and we always support the decisions of the founders we invest in.”

Ware said that while Ecomom and Romotive may have been the best known of the Vegas startups, the fund has invested in twenty companies who have relocated to Vegas, and others have moved there without an investment. He listed LaunchKey, Rolltech, and LocalMotion as three he was particularly bullish on. (I’d add in there Paul Carr’s NSFWCORP., which has just expanded to a new print edition.)

No one said building a community like this would be easy. It’s taken decades for New York’s “Silicon Alley” to turn into something more real, and many other tech hot spots remain more hype than promise. Ultimately, Vegas Tech Fund can only do what it’s done in the case of Romotive: Lure top talent, give them what they need to grow fast, and let them go with their blessing if they find they need to.

[Disclosure: In addition to my husband’s project being funded by the Downtown Project, Tony Hsieh is an investor in PandoDaily.]