The city startup: Tony Hsieh’s Downtown Project
Editor’s note: This is a guest post by Ondi Timoner.
Until recently I never much liked Las Vegas. But now there's an entire landscape growing beyond the Strip. Recently, for the 4th time since last summer, I was back as a guest in Zappos CEO Tony Hsieh’s world, “Downtown Project,” to judge the finals of a national startup competition for Tech Cocktail. [Disclosure: Tony Hsieh is an investor in PandoDaily.]
The event, which included an eclectic group of trailblazers in the art-tech community (Jermaine DuPri, Jay Adelson, Raj Kapoor, Michael Chasen, Christine Herron, among many others) spilled into the premiere version of Life is Beautiful, a food, art, and music fest spread out over 15 city blocks with dozens of bands, featuring Beck, The Killers, and a stage dedicated to inspiring speakers was sponsored by Downtown Project, which is Hsieh's big gamble.
Tony Hsieh is no stranger to wagering his own money on visions, and he has both won and lost big in the past. This time Tony’s betting $350 million worth of greenbacks on transforming the decaying and blighted part of the old Vegas Strip into the most community-focused large city in the world by earmarking $200 million for real estate, $50 million for small businesses, $50 million for education, and $50 million for tech startups. Downtown Project has funded 21 tech startups and 21 small businesses with the ultimate goal being to invest in 100 to 200 entrepreneurs.
As a filmmaker, I have documented other social experiments, like Josh Harris’ underground bunker in "We Live in Public." Just as A TOTAL DISRUPTION is the flip side of that dark look at our future online (which is now), Tony Hsieh’s Downtown Project is, in many ways, an ambitious, obverse look at bringing people together around technology, with a Buddha-like optimist at the center instead of a big-brother Oz behind the curtain.
I think that’s why I keep coming back. The bigger the project gets, the smaller and more like a community it feels, because as the ideas come off the famed wall of Post-its and go from being dreams to reality. The founders have become pillars of this community and are investing in making it the greatest place on earth.
In this week’s ATD episode of Startup Life, we focus not just on a single company but on this whole community of creative technologists, designers, and entrepreneurs that Tony is fostering called Downtown Project.
Here’s the practical “why” of it: In 2011, when Zappos was looking to move out of its company headquarters in Henderson, Nevada, Hsieh visited Nike, Apple, and Facebook, and he realized that they had created mini-cities for their employees. Hsieh didn’t want to replicate these self-contained compounds cut off from the rest of the population, but rather he decided to bring the campus concept and his new Zappos HQ to a living and breathing city like Las Vegas. At Zappos, Hsieh has instilled the importance of company culture -- happy employees translate to better customer service. For the Downtown Project, Hsieh told me he wanted to take this to the next level, “Culture is to company as community is to a city.”
Hsieh’s believes that greater connectivity between urban dwellers is not only achieved through technology, but that a key driver is creating a walkable city to foster urban collision or serendipitous encounters between people that spur innovation and nurture a city’s economy and culture. As Hsieh explains, “For someone like myself, I'm out and about in a collision-able way. I might run into someone on the street or in a restaurant or in a bar, three or four hours a day times 7 days a week times 40 weeks a year. Do the math, and it works out to be about a thousand collision-able hours per year.” By increasing these chance collisions between innovators, Hsieh hopes to bring people together, exchange ideas, and accelerate learning.
Hsieh has already purchased over 28 acres in the downtown area to date, and there is more to come in order to re-invent Vegas and create a thriving, sustainable city that rivals New York, San Francisco, and Los Angeles. Hsieh crunches the numbers, “What really matters is 100,000 collision-able hours per acre per year, which works out to 2.3 collision- able hours per square foot.”
Tony calls his four floors of luxury crash pads at The Ogden “secret weapon” of Downtown Project. These condos are offered to speakers, investors, startup entrepreneurs, and artists like myself who come into town to contribute our skills to the whole. Staying all together in the heart of the experiment allows us to connect, to experience the revitalization effort firsthand, and in my case, to fall in love with many of the pioneers who have moved there to be part of his bold, urban experiment.
Inspired by Edward Glaeser’s Triumph of the City, an iconoclastic history of cities that shatters commonly-held misconceptions about urban life, Hsieh is determined not to repeat the past mistakes of city planning, “We’re very anti-topdown master planning which is how a lot of urban revitalization projects are done and instead we focus much more on the entrepreneur and what the community wants.”
Nothing illustrates this point better than the community-sourced wall of colored Post-It notes in Hsieh’s condo at the Ogden. Each handwritten square has a type of business or service that would improve the quality of life and bring people together.
One scrap of neon paper that turned a dream into a reality was Eat, a restaurant owned and operated by Natalie Young. After stints as a chef at several Vegas restaurants, Natalie had tired of the Strip and was headed back to New Mexico. Her friends, Michael and Jennifer Cornthwaite, convinced her to stay and introduced her to Tony. That night, he asked her what she needed to make her own restaurant, and within weeks Natalie had a $225,000 interest-free loan from Downtown Project to build her vision. The restaurant is now a thriving social and community hub.
Natalie is a strong believer in the project’s vision, “Tony Hsieh took a chance on a person like me, to live my dream. To be creative as an artist. He’s given a whole lot of other people the same opportunity. So what that does for me is that teaches me when I have an opportunity, to do the same thing for someone else.”
Entrepreneurs who want to be part of Downtown Project have to meet certain requirements. “Our primary criteria for bringing in companies is similar to a typical VC firm. However, we do add on top of that the community element. It’s very important for us to know that any team coming into this has a feel for the bigger "why" behind what we’re doing, and values the importance of giving before they get and interacting and engaging with the community all along the way,” explains VegasTechFund Managing Partner, Andy White. Not to mention the fact that the company must either relocate to Vegas or be there for at least one week per month.
COO Jen Consalvo of Tech Cocktail was sold on the project’s emphasis on community: “There’s not a lot of other places like this. People are coming together, people have a singular intention, people are using that intention to build the things that people want in one place.”
“I think what sums it up is bringing a lot of creative minds, tech talent, people that are passionate about startups, art, fashion, whatever, into one physical space. And creating a test society,” says Maren Donovan. Her company Zirtual is a startup that provides executives with dedicated, remote assistants for a monthly rate -- creating jobs for stay-at-home moms and the like, while bringing down the bottom line for their clients. They have also received funding from the DTP’s Vegas Tech Fund.
On my last night on this particular trip, with all the memory cards shot and filled, and no more hard drive space, I found I couldn’t leave without saying goodbye to my new friend Cathy Brooks, founder of Hydrant Club. With the music of the Killers as an aural backdrop, we met in front of a fence plastered with blown-up pictures of dogs with advice from their canine perspective ala “Unleash your inner puppy” and “Life is short. Bark less, wag more.” We jumped up on benches to look over at the lot where she’d broken ground on her canine social club for the leagues of local pet owners and incoming Zappos employees that have four-legged family members. A self-proclaimed refugee from the tech world, Cathy’s passion and joy at fulfilling her true calling is infectious.
As I left the flagship LIB festival (attendance over 60,000), I realized that I had never been to a major music festival held on city blocks, with the small businesses and restaurants lining the streets, open for business. I filmed Lollapalooza for years in Chicago’s Grant Park, but there was something to this concrete experience: Here I was in Vegas, feeling safe and secure despite its reputation for crime, feeling like as a mother I had exposed my son to the wise and inspiring words of speakers the likes of Dr. Sean Stevenson and Tim Chang. For Tony, it’s not enough to sell tickets, he wants people to be inspired to go change the world. I hope he pulls off a sustainable community here and that the model spreads, but only time will tell. As long as I’m invited, I’m in for the ride.