by michael kaplan | August 19, 2013 | Lifestyle
In taking on unglamorous challenges like urban redevelopment, Tony Hsieh is redefining what it means to be an entrepreneur.
Electric Lemonade is one of many independent businesses popping up downtown.
Zappos alum Meghan Boyd- Mossler at the Stitch Factory workspace she opened in January.
Downtown during its first heyday, in October 1961.
Pamela and Christina Dylag at their bar, Velveteen Rabbit.
By March 1968, Downtown was looking a bit brighter.
Paula McCartney and Juliana Goldberg’s 3rd Street Studio LV opened in the Arts District in April.
Zach Ware in the offices of Work in Progress, the creative and small-business support firm he cofounded.
Downtown in early summer 1989.
Six months ago, if somebody had suggested a business meeting downtown at Gold Spike, you’d have wondered if he were joking. So when Tony Hsieh asked me to convene there recently, I was a little taken aback. I remembered it as a dumpy casino and didn’t realize that Hsieh had taken it over. After hearing that he had, I still couldn’t imagine what he might have done to the place to make it reasonably appropriate for our sit-down.
Upon arrival, I’m a bit shocked. The Zappos CEO has transformed it into the Downtown Vegas equivalent of a college game room—complete with shuffleboard and an up-front bar that would make any undergraduate drool. Slight and soft-spoken, wearing jeans and a Zappos T-shirt, the diminutive Hsieh kicks things off by asking me if I want a shot of Fernet Branca and a cinnamon whiskey called Fireball. I say yes to both. We are soon downing mouthfuls of liquor as a prelude to the late-afternoon interview. Looking around, taking in the comfy sofas, clusters of chairs, and 20-somethings immersed in their MacBook Pros, I notice that there are no slot machines. Nobody is gambling on anything—but oversize Connect Four games are in large supply. It turns out that Hsieh is not a big fan of gambling. Not even poker? “I’m not interested in gaming unless it promotes interaction,” he says. “People used to play video poker here and not talk to anyone.” This makes him very likely the first person in Vegas to buy a property with a casino license and choose not to exploit it.
Hsieh, who relocated to Henderson from San Francisco in 2004, is now transforming the old City Hall into headquarters for Zappos and its 1,500 employees—and he has big, unconventional plans for Downtown. Via the Downtown Project, he stands to leave a large footprint in a chunk of Vegas that had long been underappreciated. Of course, there are people who came before him, like Michael Cornthwaite, with his swell Downtown Cocktail Room. Seth Schorr is using lessons he learned working for Steve Wynn to develop restaurants and bars and a new hotel, the Downtown Grand, where Lady Luck once stood. Then there are the old-timers, such as the Epstein family and their El Cortez, now on the National Register of Historic Places. Derek Stevens, the automotive supplier from Detroit, has remade Fitzgerald’s into the D (outfitting it with a macho Italian steakhouse, Andiamo, that could hold its own on the Strip) and has added a new tower to his Golden Gate. “We have a penthouse suite there,” he says, “that outdoes anything at Bellagio.” I’ve seen it myself and can tell you that it’s surprisingly big, stylish, comfortable, and macho. Stevens has reason to be proud, and only a churl would quibble over his bit of hyperbole. In late October, when the Life Is Beautiful music and arts festival—viewed as the Downtown Vegas version of Coachella—takes off, the rest of the world will know all about what seems to be the fastest-developing stretch of real estate in town.
Things big and small are popping downtown, and in the thick of it, Hsieh has evolved into the f ace of the neighborhood. He’s the billionaire shoe and apparel mogul who looks like a college kid, espouses big ideas, makes things happen, holds court at the Gold Spike bar—and wields a $350 million war chest. In the process, he snatches up properties like crazy. Walking through the neighborhood one night, a lauded chef from the Strip gushes over the changes, the overall sense of reinvention, and notes that it will all seem so different come fall. Then he marvels, “When you own most of the neighborhood, you get rid of a lot of the red tape.” It’s the sort of situation that allows Hsieh to fund an endeavor like Project 100, which will combine the best aspects of Uber, Zipcar, and various bike-sharing operations, offering cars, bicycles, and shuttle buses for a single membership. Already 100 Teslas, running on electricity, have been ordered. “The idea,” says founder and CEO Zach Ware, “is to encourage people to get rid of their cars.”
While Hsieh has invested in plenty of start-ups downtown—as varied as bowling alley software called Rolltech, a fashion incubator, and the world’s largest gay club, Krave—he maintains that a lot of what he’s doing is snatching up troubled spots and using the acquisitions to improve the neighborhood. “Some of the properties that we bought were hotels, like Fergusons and Travelers, associated with crime,” he says, explaining that simply shutting these places down makes the surrounding streets safer. “Now we’re turning them into boutiques. One will be a comic book store.” A comic store might seem obvious, but Hsieh is also instinctively stepping up in more unpredictable ways. Such was the case when chef Natalie Young encountered him and explained that she had quit her job and was going to leave the city to see what she could do on her own elsewhere. On the spot, Hsieh asked how much space she needed. Five months later, Young’s restaurant, Eat, was up and running, and it now ranks as one of the best breakfast and lunch spots in town.
People on the Strip are taking notice. Never mind that Hsieh dismisses the notion of rubbing elbows with the Wynns and Adelsons of the world. (When I ask him what Steve Wynn has to say about all of this, Hsieh sniffs, “You need to ask him,” before telling me he’s never met Wynn and has met Adelson only in passing.) Jim Murren, chairman and CEO of MGM Resorts International, however, has met with Hsieh. Murren asked lots of questions and left impressed by the area’s “community of innovators.” I notice George Maloof and his girlfriend—as if to validate the point—hanging out at Gold Spike, taking it all in. It takes time to adjust to the notion of gambling taking a backseat to big ideas, chats about entrepreneurship, and shots of Fernet fused with Fireball. Hsieh calls them Firenets: “You have to try one.”
Just one hour before opening for the night, a rec room of a bar called Velveteen Rabbit is a pleasant place for a handcrafted cocktail. It’s owned by the sister team of Christina and Pamela Dylag, a pair of rock ’n’ roll–looking girls who bootstrapped their way into the business, cutting their teeth by making drinks around town and perfecting mixology in the house they share. They exemplify the young entrepreneurs taking their stands in the newly revitalized Downtown.
A world away from Bellagio and Caesars, Velveteen is outfitted with reclaimed furniture and feels cool in a way that things never will be on the Strip or in Summerlin or Henderson. Christina has shaken me a sweet and smoky Irish whiskey concoction called Crucifix in a Deathhand, named for an obscure Charles Bukowski book, and explains that she and her sister grew up in Vegas before leaving town for urban experiences. What drew them back is the growth of Downtown and the opportunities available here. For example, because they opened in the Arts District, the city waived a good portion of the liquor license fee that would have made this project untenable for them. Then there was a visual improvement grant and a core of local customers. “We made this happen on our own,” says Pamela, prepping the beer taps for the night. “Our customer base is aged 21 to 60, and most of them hear about us through word of mouth. People are talking; they’re walking around down here and discovering new things. Tourism may be the biggest thing in Las Vegas, but we don’t rely on it.”
That sentiment rings true for most of Downtown’s burgeoning operators. At the vintage clothing store Electric Lemonade (which also stocks up-and-coming designers), another sister team, Courtney and Kinsey Peters, has returned to Vegas from elsewhere with a good idea and the intention of making it work. “This seems like the perfect hub,” says Courtney while helping a customer who’s grooving on a sweatshirt featuring a topless Kate Moss. “Everybody around here is doing something new. We’re in love with walking around a neighborhood and running into people and going to different spots. We’re looking for community that goes beyond strip clubs and corporate casinos.”
If Downtown’s evolution had never begun, Courtney says, they and their shop that feels like a fashionista time machine wouldn’t be here. Doing it in the suburbs or in a casino was always out of the question. “We like it gritty,” she says. “I don’t want to say we’re anti–Vegas Strip culture, but… we are.”
For Strip refugee Paul Balikian, whose Sweet Spot Candy Shop is next to a now-closed bailbond operation, selling meticulously selected candy in a cleanly designed shop is a nice break from running retailers like Gucci and Loro Piana in the big casinos. “It’s difficult to find community in this city,” he says as two towheaded kids go into the kind of shopping trance that Balikian used to witness in cashmere fanatics at Piana. “I’ve found it downtown. I live down here, and there is a feeling of support. This is a strange block, with a check-cashing place, a bailbond place, and a cigar store. But I helped the bail-bond guy put up his no parking signs in the lot behind our shops. Everybody wants everybody else to be successful.”
Although he has no ties to Hsieh and his Downtown Project, Balikian believes they “have the same ambitions in mind.” There is already talk of Sweet Spot opening a second location at the container park that Downtown Project is developing. It’s all moving so fast that people you wouldn’t expect to see here are drawn to the neighborhood.
Juliana Goldberg and Paula McCartney are suburban ladies with photo careers: Goldberg does boudoir photography; McCartney specializes in portraits of people and their pets. They are decidedly not hipsters. Yet they too have found a place in Downtown Vegas. They’ve rented a space in the Arts District, named it 3rd Street Studio LV, and use it for their photo shoots and as a rental space. During a recent First Friday, the space was used by an artist who wanted to show his work. Looking across the street at a homeless guy pushing a shopping cart, I can’t figure out how they wound up here and how they feel secure. “We like being downtown,” McCartney says. “It’s fun. It’s where things are happening.”
These are not cool kids looking for grit. But Downtown Vegas—once you step away from the Fremont Street strip—still has a seedy, down-at-the-heels edge, so different from Henderson and Summerlin, where the two women live and had long worked. Doesn’t the area sometimes seem a little rough? “It’s comfortable and friendly,” says Goldberg. “People have pride here.”
I leave there wondering whether Downtown Vegas has jumped the shark or if it really is blowing up. Maybe both.
Spend some time here and it’s easy to believe that the ideas and endeavors are small. There’s Emergency Arts, of course, a warren of indie businesses and galleries, plus a coffeehouse. Then there are the cool little drinking spots and restaurants, like Commonwealth, with its secret bar in back, and La Comida, the thought-out Mexican entry from Michael Morton (of N9NE Group fame) with financial backing from Tony Hsieh. You see independent retailers such as Coterie, a really cool clothing store inside what was once a checkcashing joint (it retains the old sign outside as proof of its bona fides, although it’s now upside down).
But some of these operations express ambitions beyond their façades and their sales, ambitions that jibe with Hsieh’s utopian vision and catchy, almost cultish, mantra about community building. Seth Schorr jokes that he plans on marketing Downtown Cool Aide, but people who buy into Hsieh’s ideas are serious about their inclusionary goals.
At Coterie, for example, the first of Hsieh’s Downtown investments, enlightened and trippy owner Sarah Nisperos runs more than a store. When I see a pair of security guards standing near the entrance, I comment that she must have precious cargo here. She laughs and says they’re just there to get out of the heat. Then, amid her $200 jeans and carefully chosen tops, she tells me she purposely designed the place to have free Wi-Fi, lots of space for sitting, and a bar in back. “I want it to be a coworking spot,” she says. “People come in, eat their lunch, and hang out around the ottoman. I never understood stores that kick people out after they finish shopping.”
Coterie offers some of what Hsieh looks for in his projects. Don Welch, who oversees smallbusiness investments for Hsieh, explains that where they put their money needs to build community and be sustainable; it needs to be unique or outstanding and be run with passion; and it needs to be “story worthy.” That phrase is heard a lot downtown, and it means the endeavor must have a narrative that gets people talking and inspires them. “We try not to say what we need,” Welch says. “Instead, we look for people, and when they seem right, we do it.” He has fielded 2,000 project submissions, put up funding for 20 of them, and has 40 more in the works. Welch, who left a lucrative job at Citibank to work for Hsieh, adds, “Some people think we’re taking over Downtown. But we’re investing in people with vision. The small-business owners have their businesses.” Those businesses are split 50-50, with the owners’ own investment treated exactly the same as Downtown Project’s. “Our lawyers hate it,” he says. But Downtown Project’s investment involves far more than money: It offers counseling and support in almost every arena, from banking to human resources.
Ask Hsieh about his endgame in all of this and he smiles beatifically. “I don’t know if there is an endgame,” he says. “We’re hoping to accomplish in five years what normally takes 15 or 20. Five years from now, people will come down here, look around, and wonder how it all happened.”
photography by eric ita (ware); steve marcus (hsieh); courtesy of lvcva (historic)