Zappos CEO Tony Hsieh may have turned an online shoe store into a $1.2 billion business, but his 2013 bet on the future of Las Vegas has yet to pay off. Nearly five years ago, the entrepreneur sunk $350 million into a major urban revitalization initiative—the Downtown Project—that Hsieh believed would turn Vegas into "the co-learning and co-working capital of the world."
Zappos moved its operations to the city’s downtown neighborhood and a new shopping and dining development sprang up. A structure made of 40 retro-fitted shipping containers now contains a series of bars and small shops. In May, a 231-apartment residential building in the area finally broke ground.
But progress hasn’t been as definitive as Hsieh once hoped, and as more tech firms begin considering their own plans for neighborhood development, it's instructive to look at what did and didn't work in Vegas. He’s loaned seed money to more than 300 businesses in the area. Many have already shuttered, while roughly 35 businesses continue to operate in spite of the area’s dearth of housing. In 2014, more than a third of the initiative’s 100 staff members were laid off.
Hsieh told CNBC that if he could go back in time, he’d do a few things differently—build more housing sooner and better support the project’s ambition to create serendipitous encounters between innovators.
But the entrepreneur isn’t done with Vegas, not by a long way. And only time will tell whether it was a foolish scheme or winning bet.