Las Vegas may be famous for its casinos, attracting 40 million tourists each year, and the Consumer Electronic Show (170k attendees in 2015), but parts of it are not so shiny.
The city has long been too dependent on tourism and gambling, two industries very sensitive to economic fluctuations. The workers are largely low-skilled, and so far Las Vegas has not been able to rank itself as a startup hub, which could make it more attractive for a young, educated population.
As a consequence, the Downtown area, north of the strip, has long been a dangerous, desperate place. Today, it’s changing as Tony Hsieh, the CEO of Zappos, an e-commerce website, has decided to revitalize it through a series of programs called the Downtown Project.
The philosophy of the project sets it apart from traditional urban renewal programs. Tony Hsieh insists on the “return on community”, and the whole thing is a mix of capitalism and community that you often find in the tech world.
$350 million of real estate and investments for the Downtown Project
Tony Hsieh is the founder and acting CEO of Zappos, an online shop selling shoes and clothing, founded in 1999, and acquired in 2009 by Amazon for $1.2bn. The company relocated from the suburbs of Las Vegas to Downtown in 2013, as part of a broader project called the Downtown Project.
The idea is simple: by recreating opportunities in a derelict part of the town, Tony Hsieh wants to foster an innovative and entrepreneurial ecosystem to attract new talent and change the face of the district.
The total amount of the project so far is of $350m, split as follows:
- $200m for real estate, to own new plots of land and have the control of what to put there
- $100m for tech startups, with so far about a hundred of them funded and backed by the Downtown Project
- $50m for traditional, non-tech SMEs, with 50 investments so far
Investments include the Gold Spike, a former casino turned into an event place, the new HQ of Zappos (which ironically was the former town hall), and a few eateries, coffeeshops.
We visited then three emblematic places within the Downtown Project: Work in Progress, the Container Park, and the Zappos Pop-up Shop.
Work in Progress: a coworking turning into an accelerator
Among the different investments made by the project, we have been visiting three of them, thanks to a tour organized by Ethan Pierse, an American consultant living in Paris and helping French companies to better understand how the US work from a business perspective.
Our first stop was at Work in Progress, a coworking space located at 317 6th Street. There’s nothing unusual here: entrepreneurs, freelancers and early stage companies can find a place to work from and get mentorship for rates ranging from $199 to $299 per month.
Still, it’s now a cool spot to rebrand the Downtown area, and a blender of people willing to change things with lots of events and courses in entrepreneurship happening.
Recently, Work in Progress has launched The Mill, an early stage accelerator, giving for instance $5k to single entrepreneurs so that they can try out their idea for two months.
Shift Connects: a startup specializing in multimodal mobility
The second place we visited was Shift, a local startup in the field of new mobility. Surfing on the wave of the sharing economy, Shift offers its users to rent different ecological vehicles, from Teslas to other electrical vehicles or even simple bikes, to increase their mobility.
It’s not like a Uber, and closer to bike-sharing and auto-sharing schemes that have been increasingly popular across many cities in the world. For $50/month, a member can use up to 10 hours of vehicles. Those have to be parked at Shift specific garages, where the teams take care of the charging, cleaning and maintenance of the vehicles.
Shift started by assessing that owning a car in the US cost, on top of the initial purchase, about $800 per month in gas, insurance and other maintenance costs, but were used only 3 to 5% of the time.
In 2014, it was also the first year in the recent history of the US that the population moved more from the suburbs to the downtown areas of their cities than the other way round.
Zappos pop-up store: the shop of the future?
The third place we visited was the Zappos Pop-up store, a prototype of what could be the “shop of the future”, as it has often been dubbed in the media. It’s temporary, probably not perfect, but there are quite a few impressive things inside as we detailed it in another post.
The core of this concept store was both to reduce to zero the inventory, which costs both in money and floor space, and to ensure a seamless experience of shopping.
The result is a strange mix of both online and offline worlds. In one particular room, you find yourself choosing the color of your next pair of sneakers in what is close to a complete virtual reality immersive experience. Quite nice.
Then, when you checkout, for some reason, you need to fill up something close to an online login, which is the archetypal friction even airlines did get rid off with guest checkouts.
The Downtown Project: what role for tech startups in the public space?
During our trip to Vegas, we saw a few other places part of this big project. It brings a lot of reflections as well on why a business takes over the fallen heart of one of the US best known cities, and its most visited by tourists (mostly Americans, by the way).
The replacement of the former town hall by the new HQ of Zappos is another interesting sign of the public space being helpes, saved, taken over, conquered, you-name-it, by a business community.
The end goal is, by the way, half business as well. When Zappos relocated its HQ in downtown Vegas (they were in the suburbs before that), many thought it was a crazy move, as the place was dangerous, and derelict.
For Zappos employees to come and work with their very specific culture here, the boss had to revitalize this part of the city, to make it more comfortable for its employees, creating in turn a vertuous ecosystem of shops, workers of different levels, hotels, shopping outlets…
The Downtown project is overall very new as it dates from 2013. You can find a longer history of this part of the city in this wonderful article from the Las Vegas Review Journal, and the map of its spots on TechCocktail.