Take a walk down Fremont Street in downtown Las Vegas, and you're sure to feel the excitement and energy overflowing from crowded cafes and restaurants and busy construction sites. Sit down in one of these cafes, and odds are good that the person next to you will strike up a conversation about a business idea, the next outdoor community concert or the buzz surrounding a public thought leadership conference, like Startup Weekend scheduled for May 3-5.
Now rewind the clock back to 2008 and 2009. Back then, none of this was happening. Downtown Las Vegas was a ghost town, the real estate market had bottomed out and everyone was depressed. So what happened?
Zappos Superhero to the Rescue
Tony Hsieh is what happened. Hsieh is the CEO of Zappos, a fashion e-commerce company that moved in 2004 from San Francisco to Henderson, Nevada, a city 20 minutes outside downtown Las Vegas. Back then the company had about 60 employees. Today, it has more than 1,000.
Knowing the company needed more space, Hsieh considered acquiring land just outside of downtown Las Vegas. A little more than two years ago, he had enlisted the help of employee Zach Ware to conceptualize the new Zappos campus, but then came up with another idea.
“We knew that City Hall would be opening up in 2013, so we thought why not just move our offices into that building and make the whole downtown a campus for us and the community at large?” Ware says.
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Hsieh and his team got to work. They founded a new company, Downtown Project, and Hsieh committed $350 million of his own money to revitalizing the downtown core. The funds would be strategically distributed: $200 million to real estate, $50 million to small-business creation, $50 million to education and $50 million to technology startups. Construction began, and since then, Hsieh has been attracting small-business owners willing to give downtown Las Vegas a chance.
In spring 2012, he founded the VegasTechFund, a seed stage fund ($15,000 to $500,000 per investment) aimed at bringing tech talent to the desert. Ware signed on as a partner. So did Andy White, an entrepreneur out of Utah who moved to Las Vegas.
“Once you enable growth, you have the opportunity for exponential growth, which is what we are looking for,” White says. “That, and economic diversification.”
Some Startups Flock, While Others Flee
By the end of this year, the VegasTechFund will have invested in about 50 companies. The fund is interested in companies from a variety of industries—fashion and 3D printing seem to be hot right now—but all of them must have one thing in common.
“They need to be invested in enhancing and growing the downtown Las Vegas community,” Ware says.
Entrepreneur Porter Haney is all in. Last year, he co-founded Wedgies, a software-as-a-service company that creates surveys for individuals (i.e., surveys to ask friends where they want to go to lunch) and large corporations (USA Today employed Wedgies to poll readers on gay marriage issues). The company secured funding in October from the VegasTechFund, and Haney is thrilled to call downtown Las Vegas home.
“I really see this as a once-in-a-lifetime opportunity to build a company and a community from the ground up,” he says. “One of the best things about downtown Las Vegas is the community. Everyone is happy to help each other, listen to ideas and give feedback. The community is incredibly supportive.”
Not all entrepreneurs share Haney’s enthusiasm. In mid-March, news broke that Romotive, a smartphone robotics company partially funded by the VegasTechFund, was leaving the city for Silicon Valley. Was this a blow to the growing Las Vegas community? Nah, says White.
“People coming and going out of a community is a sign of a healthy community,” he says. “I really don’t find it discouraging. I know it is going to happen. It is all about balance, and I still think we have something great here.”
Is Growth Really Sustainable?
A $350 million investment from a billionaire is one thing. But is it possible to sustain growth over the long term in a place so formerly blighted as downtown Las Vegas?
“Absolutely,” Ware says, adding that Zappos plans to relocate its offices to City Hall in September. “We are focusing on small investments and making them sustainable over time. The bulk of our investment is in real estate, and there are a lot of vacant lots in downtown Las Vegas right now. We hope that as the area grows, we will have a hand in what types of business come in to make the ecosystem stronger.”
Ware hopes this ecosystem will attract more tech entrepreneurs as time goes on.
“You can develop something alone and be the only startup in town, or you can come to downtown Las Vegas where the spirit of collaboration is truly unique,” he says. “It is a place like no other. What’s happening right now is really inspiring.”
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Katie Morell is an independent journalist based in San Francisco. She regularly contributes to Hemispheres, USA Today, Consumers Digest, Destination Weddings & Honeymoons, Crain’s Chicago Business and others.
Photos: Getty Images