Why Tony Hsieh of Zappos is Gambling on Las Vegas

Posted by Chuck Kocher
On November 11, 2013

When most of us think about Las Vegas, we think about gambling. Tony Hsieh, CEO of Zappos has been known to make a gamble or two in his life—especially when he finds an idea he believes in. And when Tony thinks of Las Vegas, he thinks of gambling as well—but it has nothing to do with roulette wheels or black jack tables.

Tony, along with a number of other entrepreneurs, is gambling on The Downtown Project, a new venture that will create a city within the city of Las Vegas. Tony is betting (investing) $350 million to transform the blighted, crumbling part of the old Vegas Strip into the most community-focused large city in the world. Of that amount $200 million will go toward real estate, $50 million will fun small businesses, $50 million will be spent on education, and $50 million will fund tech start-ups. The Downtown Project has already funded more than 60 tech start-ups and 21 small businesses.

Why is he taking this gamble? Tony believes there is more to success than simply making money. At least part of his reasoning comes from his belief that, “Culture is to company as community is to a city.” Creating the right kind of community within the city will lead to a more productive, successful city (and that’s good for business, too).

So when Zappos was looking for a new company headquarters, Hsieh visited Nike, Apple, and Facebook, and saw the mini-cities these companies had created for their employees. But Hsieh wanted to bring the campus concept and his new Zappos HQ to a living and breathing city like Las Vegas.

What Hsieh really wants to create is what he calls a “collision-able” environment: Where entrepreneurs, artists, tech people, and other innovators “collide” with one another to exchange ideas and make things happen. Instead of sequestering his employees away (to protect things such as intellectual property, or trade secrets), Hsieh envisions Zappos employees interacting with others in a natural environment that’s conducive to more innovation for everyone.

Is it a gamble? You bet. But everything in business is a gamble. And if you’re going to bet big, why not do it in Las Vegas? This gamble is already underway, and they’re already starting to see results. And looking at Tony Hsieh’s track record, I wouldn’t bet against him!

If you’re interested in a more detailed look at Tony’s Delivering Happiness Downtown Project, you can check out his presentation here.