Tony Hsieh Speaks

In his first local interview since last week’s much-publicized Downtown Project layoffs, the Zappos CEO comes to his own defense, hypes Downtown’s future … and admits that mistakes were made

Photo by Checko Salgado

Photo by Checko Salgado

Tony Hsieh is feeling kinda beleaguered. Last week, the CEO and his $350 million Downtown Project took a beating in the local and national press following the layoffs of some 30 people, many of them on DTP’s corporate-support side. (A few of the harder punches: “Why Zappos’ CEO Couldn’t Save Downtown Las Vegas,” lamented a Washington Post headline, while Review-Journal columnist John L. Smith all but teed one up for the RJ’s Downtown-bashing comments page: “The cult of Tony Hsieh developed a crack this past week, and that’s a good thing.”) The layoffs, while unfortunate, are not uncommon to Las Vegas—even Smith’s employer has laid off more than a few staffers in recent years. But the media and public response to Downtown Project’s layoffs hasn’t been about those 30 staffers who lost their jobs, but about the seeming demise of the company (and, by extension, Downtown itself). There are those who want the Downtown Project to fail, and last week, those naysayers were given an unwitting gift.

For what it’s worth, Hsieh says he isn’t worried about the Downtown Project’s future. In an exclusive one-on-one interview with Vegas Seven—the only one he’s afforded the local media—Hsieh says the company’s footing is solid. On the morning we met, he was preparing for the opening of the DTP-owned urban grocery store The Market, just one of several upcoming DTP businesses that Hsieh says will add jobs to the city’s core. But the media reports from the past week—be they accurate or hyperbole or somewhere in between—gnaw at him. (So much so that in the days following the layoffs, he posted two lengthy statements to the Downtown Project’s website in an attempt to refute all the rumors). During our talk October 6, Hsieh tried to get at the source of the upheaval.

Why do you think the media has been gunning for the Downtown Project lately?

It’s probably a combination of things. Part of it is that Downtown Project is actually several hundred different legal entities and businesses, and it could be a branding mistake that causes confusion. There’s the real estate part of Downtown Project, and then there are the properties that we 100 percent own and operate, like the Gold Spike and Container Park and the Bunkhouse. But then, we have a lot of investments in small businesses (including Turntable Health, Shift and Life Is Beautiful) that we co-own.

And the perception is that it’s just one man, or a small executive elite, running all these properties and businesses day-to-day? 

Yeah. But our philosophy has been to make several hundred investments of all different types. The vibe at [Natalie Young’s restaurant] Eat is different from the vibe at Gold Spike or Turntable Health or Life Is Beautiful or the Bunkhouse. I don’t think people necessarily realize that these things are associated with Downtown Project. We purposefully want these businesses to be true to their personality and the vision of the entrepreneur: “Here’s the purpose for what you do, but you can figure out how to do it. We’ll provide the funding and resources for you.”

A lot of other redevelopment projects have these top-down master plans. The reaction to us may be based on the assumption [that we’re doing] what other developers have done in the past, whether here or in other cities.

What are the Downtown Project’s goals in that regard?

There are places where one industry dominates, and it’s very focused—like Silicon Valley is known for tech. We’re not trying to be that. Our strategy is to invest in entrepreneurs who have a bias to be helpful, and to introduce people to each other.

Ultimately, it’s the combination of diversity, density, collisions, connectedness and co-learning. It’s about getting all of that to happen. I’m just thinking out loud, but we’ve probably just done a bad job of communicating that. Internally, too. We’re partners in so many companies, with 300 employees, and I doubt even one of them knows every one of the other 299. It’s information overload.

Did all this bad press affect you personally?

The part that bothered me the most was the misleading headlines, the inaccuracies.

What’s the most persistent of those inaccuracies?

There was one headline that said I was stepping down from Downtown Project. Similar headlines implied that Downtown Project was falling apart, or Downtown itself was falling apart. If you read these articles and trace their sources, they’re all indirectly descended from one or two articles—without actually talking to anyone or doing any of their own reporting. That’s not something that we ever planned for.

I guess what bothered me the most was the lack of proper context. Zappos has been through this, too; we’ve had good and bad media days there over the past 15 years. Every startup has its challenges, its ups and downs.

Regarding the layoffs: Do they mark the end of your corporate recruitment, or do you foresee hiring more people into those roles?

Our needs are always changing. At every phase [of DTP’s development] we’ve had different needs, which means different staffing requirements. But I think of Downtown Project as a family with several hundred different entities, and it’s important that people are given the opportunity to stay within that ecosystem. A lot of [the layoffs] that weren’t on the corporate-support side of things—we’re looking for opportunities for them in other places.

Generally, we want to keep as many people as possible within our portfolio of investments. And we have some new investments in the works that we’re not ready to announce yet.

Have you read David Gould’s open letter, and have you spoken with him? [Gould, the University of Iowa educator who came to DTP to help build its educational programs, resigned his position September 30, the day the layoffs were announced, then sent a scathing letter to Las Vegas Weekly that accused DTP of wallowing in “decadence, greed and missing leadership.”]

Stepping back, last week was hard. I got a hundred text messages alone. I have a long list of people to reach out to, and he’s on that list. But each person [I want to talk with] usually takes at least a couple of hours apiece.

One question about company culture: Zappos has such a vibrant company culture—people generally love working there. Was the culture of the Downtown Project created to be similar to Zappos?

Again, we could have done a better job of communicating. But the culture at Eat is very different from the culture of, say, Bunkhouse. That’s our Downtown; it’s a community of communities that intersect.

I’ve been in Las Vegas for more than 10 years now. The amazing thing about this city is that anything is possible. It’s about resilience, and how things happen so much faster here than in other cities. It’s got the infrastructure of a big city, but with a small-town feel. And I think we’ve got all the ingredients here to put Downtown Vegas on the map for the entire world. I just hope we can do it together.

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