Sunday, Oct. 5, 2014 | 2 a.m.
Before news broke Sept. 30 that Tony Hsieh’s Downtown Project had laid off 30 employees, tech insiders’ cellphones buzzed with speculative text messages.
Initial rumors pegged the number of layoffs at 100 people or more, said Ann Diab, editor of local technology website Tech Cocktail. The curiosity was widespread: “What’s happening down there?”
Then technology news site Re/Code published a report that Hsieh had stepped down as the Downtown Project’s leader. That’s when the bubble created by the downtown darling and famed CEO of Zappos seemed to burst.
“It made everyone panic,” Diab said.
Though Hsieh rebutted the rumors with a statement denying he was ever in charge of day-to-day management of the project and that his role as an investor and adviser would not change, the community’s reaction to the possibility of his exit raised an important question: Just how reliant is downtown Las Vegas on Tony Hsieh?
The business community would have trouble denying Hsieh’s influence in the area around Fremont Street East, where, after decades of decay and struggle, thousands of people now shop, dine, play and work at more than 30 brick-and-mortar businesses that budded from Downtown Project money over the past three years.
“He was great to have in the neighborhood,” said Chris LaPorte, owner of arcade-bar Insert Coin(s). “He chased the vision. People agreed with him or disagreed with him. That’s their right to.”
But LaPorte said he believes downtown will be just fine without Hsieh if business owners focus on the task at hand: doing the best business they can.
“There was a lot of reliance on Downtown Project’s success,” LaPorte said. “But as a business owner, you know: They come, they go, and we just try to figure out something else.”
Meanwhile, commenters across the Web speculated that the layoffs signify the beginning of the end for Hsieh’s $350 million project that aimed to create a place for idealistic people to build a community of business, art and culture.
In fact, Downtown Project’s relationship with community-building has been fraught for a while now.
When he first arrived for speaking engagements about his sound-bite-happy Zappos philosophy, Hsieh often talked about the “three C’s”: community, collisions and co-learning. But in February, Hsieh’s camp removed all mentions about “return on community” from the Downtown Project website, adding the word “connectedness.” Hsieh said the move followed confusion about the Downtown Project’s intentions. The clarification seemed simple enough: We’re not a charity.
The recent layoffs at Downtown Project seemed to mirror that shift. The cuts reportedly targeted positions based in the community. Downtown Project officials declined to tell The Sunday how much savings the layoffs generated or where the extra money would be directed.
Movers and shakers in the tech community acknowledge that Hsieh’s bank account has served as much-needed fertilizer for the area but say it would take nothing short of all Downtown Project affiliates leaving town to wipe away the progress he made.
“He’s an engine, and his money is an engine,” Diab said. “His money has been a benefactor of a lot of the things going on here.”
As for the entire industry downtown imploding?
“That’s not going to happen,” said Andrew Crump, co-founder of Bluefields, a social networking application partially funded by the Vegas Tech Fund and designed to help amateur sports groups organize. “(Layoffs are) part of the ebb and flow of getting things right and getting things wrong ... I think it’s a lot of people seeing it as bigger than it really is.”
Going forward, Crump sees good things in the tech community’s future.
“We’re going to continue growing,” he said.