When Zappos CEO Tony Hsieh invested $350 million of his own money to revitalize downtown Las Vegas after the financial crisis, he cast a vision of an ideal society similar to Burning Man, the annual desert festival that has nearly become a religion for Silicon Valley. His investment vehicle, Downtown Project, said its mission was to become “the most community-focused large city in the world” in five years or less.
The project hit its five-year-mark in January and recently released an economic impact report detailing its progress. As PandoDaily’s Paul Carr points out, the report notes that most of the project’s ongoing job creation and economic impact comes from an annual three-day festival, Life Is Beautiful, co-created with Hsieh’s investment. The festival, Carr notes, “accounts for a full $77.7 m of the project’s $86.6 m in total direct economic output” and 764 of the 1201 (64%) jobs created directly and indirectly by the project.
While the project had much grander visions—including developing a tech ecosystem in downtown Vegas nearly from scratch by allocating $50 million to startups—its most significant impact, a festival, is the purest reflection of Hsieh’s original vision.
Next to creating a Burning Man-like festival, real estate acquisition was the cornerstone of the project. Hsieh allocated $200 million to purchase 100 properties within a 58-acre footprint. The report indicates that the one-time impact of completed real estate construction projects created 346 jobs and $53.5 million in economic output, directly and indirectly. It forecasts similar figures for ongoing one-time construction projects.
The Downtown Project also invested $50 million in small businesses and $50 million in arts and culture. According the the report, 61 small businesses were created, directly leading to 328 jobs and $29.4 million in economic output. The report does not detail the impact from the venture capital arm.
The report doesn’t provide a full accounting of the project’s impact. Hsieh wasn’t the project’s only investor (though he was certainly its most significant investor) and a former Downtown Project executive familiar with its finances said that the amount spent exceeded $350 million, adding that most, if not all, of the initial $350 million was spent or allocated in the first two years. Hsieh once estimated a total of $500 million was invested.
Downtown Project’s aspirational mission attracted thousands of visitors and a few hundred entrepreneurs who participated in the experiment, but few made Las Vegas home. It was always going to be an uphill battle, given the transient nature of the city.
Nonetheless, Hsieh’s dedication did result in a significant upgrade the the city, one that former mayor Oscar Goodman had been pitching for years. In 2012, as Downtown Project was getting off the ground, early Zappos investor Erik Moore remarked that if Hsieh “only had a million dollars left, he’d spend $999,999 to make Vegas work.”