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Tony Hsieh: The pied piper of Las Vegas entrepreneurs

Hsieh is building what many term as a city of nerds; we go in depth to see the new city that he is creating and the legacy he is leaving behind while achieving his goals.

Tony Hsieh likes llamas, and is able to buy land in the heart of Las Vegas, that looks like a llama. Now that is something that you may have never heard before, for it seems too surreal to actually be reality, but the fact of the matter is, this is the reality of Hsieh. With Larry Ellison stepping down, it’s not hard to see where Hsieh could have become the CEO of Oracle, if life was supposed to go the way it normally is for many people yet he chose to be different and while the jury is still out on the legacy that he will leave behind, he surely is living a life that many people can only dream about. A Harvard alumnus, he landed a lucrative job in Oracle, a job that many would give a leg and an arm to get, yet he lasted there for only a few months and moved on in pursuit of his dream.

“It was too boring, straight from the manual, too uptight and too formal. Something that would make me hate life, something that is not cut out for me”. If that ambition is to go by, it was clear that Hsieh was not ordinary even at the start of his career. Ambition, they say, is a drug; a drug that keeps you intoxicated and gives you a vision; a hallucination or mirage for the outsiders, a reason to live for the person who has ambition. “You make your own luck, you take your own chance, and you cannot just follow the same road that every other person has taken. It may work for a bit, it may make you rich and it may even give you happiness but will it last. No, not for me, definitely not a thing that I would desire”

What would you do if you get another chance at life? For a lot of us, it is about doing something totally different from what we are doing right now. I mean seriously, how many people would want to repeat their life in the same way again if they are given another chance. I get it, they probably will not get a second chance to get another shot at life but there is nothing wrong in imagining about it. Is it? No, there is actually no harm in doing so in fact it gives a perspective about how life is going for you. The reason why we play video games, why we want to immerse ourselves in fantasy shows is that we want to run away from our life. True, like everything in life, this is not a one shoe fits all phrase, some of us have happy fulfilling lives and for these people playing video games and watching movies is just an activity to have fun, an entertainment that is nothing more and nothing less than its intended purpose. But for many of us, we need a second chance, we need another beginning where we can start afresh and not make the same mistakes that we regret almost every day of our life. Follow your heart, as they say, do the things you love, it would be so great in a way for many people to actually follow their own hearts, so much happiness out there, yet so little of that opportunity is grabbed by so many of us. For Hsieh, following his dreams and listening to his heart are things which are realities of his everyday life. Now who would not want to be like him….

Zappos's new headquarters

Zappos’s new headquarters

His current venture takes inspiration from a game designed to help people forget about the problems in their real life, Second Life. Think science fiction, think theme parks for grown-ups, think the best things about your college, the dorm, the café (anything but the class room if you were like me), think innovation and add it all up to create what Hsieh believes is going to be a city for the entrepreneurs. Make no bones about it, innovation and creativity is hard work. There is no boundary to it, your time is not yours and life is always a step ahead of you, trust me, it is coming from an entrepreneur who has failed and tried and failed and tried again and again. For some people it is difficult, you need to have a culture and a sort of ability to understand and tackle problems, which are unique and difficult to handle. There are no rules that you can follow, no handbooks or self-help book are going to guide you, it is just you on your own against everything that the world has to throw at you. There needs to be a solid character behind an entrepreneur and Hsieh has it in abundance. He looks a very simple person, like all famous entrepreneurs he has a style of his own. Steve Jobs had a look about him; Mark Zuckerberg too has something that separates him from the rest and so does Hsieh. He does not wear suits, no black ties, no fancy and fashionable jackets, hardly the person you would imagine in designer clothes but his own unique style to put it in few words, is no less charming.

Entrepreneurs like him have something about their personality; their charisma. It is an attribute that is hard to pin point. You just cannot say specifically target one thing behind the charisma, it is not about the looks only, not about the way you talk as well, it is not something that is only because of your body language as well but a combination of all the things probably, with an added spice of dreams and visions. People like him inspire mere mortals to do things that they would have normally been unable to do. How will you explain people leaving their corporate jobs, education and current ambitions to blindly follow a man that they have just met into a career that they have no knowledge or idea about? Startups are risky, you know about Google, almost every single person on the planet having access to internet knows about Google but how many know about the failed ventures of which the internet is a graveyard of. Firms that had great business models, good people to manage them and even financial backing still unable to make profits and losing their way before the ventures even got started.

Rendering of Container Park, complete with fire breather praying mantas, a sculpture from Burning Man.

Rendering of Container Park, complete with fire breather praying mantas, a sculpture from Burning Man.

Tony Hsieh is an enigma, a shy person who parties hard when the time is right. The 40 year old claim to fame is the site Zappos, a shoe selling site which was obtained by Amazon for a mere $1.2 billion. The amount of money may have allowed him to buy as many toys as he desired yet he chose to buy a city. Hsieh bought 60 acres of the forgotten, somewhat lost and recession hit 109 year old town, only 10 minutes away from the more famous Strip into an experiment of how technology can change a city. There is further investment promised and the idea is to convert it into the first city designed to cater for the modern pioneers of our society – the entrepreneurs. This is something totally unique, a combination of franchises and startups, Hsieh’s Downtown Project has over 300 startup projects running simultaneously. The formula is simple, bring an idea, get a loan, start the business, get a salary, pay back the loan and get your profits, all in an environment catered to create the unique needs that entrepreneurs feel.

All things considered, things have not been all rosy. There have been problems, failures and in some extreme cases even suicides but the bigger vision stands constant among the disappointments. There is something special about the location that Hsieh picked for his “Container Park” as his vision of the city is called. It stands only at a few minutes away from the 4.2 mile stretch of casinos and hotels for which Vegas is normally known for, almost all over the world, The Strip. The container park; inside Downtown Las Vegas, which is a small desert town considered as a place for families and retirees, has almost nothing in common with The Strip. “There is almost no person in US who has not thought about going to Vegas at some stage of their life, I mean simply the life style and how it is portrayed, makes people want to think about it. The glamour, the glitter, the casinos, the fun nights, the bachelor parties and almost everything related to Vegas wants people to go there and get attracted to it” says a local resident while talking about her city. “The container park, well, I am not sure what to make of it. It could easily be anything, a corporate office, a fancy gimmick, but whatever it is, it gives a different identity and feels an interesting place to be” she concludes and rightly so, though probably she is unaware about the extent of how important the container park actually is.

The tech entrepreneurs know that right now they have plenty of reasons to be in Las Vegas. The city has international flavor, with dignitaries and investors coming to Vegas from all over the world for their own purposes. It could be a meticulously arranged seminar or it could be just some people trying to spend a good time. Chances are, with a little bit of networking, you always have an opportunity to meet someone influential, someone who can help for the finances of your new venture or someone who would actually be able to help you fine tune your idea. The city is dynamic and stays open 24 hours, with a vigorous customer care and call center economy. The biggest advantage though is that it’s cheaper city as compared to the established tech hubs like San Francisco’s Mission District. This provides the entrepreneurs with an opportunity to move and take a chance on their dream, an opportunity that has been masterfully tapped by Hsieh.

Fremont East at night

Fremont East at night

What about the people working on Hsieh’s mission to make it one of the best places in the world for new business enthusiasts? Most of them are in many ways masters of their arts, some were established before they started following Hsieh, some made a name in his circle for themselves. It is all about synergy, creating enough energy in your circle that it can be easily absorbed by people around you, illuminating your peers and colleagues with your vision that is all one of the keys to becoming successful. Andy White, a key individual in Hsieh’s team is a mild mannered individual in his forties having a great time working in Las Vegas. He is responsible for helping $50 million Tech fund, a responsibility that provides him ample chance to know people in the field. One of the best things about the container city is that it is right next to the Strip. It is like living next to the Disney World or the Disneyland, something that every child has imagined at least once in their childhood. It is not a place where you would want to go there every day, sometimes it is possible that you will not go there for weeks and you will not even think about it, but the fact is that the Strip brings people to Vegas, in a way and with the help of pop culture and movies like “Hangover” people know what Vegas is and they aspire to be here if they have the opportunity. White believes that now, and overtime, people will want to come to Vegas to see the container park. It will be a spectacle, indeed it will be something totally different from almost anything that you can imagine.

There is a dash of showmanship about the whole Trailer Park. Little gimmicks aimed at providing a shock and awe kind of feeling – something that Hsieh really likes people to feel when they meet him. There is a giant praying mantis just outside the park adding drama and creating a spectacle that is hard to easily forget. All these little things add up, you see, first you need to grab the attention, only after which you are able to get any positive results. Being close to the Strip, having enough entertainment value to keep people interested, this all adds up. The entrepreneurs currently residing in the facility; love the feeling that the whole place exudes.

All though, is not glitz, glamor and drama. The city needs a solid foundation, after all every city ever formed is the result of entrepreneurs. We like labeling things and making them fancy these days, there is enough jargon to keep everyone happy and focused. It feels like the jargon adds to the importance of the people, it is something like a necessary evil. The fact though of the matter is that every city is just a collective result of entrepreneurs working their socks off. You see every single person working on their own business is an entrepreneur in his or her own way. Sometimes it is hard to see, but even a taxi driver is someone who has his or her own business and a stake in the economy. Every society revolves and needs strong roots to sustain the growth, there is though pressure to create a sense of camaraderie. There are problems in the city driven by innovation, problems, as they are, will never leave you alone, no matter where you are. The community tries hard to create support for each other; there are communal dinners, meetings and a joint sense of purpose amongst the people. The founders are smart enough to figure it out that if this works, the model can be moved to other places, other cities and maybe other countries even. This could be the beginning of something that can truly become historic, but the knowledge of such success does not let the pressure of success ease off from the shoulders.

The journey to innovation is tiring, and often failure becomes a lonely place. Depression, anxiety and mental burnout are common places in the business world and it is no coincidence that in the last year alone, three of Hsieh’s high profile people including a very important Downtown Project employee, committed suicide when the companies failed. The journey to success is hard, funding is scarce and hard to get and success cannot be predicted despite the best of efforts put in. The pressure leads to people to lose the control on their life, a damaging reality that every person trying for such pursuits should understand. “We like to see ourselves as pioneers” say one of Hsieh’s employees “and our work is not easy. There are some jobs which are dirty and we need specific people to do them, there is no compromise, it is not rosy, someone needs to create an opportunity for others to succeed”

People find it difficult to adjust; the place seems like an odd place for many. It is not natural to see people living here in a single community like a college but only for grown men and women who have good track record of success. The project in a way is like real life reality show, where the stakes and everything is real (nothing against the reality shows here though). The nature of the experiment though is too real and often does not match the tune of more individualistic people. Startups are chiefly based on ideas of a single individual and are borne out of frustration of working for other people. They are traditionally for people who love to be on their own, head strong people who know that their way is right and follow it. There is difficulty to create camaraderie in such a community, often many projects can be direct competitors of each other. You and your neighbor can turn out to be wanting attention from the same segment of people, building a relationship in such cases is not always easy. The complete picture though is slightly more different, the need for innovation can give birth to communities that have one single minded focus, new and better ways to get things done. Often in our communities, things and processes are maintained which should be changed but they are not. The processes become a load on the system yet they are pursued, bigger cities take time to change and adapt, the infrastructures that they have are difficult to replace and change. No matter what you think about the New York subway, it will remain the same way unless someone really spends a lot of time, money and effort to re-design it. There are instances when there are solutions available but applying them will make things different as people have low adaptability. Summing up all variables, it is clear that innovative cities are not theoretical anymore; this project is not the last but probably only one of the first few that are going to shape the future of tomorrow.

The origins of the city though, lie in totally different reality and something pretty unimaginable from what the project is now. In 2004 Hsieh was searching for a better solution to a trivial problem he was facing, human resource for his call center. People in San Francisco are not keen call center agents and he needed a city which could suit his call center. Las Vegas fitted the bill perfectly, the city remains functional 24 hours a day and call center industry is well established and thriving. So Zappos moved from Bay Area to Nevada, a city just 15 miles away from Las Vegas. Provision of excellent customer services and the love of Poker brought him closer to something that was not literally in his mind at the moment. The opportunity as they often say comes in the form of a loss to someone. Recession hit Vegas hard in early 2009, leading to great real estate properties empty and void of any takers. The market was crumbling, people were scared and running away, the bubble had truly burst.

Like all good business people, Hsieh spotted the opportunity. The love of gambling had brought him closer to Vegas, now the same love wanted him to take one more chance. He visited the downtown and saw the opportunity, there were places that could be converted into more hip and functional places, and all it needed was money and time. Before he could invest massively in his idea, he wanted to have a taste of how it felt to live there. He moved into three combined condos in Ogden, a luxury apartment building exactly in the center of Downtown, a place that he still lives in even today. It was an opportunity that gave him a chance to realize his dream. In order to work out on the intricate and fine details of his project, this was necessary and something that he still relishes today. What he needed to build was a tight knit community that would work with one single aim in mind. He had even tried this before, trying to replicate the Harvard dorm, an idea that worked well and created a vibe which got creativity and innovation going. “The parties, that is what separates college from the real world, every day feels like a party when you are a student. Sometimes in the middle when you graduate to the time when you land your first job, that party spirit kind of vanishes away. That thing, that spirit is what is needed to be re-kindled”

There was a chance, in the rubble of a recession hit community, failing to inspire the people to reach for higher aims, a chance to build something fancy, something that will make people recall it, something that is going to be a really big party and something that Hsieh wanted to re-create.

The initial investment on land was enough to get the project going; he managed to rope in enough blocks to get a start. This was the first step, the re-modeling and creation of work and living space was next, probably a bigger and more difficult project. Such things require time, expertise and team of people who can actually understand and carry out the image without much supervision. The first thing to get going was about engaging the locals and getting them excited about the project. Attention it seemed from the locals came without too much effort. All of a sudden a new wave of energy had befallen the quiet and slightly quaint town in comparison to more flashy parts of the city. There was a feeling of change coming through the ranks, everyone felt it – those who were living for years to those who had left the place, all looked on with an air of expectancy.

Residents laugh and enjoy when you ask them about how it all started. Some of them were worried, a private investor buying land and after barring people from entry, it was not a thing that people looked forward to. There was also an air of excitement that they finally had an activity that did not involve going to the Strip. Some of the people felt being overrun by the nerds, after all most of the entrepreneurs are assumed to be geeky and nerdy if you go by stereotyping. The opportunities though, converted cynics into fans, in very little time. High school students had a chance for a new career, internship opportunities were abundant and for construction workers new jobs were there. A win-win deal for most of the people involved.

Jason, a 17 year old student who was trying to find work in areas which interested him had been trying hard but failing. His interest in fashion meant that he could try his luck here and luckily for him he got his break with a startup. This was an opportunity that he gobbled up with glee and something that he is really proud of. It also helps the local community; young kids are now learning to understand the full potential that they have, right next to their door. It is all good and great to see success stories on the television or in films or reading about it in books, but when you see success right in front of you, lives can change. People are not lazy or uninterested; they just lack the right inspiration. In such a case where the complete eco system changes, young people get chances to shine.

Hsieh the person is not too dissimilar to Hsieh the entrepreneur. If anything, his life rotates around his strong work ethic. He loves to party – that is a given but there is more to the person than meets the eye. It takes time to open him up and surprisingly there is much more character hidden deep within his personality. He has the ability to understand people in a way that is often rare and unique. Whenever he speaks or shares his vision, you feel inspired, touched even wanting to be part of his vision. It is a great quality, like pied piper, his tune touches the heart and you want to follow him, no matter where the road leads you, there is so much appeal that you would want to follow blindly.

David Gould, a former professor tells of an interesting tale about Hsieh, a tale that truly is inspiring and a story that needs more people to know about it. In 2010, the students were having issues continuing their education – even good students were unable to continue their studies (some were affected by lack of ambition while others wanted to get back to the job market to ensure safe future). Students studying social sciences are made to believe even in the best of institutes at the best of times that their education is pretty much worthless. This is a belief that instills insecurities among students studying English Literature, History or other such subjects. Gould was unhappy with the trend of students dropping out and went on to create a course where he would invite people to come and speak about their ambitions and share their success stories. The thought behind the program was to inspire the students to continue with their studies and provide them with mental support.

Gould wanted people who were different, people who worked against the system or not followed it totally yet were able to create their success stories. He had heard of Hsieh as an eccentric person who did not conform to the societal standards and fitted the bill perfectly. What followed next was unprecedented for Gould; he wrote Hsieh about the program and got an immediate response as he was travelling into the vicinity and accepted the invite. The guy just stood there in front of the class and spoke about life in such a compelling way that once the session was over the students were in total awe of the stranger that they had never even heard of before. He just mumbled that he did not know about the town and had no idea where to go and Gould swears to this that 150 students packed their bag packs and followed him in the town showing him where to go.

The next few hours’ life stopped for the students. All they did was follow Hsieh into the gravel parking lot for discussing their life and dreams. Every single one of them had forgotten about everything else in their life, lunch, next class, job, nothing mattered. They were truly mesmerized

Gould has now joined the vision and works as a Director of Imagination. There is no specific job description for him, all he does is tries to get the best ideas and act as a filter, helping students pay off their student loans while making money for the Hsieh. “There is flexibility, but only a few people can fit in the system” concludes Gould.

Hsieh’s office in Zappo is accessible to all and you are free to take pictures as well. Things have not been easy for him always but he has tried to keep his spirits up, this can be taken literally as well as he keeps a vodka bottle right on his desk.

Creativity innovation and fun are probably the three things that are valued very much in Down Town project. It will take time for the project to settle into its own, after all this is not a charity. It is an invitation to the best of the minds to come and take a chance on their own ability. Some of them may not like the vision, some of them may not like the terms and conditions, some of them may want to live differently, and some of them may just disagree with Hsieh. The thing is, entrepreneurs create opportunity when there is none or in some cases very limited. The mayor of Las Vegas understands the gravity of the situation as well. The value that the venture has brought to the city cannot be underestimated, she says. It has opened a door that previously was hidden for the people of the city. The Vegas you see in movies is not the only real Vegas, there is always more to the city, there is much more character in the streets, much more life and energy and the exuberance does not only begin and end at the famous Casinos.

The underlying fear though remains; people like Hsieh are not charity workers. In fact they are on the lookout of precious resources. The moment a better opportunity comes, the Down Town project will be moved and that is something which keeps everyone grounded to their feet.

Hsieh has started something that can work and can bring great success to the future. Often when we think about future, we think about it changing in terms of technology, we rarely think about it in changing terms of demographics. A flock of intelligent people, dedicated and with a vision, living together is almost as futuristic as it is going to get. The catch though is, is this lifestyle sustainable? Will the pressure of success weigh people down? Will it make difficult to keep a happy face and an easy going lifestyle when you have to achieve too much? Is there a contradiction somewhere in the model? We do not know the answers to most of the questions yet, all we can do it wait and see what the future brings. It may turn out to be a journey with no destination, the thing that matters now is not the destination but the journey itself.

1 Comment on Tony Hsieh: The pied piper of Las Vegas entrepreneurs

  1. I worked for Tony Hsieh back int he old Silicon Valley days. It was his old incubator, Venture Frogs, I actually worked at BBQ.com, and sat about 5 feet from some of the very talented people at Zappos. At one point I was offered a position there, which I turned down. After all, who would ever buy shoes on the Internet, right? I lacked the vision Tony had back then.

    Tony was already ver successful in ’99, having sold his previous company to Microsoft. I met him a few times and he always struck me as a decent, down to earth, thoughtful guy.

    It doesn’t surprise me he moved to Las Vegas. I did the same thing. He liked living in downtown San Francisco, and I imagine the hit in real estate prices at the time were very alluring for him, as it was for me. It also doesn’t surprise me that after a few months he came to the same conclusion I did; this place kinda sucks. I mean Vegas has all this potential, but know culture. Plenty of people, but no real soul.

    I’d imagine Tony was homesick for SF, and after visiting Austin, likely for SXSW, wanted to bring some of that back home. It makes sense; what if one could bring Austin type culture to Downtown Vegas? That would be a win for everyone. So Tony did what does, he put together a methodical plan to make his city the coolest city on the planet.

    When I moved here, he hadn’t really started talking about his plan. I discovered First Friday on my own, and enjoyed that. I was able to find little interesting pockets of culture, but for the most part Las Vegas is a one trick pony. Good food can be found primarily on the Strip, your shopping choices are big box stores, and high end boutique on the Strip, and live music is surprisingly sparse; it seems the DJ is considered a musician in this town.

    I have always had my doubts on Tony pulling his vision off, but then again I didn’t go work for Zappos, who a few years later was acquired by Amazon. So my lack of vision against Tony was well documented. But I just don’t see the people in Vegas wanting the change.

    When Tony and the Downtown Project people took over First Friday, I saw one of the only real pockets of authentic culture in this town snuffed out. Too much fanfare and trivial features took what was once a nice gathering of some of the hipper people enjoying art, food trucks and music, and turned it into a circus. And the effects on the artists themselves was noticeable; one even told me it was the final straw that put them out of business.

    I see what Tony wants, I just don’t know if can happen. That being said, there is nothing easier than be a critic or nay-sayer. Any criticism against Tony for this endeavor is short sighted and ignorant. The man is trying to make Las Vegas a better place to live. He’s trying to diversify it’s income and talent. He’s trying to breath life in what is plain to see a zombie town. The lights are on in Vegas, but nobody’s home. Think about what it’s like to live here. Worst schools in the country, highest suicide rate, crappy employment numbers. When the economy takes a hit, travel takes a hit, and Vegas suffers.

    Don’t blame the man for moving here and working hard to make this place something better. Frankly, Vegas needs people like Tony. It’s great to have a city founded by gangsters and known as Sin City, but the reality of living here sucks. I for one hope Tony keeps pushing his agenda. There will be some missteps, but in the end it would be well worth it, and possibly be the thing that give Las Vegas a second wind.

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