Zappos becoming downtown’s magnet for startups
2 December 2011
- More business stories
- Zappos putting its stamp on downtown Las Vegas (10-18-2011)
- Zappos.com CEO Tony Hsieh named the ‘smartest’ in town (9-5-2011)
- Zappos CEO envisions a new community downtown (3-17-2011)
- Goodman: Zappos move a ‘watershed moment’ for downtown Las Vegas (12-1-2010)
- Zappos views Las Vegas City Hall as perfect fit for new headquarters (11-29-2010)
Inside The Beat coffeehouse on Fremont Street, Tony Hsieh reviewed a calendar on his laptop computer. It listed eight people from startups — tech companies, eateries and other businesses — visiting Las Vegas this week to decide whether to relocate here.
“I mean, look at all these people,” he said.
The list represents a handful of the dozens of entrepreneurs who have heard the pitch from Hsieh, CEO of online shoe and clothing retailer Zappos, which moves into City Hall in 2013. With sizable investments from Hsieh, these startups are the kinds of businesses he hopes will help fulfill the vision of a resurgent downtown to surround his company’s new headquarters.
It has been a year since Hsieh and city officials announced this “watershed” moment for the area. City Hall was to be sold to Resort Gaming Group for $18 million, then leased by Zappos. The company expects to put about $40 million into renovations before moving in.
But Hsieh didn’t want to simply move his company into City Hall. He wanted others to buy into the vision of a downtown community, to see Las Vegas as more than a neon-lit resort that creates empty pockets and hangover weekends. The 37-year-old talked of helping to revitalize and transform downtown within five to 10 years.
So how is it going after year one?
Miki Agrawal, 32, was a New York Deutsche Bank investment banker, then a semipro soccer player, then a banker again before opening her first organic pizza joint, Slice, in Manhattan in 2005. She has two locations in New York now and is planning a third. She met Hsieh at an entrepreneurship conference about six months ago. She’s planning on becoming one of the first businesses to occupy space in the first floor of The Ogden, a downtown high rise within a stone’s throw of City Hall.
With all the hipster neighborhoods in cities across the country where health-minded residents would swarm a pizza place like hers, why choose downtown Las Vegas for a new store?
“There’s so much promise here and it still has that Wild West vibe to it, and the opportunities are endless,” Agrawal said during a pizza-making session with her mentor, John Arena, owner of Metro Pizza.
Although she says she’s not a “follower,” Hsieh’s quiet approach is a big draw, too. “He has the qualities people admire and like to be around,” she said.
With Hsieh’s financial backing, she hopes to open in The Ogden by mid-2012. Planned rooftop gardens throughout downtown will help supply the fresh produce for which her pizzas are known.
Outside The Beat, where Hsieh was working, Jody Sherman, 46, CEO of ecomom.com, a Santa Monica-based Internet retailer that just moved to Las Vegas, is talking business on his cellphone. He later says he will soon lease space for his company in the Holsum Lofts building on Charleston Boulevard near Interstate 15.
Then there’s the small startup Romotive, which is all of about two months old and moved here just few weeks ago. Romotive makes iPod-powered robots. You put your iPod into one of the bots, which looks like a see-through plastic Army tank without the turret, and remotely control it with another phone, while monitoring its explorations on the phone’s screen. In 45 days, the company has sold 1,500 of the gadgets.
The founders are raising $1 million in investment capital — Hsieh is putting some money in but not a majority.
Keller Rinaudo, 24, one of the founders, all of whom grew up in Phoenix, said Zappos’ Zach Ware, the “downtown development guy,” sold them on the area as the right place for their company.
“It’s not for the money,” Rinaudo said. “We have to nail the idea of building a community around Romotive, and when we talked to Zach and Tony about their plans, that’s what they want — a community-based development. We love the idea of building this community … not a mini-Silicon Valley, but a new Las Vegas.”
But Las Vegas isn’t a hub for people with computer science degrees. Where is all the brainpower going to come from?
Zappos, for one.
Romotive is hiring one person from Zappos’ development team. Another is an executive from Nokia.
“It’s hard to find good people,” he said. “I know someone who raised $1 million for a startup, hired developers, then had to fire them all.”
City officials are hoping to help provide the right people for such businesses.
Bill Arent, Las Vegas director of economic and urban development, said the city is in talks with the College of Southern Nevada to establish a “center of excellence” for students to train in areas that might be needed by some of the startups Zappos draws downtown. Slot machine companies also employ people skilled in electronics and computer technology, another potential source of employees for startups, Arent said.
Not a week goes by, Arent said, without the city talking to a new business interested in downtown. A local community bank is now looking to open a branch to support small businesses.
Arent gives much of the credit to Zappos. He notes that Zappos employees brought “startup weekends,” which had been happening in other cities, to the El Cortez this year. It’s a 54-hour event where teams prod and try out and dream up and improve ideas for startup businesses.
Hsieh also formed a new company called Downtown Project, which has hired someone to assist entrepreneurs with the details of operating a business that they may not be ready for: bookkeeping, accounting, how to run a payroll.
“Rather than go it on their own and figure it out in a new environment, they’ll have the support and the infrastructure right there,” Arent added.
Arent’s agency is working on about a dozen other development ideas, he said. And once Zappos moves into City Hall, in 2013, he expects a “second wave” of downtown business influx.
“When (that move) happens, we expect a lot of small businesses to move in,” he said.
Hsieh said Thursday that in two years, he expects “at least 100” new businesses to have set up shop downtown.
Jen McCabe, 30, isn’t waiting until 2013. She filled up a car with belongings Wednesday in Seattle and is moving into a temporary residence in The Ogden, courtesy of Hsieh, as she moves her online business, HabitLabs.com, to Las Vegas. Habit Labs helps people adopt beneficial habits. One way: earning points for making progress toward specific goals.
While Seattle-ites think she’s “crazy” for moving to Las Vegas, she couldn’t pass up the opportunity “to be downtown as they build this healthy-habit community — it is an opportunity that a company like ours will never see again in our lifetime.”
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