Could the Next Brooklyn Be … Las Vegas?! (Ep. 205)
Our latest Freakonomics Radio episode is called “Could the Next Brooklyn Be … Las Vegas?!” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above. You can also read the transcript, which includes credits for the music you’ll hear in the episode.) The gist: Zappos CEO Tony Hsieh has a wild vision and the dollars to try to make it real. But it still might be the biggest gamble in town.
Tony Hsieh is the CEO of Zappos, the online shoe and clothing retailer, presiding over a corporate culture that most corporations wouldn’t recognize. (His book is called Delivering Happiness: A Path to Profits, Passion, and Purpose.) Among Hsieh’s priorities at Zappos: having fun, empowering his call-center employees, and making customers happy at almost any cost. We’ve written about Hsieh and Zappos before – how, for instance, company meetings are sometimes held in a bar. And why customer reps are encouraged to talk to a customer for as long as they want, all without a script, how they authorized to settle problems without calling in a supervisor and can even “fire” a customer who makes trouble for them. And how Zappos gives new employees a chance to quit their brand-new job and get a quitting “bonus” because Hsieh figures he’d rather weed out anyone who doesn’t really, really want to work at Zappos.
A few years ago, Zappos relocated its headquarters from the southeast edge of Las Vegas into the old downtown area. But Hsieh, being Hsieh, didn’t settle for some random address: Zappos moved into the old City Hall. So today, the former Las Vegas city council chamber is an auditorium for company events. The old jail has been converted into an employee gym. And once Zappos made over City Hall, Hsieh began to wonder if downtown itself might need a makeover. He thought it might be nice to convert it from an underused, outdated, car-centric area into a dense, vibrant, walkable place for living and shopping and eating and just hanging out — a bit like a western Brooklyn or a desert Austin. One of Hsieh’s main inspirations was the Harvard economist Ed Glaeser, who four years ago published a manifesto called Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier.
The resulting effort is called The Downtown Project, backed by Hsieh’s $350 million investment. It is simultaneously a real-estate play with a startup vibe and a venture-capital gamble aimed at incubating whatever kind of firms will make downtown work. The project has already encountered plenty of friction, and will almost certainly encounter more. But its ultimate outcome isn’t the prime concern of this podcast. We wanted to talk about what makes a modern city successful, and whether that success can be engineered in a different way than it has been in the past.
To that end, you’ll hear from Tony Hsieh, Ed Glaeser, and a variety of others (including VegasTechFund’s Zach Ware), and get a walking audio tour of the revitalized downtown. Here’s Hsieh on how this urban startup is different from others:
HSIEH: A lot of city revitalization projects are really top-down, master planned, and we’re really anti-that. It’s really more about backing the entrepreneurs and their passions, and so our goal is to help accelerate stuff, help make Downtown Vegas a place of inspiration, entrepreneurial energy, creativity, innovation, upper mobility, discovery and all that combination of creativity and entrepreneurism.
This echoes Glaeser’s thesis (more on which can be found in his paper “Clusters of Entrepreneurship”):
GLAESER: When you look at the globe and what building cities usually means– it means that somebody has come up with a couple billion dollars to build some form of project – a convention center, a sports stadium, maybe something to do with transportation — and then they try to wrap a city around it. And sometimes it works, at least half of the time it doesn’t, but it’s very much of the view that cities are physical structures and let the people follow that. Hsieh was remarkable because his view was that the structures should actually follow the people. That’s a view I largely share, that actually focusing on the real heart of the city, which is always the humanity that is dwelling in that city, is the right thing to do.
But as Glaeser points out, good urban growth often depends on an intellectual bounty that Vegas traditionally does not have:
GLAESER: I think historically the great weakness of Las Vegas has been education. So much so that in my earliest work documenting the connection between education and urban growth, Las Vegas was an obviously huge outlier because it grew so quickly and had so little of a base in terms of share of the population with a college degree. And in the city you still have about 21% of Las Vegas adults with a college degree, which is a lot closer to Detroit, which is about 12%, than it is to Seattle, which is about 50%. And I continue to think that that is Las Vegas’s greatest challenge, is making itself attractive to a wider range of skill categories.
You can hear more of Glaeser’s take in our earlier podcast “Why Cities Rock.” And you can let us know what you think of Hsieh’s ideas in the comments below. Special thanks to Adam Burke for production help and to Brian Paco Alvarez for the Zappos tour and his wealth of Vegas information.