Zappos and the Rise of Corporate Neo-Urbanism

Tony Hsieh, CEO of Zappos, is fast becoming an unlikely godfather to Las Vegas, the city I live in.

Unlike the mafia bosses of the thirties, such as Bugsy Siegel, who helped turn Vegas into a gaming boomtown, Hsieh is attempting to turn Vegas into a Tier II technology startup destination, like Boulder, CO. Unlike Boulder however, which rose to prominence due to the efforts of VCs like Brad Feld trying to catalyze a startup scene, Hsieh is trying to use the sheer size of Zappos to make a difference. His ambitions, moreover, extend far beyond just creating a tech scene. He wants to revitalize Las Vegas and make it an attractive hub for what urbanist Richard Florida calls the "Creative Class."

In the process he is reviving, in an interesting new form, a kind of intimate relationship between corporations and cities not seen since the fifties. I call it corporate neo-urbanism.

The big difference is that while the corporations of the fifties sparked the growth of suburbia, Hsieh is targeting the urban core. Literally: he is moving Zappos to the old City Hall in Las Vegas (about a half-mile north of the Strip).  He has bought up the monthly downtown arts festival, First Friday. He is the driving force behind a local startup incubator program. He talks about how he wants Zappos' culture — already famous for focusing on "happiness" — to evolve further into a kind of open culture that is deeply intertwined with its civic environment.

How intertwined? Try this on for size: in an interview, he remarked that he wanted every downtown bar and eatery to serve as an extended conference room for Zappos' employees. Contrast this with traditional companies that advise employees against talking company business even in company building elevators, for fear of non-NDAed visitors overhearing.

That's not a surprising attitude for Zappos (after all, the company offers popular public tours of its "happy" facilities), but it is a significant shift with respect to mainstream corporate America. I was frankly rather critical and skeptical of Hsieh's management philosophy as articulated in his book, Delivering Happiness (see my review ), but his neo-urban ambitions seem a great deal more intriguing and original.

On the one hand, Hsieh's vision for downtown Vegas sounds like the sprawling city-like campuses of companies like Google in the Bay Area. But while Google tries to keep its employees within a gilded cage of sorts, by providing every amenity from buffet lunches and cafes to fun classes and high-tech nap pods, it doesn't really attempt to Googleize Mountain View. A sort of city-corporation separation is maintained. What Zappos is trying on the other hand, is to expand its corporate boundaries to include its civic environment, rather than to isolate itself from it. Hsieh is trying to Zapp Las Vegas.

On the other coast, we have companies like Meetup.com, which pride themselves on a sort of anti-Google philosophy of being intimately embedded in their New York environment.  But Zappos does not fit that mold either. Hsieh is not content being merely a relatively passive participant in a broader cultural scene, like Meetup is. He wants to shape it to serve both the immediate needs and broader philosophical mission of Zappos.

This is partly a question of feasibility: Meetup is too small to do anything to New York, and even Google is not big enough to truly own even a smaller Bay Area city like Mountain View.  But it is also a matter of intent. I very much doubt that Google or Meetup would try to pull a Hsieh, even if they could.

So why is Zappos doing this? Will Hsieh succeed?

Three Generations of Company Towns

Hsieh's visions for Las Vegas mark the third major era of corporate-urban relationships. Each era has seen a particular pattern of corporation-driven civic organization, driven by a specific corporate human-resources concern.

In the first era, corporations needed very basic human infrastructure near their operations, for their largely blue collar workforces. Cities did not normally exist close to ideal sites for operations (generally near raw material sources) and had to be built. This first generation of company towns quite literally comprised "company towns" in a legal sense. Often owned by the corporation, de jure and de facto. I grew up in such a town (Jamshedpur, the first steel city in India, basically owned by the Tata group). In America, first-generation company towns have largely vanished, or are shadows of their former selves (an example is the Union Pacific company town of North Platte, NE).