Zappos CEO suggests how startups can foster smarter, more productive cities

Zappos CEO suggests how startups can foster smarter, more productive cities

Summary: According to the online retail giant's CEO, every time a city doubles in size, productivity and innovation levels per resident increase by approximately 15 percent.

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ASPEN, COLO. -- Is Las Vegas the next big startup scene? Based on the success of hometown success story Zappos, perhaps so.

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The online retail giant's CEO Tony Hsieh would certainly give a nod to that that based on his lecture today at the 2013 Aspen Ideas Festival.

The crux of his keynote was that the growth and proliferation of smarter cities closely parallels the startup culture fostered in those communities.

"Our whole philosophy at Zappos is all about company culture," asserted Hsieh on Saturday morning, pointing towards a trickle-down effect of positivity that then drives customer service.

The Zappos CEO made similar comments at BoxWorks 2011 in San Francisco, primarily stressing the importance of fostering internal company culture ahead of anything else.

"Our whole philosophy at Zappos is all about company culture," asserted Hsieh on Saturday morning, pointing towards a trickle-down effect of positivity that then drives customer service.

But now Hsieh is widening the net with his hypothesis, citing internal research that every time a city doubles in size, productivity and innovation levels per resident increase by approximately 15 percent.

Using Las Vegas as a prime example, Hsieh described the recent expansion of Zappos headquarters to a less tourist-ridden part of the desert city known as Fremont.

Zappos is an interesting case study considering its actually a subsidiary of Seattle-based Amazon. But Hsieh remarked that Zappos is "very different from most of Amazon's other acquisitions" given its level of autonomy.

"Four years later they've remained totally true to their word," Hsieh said about Amazon.

As part of the company's geographical expansion, Hsieh outlined a new $350 million initiative dubbed The Downtown Project.

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Hsieh suggested to actually think of a city as a startup itself.

Arguably, a startup is supposed to deliver a product or service that fills a void -- whether consumers knew about that gap before or not.

In the case of Las Vegas, the Downtown Project is aiming to fill a void for local residents by growing a vibrant and safe meeting place filled with music, art, entertainment and more.

That funding is going towards the investment of a few hundred small businesses a top-down master planning strategy reminiscent of the hiring and management scheme at Zappos.

At least $50 million of that fund will be going to tech startups. Hsieh admitted that as recently as a few years ago, the tech community was non-existent in Las Vegas.

There are no outside investors for the project, which Hsieh reflected is actually better because it lets his team take the route they want.

That route is supposed to lead toward building a community (in at least the Fremont district for now) that helps create everything needed for work and play within walking distance as well as build "the co-learning and co-working capital of the world."

Certainly a lofty ambition. Aside from just money, attendees pointed out a number of real-life practical concerns that need to be addressed, from reaching out to older residents in the area who might not be interested in such dramatic changes to law enforcement considering that part of Las Vegas historically isn't very safe.

But those questions didn't dampen Hsieh's optimism.

The big bet, according to Hsieh, is focusing on these targets, which he believes will lead to a happier and luckier community with increased productivity.

Stressing the importance on fostering the ideal community culture (at least from the perspective of Zappos leadership) even if a prospective small business seems like a big money-maker, Hsieh admitted they'd pass on it if it didn't contribute to said culture.

Topics: Tech Industry, E-Commerce, Emerging Tech, Smartphones, Start-Ups

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