Tony Hsieh Steps Down From Vegas Downtown Project

Tony Hsieh, the CEO and founder of Zappos has stepped down from his leadership role at the Las Vegas Downtown Project, according to Re/code. Hsieh created the massive $350 million project to revitalize several city acres east of Las Vegas Boulevard and convert the area into a tech hub.

Hsieh’s announcement comes right on the heels of a massive 30 person layoff at the project. Hsieh had called a surprise all-hands meeting at the Inspire Theater to announce the layoffs, witnesses to the meeting first told KNPR. Several different sources have said the layoffs mainly affected non-revenue generating entities including the Learning Village, tours and music programs.

A source close to the project reportedly said the layoffs were the result of the project “bleeding money.” The project had invested in real estate, a private school, restaurants, an ambitious transportation project and the purchase of what some may think of as frivolous and expensive items such as several Burning Man sculptures intended to decorate the area.

Most telling of the troubles to come may have been the closing of Factorli, a $10 million manufacturing plant that opened just this year. “Tony is not always altogether the most wise judge of character.” a source told Re/code. “There’s a lot of family. There’s a lot of drinking buddies. And some poor choices were made.”

University of Iowa professor David Gould wrote an open letter in Las Vegas Weekly about his disillusionment with the man he once heroicized after the announcement was made.

Business is business” will be the defense from those you have charged with delivering the sad news. But we have not experienced a string of tough breaks or bad luck. Rather, this is a collage of decadence, greed, and missing leadership. While some squandered the opportunity to “dent the universe,”others never cared about doing so in the first place. There were heroes among us, however, and it is for them that my soul weeps.

Downtown Project spokesperson Kim Schaefer said her team *was working on addressing what they see as inaccuracies in the press. This is the official statement she was able to share about Hsieh’s move to step down for now:

Since January 2012, Downtown Project has been working to help revitalize downtown Las Vegas through several hundred investments and initiatives. At this time, we are focused on streamlining our operations as we continue to execute on our plans. Doing so requires that we restructure our operations and focus on follow-on investments. We continue to evaluate all of our initiatives in terms of those that achieve the right balance of both ROI (return on investment) and ROC (return on collisions).

*Update: The Downtown Project has posted on their site a list of what they say are inaccuracies circling around in the news at the moment about Hsieh stepping down. The post addresses misleading headlines, goes deeper into an explanation of what the project is and gives a breakdown of the timeline of events for the project by year.