Zappos CEO Tony Hsieh's deeply sad plan to transform Downtown Las Vegas—the bleakest part of a bleak town—into a startup enclave is dying, Las Vegas Weekly reports. Huge layoffs just arrived, and one of the $350 million project's leaders is already publicly blasting Hsieh.

The "Downtown Project" was meant to give Hsieh and his merry band of manchildren a facsimile of college: dorm-style living, flowing booze, organized activities, and a very fresh start. Instead, it was basically just a shipping container park, unpopular retail space, and luxury housing in an undesirable part of Vegas. DTP relied on its giant endowment, luring entrepreneurs to stick around town and build pretty much any business that's not selling cocaine outside casinos. But the digital homesteaders never built much of anything beyond the semblance of prosperity and productivity, attending subsidized hackathons and cocktail hours in the desert.

Still, it persisted. Just this week, Recode published a multi-part series that described the Downtown Project as "The Great American Techtopia":

Tony Hsieh — the enigmatic, shy yet hard-partying 40-year-old founder of Vegas-based shoe-sales site Zappos, which he sold to Amazon for $1.2 billion — could have a lot of toys. He chose a city.


In a mix of franchising and entrepreneurship, Hsieh's Downtown Project has 300 projects going on simultaneously, from new restaurants to tech startups to social science experiments — his small business founders make a salary and then 50 percent of the profit after paying their loans back to him. He said his inspiration was, in part, the immersive computer game Second Life.

It turns out Sim City experience doesn't lend itself that well to the real world, and well-funded arrogance isn't enough to maintain a fantasy. From Las Vegas Weekly's report:

Sources say there has been a "bloodletting" at DTP, with numerous layoffs beginning this morning. Employees have been called in for individual meetings and entire teams have been cut from the payroll.

One source said the cuts directly hit non-revenue-generating entities—the Learning Village, music programs, tours, kids and family and the Window at the Ogden. Another source said that almost everyone "non-operational" was being let go. Names of those who lost their jobs are beginning trickle in, including Ashton Allen, head of the music team. Former University of Iowa professor David Gould, who moved to Las Vegas to work with DTP and ran the Window multi-use space, resigned this morning.

In a public letter, Gould decries pretty much the whole operation:

Tomorrow, many of the people who merged their voices with yours will find themselves without a job. While their names have yet to be revealed, the disillusioned expressions I conjure up are keeping me awake tonight. This group will undoubtedly include numerous young adults, who have not yet found your good fortune. As they have naively purchased homes and started families, this decision will impact them greatly.

"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.

My heart also goes out to those whose jobs are spared. While that might seem a bit ridiculous, they will surely expend energy trying to understand the secret of why they were kept and others let go. In the end, the only thing they will know for sure is that their leaders lied to them in order to hurt their friends.

While reason might conclude that I should wait to either identify a new job, or collect my severance pay, I am compelled to tender my resignation instead. Compensation was never my primary concern. Doing meaningful work, however, is.

Emphasis added. Now, the hangover sets in.

Photo: Sheila Scarborough/Flickr

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