Apr 11, 2017 ยท 2 minutes

I’ve written enough about [Pando investor] Tony Hsieh’s Downtown Project -- good and bad --  to last a lifetime. Still, as the project passes its 5th anniversary, it’s worth taking another quick glance Eastwards to see how things are going.

As luck would have it, the DTP just published a new study (downloadable here -- h/t Dayvid Figler) that shows the total “economic impact” of Hsieh’s investment in revitalizing and reinventing Downtown Las Vegas.

The headline?

According to the DTP’s own numbers, the project has created an impressive 1571 jobs and an even more impressive $272m in “one-off economic output” for downtown Las Vegas, and $209m in “ongoing economic output.”

Kudos!

Except.

First off, it’s important to remember that’s to create those 1571 jobs Hsieh had to invest a whopping $350m in the Downtown Project. That’s $223k per job. (The 1571 figure also doesn’t take into account the roughly ~300 Zappos employees who have reportedly departed the Vegas-based company as a result of Hsieh’s crazy post-DTP reinvention.)

Second, that job and economic output figures are broken down into direct, indirect and “induced.”

Indirect and induced jobs include jobs not actually created by the DTP or portfolio companies. Rather, they are the DTP’s estimates of how many jobs have been created in companies that supply or tangentially orbit Hsieh’s empire. For example, “at grocery stores and movie theatres” close to Downtown Vegas.

And even that figure is, well, kinda nonsense given that many of the DTP’s new residents are Zappos employees who relocated from the company’s old headquarters in Henderson to their shiny new Downtown digs. One might reasonably assume a similar number of movie theater and grocery jobs have been destroyed by that move.

So what’s the total number of jobs created directly by DTP, according to the project’s own numbers?

609.

For $350m in investment.

And that’s still too rosy a picture.

Digging further, we see that the vast bulk of both direct and indirect jobs (764 of 1201 jobs across both categories) were created by a single project: The Life Is Beautiful music festival which Hsieh brought to Vegas but was actually co-created by Another Planet, the organizers of the long-running, hugely successful Outside Lands in San Francisco.  By the DTP’s own numbers, that same festival accounts for a full $77.7m of the project’s $86.6 in total direct economic output.  Most strikingly, according to DTP’s own report, the annual budget for Life is Beautiful is less than $16m -- just a tiny fraction of the $350m spent across the entire Downtown Project.

In other words, by far Hsieh’s biggest contribution to reinventing the entertainment and partying capital of the world was to encourage an existing festival company to host a giant entertainment party. A party which he could have hosted every year of the DTP’s life to date and still ended up with $270m left in the bank. Meanwhile, the vast bulk of jobs and income generated by his promise to build a Utopian community for families and entrepreneurs came from tourists getting wasted and listening to Mumford & Sons. No wonder DTP encouraged residents to skip work at other companies to attend the festival. 

Delivering Happiness indeed.