Hsieh's downtown Las Vegas Container Park. Flickr/somewhatfrank

Tony Hsieh's visionary plan for the city's off-strip core seems to be imploding, leaving followers disillusioned.

Zappos CEO and "evangelical urbanist" Tony Hsieh has stepped down from his role as leader of Las Vegas' Downtown Project, and 30 additional staff members were laid off yesterday. A statement explains the cuts as an aim to "restructure ... operations and focus on follow-on investments."

Seeded by Hsieh's own $350 million, the Downtown Project is a redevelopment group aimed at turning Las Vegas' off-strip urban core into a kind of alt-wonderland. Since 2012, "DTP," as it's known to insiders, has purchased some 60 acres of property in the area, funding restaurants, bars, shops, bakeries, a record store, a hardware hacking center, and a $40 million outdoor mall built from shipping containers. A source close to the project told Re/Code that many of these new businesses were "bleeding money."  

Hsieh, who's been called the "mayor of downtown," said in an email dispersed to media that he never considered himself the “CEO” of the project.

That may be telling. Many sources pointed to Hsieh's leadership and hiring practices as contributors to the apparent implosion. “There are a lot of people in leadership at Downtown Project who have absolutely no business being there,” another source told Re/Code. “Tony is not always altogether the most wise judge of character. There’s a lot of family. There’s a lot of drinking buddies. And some poor choices were made.”

Certainly, the massive layoff is sharply disillusioning for the many DTP staffers who latched on to Hsieh's community-oriented, "beyond-the-bottom-line" vision for redevelopment. The Las Vegas Weekly reports:

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."

David Gould, an academic who left the University of Iowa to be "Director of Imagination" at DTP, resigned yesterday following the layoffs. In an open letter to Hsieh published in the Weekly, he sums up a sense of disenchantment reminiscent of a former religious convert now wracked with doubt:

“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.

Hsieh said in another statement that he would continue to act as an "investor, advisor, and equivalent of a board member" at DTP, but would not be "involved in day-to-day management of people or projects." His lawyer, Millie Chou, will be taking over that role, Re/Code reports.

Hsieh also outlined a plan for the project through 2016 that includes more so-called streamlining. “[J]ust like any startup,” Hsieh wrote, “[DTP] has gone through the same range of ups and downs that we went through at Zappos—just twice as quickly, so therefore the highs and lows can oftentimes appear to be twice as intense.”

Top image courtesy of Flickr user somewhatfrank.

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