It was an ambitious gamble — even by Vegas standards. In 2013, Zappos CEO Tony Hsieh relocated his Amazon-owned shoe company to Las Vegas' downtown district, taking over the building that was once city hall in the rundown area north of the Strip. A year earlier, Hsieh had launched the first half of his bet: the Downtown Project, a $350 million revitalization effort to turn the neighborhood into a mecca for entrepreneurs. He invested his own money, hoping Vegas would become "the co-learning and co-working capital of the world." Nearly five years into the project, results have been mixed. Critics point to a less-than-robust tech scene, layoffs and shuttered businesses as major stumbling blocks, while others applaud the community's transformation. Hsieh told CNBC he's still invested in the project's success, but if he could go back, he'd do a few things differently.

Tony Hsieh, CEO of Zappos

"One is we're just now starting construction on an apartment building," he said, referring to the separately funded, 231-unit Fremont9 apartment building, which broke ground in May. The building aims to address a problem business owners often cite: a lack of consistent foot traffic. "Maybe we would have waited until year three to start the new apartment buildings instead of waiting until year four." It's the chicken-and-egg dilemma of investing $50 million in downtown destinations like bars and restaurants to show would-be residents what downtown has to offer before having a place for them to move. "The other thing that we would have done differently, knowing what we know now, is really made our goals much more explicit," Hsieh said. For example, he would have put "collisions" — serendipitous encounters between individuals who can drive innovation — ahead of co-learning, connectedness and even return on investment.

Hsieh intentionally set lofty goals for the project. Speaking at the Aspen Institute in the early days of the project, Hsieh compared the legacy he hoped his Downtown Project would have to the phenomenon of the four-minute mile. For years runners tried and failed to break the mark, which was long thought to not only be dangerous but impossible. In 1954, Roger Bannister was the first to make history, but Hsieh noted others quickly followed suit until the four-minute mile became all but routine. "We want Vegas to be the four-minute mile of the world," he said. "If we can make downtown Vegas a place of inspiration, creativity and entrepreneurial energy and discovery and so on, in probably the place people would least expect it, then there's really no excuse for any other community or city."

Visitors stand in Container Park across from a construction site where an owner- independent of the Downtown Project- hopes to open a new two-story Indian restaurant. Mary Stevens | CNBC

Hsieh's Downtown Project will turn 5 years old in January, and there are signs of progress. The spark he provided is starting to spread beyond the businesses he originally funded — a key benchmark laid out in the Downtown Project's original five-year plan. Business owners independent of the project are moving into the neighborhood now famous for the project's outdoor Container Park, built from repurposed shipping containers and featuring a giant fire-breathing praying mantis that Hsieh adopted from Burning Man. "To see kids and families walking around in a place that was previously pretty dangerous, that's progress," Hsieh said, "and [I'm] pretty happy about that."

Built in 2013 using repurposed shipping containers, Container Park houses about 30 small businesses and boutique stores. Mary Stevens | CNBC

Some of the original investments the project made are also paying dividends.

For example, a few years ago Chef Natalie Young was planning to leave Vegas, the city where she had worked her way up the culinary ranks, when she met with Hsieh. After seven business plans and a $225,000 loan, she was instead planning the design of her new Vegas-based restaurant, Eat.



Chef Natalie Young opened her restaurant Eat in 2012 with help from Tony Hsieh’s Downtown Project. It’s now a multimillion dollar business. Mary Stevens | CNBC