“It wasn’t just about building a business. It was about building a lifestyle that was about delivering happiness to everyone, including ourselves.” — Tony Hsieh, “Delivering Happiness”
Before Tony Hsieh stepped down from his leadership of the Downtown Project — his radical experiment in building a startup city in Downtown Las Vegas — there were already signs of serious trouble. Startups were shutting down. Outside investment wasn’t coming. And then there were suicides.
Three of the most prominent entrepreneurs involved with Hsieh’s project committed suicide, sending the tight-knit community into a tailspin.
In January 2013, Jody Sherman, the 48-year-old founder of Ecomom, one of the most prominent Vegas tech-funded startups, shot himself while in his car. His company had been going south.
In January 2014, 24-year-old Ovik Banerjee, who was part of the first Venture for America group in Vegas and an integral member of the Downtown Project team, leapt from his Town Terrace apartment in downtown.
In May 2014, Matt Berman, the 50-year-old founder of Bolt Barber, the flagship shop at the center of the Container Park, was found in his home in an apparent suicide by hanging, though it’s still unclear. People familiar with the Downtown Project say many of its small businesses have been struggling.
Amid all the experimentation and twee playfulness of the Downtown Project, the deaths were a jarring moment of flesh-and-bone reality in a community of about 300 entrepreneurs.
And yesterday, a substantial round of layoffs was announced.
Hsieh seemed to work hard to keep each suicide quiet. Entrepreneurs told me there were few community resources made available, no large-scale gatherings, no cathartic outpouring, and that they felt confused about what was happening and why it was never addressed. Many in the Downtown Project, including a crisis counselor who worked with the parents of one entrepreneur, pointed to Hsieh’s philosophy — his obsession with happiness, and with imposing it upon the community — as one of the problems.
“Suicides happen anywhere. Look at the stats,” Hsieh said, sounding agitated, when I asked him about it one evening on folding chairs in the Learning Village, where speakers regularly come to lead sessions. “It’s harder for people who are really good students in school. Then they move in to this, where there is no instruction manual, and you have to be MacGyver on your own.”
My question appeared to make him uncomfortable. He scooted two seats away.
Whether or not the suicides are statistically significant, the deaths have clearly shaken the entrepreneurs. Many point directly to Hsieh, the enigmatic leader who guided hundreds into his experiment in the desert.
“Startups are a major stressor, and it can be a trigger for dormant stuff that’s already there,” said Kimberly Knoll, a therapist who works with Downtown entrepreneurs. “The difference here is the focus on happiness — that’s a goal. But if we negate the negative emotions in our lives, it takes us away from happiness and brings around shame. The whole idea of Downtown is grand and wonderful and purposeful, but sometimes the way we’re going about it isn’t psychologically healthy.”
Where does this emphasis on happiness come from?
“In Vegas, it comes from top down. It comes from Tony, from Zappos,” Knoll said. “The book is called ‘Delivering Happiness.’”
Hsieh’s 2010 book is his memoir and manifesto. It follows him as he starts companies, beginning with a worm farm as a child, through to the sales of LinkExchange and then Zappos. In it, he realizes that his mission is not to make money, but to make people happy and build better lifestyles for them.
Knoll had been a crisis counselor after one of the suicides. When Banerjee’s parents arrived from Alabama, their son had been dead for a few days (police had misidentified the body), and counselors spoke with the parents before they could see his body.
“The pressures are the lack of being able to confide with people, having to put on a vest or mask, and having to say everything’s great,” Knoll said. “The struggle of how do you keep your team going, and knowing that you’ve only got one month left on your runway.”
Hsieh — a difficult leader who rarely went to the office but seemed to be everywhere — created an environment that was confusing for some of his followers.
Banerjee had been hired by Hsieh without being given a specific job. He worked at first for Hsieh’s cousin Connie Yeh at the 9th Bridge School (which focuses on entrepreneurship and starts at age 6 weeks). He was moved to the Downtown construction zone and the Learning Village, where his friends told me he was asked to mislead city officials about the nature of the project, skirting zoning codes and the permit process by claiming a permanent structure was temporary. Doing this upset him deeply, a source told me.
Hsieh’s real estate partner, Andrew Donner at RGG, said there was nothing misleading, and said the plan had simply changed: “The entitlement on the Learning Village was initially a temporary permit for construction trailers. As the vision for the Learning Village continued to expand and materialize, the entitlement was changed to incorporate something more appropriate for how it is currently being used.”
Banerjee struggled. “He was really principled, and it tore him up,” one source said. “He never had a clear job. No one had a clear job. It was Tony leading people saying, ‘Come out and do things, come out and have fun,’ and then you get here, and there’s no structure, and that’s what they did to Ovik.”
Before his death, Banerjee emailed Hsieh and said he was concerned about the Downtown Project — concerned about how resources were being allocated, and about how people in the company were treated. He listed problems that he was seeing Downtown, starting with values: “Problem 1) Lack of Culture, Mission, and Core Values,” according to parts of the email correspondence, which Hsieh shared with me.
Hsieh had responded to each concern, noting that it takes time, and that Banerjee should work with his manager. A friend of Banerjee’s said he had felt these emails were “dismissive.”
After he died, four employees at the Downtown Project quit.
Las Vegas has always had a high suicide rate — the odds of suicide among Vegas residents have been reported to be about 50 percent greater than in other large U.S. metropolitan areas between 1979 and 2004.
Add to this a peculiar pressure in Las Vegas: It is very important you be perceived as happy in Las Vegas. It is very important for entrepreneurs to hit the bars to maximize their “collisionable hours.”
As a response to the deaths, Downtown Project denizens are thinking of setting up a dedicated crisis hotline. Two entrepreneurs are even planning to start churches.
“After Ovik [Banerjee], they brought me in to do crisis counseling. From what I hear, there hasn’t been much more,” Knoll said. “Like anything else in our world, we’re hyped up on something, and then it goes away.”
When I met with Las Vegas Mayor Carolyn Goodman, she also brought up Hsieh’s emphasis on happiness as something that perplexed her: “He’s big on fun. He’s big on collisions,” she said, referring to Hsieh, the magnetic center of this tech renaissance. “And there’s one thing I’m missing there — happiness.”
Goodman turned to Lora Kalkman, her assistant. “I couldn’t turn to Lora and say, ‘Lora, you’ve been sad for a week.’ I can’t make Lora happy — you have to earn, you have to achieve. You can’t make happy.”
Mark Rowland is a career coach who helps on the Delivering Happiness team as the “Happy Cheer Leader.” On his bio page, it says: “Mark’s passion in life is to be happy.” He sees his role as inspired by and informed by the suicides, and said Hsieh hired him as part of a suicide response.
“There wasn’t an independent person that these guys could go to,” he said. “There’s a lot of people who have flown into Vegas from another part of the country. They’ve left their family, their friends, their network. The people they would normally hang out with when they’re having a bad day aren’t around.”
Jonathan Jenkins, the affable Southern co-founder of supply chain startup OrderWithMe, said that by the third suicide, he realized he needed to start a church.
“A lot of the young people who do these startups, they don’t think they can be frank with each other,” Jenkins said. “Just before this meeting with you, I met with someone who said, ‘You know, I’m out of runway. Like even for food to eat.’ And who do they turn to?”
He compared it to the concept of “face” in China — essentially, preserving one’s reputation — and pointed out that often the only people an entrepreneur knows in Vegas are venture capitalists and other struggling founders.
“We call it ‘face‘ in China — everything’s great, we’re doing great,” said Jenkins, who founded his company in China. “But at the end of the day, you need a community, a safety net. You don’t want to air out these issues to your investors, but if there are only investors around, then what do you do?”
One entrepreneur I spoke with who requested anonymity for fear of being ostracized by the community said she felt the problem was that there weren’t more cathartic community events after the suicides. And this week’s layoffs were sprung on the team so suddenly.
“It’s been kept very, very quiet,” she said. “They need to open the doors. You can’t hide it. You can’t pretend it didn’t happen — everybody knows these people. There is a danger of happiness as a goal, it’s a byproduct of striving for that which you desire. Where’s the grownup? Barry from Venture for America is 22 years old. There was no check-in, no meetup for the community. I want someone who can talk to me about my life, not my business.”
“We have a lot of young people who may be business-brilliant, but the pressure is insane. It’s lonely. There’s a pressure to socialize and go out. There’s a pressure to party.”
As a response to the suicides, the Downtown Project’s clinic, Turntable Health, which is also a co-working space, is going to hire a full-time psychiatrist.
When I arrived at the clinic for an interview, a girl working at a standing desk told me that she’d shoot the founder a text to let him know I’d arrived. Dr. Zubin Damania had gained prominence through his quirky medical-rap YouTube videos, such as “Manhood in the Mirror,” and knew Hsieh from Harvard. We talked while he watered some little plantings — peppermint and lemon thyme — in the clinic’s demonstration kitchen.
The clinic offers primary care, and costs $80 a month. You need insurance beyond that. He said Vegas already has a high suicide rate (about twice the national average; 34.5 per 100,000 people), but that being in an entrepreneurial city within the city exacerbates it.
“In an entrepreneurial community, so, so many boundaries are gone,” Damania said. “People are taken away from their social moorings. It’s extremely high-pressure.”
Damania said there’s a tendency to say the suicides were just a fluke or a coincidence, but that they’re actually a fundamental problem with entrepreneurship.
“It’s a symptom of this performance,” he said.
It’s part of an ultra-individualistic, stoic ethos similar to one espoused by philosopher Ayn Rand.
“Founders are the worst,” he said. “There’s a Randian — I must be the John Galt — feeling. You can be as liberated as you want, but there’s a web of connectivity, and they forget.”
MacGyvers on their own, as Hsieh put it. Building a startup city in the desert is lonely and hard. Founders leave behind their social networks and their roots, and engage in an incredibly risky activity — starting a company. They often move to Las Vegas because they received venture capital from the Vegas Tech Fund, so their closest friends may be venture capitalists. And when companies begin to fail, there is little emotional support for the entrepreneurs.
As one entrepreneur who was laid off from the Downtown Project yesterday told me: “There’s not that much hope here now.”
Correction: (10/1/2014) In an earlier version of this story, Dr. Zubin Damania’s name was misspelled. The timing of Jody Sherman’s death has also been corrected.
(10/3/2014) Turntable Health had planned to hire a full-time psychiatrist, not a therapist as we first reported.
This article originally appeared on Recode.net.