Most people do not associate Las Vegas, the nation's capital of excess, with anything small. Vegas is a metropolis where the massive Mirage casino has to make $1 million per day just to break even, the Strip houses nine of the largest hotels in the world, and casino owners spend millions of dollars to manufacture fake volcanoes and other gargantuan amusements.
Yet even as Las Vegas has boomed-Vegas' population grew by 66 percent between 1990 and 2000, the largest growth of any major U.S. city-and the casino business has expanded, the city has become an entrepreneurial town. In fact, Las Vegas ranked second in the West in D&B and Entrepreneur's 2002 "Best Cities for Entrepreneurship."
Now, after more than a decade of breakneck growth, as well as several months of economic slowdown, the entrepreneurs of "Sin City" face three concurrent challenges. How entrepreneurs handle these challenges will determine whether they succeed or, like many migrants to Las Vegas, fail and then leave town, just more dreamers who gambled and lost.
A Land of Promise
In many ways, Las Vegas seems a natural destination for entrepreneurs, for dreamers and schemers planning to strike it rich in the desert. "Vegas draws people who are adventuresome, since it is a city focused on taking chances," says Sharolyn Craft, counseling director at the Nevada Small Business Development Center. "In most cities, people moving there already have a job when they arrive. But many people move to Vegas without a job, hoping to set up a business here."
Paula Yakubik, 30, co-founder of Mass Media/Vanguard, a marketing firm with 11 employees in Las Vegas, understands what Craft means. "Vegas loves entrepreneurs, and it's a young city compared to New York or Los Angeles, so it embraces its young," she says. "I can go to a meeting with a client who's 55 and be treated like an equal."
The city's most famous figure, Brooklyn-born mobster Bugsy Siegel, was a self-starting dreamer. In the 1940s, Siegel moved to Vegas, which had already legalized gambling but had only a few dingy betting parlors, with the idea of turning the city into a tourist destination by building gleaming casinos, taking craps, roulette and other games upscale. In December 1946, he opened the swank Flamingo Hotel, a luxurious and profitable gambling joint that triggered the fast growth of the Vegas Strip. By 2001, the city was drawing more than 36 million visitors a year.
As the city has grown, its leaders have adopted some of the most pro-small-business policies in the nation. Nevada has no income tax and relatively low corporate taxes, and the lack of excessive regulations on housing has helped developers keep new-home prices among the lowest in the country, allowing entrepreneurs to stretch their dollars. "I have a huge house here that I never could have afforded when I lived in the Bay area," says Mark Olson, 45, president of Olson/Ballard Communications, an eight-person Vegas consulting and public relations firm. Indeed, the cost of living in San Francisco is 171 percent higher than in Las Vegas.
These low-tax, anti-red-tape policies attract thousands of retirees to the state, providing consumers for small businesses and making it relatively easy to start a company in Nevada. What's more, because Vegas boasts few large corporations other than casinos, small businesses enjoy significant influence over the chamber of commerce and other local instruments of power, a rarity in most American cities.
The fact that the casinos depend on small-scale contractors also promotes growth. Add a work force accustomed to handling shifts at any time because the casinos stay open all night, a favorable climate and incessant evangelizing from mayor Oscar Goodman (a former mob lawyer), and Vegas' charms become even more alluring. Goodman, who drinks and gambles frequently yet is seen as a highly skilled politician, has started a range of incentive programs to lure even more businesses to Sin City.
Hardly surprising, then, that entrepreneurs have been coming to Vegas with a gold-rush mentality, creating a huge and diverse community of small businesses. Boutique developers have built upscale condominiums for seniors who want to retire in style; one condo complex contains anti-aging spas and elegant cigar bars. The Greater Las Vegas Yellow Pages lists 98 pages of advertisements for adult entertainment proprietors and escort services, most of which are small businesses. Vegas supports hundreds of florists, many of which handle the conventions, weddings and other massive events held at casino hotels. Joe Valdes, 34, co-founder of Flowers2U, a 24-hour florist with 12 employees, says his shop frequently prepares massive bouquets for shotgun weddings or sends hundreds of dead, black roses to recent divorcees-fitting for the quickie marriage and divorce capital of the country. Meanwhile, Systems Research & Development, a tiny Vegas company backed by the CIA's venture-capital fund, creates software that helps casinos detect card cheats and other thieves.