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An Interview with Tony Hsieh, Chief Executive Officer, Zappos.Com

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An Interview with Tony Hsieh, Chief Executive Officer, Zappos.Com EDITORS’ NOTE In 1999, paid advertising or mar- at the age of 24, Tony Hsieh keting and invest it into (pronounced Shay) sold the customer experience. LinkExchange, the company An Interview with Tony Hsieh, so that means things like, he co-founded, to Microsoft Chief Executive Offi cer, Zappos.com free shipping both ways; for $265 million. He then joined Zappos values that are right for their company to help our 365-day return policy; surprise upgrades as an advisor and investor, and eventually be- them create their own strong culture. to overnight shipping; running our warehouse came CEO, where he helped Zappos grow from so it’s great to see it can work in other and call center 24/7; no scripts for our call cen- almost no sales to over $1 billion in gross mer- types of industries and businesses. ter; and directing customers to competitor Web chandise sales annually, while simultane- What process did you go through in sites. We put our money into the customer ex- ously making Fortune magazine’s annual Best creating your core values? perience and let our customers do the market- Companies to Work For list. In November 2009, We e-mailed the whole company for sug- ing for us through word of mouth. We’ve grown Zappos was acquired by Amazon.com in a gestions and got a bunch of responses, and from no sales in 1999 to over $1 billion gross deal valued at $1.2 billion on the day of clos- eventually came up with our fi nal list of 10. merchandise sales every year, and the number ing. His first book, delivering Happiness: a We wanted a list of committable core val- one driver of that growth has been through re- Path to Profi ts, Passion, and Purpose, a #1 new ues, meaning we’re willing to hire or fi re people peat customers and word of mouth. York Times Bestseller, was published in June based on whether they’re living up to our core As Zappos has grown, has it been im- 2010 and is available at www.amazon.com or values, completely independent of their actual portant to you to maintain an entrepre- www.deliveringhappinessbook.com. job performance. The same thing applies to the neurial culture within the organization? hiring process. even if someone is smart and defi nitely. We try to cultivate that entre- COMPANY BRIEF Zappos.com was established talented, if his or her values aren’t in line with preneurial spirit at Zappos and you don’t need in 1999 and has quickly become a leader in on- our corporate values, we won’t hire that per- to be an entrepreneur to have that spirit – that line apparel and footwear sales. The company son. Fifty percent of our performance reviews spirit is more about having a combination of currently stocks millions of products from over are based on whether you’re living or inspiring creativity and optimism, and real world practi- 1,000 clothing and shoe brands, and was recog- those values. cal street smartness. We have tried to instill nized in 2009 and 2010 by Fortune magazine in our employees, if you are passionate as one of the “100 Best Companies to Work For.” Zappos Core Values about something, go for it even if it’s not in your job description. We also try to instill the What made you feel the timing was right for • deliver WoW Through service sense that it’s easier to ask for forgiveness than your book Developing Happiness and who • embrace and drive Change permission. are you targeting? • Create Fun and a Little Weirdness Will there come a time when you’ll The target audience could be anyone who is • be adventurous, Creative, need a challenge to build something else? interested in happiness in the workplace, but also and open-minded The great thing about building the Zappos specifi cally entrepreneurs and business leaders. • Pursue Growth and Learning brand is it’s not just around shoes, but around maybe 50 years ago, most businesses felt they had • build open and Honest relationships the very best customer service. so we talk to choose between maximizing profi ts and mak- with Communication about how maybe 20 or 30 years from now ing customers or employees happy, but we’re at • build a Positive Team and Family spirit there will be a Zappos airline that is about the the beginning of a special time where because ev- • do more With Less very best in service. It makes more sense to eryone is hyper-connected and information travels • be Passionate and determined do it within the Zappos platform than to start so quickly, it’s possible to have it all – to make • be Humble a new company. customers and employees happy and to drive As you look two to three years out profi ts and, ultimately, make shareholders happy. for Zappos, what are you most focused Is that easier in companies that have Do you foresee broadening into new on to make sure the strength of the brand an entrepreneurial feel? For many that are product categories or are you happy with continues? large players, it’s hard to penetrate culture. the range of collections? For many companies, as the organiza- We found that it works at Zappos and We started out in footwear and we’re mak- tion gets bigger, the culture ends up going our number-one priority is company culture. ing a big push into apparel, which is four times downhill. For us, not only do we want to We made a lot of mistakes along the way and the size of the footwear market in the u.s. We prevent that from happening but we want learned from them, so we want to help spread also sell beauty products, housewares, kitchen- the culture to scale and get stronger as we this message. wares, and a few other categories. grow. Part of it is making sure that every em- We also now offer one- and two-day semi- What approach do you take to market- ployee views living and inspiring the culture nars where companies from all over the world ing the Zappos experience? in others as part of his or her job because it come to our offi ces for a few days to observe our philosophy is, let’s take most of the can’t just be me or a few people; it needs to and we help them figure out their own core money that we would have normally spent on be everyone’s job.• 88 Leaders voLume 34, number 2.
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