CoNTENTS 1 2 3 4 5 6 FOREWORD ix 7 ACKNOWLEDGMENTS xi 8 9 1. Zappos? What is Zappos? 1 10 11 PRINCIPLE 1 12 serve a Perfect fit 13 14 2. It all Comes BaCk to Culture 27 15 16 3. Culture should Be a Verb 48 17 18 Principle 2 19 make it effortlessly swift 20 21 4. Less effort, more Customers 81 22 23 5. The tiCket to the Big serViCe dance: 24 VeloCity, KnoWledge, reCoVery, aNd 25 SurPrise 101 26 27 Principle 3 28 step into the Personal 29 30 6. More thaN a Wallet With legs 127 31 vii 0071749586_Michelli_000_r3.indd 7 8/2/11 4:45 PM viii C o N t e N t s 7. ConneCtioNs at all leVels 146 Principle 4 s t r e t C h 8. Zappos UniVersity 173 9. BeyoNd shoes 195 Principle 5 Play to Win 10. Play Well 227 11. R.o.f.l. 252 ConclusioN: EndiNgs, BeginniNgs, aNd you 272 Notes 278 Appendix A: Sharing Great Calls 286 Appendix B: Excerpts from Zappos Culture Books 291 Index 297 0071749586_Michelli_000_r3.indd 8 8/2/11 4:45 PM 1 1 2 3 4 5 6 7 Zappos? What 8 9 Is Zappos? 10 11 12 13 14 15 I saw Winnie the Pooh running through the parking 16 lot. Yes, I work at Zappos! 17 —@dylanbathurst (Twitter post) 18 19 20 21 Unconventional. That’s one of the first words 22 people use to describe Zappos. Even the name Zappos befits the 23 unconventional character of one of the most transformational 24 business success stories of our time. 25 In keeping with what you will learn about the unorthodox 26 nature of Zappos, let’s get started in a manner that’s somewhat 27 different from the beginning of your average business book. I’ll 28 quiz you! Fear not; the quiz consists of only one question, there 29 will be no grading, and I have a hunch you’ll do well. Please choose 30 the one response that reflects the best answer: 31 1 0071749586_Michelli_001_r3.indd 1 8/2/11 4:46 PM 2 t h e Z a p p o s e x p e r I e n c e Zappos is . A. an Internet company that began by offering shoes online and went from virtually no sales to $1 billion in annual gross merchandise sales over a 10-year period, despite minimal advertising. B. a purveyor of a wide array of online merchandise, including clothing accessories, home furnishings, and Halloween costumes. C. the place where newly oriented employees are offered money to leave if they perceive themselves as not fitting the culture. D. a company where being a little “weird” is part of the core values. E. a work environment in which every person can offer descriptions of the company’s culture that are published each year in an uncensored Culture Book. F. one of Fortune magazine’s top 10 best places to work. G. the site of numerous spontaneous employee parades and other offbeat, playful activities. H. a place where employees are offered classes on using Twitter. I. a leader in social networking strategy and execution. J. an obsession. K. a standard-bearer for authentic and vibrant, albeit somewhat wacky, corporate culture. 0071749586_Michelli_001_r3.indd 2 8/2/11 4:46 PM Zappos? What Is Zappos? 3 L. a little start-up company that was sold to Amazon.com 1 for approximately $1 billion. 2 3 M. a way of life. 4 N. a place where “happy hours” occur all day long and 5 where shots of Gray Goose vodka are essential to 6 celebration. 7 8 O. a company that helps other business leaders drive a 9 service culture into their organizations through its 10 Zappos Insights program. 11 P. a movement. 12 13 Q. the creator of more than 50,000 online product videos 14 annually. 15 R. an innovator of enriched website “user” experiences. 16 17 S. actually ten companies in one, including training, 18 fulfillment, and website divisions. 19 T. a business where the CEO makes $36,000 per year, 20 wears jeans to work, sits in a centrally located cubicle, 21 and has well over a million Twitter followers (@zappos). 22 23 U. a deliverer of happiness. 24 V. a company whose made-up name comes from a variation 25 of the Spanish word for shoes: zappatos. 26 27 W. a place where the Headquarters and Fulfillment Centers 28 host regular and highly sought-after tours. 29 X. a location where a call-center employee’s longest inbound 30 call lasted more than eight hours. 31 0071749586_Michelli_001_r3.indd 3 8/2/11 4:46 PM 4 t h e Z a p p o s e x p e r I e n c e Y. a business you must study in order to achieve skyrocketing sales, an enviable culture, and a leadership position in customer service. Z. all of the above, and so much more. Of course the correct answer is Z, which stands for the very different and very much talked about Zappos. Zappos is certainly different in every good sense of the word. Whether you are a customer who has been “wowed” by lightning- fast service and amazingly personal care, a social marketer who is benchmarking Zappos innovations, a business leader who wants to change a negative or sluggish workplace, or simply a student of powerful social forces, this book will offer you a chance to learn from a company that is changing the paradigm for how to deliver excellent service by embedding that service into its culture. Professor Peter Jackson, author of Maps of Meaning: An Introduction to Cultural Geography, wrote, “Cultures are maps of meaning through which the world is intelligible.” At Zappos, leadership has offered a “map of meaning” that produces success powered by a culture of service. Buzz and Substance It seems as if Zappos is popping up everywhere: articles in Fast Company, Inc., Harvard Business Review, and Psychology Today and coverage on television programs like CBS Sunday Morn- ing and Nightline. But is Zappos really worthy of your time and study? Are the company’s lessons applicable to individuals whose businesses and lives go beyond online product sales? 0071749586_Michelli_001_r3.indd 4 8/2/11 4:46 PM Zappos? What Is Zappos? 5 Having studied, consulted with, and written about amazing 1 businesses like Starbucks, The Ritz-Carlton Hotel Company, 2 and the World Famous Pike Place Fish Market in Seattle, Wash- 3 ington, I daresay that the Zappos lessons are applicable not only 4 to every business sector, but also to the personal and professional 5 development of people at every level of an organization. 6 While the media image of Zappos often portrays an over-the- 7 top playful culture that might not seem applicable in your indus- 8 try or workplace, I challenge you to temporarily suspend your 9 cynicism and explore the possibility that Zappos is neither too 10 casual nor too weird. In fact, employees at Zappos demonstrate 11 a commitment to hard work and excellence that the best compa- 12 nies in the most conservative of industries would envy. Style dif- 13 ferences may exist; however, the underlying principles that drive 14 success at Zappos will improve both your company and you. But 15 before you accept my premise, let’s make sure that we all under- 16 stand how Zappos became the company it is today. Through the 17 process of establishing a shared overview, I’ll foreshadow some 18 of the lessons any company can take away from spending time 19 with Zappos. 20 21 22 JUst a slIver of perspectIve 23 24 I am not here to give a comprehensive history of Zappos. In fact, 25 no one can tell that story better than Tony Hsieh, the compa- 26 ny’s CEO. Fortunately, Tony has done a spectacular job of of- 27 fering personal insights on the evolution of Zappos in his book 28 titled Delivering Happiness. While I assume that many of you 29 have picked up that book or will do so, I want to make sure that 30 we all start with a basic understanding of several key elements 31 0071749586_Michelli_001_r3.indd 5 8/2/11 4:46 PM 6 t h e Z a p p o s e x p e r I e n c e that have contributed to the Zappos we are examining today. The Zappos Milestones sidebar provides a more detailed timeline of significant events in the history of Zappos. Zappos Milestones 1999 • Founder Nick Swinmurn identifies the need for online shoe distribution and creates a site called ShoeSite.com. • Successful entrepreneur Tony Hsieh meets Nick. Tony invests $500,000 in Swinmurn’s business through a company that Tony cofounded with Alfred Lin named Venture Frogs. • ShoeSite.com becomes Zappos.com, allowing the brand breadth for expansion beyond shoe sales. • Negligible gross sales are reported. 2000 • Nick Swinmurn and Tony Hsieh function as co-CEOs of Zappos. • Zappos records $1.6 million in gross sales. 2001 • Sustained effort produces $8.6 million in gross sales for Zappos. 2002 • Zappos leases the Fulfillment Centers in Shepherdsville, Kentucky. • The brand elevates gross sales to $32 million. 2003 • Gross sales at Zappos rise to $70 million. 2004 • Sequoia Capital infuses a significant amount of cash into Zappos. • Zappos moves its Headquarters and call-center operations to Henderson, Nevada. 0071749586_Michelli_001_r3.indd 6 8/2/11 4:46 PM Zappos? What Is Zappos? 7 1 2004 (continued) 2 • Zappos opens its first outlet store in Kentucky.