One of the most striking Internet success stories in recent years is Zappos, the $1+ billion e-commerce business which was bought last year by Amazon.
But, as is often the case, the Zappos empire was not created overnight. Ten years ago, the online retailer known for selling shoes was actually desperate for sales. It wasn’t until a young Tony Hsieh came aboard in 1999 -- as a business consultant and investor -- did that all begin to change.
Hsieh’s unorthodox approach to company culture turned Zappos not only into a very lucrative business, but one beloved by customers and employees alike. He was named CEO in 2000 and attributes Zappos’ success to sticking by the company’s core values, which were designed to make employees happy.
“Our number one priority at Zappos is company culture. Our belief is that if we get the culture right most of the other stuff like delivering great customer service or building a long-term enduring brand for the company will happen naturally on its own,” says Hsieh who is also the author of a new book “Delivering Happiness: A Path to Profits, Passion and Purpose.”
Hsieh, 36, has stayed CEO of Zappos, despite making a salary that one would normally associate with an entry-level customer-service rep--$36,000 a year. Hsieh has been so successful as an entrepreneur that money no longer motivates him. What does, he says, is continuing to develop the company and culture that the Zappos team built over the past decade. And, so far, Amazon has allowed him to do that.
He must be on to something: Fortune magazine named Zappos #15 on its annual ranking of “Best Companies to Work For” at the beginning of the year.
Born for business
Hsieh, a first-generation Taiwanese-American, was only in his mid-20s when he joined the Zappos team. He may have been fresh out of college, but he certainly was no stranger to creating and cultivating multi-million dollar businesses.
From a very young age, he had the entrepreneurial instinct. At just nine years old, he had started his very first business – a worm farm. A few years later came his mail-order make-your-own button company. Then while studying computer science at Harvard he started making his peers what every college student demanded more than anything: pizza.
His first “real” company
Shortly after college in 1996 at the age of 24, Hsieh co-founded LinkExchange a website development business from the comfort of his own basement. Two years later Microsoft paid him $265 million – yes, nine figures – for his creation.
Of course Hsieh needed another challenge and to feed his insatiable entrepreneurial appetite. That challenge would be Zappos. His goal was to make the company – at the time fighting for financial stability - the largest online shoe retailer.
Zappos named him CEO and he did what he set out to do. Hsieh grew the company that had nearly non-existent sales when he started, to over $1 billion in sales today.
His guiding principle: Happiness. When you enjoy what you do and where you work, great things will happen.
“We have 10 core values at Zappos. We try to do is hire people whose personal values match their corporate values,” says Hsieh while also stressing the importance not hiding or holding back who you are outside of the office. “It is about being yourself in the office because we found that when true friendships are formed, that is when creativity really blossoms (in our employees) and great ideas come out, which is what has driven our growth.”
The company will not hire anyone who does fit within their corporate culture.
“One our values is to be humble, and that is the one that trips us up most during the hiring process. There are a lot of smart people out there that are also egotistical and for us it is not a question, we just won’t hire them,” says Hsieh.
In the same vein, the company will fire employees who do not live up to those standards.
Often, when growing companies are acquired by much-larger ones, such cultures are destroyed, as the acquirer seeks to wring out the "synergies" used by financial folks to justify the acquisition.
But that's not so in this case, Hsieh says.
Before Amazon and Zappos agreed to their deal, Amazon signed a document saying it would let Zappos continue to do its own thing. And Hsieh says Amazon has honored that commitment.
Basically, the only thing that has changed, Hsieh says, is that Zappos has swapped its old board of directors for a new one--at Amazon. Zappos still runs its own show, and that has enabled it to maintain the culture that it so carefully cultivated in its years as an independent company.
