Tony Hsieh Interview by Cliff Michaels (Part 1 of 2)
In late 2011, I sat down for an exclusive interview with Zappos CEO and New York Times Bestselling author, Tony Hsieh (pronounced Shay). I was so honored that Tony endorsed my new book, The 4 Essentials of Entrepreneurial Thinking, I decided to hand deliver a “thank-you” basket filled with his favorite snacks (red bull, beef jerky, gourmet pickles, and Grey Goose Vodka). Ironically, ABC’s Barbara Walters and her 20/20 camera crew were there the same day. But true to his generous character, Tony carved out extra time for an interview with me.
The son of Taiwanese parents and a computer-science graduate from Harvard, Tony was open about success and failure, passion and purpose, and why he wrote a book titled, Delivering Happiness. Thanks again, Tony! It was a privilege to go inside the mind of a fellow author and groundbreaking entrepreneur.
TONY’s BACKGROUND
In a competitive business world where attracting talent and satisfied customers is everything, one entrepreneur has not only created a paradigm shift in corporate culture, he’s delivering happiness to thousands of employees and millions of loyalists through “fun and a little weirdness.” If you don’t know his mantras yet, you might want to study the success principles of maverick, Tony Hsieh (37). In 1999 (at age 24), Hsieh sold LinkExchange to Microsoft for $265 million dollars. LinkExchange was an Internet advertising network that Hsieh co-founded. Shortly after, he invested in a series of companies, but the one that caught his attention was e-commerce merchandiser, Zappos.com.
Hsieh started as an Advisor and eventually became its CEO, helping Zappos grow from almost no sales to over $1 billion annually. With Hsieh’s approach to extraordinary customer service and a happy corporate culture, Zappos also made Fortune Magazine’s list of “Best Companies to Work For” from 2009 to 2011. On July 22, 2009, Amazon.com announced the acquisition of Zappos in a deal valued at $1.2 billion dollars. Then in 2010, Tony’s book, “Delivering Happiness,” debuted at #1 on the New York Times Bestseller list and stayed there 27 consecutive weeks.
Hsieh’s secret to success? No secret at all. Tony opens company doors and hands over a culture handbook to competitors and street tourists alike. Talk about word-of-mouth marketing. Tony understands that success begins with shared experiences and real-world relationships. To that end, “anyone” can sign up for free office tours. The Zappos team will then provide an insider’s peek that has you scratching your head about how crazy their culture is, or why you didn’t think of it first.
The Zappos vibe is a cross between Halloween and a college-dorm party where employees are called “Friends” and there’s an acronym for everything: CLT stands for Customer Loyalty Team and PEC is how you’d describe a Personal Emotional Connection. The mantras hang from office rafters like championship banners in a sports arena. And don’t look for Hsieh in a cushy office behind closed doors. His cubicle is smack in the middle of the madness, right next to his co-workers.
Contests, celebrations, and on-site life coaches are also just a few perks that lead to happy and loyal employees. Feel free to also lose the suit and tie. You’re as likely to see employees dressed as comic heroes as you are a hot-dog vendor strolling the corridor. As for street signs and poster-sized photo albums on every wall, it’s like social-media nirvana. Millions of Zappos fans online are anxious to share the Zappos buzz.
Does LOL = GENIUS? It may sound nuts but it’s all par for the culture course engineered by Hsieh. He loves what he does, puts clients on a pedestal, and celebrates the individuality of each employee. Social media mavens might want to take note too — there’s a good reason Hsieh gets an average 2000 e-mails per day and has nearly 2 million followers online.
But it wasn’t always fun and games for Tony. Here’s what I learned …
ONE-ON-ONE with TONY
Cliff: Thanks for time today Tony and congratulations on the successful sale of Zappos to Amazon. I really enjoyed learning about your journey in Delivering Happiness. The book was a great read! Could you briefly take us through your story with LinkExchange as your first baby, Zappos as your big baby, and Delivering Happiness as your new baby?
Tony: Sure. Back in 1996 after graduating college, my roommate and I started a company called LinkExchange. We specialized in online advertising and grew that company to about 100 employees. We ended up selling the company to Microsoft two and half years later for $265 million. But what a lot of people don’t know is the real reason we ended up selling — it just wasn’t fun anymore.
The company culture went completely down hill. When it was just five or ten of us, it was a typical dot-com. We worked around the clock and slept under our desks. We had no idea what day of the week it was, but it was fun. We started hiring friends which worked pretty well until we got to about 20 people and ran out of friends. Then we had to hire people based on resumes and interviews. We were fresh out of college and had never done it before. I did a decent job in terms of hiring people with the right skills and experience, but we didn’t know about company culture — so not everyone we hired was good for us.
By the time we got to 100 people, I dreaded getting out of bed and going to my own company. That’s really what led us to sell. We got lucky with timing because it was the first dot-com boom. So I started investing in companies. But after a year, I was tired of sitting on the sidelines. I missed being part of building something. Of all the investments, Zappos was the most fun and promising so I ended up joining the company and becoming its CEO.
Cliff: On that note, let’s talk about the famous corporate culture you’ve built. Can you share the Zappos Values and which of those are most essential?
Tony: We have 10 core values and I guess when we’re hiring someone, we don’t say, “This person has 9 out of 10, we’ll let them pass.” We really need all 10. The values are:
1. Deliver WOW Through Service
2. Embrace and Drive Change
3. Create Fun and A Little Weirdness
4. Be Adventurous, Creative, and Open-Minded
5. Pursue Growth and Learning
6. Build Open and Honest Relationships with Communication
7. Build a Positive Team and Family Spirit
8. Do More with Less
9. Be Passionate and Determined
10. Be Humble
In general, I think some combination of “Being Humble” and “Embrace and Drive Change” encompass the whole idea of adapting to change. Charles Darwin said, “It’s not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.” I think that’s true in business as well.
Cliff: (smiling) I have that same quote in my book, The 4 Essentials of Entrepreneurial Thinking. It’s one of my favorite success principles.
Tony: (smiling) Did I get it right?
Cliff: I think you got it word for word. Take us to where you are today with Delivering Happiness. What was the inspiration for the book and what’s your vision for this new path?
Tony: Originally, it was about writing a book to spread the idea of “happiness” as a business model to other companies and industries. That includes making customers and employees happy, as well as business partners. Along the way, we decided to go on a book tour. On average, ten of us went on a bus for a cross-country road trip (23 cities, 3 to 4 events per city). It felt like planning 80 weddings over 4 months. We actually got the bus from the bass player of the Dave Matthews Band.
Cliff: I love it! Did you bring musicians?
Tony: Actually, in some of the cities we had local musicians perform. Those were pretty interesting times and we recorded that too.
Cliff: What evolved from the tour?
Tony: Delivering Happiness was written as a business book but people took away something more. That surprised us. We had moms e-mailing us, saying they were now the CEOs of their families and thinking like value-driven corporations. We heard from charities that said they were going to focus more on their culture. We even heard the book was going to be required reading at certain colleges like Iowa University. So we ended up visiting there.
Cliff: That must have been really rewarding.
Tony: It was exciting. But then Jenn Lim (who I climbed Mount Kilimanjaro with and was part of our tour) told the Iowa students about how she quit her pre-med major and decided to focus on what she was passionate about. Then she heard back from one of the students who said they had quit their pre-med major to focus on art history. That’s both great to hear and slightly terrifying.
Cliff: What happened next?
Tony: The tour led us to start a company called Delivering Happiness (I’m a co-founder but Jenn is the CEO / Chief Happiness Officer — it’s her baby now). This whole idea of inspiring and being inspired fostered a movement with happiness beyond the business level.
Cliff: So what’s the biggest challenge in getting that message adopted within a large organization like Zappos, where everyone has a unique definition of success and happiness?
Tony: If you want to go with one, simple principle, just be true to yourself. Things magically happen if you let that be your guiding light, but you have to be willing to take that first step. There are so many people not being themselves at their job. One of the things we really encourage at Zappos is to bring your true personality to the office. It takes a toll when you don’t.
Cliff: (smiling) One of my favorite quotes on that theme is by Oscar Wilde, “Be yourself, everyone else is taken.” It’s one of the core messages I like to leave with students, young entrepreneurs, and career professionals alike. So where do you see Delivering Happiness a few years down the road?
Tony: Jenn is the CEO and it’s really up to her and her team. Letting it develop organically is part of what makes it exciting.
Cliff: You’re touching on another smart business principle here. You seem to focus on what you do best, then delegate or collaborate the rest. You’ve empowered Jenn (Lim) to drive Delivering Happiness (the company). So where’s your passion these days?
Tony: I’m still CEO of Zappos. We announced nine months ago that we’re moving to downtown Las Vegas and taking over City Hall. So what started out as a project to build a campus (to have everyone under one roof), has evolved into a roll to revive downtown. We’ll integrate the Zappos campus and city together.
Cliff: So you’re spearheading a renaissance. Is there a city you might use as a model?
Tony: I think it’s got it’s own personality (neighborhoodie) and community feel. There’s an area (Fremont East) with eight or nine bars and cafes where owners hang out in each other’s bars. I’ve never seen that. It’s exciting. There are tech companies and start-ups there too. I’d like to see a growing art scene and more live music. Ultimately, everything you need to live, work, and play would be within walking distance — a real neighborhood. On my wall at home there are about 70 post-it notes. They’re passion projects for downtown. These ideas aren’t coming from me. They stem from anyone with a passion about their community, be it a bakery or a yoga studio. So as long as someone is passionate about his or her community and the idea is sustainable, I’m interested.
Cliff: You’ve now evolved from a technology CEO and bestselling author to a community builder. It’s fantastic to see an entrepreneur cross bridges. Did you ever imagine you’d change a brick-and-mortar city the way you influenced online communities?
Tony: Not at all. Not even a year ago. When we originally thought of a campus design, we were thinking Apple, Nike, and Google all have great campuses, but they’re very insular. They don’t really integrate with the community or contribute to the environment. We want to take more of an NYU approach; almost a seamless transition between the city and campus.
Cliff: You clearly have vision and compassion for others. I’m curious, who were your mentors?
Tony: There wasn’t a single mentor or book. There’s something to learn from almost anyone. Here at Zappos, we have a library with lots of book titles and something to learn from each.
Cliff: How about biggest fears?
Tony: Based on past experience, I want to make sure the Zappos culture not only scales, but gets stronger. That’s why this campus move to downtown is exciting. It will take our culture to a whole new level. Every bar or bookstore will become an extended conference room. Employees are already gravitating downtown. On any given night, every bar feels like Cheers.
Cliff: Walking through the Zappos halls, I hear cowbells, pride, and passion. Your co-workers speak of you as a friend, not “Boss Tony.” That culture is rare and I think it stems from how much you give back. To that end, can you speak about the charitable component of the Zappos culture?
Tony: It’s funny because it all goes back to what people are passionate about. When we were smaller, we could only afford to give to one local or national charity. We basically sent a survey out and asked employees what they would suggest.
Cliff: So you engage employees to make decisions, even about charities?
Tony: Right. Now that we’ve grown, we can do more and we still leave it up to the employees. Whatever they’re passionate about is what we’ll support.
Cliff: You obviously have high-performance strategies here at Zappos. But it’s my understanding you once had a regular diet of red bull, gourmet pickles, and beef jerky. Was that the true secret behind this e-commerce giant?
Tony: (smiling) I probably did go through a phase where those were the only three things I ate. I’m the type of person who gets bored easily so it’s hard for me to stick to any single diet.
Cliff: Do you think that boredom is what drives you to constantly improve?
Tony: I don’t think that’s unique to me. Everyone wants to grow and flourish. Everyone may not instinctively know how because they’ve been stuck in that boring job for ten years. But I think once you push people slightly outside their comfort zone, they realize there’s more potential in them than they may have realized.
Cliff: So who pushes you?
Tony: It’s not any one person. When I meet different people, we could talk about any topic, and they might say, “Why don’t you do this?” And I think … hmmm … maybe.
Cliff: On that thought-provoking note, thanks for your time today Tony. It’s been an inspiring interview. Good luck with the new Zappos campus … and keep delivering happiness!
Ready for More? Part 2 of this interview provides Tony’s Top Tips on Social Media. Part 2 with Tony & Cliff.
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