Q&A with Tony Hsieh ’95
Some people adore Zappos, the online shoe and clothing retailer, in the same way they adore their favorite rock band. Just mention the company’s name to a crowd within earshot and a chorus of “I just love that place!” will follow.
To CEO Tony Hsieh ’95, the reaction, italics included, reflects the success of Zappos’ 10 core values (see sidebar).
After earning his degree in computer science, Hsieh cofounded and then sold one of the earliest platforms for managing online advertising, LinkExchange, to Microsoft in 1998. With the profits from the sale, he started a venture capital/incubator firm, Venture Frogs, with fellow graduate Alfred Lin ’94 (Applied Mathematics). Hsieh, intrigued by one of the start-ups in the portfolio, quickly moved from outside investor to company insider to his present role. Lin made the move as well, becoming CFO/COO of Zappos.
With profiles in the Economist, CBS.com, and Fast Company, Hsieh is becoming the poster child of the kind of boss everyone wants. “My role is about creating an environment where employees feel empowered to come up with their own ideas for fulfilling that vision and growing the culture,” he says. With over $1 billion in sales last year, the combination of making the customer and employee king is empowering indeed.
Some people love Zappos in the same way they love their favorite rock band. Was that always the intention?
I think most people are initially drawn to Zappos because of our huge selection of shoes and clothing, but what creates the passionate loyalty from customers is our focus on customer service. This includes free shipping both ways, our 365-day return policy, our fast shipping, and the fact that we put our 1-800 number at the top of every single page of our website because we actually want to talk to our customers. We run our call center pretty differently from most call centers. The goal is to “Deliver WOW Through Service,” so we don’t have scripts, call times, or upselling the way most call centers do.
Did you always intend to be an entrepreneur? And now that Zappos has become a more mature company, what, in your mind, does it mean to “be in charge”?
I’ve been fairly entrepreneurial all my life. In middle school I ran a mail-order business, and while at Harvard I ran the Quincy House Grille and decided to expand the food selection there by investing in pizza ovens. Now that Zappos is a bigger company (we have about 1400 employees), being “in charge” is less about me trying to do everything and more about making sure that all of our employees understand the vision of Zappos being about the very best customer service and customer experience, as well as our focus on company culture. Every day, employees are coming up with new ideas of how to express our core values, both internally and externally, whether it’s an idea for making our offices more fun or an idea for how to make customers happier.
Zappos’ Core Values1. 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
What was it like when Microsoft purchased LinkExchange? Did it seem surreal?
At LinkExchange, I remember when it was a lot of fun when it was just 5 or 10 of us working around the clock, sleeping under our desks, and having no idea what day of the week it was. But we didn’t know to pay attention to company culture, so by the time we were 100 people, the culture of the company had gone completely downhill. That was actually one of the main reasons why we decided to sell the company. I wanted to make sure the same mistake didn’t happen at Zappos. 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, will happen naturally on its own.
What’s your advice to other corporate (or nonprofit) leaders interested in creating the “right” culture?
The most important thing in creating a strong culture is that it creates strong alignment within the organization. What the culture is actually doesn’t matter as much as the commitment to the culture and core values of the organization. By commitment, I mean that you are willing to hire, fire, and give performance reviews based on whether an employee is living up to the core values of the organization. A lot of companies have “core values” or “guiding principles,” but most of the time they are very lofty sounding, they read like press releases, and are usually a meaningless plaque on the wall of the lobby that nobody really pays attention to. It doesn’t really do much good to have core values if the organization isn’t living by them.
Right now, given the economic crisis, consumerism is receiving a bad rap. Do you have thoughts on the situation (as an individual . . . as a company)?
I don’t know if it’s consumerism that’s receiving a bad rap as much as what a lot of companies stand for. Companies that have built their brands around appealing to some people’s desires to brag about their financial status probably are not doing too well in this economy. For Zappos, we’ve always thought of ourselves as a service company that happens to sell shoes and clothes. I think that regardless of the economy, people always appreciate good service, and we’ve found that our customers have continued to be loyal to us, and that’s why we’ve continued to grow.
Apart from Zappos, what are you passionate about?
Over the past year, I’ve been really interested in learning more about the science of happiness. I’ve been reading a lot of books on the topic and thinking about how to apply the concepts from the science of happiness to both business and my personal life. I recently gave a talk at the SXSW Interactive conference that talks about customer service, company culture, and the science of happiness. [You can find the presentation of the talk at http://bit.ly/zsxsw and an audio version at http://bit.ly/zsxswaudio.]
What did Harvard bring out in you that you might not have had when you arrived on day one?
For me, most of what I got out of Harvard was outside the classroom, including people that I met and running the pizza business. My concentration was in computer science because that’s what I was most passionate about at the time, but I also learned to discover other passions through other classes (for example, linguistics).
What’s your advice to current students at Harvard—especially given the challenging job market?
I would say rather than focus on what will make you the most money or be best for your career, figure out what you would be passionate for in 10 years and go pursue that. A lot of people work hard at building a career so that one day down the road they think it will bring them happiness. And most of the time, when they finally accomplish their goal, they realize that it doesn’t really end up bringing happiness or fulfillment for the long term.
The Zappos offices are located in Las Vegas, and, Hsieh says, “We’d like to encourage people to come tour our offices. The tour takes about an hour and is available on weekdays (Mondays through Thursdays are better, though, when there are more people in the office). We are located next to the airport and can pick you up in a Zappos shuttle from there and drop you off at your hotel afterward. To schedule a tour, just email firstname.lastname@example.org.”
Not up for a walking tour? You can watch orders placed on the Zappos website from all over the United States, coming in and being mapped to the location to which each order is being shipped, in real time: www.zappos.com/map/.