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Why I Sold Zappos
- _pius 16y agoRemarkable article, well worth a read.
- blizkreeg 16y agoSuch an inspiring story. What amazes me about great companies is there is always one (just one) underlying trait that strings through the company as its DNA. And it is never money.
- clemesha 16y agoIs this actually true? Or is it more that we "hear" (listen and remember) about this type of "great" companies? (This is definitely more of an honest question than some sort of inadvertently negative response.)
- mikebo 16y agoWay more frank than I was expecting. Great article
- mawhidby 16y agoAgreed. This article was adapted from Tony's book, Delivering Happiness, and it just so happens that today is the official release: http://www.deliveringhappinessbook.com/ http://www.deliveringhappinessbook.com/ I was planning on getting the book, but after reading this article, I went ahead and orered it. Can't wait to read it.
- tansey 16y agoI had no idea Zappos was so big (1800 employees, over $1.5B in revenue), but with a founder like that, I can see why. He clearly cares a lot about his employees and his company's vision. What an enthralling story too! Easily the best article I've read today.
- alain94040 16y agoIndeed well worth the read. There are many parallel story lines that you could extract, depending on which point you are trying to make, but the best thing to do is read it and decide for yourself.
- coryl 16y agoAwesome, Tony Hsieh is a true business leader.
- staunch 16y agoHe's still in the honeymoon period. Everyone is optimistic at this stage. My guess is that within a year or two he will leave, disgusted by the subtle erosion of the Zappos vision.
- megablast 16y agoWell, he is still growing, which is good, and likely to lead to a hands-off approach by Amazon. Amazon might just let them work things out, rather than integrating them too much into Amazon.
- byoung2 16y agoSome more of the Zappos vision might actually bleed over into Amazon (the article mentioned the Amazon distribution center that followed the "$2000 to quit" Zappos approach).
- tk999 16y agoAgree. 1 year.
- jrockway 16y agoThis article explains a lot of Corporate America. Banks and investors make money by doing nothing; they write a check, they get a check back for more than the original. Therefore, they don't care if the employees or customers are happy, they only care about maximizing the chance that they get their check tomorrow. This is obviously shortsighted in the case of Zappos. You can buy shoes online from anywhere. The user selects the shoes he wants, you put them in a box, you ship the box. Take away the "expensive" features of Zappos, like good customer service and free shipping, and your customers will just go somewhere else, leaving you with nothing. Amazon has a clue about dealing with customers, so I think Zappos will be OK. But if the banks and VCs took over, Zappos would have become another data point in the portfolio of "being nice fucks you over". (But really, it's the banks that are fucking you over. Or perhaps, the people that default on their loans are fucking everyone else over.)
- dschobel 16y agoBanks and investors make money by doing nothing; they write a check, they get a check back for more than the original. That's grossly unfair but I think you know that. Without the initial capital there would be no Zappos to speak of. The conclusion that people should be drawing is the same one we see time and again on HN, choose your investors carefully.
- loewenskind 16y agoThe banks and investors are investing in enough places that the risk is pretty minimal. Some people would tell you the ones who simply invest money are putting the most on the line. In the case of the majority of investors, this is completely rediculous.
- deleted 16y ago[deleted]
- nazgulnarsil 16y agowhen you ignore risk stupid ideas start making sense, like jumping a bus with a motorcycle. it must seem grossly unfair that the head of a corporation is wealthy if you ignore all the people who failed and the risk that person took making that company successful.
- smanek 16y agoThis was interesting: When employees log in to their computers, we ask them to look at a picture of a random employee and then ask them how well they know that person -- the options include "say hi in the halls," "hang out outside of work," and "we're going to be longtime friends." We're starting to keep track of the number and strength of cross-departmental relationships -- and we're planning a class on the topic.
- joe_fishfish 16y agoMaybe this is a cultural thing but personally I would take great exception to my employer interfering in my private, personal relationships in such a fashion.
- blacksmith 16y agoBear in mind that they may factor that in in the hiring process...and not hire you. Great cultures begin with hiring right. That's not to say you are not awesome, it's just to say you may not be a fit for their culture and their values.
- deleted 16y ago[deleted]
- twidlit 16y agono option for "Purposefully avoid" and "I hate his guts." Thats software is highly unrealistic.
- tcdent 16y agoI can understand encouraging casual relationships with your coworkers, but tracking and giving seminars on improving them goes too far. I'll take my $2000 now, please.
- regularfry 16y agoI thought he meant it was more meta than that, in that rather than sitting everyone down and explaining how to be friends, he'd get the managers in and help them create an environment in which it happens naturally.
- iworkforthem 16y agoTake-a-away... VCs funding is not a good idea. They just want to grow their investments and not grow the business. To build a great company, you need to have some form of identity... To think Zappos is a Billion $$$ company that sell shoes, etc. Crazy..
- hartror 16y agoFantastic story but I think it avoids the obvious, if Zappos didn't have what customers wanted being really really nice wouldn't have done them any good.
- bennysaurus 16y agoIt looks like they are hanging onto a little of their culture at least even externally - just take a look at the link in the about section at the bottom of the page labelled 'Don't ever click here'
- rama_vadakattu 16y agoReminding "VC money is a time bomb" --DHH http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2351 http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2351
- dabeeeenster 16y agoI find it incredible that a company that on the face of it seems so robust was/still is completely at the mercy of the banks that are funding its cashflow. 1 bn in sales, yet the moment it misses a growth target it could easily get caught in a cashflow credit crunch and go belly up? Utter madness.
- jey 16y agoThis is why businesses involving direct distribution of physical goods are, to use a technical term, "teh suck".
- roel_v 16y agoEh? Most big retail businesses finance inventory this way. Ahold (big supermarket holding company) with a market cap of 15 billion and a revenue of a little under 40 billion almost went bust a few years ago because of a similar reason. It's too expensive for a company of that size and in that market to use its own capital for financing inventory - margins are like 3 percent, 5 percent if they're selling premium products. There's no (financial) room to keep 10% of their revenues laying around in warehouses. Besides, those that don't have credit lines from banks have them from their suppliers - with the same risks and conditions.
- dabeeeenster 16y agoIf they make 3% profit per annum, and they have no growth, it would only take 3.33 years of profits for them to be able to finance 10% of stock...? Surely this would be a better use of capital than the enormous risk of relying on commercial paper/short term credit lines?
- roel_v 16y agoWhat, and let shareholders wait for three years for any profits? These businesses operate on the edge - in the margin as an economist would say. They need every single bit of competitive advantage to survive. Storing capital that can be put to productive use in a warehouse is a liability, to be remedied asap. Every business has risks, credit risk is just one of the many. When managed well, there is no problem with relying on outside credit to finance short-term debts. Running a big company (or a country, for that matter) is _not_ the same as balancing a household budget. Risk is an essential part of doing business, and managing risk is one of the aspects that can give a company a competitive advantage. A few days ago there was a link here on HN about marginal advantages in game design, how the best Starcraft players thrive in environments where they are just a smidgen ahead of their opponent, and maneuver themselves in such a position, in contrast with the amateurs who want to 'win big' - have a big lead and crush their opponent in an overwhelming fashion. It's an eye-opening read, putting in words a property of winners that I never quite managed to capture myself. The theory applies to businesses equally - in a mature market, you can never be hunkered down, playing an all-defense game while you build up resources and then crush the opposition. By that time, that competition will have eaten your lunch and driven you out of business.
- edw519 16y agoWow, I really enjoyed that. For a totally unexpected reason... There's lots of discussion here at hn about MBAs and I often comment about how little use I got out of mine. I remember little from marketing, finance, and operations classes. But I remember the case studies. The comprised almost half of the curriculum. And I hadn't thought much about them for years. Until reading this post. This reads like a Harvard Business Review case study. It's got everything that makes for good business reading: compelling ideas, profit and loss, tradeoffs between profit and growth, economic considerations, competing interests, and most of all, characters. For a minute there, I thought I was reading Lee Iacocca. This could even make a great Hollywood script. Great post. Thank you dwynings. I gotta get this book!
- maukdaddy 16y agoIt reads exactly like a HBR case...except without all of the excel attachments ;)
- davidmurphy 16y agoThis makes me want to read some case studies! Does anyone know of a good source for (ideally free) case studies, or does one always have to pay? I did a search for HBS case studies and found them for sale....
- danielnicollet 16y agoThe HBR case studies are always sold but fairly cheap ($6.95) given the quality of insights - see http://hbr.org/search//4294958507/?Ns=is_HBD_bestseller|0 http://hbr.org/search//4294958507/?Ns=is_HBD_bestseller|0 Otherwise, go to a business school library if you have access to one and you should find copies to read... On the other hand, all the free business case studies you can find on the web (http://www.google.com/search?aq=f&sourceid=chrome&ie=UTF-8&q=free+business+case+studies http://www.google.com/search?aq=f&sourceid=chrome&ie...) are rarely worth the effort reading though them in my opinion...
- perlpimp 16y agoWhat a great read. It seems that you have so many options, as long as you don't rush it.
- eande 16y agoTony Hsieh website on delivering happiness http://www.deliveringhappinessbook.com/ http://www.deliveringhappinessbook.com/ with lots of more information around the subject he is very devoted to.
- mchafkin 16y agoIf anyone is interested, we'll be hosting a live chat with Tony at 1pm EST. http://www.inc.com/live http://www.inc.com/live
- tjmaxal 16y agoIf you liked this article you might like a similar one at Fast company: http://www.fastcompany.com/1657030/the-happiness-culture-zappos-isn-t-a-company-it-s-a-mission http://www.fastcompany.com/1657030/the-happiness-culture-zap...?
- rantfoil 16y agoSubtle jab at Sequoia -- on the one hand, yes, macro trends went against Zappos heavily. On the other hand, the board didn't have faith in Tony's groundbreaking worldview. You can tell through the heavily filtered language that Tony went through hell and back on this one.
- petercooper 16y agoexcept whereas Virgin was about being hip and cool, Zappos would be about offering the best service. According to Branson's autobiography, that was Virgin's initial brand ethos too.
- justinchen 16y agoAre his books any good?
- petercooper 16y agoThe original "Losing My Virginity" autobiography is excellent. Some of the smaller "guide" type books he did afterwards tend to just rehash things from the autobiography..
- justinchen 16y agoCool, thx. I'll check it out.