6 ms·

How Sequoia forced Tony Hsieh to sell Zappos

33 points by pier0 16y ago

alttab 16y ago
or, "How taking venture capital is a risk, and where the control lays even if you're successful." (also: especially if you're successful). Except that Tony Hsieh is now on a committee with Jeff Bezos, and 4 executives from Amazon and Zappos. It will still operate as their own entity, run by Tony, and they've basically placated the VCs with Amazon stock while he gets full control over the company, culture, and with access to Amazon's resources. They went inside the deal in a couple of places, check out Inc.'s article on the subject.
- dhimes 16y ago
  It will still operate as their own entity, run by Tony For now, at least. As staunch commented on the other thread (http://news.ycombinator.com/item?id=1409915 http://news.ycombinator.com/item?id=1409915), this is still really a honeymoon period.
  - alttab 16y ago
    By the looks of it, as long as he continues to reach his numbers he'll have things the way he wants it. Not to say that he got out Scott-free, but in this case he at least gave himself control over his own destiny. It was the price he paid to get the company where it was that he was in that bind (a good bind to be in, if you ask me), and the best move he could have made to keep the company and the destiny of the culture in his hands. (Edit: An argument against this case would be Tivoli. It was bought out by IBM and slowly the cultures merged.)
    - irrelative 16y ago
      ...as long as he continues to reach his numbers. The real position he wanted to be in was to be able to ignore short term numbers for long term positioning. I think it's safe to say he can't really do that anymore.
      - alttab 16y ago
        I agree. His move was still better than having the VCs choose the highest bidder leaving him without a company to run. I think he reached a local maximum given his situation.
- hga 16y ago
  How often does this happy (at least initially, as noted by dhimes) an outcome happen?
Scott_MacGregor 16y ago
"— “Tony’s social experiments,” they called it…" I think I understand what they mean by this.
ashbrahma 16y ago
It's rather interesting that Alfred Lin, the other board member who opposed the VC board, ended up going to work for Sequoia Capital..
- hga 16y ago
  Maybe he wants to apply the cluebat from the inside? If some at Sequoia saw the wisdom in what they were saying, that might have been why they hired him....
edash 16y ago
This piece pulls long quotes the INC article with little added value. If you want to get the whole story, support the original publisher and read what several commenters considered the best article they'd read all day...skip this and read the original: http://news.ycombinator.com/item?id=1409858 http://news.ycombinator.com/item?id=1409858
- Ixiaus 16y ago
  Quotes without context are misleading, thank you for linking the original.
- KC8ZKF 16y ago
  And the article itself is adapted from Delivering Happiness, Tony Hsieh's new book.
- hga 16y ago
  I strongly disagree: the author is trying to make a specific point, mostly by using long quotes from the original article, but he adds various links about the point and his own commentary. And it's an important point: if you accept VC money in this post-Sarbox don't expect an IPO exit environment keeping control is going to be nearly impossible. The best possible outcome is selling your company to another and most of the time that doesn't end happily for the founders.

33 points by pier0 16y ago

or, "How taking venture capital is a risk, and where the control lays even if you're successful." (also: especially if you're successful). Except that Tony Hsieh is now on a committee with Jeff Bezos, and 4 executives from Amazon and Zappos. It will still operate as their own entity, run by Tony, and they've basically placated the VCs with Amazon stock while he gets full control over the company, culture, and with access to Amazon's resources. They went inside the deal in a couple of places, check out Inc.'s article on the subject.

dhimes 16y ago
It will still operate as their own entity, run by Tony For now, at least. As staunch commented on the other thread (http://news.ycombinator.com/item?id=1409915 http://news.ycombinator.com/item?id=1409915), this is still really a honeymoon period.
- alttab 16y ago
  By the looks of it, as long as he continues to reach his numbers he'll have things the way he wants it. Not to say that he got out Scott-free, but in this case he at least gave himself control over his own destiny. It was the price he paid to get the company where it was that he was in that bind (a good bind to be in, if you ask me), and the best move he could have made to keep the company and the destiny of the culture in his hands. (Edit: An argument against this case would be Tivoli. It was bought out by IBM and slowly the cultures merged.)
  - irrelative 16y ago
    ...as long as he continues to reach his numbers. The real position he wanted to be in was to be able to ignore short term numbers for long term positioning. I think it's safe to say he can't really do that anymore.
    - alttab 16y ago
      I agree. His move was still better than having the VCs choose the highest bidder leaving him without a company to run. I think he reached a local maximum given his situation.
hga 16y ago
How often does this happy (at least initially, as noted by dhimes) an outcome happen?

Scott_MacGregor 16y ago

"— “Tony’s social experiments,” they called it…" I think I understand what they mean by this.

ashbrahma 16y ago

It's rather interesting that Alfred Lin, the other board member who opposed the VC board, ended up going to work for Sequoia Capital..

hga 16y ago
Maybe he wants to apply the cluebat from the inside? If some at Sequoia saw the wisdom in what they were saying, that might have been why they hired him....

edash 16y ago

This piece pulls long quotes the INC article with little added value. If you want to get the whole story, support the original publisher and read what several commenters considered the best article they'd read all day...skip this and read the original: http://news.ycombinator.com/item?id=1409858 http://news.ycombinator.com/item?id=1409858

Ixiaus 16y ago
Quotes without context are misleading, thank you for linking the original.
KC8ZKF 16y ago
And the article itself is adapted from Delivering Happiness, Tony Hsieh's new book.
hga 16y ago
I strongly disagree: the author is trying to make a specific point, mostly by using long quotes from the original article, but he adds various links about the point and his own commentary. And it's an important point: if you accept VC money in this post-Sarbox don't expect an IPO exit environment keeping control is going to be nearly impossible. The best possible outcome is selling your company to another and most of the time that doesn't end happily for the founders.