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Tony Hsieh is not your typical CEO. The CEO of online shoe and accessory retailer Zappos.com works in an open space amidst the hustle and bustle of busy co-workers, hosts employee parties and barbecues at his home, encourages employees to hang out after work, and spends his spare time studying the science of happiness.
Of course, in addition to all that, his company surpassed $1 billion in gross sales in 2008, two years ahead of projections. And at the end of 2009, he sold Zappos to online giant Amazon.com, a deal valued at about $1.2 billion. Hsieh says the act was more akin to getting a new board of directors than selling a business outright.
“They are leaving us alone and independent.... [Amazon] recognizes that it’s our culture that’s gotten us this far, and they want to make sure to protect it,” Hsieh says.
It’s Zappos’s culture that’s contributed to its stellar customer service, garnering raves from consumers as well as media attention.
“During these challenging economic times, as other small businesses were looking for new ways to compete and survive, Zappos reminded us that it’s all about customer service and delivering value every day,” says SUCCESS Publisher Darren Hardy, “and that’s why Tony Hsieh was selected as our Achiever of the Year for 2009.”
Creating Fun, Delivering Wow
What captured everyone’s attention more than Hsieh’s financial scorecard was his dedication to that quirky company culture that has brought Zappos so far. Company mandates include regular office parades, never reading from a script, shouting when tours come through and following the 10 core values, which include “create fun and a little weirdness” and “deliver wow through customer service.” All of these concepts, and many others, come together to unite employees and create a friends-and-family atmosphere.
“For us, being a part of Zappos is just a lifestyle,” Hsieh says. “And it’s not because people are being forced to work crazy hours. It’s just because people want to hang out with each other and people are passionate about their company.”
“AS other small businesses were looking for new ways to compete and survive, Zappos reminded us that it’s all about customer service and delivering value every day.”
That passion is probably what earned Zappos the No. 23 slot in Fortune’s 2009 best 100 companies to work for list, making it the highest-ranking newcomer. Exemplifying one of Zappos’s core values, “be humble,” Hsieh gives all the credit to the entire Zappos family. In fact, he pointedly requested that SUCCESS change this award title from “Achiever of the Year” to “Company of the Year.” (Sorry, Tony.)
However, as far as companies go, Zappos also warrants kudos for its ability to evolve and grow into something stronger over time. When the company began, Hsieh says its main goal was to be a great online shoe retailer. That philosophy grew into creating an unparalleled customer experience to impress firsttime customers and turn them into repeat customers, who make up 75 percent of Zappos sales. Then, about five years ago, the leadership at Zappos rolled out a list of core values (developed from employee feedback) to put a spotlight on the company culture that still maintains all its previous missions.
Happiness Is Serious Business
So what is Hsieh’s current idea for the ever-changing Zappos evolution? Zappos employees will now focus on happiness. Seriously, who wouldn’t want to work here?
“The thing we realized this year that sort of ties everything together is that customer service is about making customers happy, and the culture is about making employees happy,” Hsieh says. “So, really, we’re about trying to deliver happiness, whether it’s to customers or employees, and we apply that same philosophy to vendors as well.”
It wasn’t always happy times for Hsieh. At one of his previous companies, LinkExchange, which he sold to Microsoft for $265 million when he was 24, Hsieh witnessed the work environment gradually worsen. What was an enjoyable enterprise with a handful of employees turned into a large company that was all business and no fun.
“We didn’t know any better to pay attention to company culture. By the time we got to 100 people, I myself dreaded getting out of bed and going to the office in the morning,” Hsieh says. “That is actually the main reason why we ended up selling the company.”
That mistake taught Hsieh that preserving culture was more important than the bottom line. Setting a standard of values and hiring and fi ring according to them is what separates Zappos from companies that fail at introducing or keeping a mission to work by. It has taken some time for the Zappos culture to take root, but the results have forced others to take notice. Many entrepreneurs and managers are now attempting to incorporate a similar strategy into their own businesses.
A Zapponian World
Now, with ZapposInsights.com, entrepreneurs from all over the world can learn about the company’s keys to success. In addition to information about live seminars hosted by Zappos, the video subscription service offers direct answers to member questions. But is Zappos giving away its competitive edge by showering other businesses with insider advice? Hsieh says no.
“Ultimately, it comes down to [this].... If our position for the company is really about delivering happiness to the world, then that’s the filter for which we make decisions. Is this going to make the world a better or happier place?” Hsieh says. “If we’re able to do it from a business perspective, then we should.”
Educating outside businesses on the importance of culture could indeed make the world a happier place. Hsieh says putting too much emphasis on the bottom line is a mistake and motivating employees purely through bonuses is a lazy way to manage. Especially when research indicates that good boss-employee relationships, opportunity and friends all rank higher than money on the list of what is important to employees in the workplace.
“All the research is already out there,” Hsieh says. “It’s just that no one bothers to pay attention to it because it’s much easier to not think about that type of stuff.”
Hsieh hopes that by studying the science of happiness he’ll be able to help Zappos be more purposeful in its mission to deliver it as the company expands into apparel and taps into the new resources and technology available from Amazon.
Now Hsieh has also taken up reading about the science of humor. If his Twitter page is any indication, it’s already paying off. Making people laugh in today’s business world is definitely an achievement.
Read more about the nominees for the second annual SUCCESS Achiever of the Year including Amazon.com founder and CEO Jeff Bezos; Kraft Foods Inc. CEO Irene Rosenfeld; Leonard Abess Jr., CEO of Miami-based City National Bank; and Twitter founders Jack Dorsey, Biz Stone and Evan Williams at SUCCESS.com.