The document discusses Zappos and its CEO Tony Hsieh. It describes how Zappos prioritizes company culture and employee happiness over profits. Hsieh believes this approach will lead to long term success. New employees go through rigorous interviews and training to assess cultural fit, and are paid to quit if not a good match. This creates a highly engaged workforce that strives for customer and employee satisfaction rather than just revenues. The culture is rooted in Hsieh's entrepreneurial experiences from a young age.

1. The Happiness Culture: Zappos Isn't a Company -- It's a Mission
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Article location:http://www.fastcompany.com/1657030/the-happiness-culture-zappos-isn-t-acompany-it-s-a-mission
June 6, 2010
Tags: Technology, Leadership, Management, Work/Life
The Happiness Culture: Zappos Isn't a Company -- It's a
Mission
By Steve Rosenbaum
The thing about Zappos is that it really might be a model for a new way to build and run a business.
Okay, now that seems like a stretch at first glance for an on-line etailer who's major claim to fame
is that they sell a ton of shoes. But if you read the Zappos CEO's new book, Delivering Happiness,
you may come to believe that Tony Hsieh (pronounced: Shay) is really on to something.
"It's about giving employees permission and encouraging them to just be
themselves," says Hsieh. Seem a bit far-fetched? Read on, and see what
you think.
It all began with worms, before shoes.
Are entrepreneurs born or made? In Tony's case the urge started young. "I
think that's one of the things I've noticed in a lot of other entrepreneurs is
they all have usually done all sorts of crazy things, and just tried a lot of
things especially at a pretty young age. Growing up, whether it was
garage sales, lemonade stands, and yeah, the idea of selling earthworms and making lots of money
from that was one of my childhood dreams."
While earthworms didn't work out, a teenage button-making business turned a profit, and Hsieh
was hooked on building businesses.
"I think entrepreneurs view the failures as getting one step closer to the success. As opposed to oh,
like I'm a failure."
After a few attempts, and a big win at LinkExchange, Tony was looking for his next thing. "I used
to wear one pair of shoes for two years," says Hsieh. But then he saw the future of feet. "The paper
mail-order shoe catalogs back in '99 were 5% of the $40 billion-dollar market, so 2 billion dollars.
So in our mind, at the very least, the Qeb was going to surpass 2 billion dollars."
Today, of course, Zappos is way more than shoes. "Without being super fashion focused, we know
that many of our best sellers are brands that even you and I know, but we definitely have the longtail customer as well."
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For the book, Delivering Happiness is a chronicle of the journey, and of Tony's early life as an
entrepreneur.
In many ways, it's two books for the price of one.
It's a funny, wry, honest autobiography of a striving Asian American who's got the drive and
ambition of his family deeply ingrained, and at the same time the irreverence of a slacker college
student who's looking to create a "vibe" that makes the people around him feel like they're part of
something special.
Tony's childhood is a textbook entrepreneur's trial and error. His first job, raising and selling worms
isn't a huge success. But then, from the back page of Boy's Life magazine, Tony tries first greeting
cards, and then selling custom buttons. The button business takes off, becoming something of a
family legacy handed down from brother to brother, and making hundreds of dollars a month as the
mail-order business grew.
Early on the postman was Tony's friend. And in many ways the success at Zappos today can be
tracked back to that feeling that Tony had as a child--of wanting something magical to come in the
mail, and enjoying the feeling of getting that mail-order burst of pleasure when the mailman
delivers his anticipated gifts.
Of course, Tony isn't the only entrepreneur who started out of the back of Boy's Life, or who
dabbled in magic as a way to both understand human emotions and put on a show. (Yes, I had
doves, and he didn't--but the impulse is the same).
But what you begin to understand as you pore over his immensely readable book is that Zappos
today is rooted in Tony's youthful pleasures and passions. In fact, Tony found a lot of inspiration in
the rave scene, throwing massive parties and embracing the music, lights, and smoke that turned
many individuals into a communal, and connected gathering. It's kind of hard to think of Tony as a
raver, but then again, what does a "raver" look like?
Says Hsieh "It's actually really funny. I've had people come up to me and say oh, I used to go to
raves. I would never have guessed that about them. So I don't know what a raver looks like 10 years
later in general."
But today Zappos has an employee culture that seems very much of one mind, focused on customer
service and not in some sort of cookie-cutter corporate way. Zappos really cares that you're happy,
and it's baked into their beliefs, their customer interaction, and even the way they hire.
"When we hire people we do two sets of interviews. The hiring manager and his or her team will do
the standard fit within the team, relevant experience, technical ability and so on. But then our HR
department does a second set of interviews purely for culture fit."
"We've formalized the definition of our culture into 10 core values. Basically what we're looking
for are peoples whose personal values match our corporate values. They're just naturally living the
brand. Wherever they are whether they're in the office or off the clock."
The Zappos Core Values [1] are:
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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
And the thing that Zappos figured out, and continues to deliver on,is the idea that people who don't
fit the company culture are better off being paid to leave.
"Everyone that's hired, it doesn't matter what position--you can be an accountant, lawyer, software
developer--goes through the exact same training as our call center reps. It's a four-week training
program and then they're actually on the phone for two weeks taking calls from customers. At the
end of that first week of training we make an offer to the entire class that we'll pay you for the time
you've already spent training plus a bonus of $2,000 to quit and leave the company right now."
Paying new hires to leave may seem counter-intuitive, but for Tony, it makes simple sense. "Really,
the goal of that originally was to weed out the people that are just there for a paycheck."
In the end, the culture is about more than money. "It's not me saying to our employees, this is
where our culture is. It's more about giving employees permission and encouraging them to just be
themselves.
For Tony, building Zappos hasn't been easy. In fact, the story has more twists and turns than you
might imagine as in the early days when Sequoia Capital was ready to throw in the towel, "I think
they just assumed the company would either go out of business or possibly get funding from
someone else. But this was back in what 2002. So the dot-com crash had just happened, Pets.com
went out of business, and e-commerce in general were not looked favorably upon. So I don't think
it was Sequoia. I think VCs in general at the time weren't making investments."
Tony had to sell his prized party loft (at a significant loss) just to make payroll, but they made it
round the bend. "Our customers didn't know that we were struggling with cash flow and so on. So,
customers kept coming. Our revenues were going up, and so we knew that there was definitely a
potential business here. So, it was never a question of whether the idea would work. It was just
whether we could get over that cash flow hump."
In some ways the trends happening today in social networking seem like they were designed for the
uber-transparent CEO. Twitter, for example, was a no-brainer for Zappos. But other trends, like
virtual offices, don't work for Tony. He says a community needs proximity, and for him Vegas was
the right place to locate and build Zappos. Zappos isn't virtual, it's physical. "We really wanted to
build the company around culture, company culture being the number one priority. And it's much
easier to build a culture when it's actually in person versus remotely by email."
And while Zappos remains the company that will pay you to leave, Tony reveals that they haven't
had to write a check like that in almost a year. Zappos, it seems, is a place folks aren't in a hurry
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leave once they get in the door. Tony says it's about Happiness.
"So many people when they go to the office, they leave a little bit of themselves at home, or a lot of
themselves at home. And they have to put on this different persona in the office, especially in
corporate environments. And our whole...there's a lot of talk about work life separation or balance
and so on, whereas our whole thing is about work life integration. Its just life."
As you read Delivering Happiness, it's clear that Hsieh is talking about customer happiness, but
also employee happiness, and even his happiness. He says the goals of Happiness aren't mutually
exclusive.
"There's a lot of talk about work life separation or balance and so on, our whole thing is about work
life integration. Its just life. And so the ideal would be if you can be the same person at home as
you are in the office, and vice versa. And when people actually feel comfortable being themselves,
so much creativity comes out of that."
So, if you believe Hsieh, there really is a change in the wind. A change in the way companies think,
and act, and those that understand that will survive and thrive.
"I think we're just at the beginning where companies are becoming more and more transparent
whether they like it or not. People are becoming...just because the information is everywhere and
it's pretty hard to control now. So I think moving forward it's going to be only the authentic
companies or people can win because everyone else will eventually be outed."
Can it be that Happiness is profitable?
The book is titled Delivering Happiness and the subtitle is A Path to Profits, Passion and Purpose.
Tony Hsieh says in the book that research found that the best companies in terms of long-term
financial performance are ones that are able to combine profits, passion and purpose.
If that's true, then we're standing at the edge of a new Happiness Culture, and it all began with
selling shoes online.
"There's three types of happiness and really happiness is about being able to combine pleasure,
passion, and purpose in one's personal life. I think it's helpful and useful to actually think about all
three in terms of how you can make customers happier, employees happier, and ultimately,
investors happier."
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5. The Happiness Culture: Zappos Isn't a Company -- It's a Mission
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What does 'Delivering Happiness Mean?"
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Watch all the Tony Hsieh interview videos on Curation Nation [2]. Follow author Steve
Rosenbaum @Magnify
Links:
[1] http://about.zappos.com/jobs/why-work-zappos/core-values
[2] http://curationchronicles.magnify.net/pages/tony.hsieh
http://www.fastcompany.com/node/1657030/print
6/7/2010