This document contains slides from a presentation given by Tony Hsieh, CEO of Zappos, at a conference on April 29, 2009. The presentation provides an overview of Tony's background and Zappos, focusing on their commitment to outstanding customer service and building a strong company culture. Key points include that Zappos has over 1,000 brands and ships orders within 1-2 business days with free shipping and returns. The presentation emphasizes that Zappos' core values like delivering "WOW" customer service have helped them achieve high customer loyalty and word-of-mouth marketing.

1. Delivering Happiness
Tony Hsieh – CEO
tony@zappos.com
Follow me on Twitter: twitter.com/zappos
Parafest
April 29, 2009

2. Slide 2

3. Slide 3
A Little About Me (Tony)
My Background
• 1994-1995: Pizza business in college
• 1996-1998: LinkExchange (online advertising)
Sold to Microsoft for $265 millon
• 1999: Venture Frogs, LLC (angel investment fund)
Invested in Zappos.com
• 1999-Today: Zappos.com

4. Slide 4
Zappos at a Glance
Corporate Background
• Founded in 1999
• 1400 employees (half in Las Vegas headquarters, half in Kentucky)
 #23 in FORTUNE MAGAZINE’s “100 Best Companies To Work For”
 Highest debut for a newcomer in 2009
• Zappos is “Powered by Service”
 Providing the best online shopping experience possible.
 Fast, Free Shipping. Free return shipping. 365-day return policy.
 Fast fulfillment. Expedited delivery. Fast, friendly & expert customer service.
• Best selection
 Over 1,000 brands, over 200,000 styles, over 900,000 unique UPCs.
 4 million items in warehouse
 100% of products inventoried (no drop ship).
• Zappos is a service company that happens to sell clothing, shoes, handbags, eyewear,
watches (and eventually a bunch of other stuff).

5. Slide 5
Recent Recognition:
Nice, but we pay more attention to our customers
• TV Stories
• Oprah (2008/2009)
• ABC Nightline (2008)
• 60 Minutes (2007)
• Fortune “100 Best Companies to Work For”
• #23 (2009) – Highest ranking newcomer to list
• Fast Company “50 Most Innovative Companies”
• #20 (2009)
• BusinessWeek Top 25 “Customer Service Champs”
• #7 (2009)

6. Slide 6
Customer service value proposition in action…
Zappos is committed to WOWing every customer.
• Customers come…
 Over 10 million total purchasing customers
 Over 4 million have purchased in the last 12 months
• Customers come back…
 On any given day, about 75% of purchases from returning customers
 Repeat customers order >2.5x in the next 12 months
• Customers come back, order more and order more often…
 Repeat customers have higher average order size
 $123.86 – first time customers in Q407
 $156.27 – returning customer in Q407

7. Slide 7
Power of repeat customers and word of mouth...
2000 2001 2002 2003 2004 2005 2006 2007 2008
Gross Sales 1.6 8.6 32 70 184 370 597 841 1014
$0
$200
$400
$600
$800
$1,000
GrossSales$M's

8. Slide 8
Customer Service:
What customers first see
• 24/7 1-800 number on every page
• Free shipping
• Free return shipping
• 365-day return policy

9. Slide 9
Customer Service:
What customers experience
• Fast, accurate fulfillment
• Most customers are “surprise”-upgraded to overnight shipping
 Create WOW
• Friendly, helpful “above and beyond” customer service
• Occasionally direct customers to competitors’ web sites

10. Slide 10
Customer Service:
What we do internally
• No call times, no sales-based performance goals for reps.
• The telephone is one of the best branding devices available.
• Run warehouse 24/7. Inventory all product (no drop-shipping).
• 5 weeks of culture, core values, customer service, and warehouse training for everyone
in Las Vegas office.
• We’ll pay you $2000 to quit.
• Culture Book
• Interviews & performance reviews are 50% based on core values & culture fit.
• Twitter helps build company culture.

11. Slide 11

12. Slide 12
Owning the 3 C’s
Clothing
Customer Service
Culture

13. Slide 13
Clothing

14. Slide 14
Customer Service

15. Slide 15
Culture

16. Slide 16
Owning the 3 C’s:
Clothing, Customer Service, Culture
Customer Service
Clothing
Culture

17. Slide 17
Zappos
Delivering Happiness
(customers and employees)
“People may not remember exactly what you
did or what you said, but they will always
remember how you made them feel.”

18. Slide 18
CULTURE
“Committable Core Values”

19. Slide 19
Zappos Core Values
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

20. Slide 20
“That’s great for Zappos but
it would never work at my
company…”

21. Slide 21
It doesn’t matter what your
core values are…as long as
you commit to them.
ALIGNMENT

22. 7 Steps For Building
A Brand that Matters

23. Slide 23
Step #1
DECIDE
if you’re trying to build a long term sustainable brand
Requires more patience with revenues & profits
in order to lay the foundation
Decide sooner rather than later

24. Slide 24
Step #2
FIGURE OUT
VALUES &
CULTURE

25. Slide 25
VALUES & CULTURE
Figure out values & culture sooner rather than later
• What are your PERSONAL core values?
• What are the COMPANY’s core values?
• Start EARLY.
• It is surprisingly HARDER than you think.
• It doesn’t MATTER what the values are.
• The most important thing is ALIGNMENT.
• …LIVE the BRAND.

26. Slide 26
Step #3
COMMIT TO
TRANSPARENCY
“Be real and you have nothing to fear”
Your culture is your brand
Don’t try to be someone you are not

27. Slide 27
Commitment to Transparency:
Examples
• twitter.zappos.com
• “Ask Anything” newsletter
• Extranet for vendors
• Tours & reporter visits
• ZapposInsights.com

28. Slide 28
Step #4
VISION
“Whatever you’re thinking, think bigger.”
Does the vision have meaning?
Chase the vision, not the money…

29. Slide 29
VISION
“Don’t chase the paper,
chase the dream.”
Sean Combs aka “Puff Daddy” to rapper
Biggie Smalls aka “Notorious B.I.G.”
in Notorious

30. Slide 30
ENTREPRENEURS:
“What would you be
passionate about doing
for 10 years even if you
never made a dime?”

31. Slide 31
EMPLOYEES:
What’s the larger vision
and greater purpose in
their work beyond
money or profits?

32. Slide 32
VISION
MOTIVATION
vs.
INSPIRATION

33. Slide 33
Step #5
BUILD
RELATIONSHIPS
(not networking)
Be INTERESTED rather than trying to be INTERESTING

34. Slide 34
Step #6
BUILD YOUR TEAM
“If you want to go quickly, go alone.
If you want to go far, go together.”
(Al Gore quoting African proverb)
Hire slowly
Fire quickly

35. Slide 35
Step #7
THINK LONG TERM
Repeat customers
Customer service
There is no “get rich quick” formula
“Overnight” successes are years in the making
(both personally and in business)

36. TAKE A STEP BACK
What is your goal in life?

37. Slide 37
WHAT IS YOUR GOAL IN LIFE?
Grow
Company
Get a Great
Job
Boyfriend /
Girlfriend
Be Healthy
Retire Early Make Money
Find Soul
Mate
Run Faster
Spend Time
w/ Family
Buy A Home Get Married
Run A
Marathon
why? why? why? why?
why? why? why? why?
HAPPINESS
why? why? why? why?

38. Slide 38
RESEARCH HAS SHOWN:
HAPPINESS
People are very bad at predicting what
will bring them sustained happiness.
“When I get ___, I will be happy.”
“When I achieve ___, I will be happy.”

39. Slide 39
HAPPINESS:
• There is a SCIENCE behind many aspects of business including:
• conversion
• psychology of buying
• direct marketing
• customer acquisition metrics
• repeat customer behavior, etc.
• What if you spent just 10% of your time studying and learning the
SCIENCE of HAPPINESS?
• How much HAPPIER could you be?

40. Slide 40
WHAT IS YOUR GOAL IN LIFE?
Grow
Company
Get a Great
Job
Boyfriend /
Girlfriend
Be Healthy
Retire Early Make Money
Find Soul
Mate
Run Faster
Spend Time
w/ Family
Buy A Home Get Married
Run A
Marathon
why? why? why? why?
why? why? why? why?
HAPPINESS
why? why? why? why?

41. A Few Different Frameworks
of
HAPPINESS

42. Slide 42
Perceived Control
Perceived Progress
Connectedness
Vision / Meaning
(Being part of something bigger than yourself)
A FEW DIFFERENT FRAMEWORKS ON HAPPINESS:

43. Slide 43
Maslow’s Hierarchy:

44. Slide 44
Rock Star
(Pleasure – chasing the next high)
Flow
(Engagement – time flies)
Meaning /Higher Purpose
(Being part of something bigger than yourself)
3 TYPES OF HAPPINESS
time
time
time

45. Slide 45
RECOMMENDED BOOKS:
PEAK
Chip Conley
TRIBAL LEADERSHIP
Dave Logan, John King & Halee Fischer-Wright
FOUR HOUR WORK WEEK
Tim Ferriss
HAPPINESS HYPOTHESIS
Jonathan Haidt

46. Slide 46
What % of your time do you
want to spend learning about
the SCIENCE of HAPPINESS?
How can the SCIENCE of HAPPINESS help
your business, your brand, and
yourself?

47. Slide 47
If the research shows that
vision / meaning / higher purpose
leads to happiness…
What is your company’s higher purpose?
What is your higher purpose?

48. Delivering HAPPINESS

49. Slide 49
Put a little Zappos in your day…
…some links to check out…
• Follow me on Twitter: @zappos
http://twitter.com/zappos
• http://twitter.zappos.com (public mentions, employees)
• http://bit.ly/twitterbetter - “How Twitter Can Make You a Better (And Happier) Person”
• http://blogs.zappos.com (photos & videos of culture)
• http://about.zappos.com (more information about us & core values)
• http://www.zapposinsights.com (video Q&A, book recommendations)
• http://jobs.zappos.com (job opportunities)

50. Slide 50

51. Slide 51
Put a little Zappos in your day…
…to contact me or get a tour…
• Email tony@zappos.com for:
 A copy of this presentation
 Copies of our culture book
(need physical mailing address)
• Email tours@zappos.com for:
 Tour of our offices when you’re next in Las Vegas
(takes about 45-60 minutes)
 We’ll pick you up from the airport or your hotel in a Zappos Shuttle!

53. Slide 53
Legal and Financial Disclaimer
P.S. You might be wondering why we need to have a legal and financial disclaimer in this presentation, but you are still
reading, so our lawyers, auditors and accountants would really like to make sure we make the following clarifications.
Although an audit was underway and almost done, the financial information presented in this slide show was unaudited. We
made every effort to present the best information we had at the time.
Gross merchandise sales is a non-GAAP metric. We use it to express the total demand across all of our web sites and stores.
This number measures the dollar value of the orders placed in the year before accruing for certain items such as returns, and
it ignores certain timing cut-offs that are required by GAAP for revenue recognition purposes. If we were a public company,
we would have to reconcile gross merchandise sales to the nearest GAAP metric (net sales), but we are currently a private
company so the gross merchandise sales number should be viewed just as an interesting number that we want to share with
our friends.
This presentation contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if
they ever materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by the
forward-looking statements and assumptions. These risks and uncertainties include, but are not limited to, the risk of
economic slowdown, the risk of over or underbuying, the risk of consumers not shopping online or at our web site at the rate
we expected, the risk of supplier shortages, the risk of new or growing competition, the risk of a natural or some other type
of disaster affecting our fulfillment operations or web servers, and the risk of the world generally coming to an end. All
statements other than statements of historical fact are statements that could be deemed forward-looking statements,
including statements of expectation or belief; and any statement of assumptions underlying any of the foregoing.
Zappos.com assumes no obligation and does not intend to update these forward-looking statements.
Congratulations on making it through all the fine print. If you enjoy fine print, look for openings on our legal and finance
team at jobs.zappos.com.