Zappos Passion Tony Hsieh’s first entrepreneurial effort began at the age of 12, when he started his own custom button b
Posted: Wed May 04, 2022 7:44 am
Zappos Passion Tony Hsieh’s first entrepreneurial effort began
at the age of 12, when he started his own custom button business.
Realizing the importance of advertising, Hsieh began marketing his
business to other kids through directories, and soon his profits
soared to a few hundred dollars a month. Throughout his
adolescence, Hsieh started several businesses, and by the time he
was in college, he was making money selling pizzas out of his
Harvard dorm room. Another entrepreneurial student, Alfred Lin,
bought pizzas from Hsieh and resold them by the slice, making a
nice profit. Hsieh and Lin quickly became friends. After Harvard,
Hsieh founded LinkExchange in 1996, a company that helped small
businesses exchange banner ads. A mere 2 years later, Hsieh sold
LinkExchange to Microsoft for $265 million. Using the profits from
the sale, Hsieh and Lin formed a venture capital company that
invested in start-up businesses. One investment that caught their
attention was Zappos, an online etailer of shoes. Both
entrepreneurs viewed the $40 billion shoe market as an opportunity
they could not miss, and in 2000, Hsieh took over as Zappos’s CEO
with Lin as his chief financial officer. Today, Zappos is leading
its market and offering an enormous selection of more than 90,000
styles of handbags, clothing, and accessories from more than 500
brands. One reason for Zappos’s incredible success was Hsieh’s
decision to use the advertising and marketing budget for customer
service, a tactic that would not have worked before the Internet.
Zappos’s passionate customer service strategy encourages customers
to order as many sizes and styles of products as they want, ships
them for free, and offers free return shipping. Zappos encourages
customer communication, and its call center receives more than
5,000 calls a day with the longest call to date lasting more than 4
hours. Zappos’s extensive inventory is stored in a warehouse in
Kentucky right next to a UPS shipping center. Only available stock
is listed on the website, and orders as late as 11 p.m. are still
guaranteed next-day delivery. To facilitate supplier and partner
relationships, Zappos built an extranet that provides its vendors
with all kinds of product information, such as items sold, times
sold, price, customer, and so on. Armed with these kinds of
details, suppliers can quickly change manufacturing schedules to
meet demand. Zappos Culture page 364 Along with valuing its
partners and suppliers, Zappos also places a great deal of value on
its employee relationships. Zappos employees have fun, and walking
through the offices, you will see all kinds of things not normally
seen in business environments—bottle-cap pyramids, cotton-candy
machines, and bouncing balls. Building loyal employee relationships
is a critical success factor at Zappos, and to facilitate this
relationship, the corporate headquarters are located in the same
building as the call center (where most employees work) in Las
Vegas. All employees receive 100 percent company-paid health
insurance along with a daily free lunch. Of course, the Zappos
culture does not work for everyone, and the company pays to find
the right employees through “The Offer,” which extends to new
employees the option of quitting and receiving payment for time
worked plus an additional $1,000 bonus. Why the $1,000 bonus for
quitting? Zappos management believes that is a small price to pay
to find those employees who do not have the sense of commitment
Zappos requires. Less than 10 percent of new hires take The Offer.
Zappos’s unique culture stresses the following: 1. Delivering WOW
through service. 2. Embracing and driving change. 3. Creating fun
and a little weirdness. 4. Being adventurous, creative, and
open-minded. 5. Pursuing growth and learning. 6. Building open and
honest relationships with communication. 7. Building a positive
team and family spirit. 8. Doing more with less. 9. Being
passionate and determined. 10. Being humble. Zappos’s Sale to
Amazon Amazon purchased Zappos for $880 million. Zappos employees
shared $40 million in cash and stock, and the Zappos management
team remained in place. Having access to Amazon’s world-class
warehouses and supply chain is sure to catapult Zappos’ revenues,
page 365 though many wonder whether the Zappos culture will remain.
It’ll be interesting to watch!
at the age of 12, when he started his own custom button business.
Realizing the importance of advertising, Hsieh began marketing his
business to other kids through directories, and soon his profits
soared to a few hundred dollars a month. Throughout his
adolescence, Hsieh started several businesses, and by the time he
was in college, he was making money selling pizzas out of his
Harvard dorm room. Another entrepreneurial student, Alfred Lin,
bought pizzas from Hsieh and resold them by the slice, making a
nice profit. Hsieh and Lin quickly became friends. After Harvard,
Hsieh founded LinkExchange in 1996, a company that helped small
businesses exchange banner ads. A mere 2 years later, Hsieh sold
LinkExchange to Microsoft for $265 million. Using the profits from
the sale, Hsieh and Lin formed a venture capital company that
invested in start-up businesses. One investment that caught their
attention was Zappos, an online etailer of shoes. Both
entrepreneurs viewed the $40 billion shoe market as an opportunity
they could not miss, and in 2000, Hsieh took over as Zappos’s CEO
with Lin as his chief financial officer. Today, Zappos is leading
its market and offering an enormous selection of more than 90,000
styles of handbags, clothing, and accessories from more than 500
brands. One reason for Zappos’s incredible success was Hsieh’s
decision to use the advertising and marketing budget for customer
service, a tactic that would not have worked before the Internet.
Zappos’s passionate customer service strategy encourages customers
to order as many sizes and styles of products as they want, ships
them for free, and offers free return shipping. Zappos encourages
customer communication, and its call center receives more than
5,000 calls a day with the longest call to date lasting more than 4
hours. Zappos’s extensive inventory is stored in a warehouse in
Kentucky right next to a UPS shipping center. Only available stock
is listed on the website, and orders as late as 11 p.m. are still
guaranteed next-day delivery. To facilitate supplier and partner
relationships, Zappos built an extranet that provides its vendors
with all kinds of product information, such as items sold, times
sold, price, customer, and so on. Armed with these kinds of
details, suppliers can quickly change manufacturing schedules to
meet demand. Zappos Culture page 364 Along with valuing its
partners and suppliers, Zappos also places a great deal of value on
its employee relationships. Zappos employees have fun, and walking
through the offices, you will see all kinds of things not normally
seen in business environments—bottle-cap pyramids, cotton-candy
machines, and bouncing balls. Building loyal employee relationships
is a critical success factor at Zappos, and to facilitate this
relationship, the corporate headquarters are located in the same
building as the call center (where most employees work) in Las
Vegas. All employees receive 100 percent company-paid health
insurance along with a daily free lunch. Of course, the Zappos
culture does not work for everyone, and the company pays to find
the right employees through “The Offer,” which extends to new
employees the option of quitting and receiving payment for time
worked plus an additional $1,000 bonus. Why the $1,000 bonus for
quitting? Zappos management believes that is a small price to pay
to find those employees who do not have the sense of commitment
Zappos requires. Less than 10 percent of new hires take The Offer.
Zappos’s unique culture stresses the following: 1. Delivering WOW
through service. 2. Embracing and driving change. 3. Creating fun
and a little weirdness. 4. Being adventurous, creative, and
open-minded. 5. Pursuing growth and learning. 6. Building open and
honest relationships with communication. 7. Building a positive
team and family spirit. 8. Doing more with less. 9. Being
passionate and determined. 10. Being humble. Zappos’s Sale to
Amazon Amazon purchased Zappos for $880 million. Zappos employees
shared $40 million in cash and stock, and the Zappos management
team remained in place. Having access to Amazon’s world-class
warehouses and supply chain is sure to catapult Zappos’ revenues,
page 365 though many wonder whether the Zappos culture will remain.
It’ll be interesting to watch!