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Tony Hsieh Interview by Cliff Michaels (Part 1 of 2)

A Happy Maverick on a Mission

In the Fall of 2011, The 4 Essentials of Entrepreneurial Thinking was 3 months away from launch when I received an endorsement from Zappos CEO Tony Hsieh (pronounced Shay). Tony’s book Delivering Happiness had recently hit #1 on the New York Times Bestseller list so I was sincerely humbled.

As a token of appreciation, I drove from Los Angeles to Vegas with a basket of Tony’s favorite snacks (beef jerky, gourmet pickles, Red Bull and Grey Goose Vodka). Upon arrival, I was pleasantly surprised that my book was in the Zappos Library, snuggled between The 4 Hour Workweek and Tribal Leadership (#1 Bestsellers). A few months later, my book hit #1 on Amazon and #3 on the New York Times Bestseller list.

The day I arrived, ABC’s Barbara Walters and her 20/20 TV crew were interviewing Tony. So I asked if he had 10 minutes for an interview with me too. He graciously said yes and we filmed an impromptu Q&A. The video highlights are at the end of this blog. Below is the article I wrote shortly after. The lessons are as true today as they were 3 years ago.

About Tony Hsieh

The son of Taiwanese parents and a computer-science graduate from Harvard, Tony Hsieh is very clear on why he wrote a book titled Delivering Happiness. In a world where attracting talent and satisfied customers is everything, Hsieh not only created a unique corporate culture driven by core values, but a global movement that includes “fun and a little weirdness.” If you don’t know the Zappos mantras, a few million fans and thousands of loyal employees will tell you why you should.

In 1999, Hsieh (24), sold LinkExchange to Microsoft for $265 million dollars. It was an Internet advertising network that he co-founded out of college. Shortly after, he invested in a series of companies, including the fledgling e-commerce company Zappos.com. Hsieh started as an Advisor and eventually became CEO of Zappos, helping the company grow from almost no sales to a $1 billion dollar juggernaut. With Hsieh’s dedication to a happy corporate culture, Zappos also made Fortune Magazine’s list of “Best Companies to Work For”.

So Whats Tony’s Secret to Delivering Happiness?

On July 22, 2009, Amazon announced the acquisition of Zappos in a deal valued at $1.2 billion dollars. Then in 2010, Tony’s book, Delivering Happiness debuted #1 on the New York Times Bestseller list and stayed there 27 weeks.

Tony also hands over a Zappos culture handbook and provides free office tours (to competitors and street tourists alike). He understands that success begins with sharing. “You never know where talent or ideas come from. Why not invite everyone to the party,” says Tony.

Feel free to also lose the suit and tie at Zappos. Employees wear anything from jeans to Halloween costumes. The vibe is like a college campus party where employees are called friends and motivational mantras hang from rafters like championship banners.

As for Hsieh, there’s no private office. His cubicle is in the middle of the madness for optimal interaction with employees.

But it wasn’t always fun and games for Tony. Here’s what I learned from our Q & A …

ONE-ON-ONE with TONY HSIEH

Cliff: Thanks for your time today and congratulations on the successful sale of Zappos to Amazon. I really enjoyed reading your book Delivering Happiness. Could you take us through your story with LinkExchange as your first baby and Zappos as your big baby?

Tony: Sure. Back in 1996 after graduating college, my roommate and I started a company called LinkExchange. We specialized in online advertising and grew that company to about 100 employees. We ended up selling the company to Microsoft two and half years later for $265 million. But what a lot of people don’t know is the real reason we ended up selling — it just wasn’t fun anymore.

The company culture went completely down hill. When it was just five or ten of us, it was a typical dot-com. We worked around the clock and slept under our desks. We had no idea what day of the week it was, but it was fun. We started hiring friends which worked pretty well until we got to about 20 people and ran out of friends. Then we had to hire people based on resumes and interviews. We were fresh out of college and had never done it before. I did a decent job in terms of hiring people with the right skills and experience, but we didn’t know about company culture — so not everyone we hired was good for us.

By the time we got to 100 people, I dreaded getting out of bed and going to my own company. That’s really what led us to sell. We got lucky with timing because it was the first dot-com boom. So I started investing in companies. But after a year, I was tired of sitting on the sidelines. I missed being part of building something. Of all the investments, Zappos was the most fun and promising so I ended up joining the company and becoming its CEO.

Cliff: On that note, let’s talk about the famous Zappos 10 Core Values.

Tony: When we’re hiring, we don’t say, “This person has 9 out of 10, we’ll let them pass.” We really need all 10. The core values are:

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

Cliff: Were those principles the inspiration for your book Delivering Happiness?

Tony: Originally, it was about spreading the idea of “happiness” as a business model to other companies. That includes making customers, employees and business partners happy. Along the way, we decided to go on a book tour. It felt like planning 80 weddings over 4 months. We actually got the bus from the bass player of the Dave Matthews Band.

Cliff: What evolved from the tour?

Tony: Delivering Happiness was written as a business book but people took away something more. That surprised us. We had moms e-mailing us, saying they were now the CEOs of their families and thinking like value-driven corporations. We heard from charities that said they were going to focus more on their culture. We even heard the book was going to be required reading at certain colleges.

Cliff: That had to be rewarding. What happened next?

Tony: The tour led us to start a company called Delivering Happiness. This whole idea of inspiring and being inspired fostered a movement with happiness beyond the business level.

Cliff: So what’s the biggest challenge in getting that happiness message adopted within a large organization like Zappos, since everyone has a unique definition of success … or happiness?

Tony: If you want to go with one, simple principle, just be true to yourself. One of the things we really encourage at Zappos is to bring your true personality to the office.

Cliff: (smiling) One of my favorite quotes on that theme is by Oscar Wilde, “Be yourself, everyone else is taken.” Where’s your biggest passion these days?

Tony: I’m still CEO of Zappos ad we’re moving to downtown Las Vegas. We’ll integrate the Zappos campus and city together.

Cliff: So you’re spearheading a renaissance. Is there a city you might use as a model?

Tony: I think it’s got it’s own personality (neighborhoodie) and community feel. There’s an area (Fremont East) with eight or nine bars and cafes where owners hang out in each other’s bars. There are tech companies and start-ups there too. I’d like to see a growing art scene and more live music. Ultimately, everything you need to live, work, and play would be within walking distance. On my wall at home there are about 70 post-it notes. They’re passion projects for downtown. These ideas aren’t coming from me. They stem from anyone with a passion about their community.

Cliff: You’ve now evolved from a technology CEO and bestselling author to a community builder. It’s great to see an entrepreneur cross bridges. Did you ever imagine you’d change a city the way you changed a business model?

Tony: Not at all. We were originally thinking Apple, Nike, and Google all have great campuses, but they’re very insular. They don’t really integrate with the community or contribute to the environment. We want to take more of an NYU approach; almost a seamless transition between the city and campus.

Cliff: Great stuff. Who were your mentors?

Tony: There wasn’t a single mentor or book. There’s something to learn from almost anyone. Here at Zappos, we have a large library with something to learn from countless books.

Cliff: Yours library is like a museum. Thanks for including my book The 4 Essentials of Entrepreneurial Thinking. From all you’ve learned, what are your biggest fears?

Tony: Based on past experience, I want to make sure the Zappos culture not only scales, but gets stronger. That’s why this campus move to downtown is exciting. It will take our culture to a whole new level. Every bar or bookstore will become an extended conference room. Employees are already gravitating downtown. On any given night, every bar feels like Cheers.

Cliff: Walking through the Zappos halls, I hear cowbells, pride, and passion. Your co-workers speak of you as a friend. That culture is rare and stems from how much you give back. Can you speak about the charitable aspect of Zappos?

Tony: It’s funny because it all goes back to what people are passionate about. When we were smaller, we could only afford to give to one local or national charity. We basically sent a survey out and asked employees what they would suggest.

Cliff: So you engage employees to make decisions, even about charities?

Tony: Right. Now that we’ve grown, we can do more and still leave it up to the employees.

Cliff: Do you think boredom is what drives you to constantly improve?

Tony: I don’t think that’s unique to me. Everyone wants to grow and flourish. Everyone may not instinctively know how because they’ve been stuck in a boring job for ten years. But I think once you push people slightly outside their comfort zone, they realize there’s more potential in them than they may have realized.

Cliff: On that thought-provoking note, thanks for your time today Tony. It’s been an inspiring interview. Good luck with the new Zappos campus … and keep delivering happiness!

Part 2 of this interview provides Tony’s Top Tips on Social Media. Part 2 with Tony & Cliff.

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RIP Steve Jobs – Remembering A Crazy One

On October 5, 2011, we lost Steve Jobs. He was a misfit who built one of the most endurable brands in history — APPLE, taking us through revolutions in computers, music, and entertainment. He master-minded one of the most famous advertising campaigns in history: Think Different: The Crazy Ones. In that 1997 Orwellian commercial, he  reminded us of 17 iconic figures who didn’t like rules very much either —  but they sure did like putting square pegs in round holes (Einstein, Rosa Parks, Thomas Edison, Picasso, John Lennon, Muhammad Ali, Gandhi, Amelia Earhart, Martin Luther King, Jr, etc).

The spirit of Steve Jobs has always been a conundrum for fans and scholars alike. Books and films about the man reveal a complex soul who vacillated between genius and madness. Walter Isaacson’s biography on Jobs, describes him as a “deeply emotional, sometimes mean, anti-social human being … who lived in his own altered reality.” In short, a creative mind with a passion for what’s possible, but little tolerance for mediocrity.

When he passed away, I reflected on an essay I wrote in my book The 4 Essentials. I had fun comparing Bill Gates to Steve Jobs and Mozart to Tiger Woods in order to dispel the myths of “born genius” or “born entrepreneur.” In doing so, I was challenging the heart of Malcolm Gladwell’s theory which suggested 10,000 hours or 10 years of practice are “the secret to success”. It was a theory Gladwell proposed in his bestselling book Outliers (PS: I loved the book but a elements in some of his stories seemed very flawed). In fact, reading Outliers triggered a memory about Steve Jobs that to this day makes me certain Gladwell’s 10,000-hour theory was fundamentally flawed (clever as it was).

Most of us know the stories of Apple founder Steve Jobs and Microsoft founder Bill Gates. Volumes have been written about both juggernauts so I can offer little to their biographies. But there’s a unique lesson I picked up watching a 2010 Apple commercial comparing PC to Mac.

In a cheeky TV commercial, Apple pokes fun at the ongoing glitches of Microsoft’s operating system. Apple had similar bugs throughout its storied past, but since Microsoft’s PC is known to crash more than an Apple computer, the TV audience gets the joke. The commercial is clever, but I came away with a totally different take than the one Apple intended. It starts with a hip-looking kid i jeans (Jobs), standing next to a geeky, older guy in a suit and glasses (Gates). The next 60 seconds goes something like this …

INSERT YOU TUBE COMMERCIAL HERE

Kid Mac: “Hello, I’m a Mac.”

PC Gates: “And I’m a PC. Hey Mac, did you hear the good news? Windows 7 is out and it’s not gonna have any of the problems that my last operating system had. Trust me.”

Kid Mac: (suspiciously): “I feel like I’ve heard this before, PC.” For the remainder of the commercial, we see PC Gates in decade-old leisure suits, insisting each new version of Microsoft’s operating software won’t have the previous problems.

PC Gates: “Windows Vista won’t have any problems Windows XP had, or any problems Windows ’98 had, or any problems Windows ’95 had … or any problems Windows 2 had. This time it’s gonna be different. Trust me (winking).”

What I gleaned from this time-capsule wasn’t that Mac was better than PC, Apple better than Microsoft, or Jobs better than Gates. My epiphany was that neither guy ever stopped innovating. By the time you read this, the latest versions of iPads, iPhones, and Microsoft PCS will be in stores (trust me).

THE TRUE LEGACY of  MISFIT & CRAZY ONE

Steve Jobs left behind mantras that almost every artist, misfit, outlier, or innovator knows well. In fact, he repeated it in a speech he gave at Stanford in 2005.

“Think different …
Don’t be trapped by dogma and other people’s thinking …
Have the courage to follow your heart and intuition …
They somehow already know what you truly want to become… “

In my view, the Steve Jobs legacy is not a question about genius. He was one. He was also a complicated and very flawed human being — there was a dark side. But he never stopped asking, “What if ?” And I suspect crazy ones like me take away the best lesson of all … “What’s Next?”

RIP Steve Jobs