November 21, 2013

An interview with Tony Hsieh

Tony Hsieh (his twitter is actually @zappos) and he has since 2000 been the CEO of Zappos - an online shoe and clothing shop. Prior to joining Zappos, Tony Hsieh co-founded and sold the internet advertising network LinkExchange to Microsoft in 1999 for $265 million. He has also written the book Delivering Happiness. This interview is from 2012.

Lessons learned
  • After college, Tony Hsieh began working for a larger company but realized that the corporate lifestyle wasn't for him.
  • Before Google's AdSense, it was difficult to get ads to your website. Kevin Rose told how he created fake ads on his website to trick real companies to think that other companies were paying for the ads. I believe it was this site: So the idea behind Tony Hsieh's LinkExchange was that if you displayed two ads on your website, then one website displayed an ad to your website. 
  • One thing Tony Hsieh learned from LinkExchange was that outside "experts" are not always experts in your area. "If they have 10 years of experience they must be able to do a better job" is not always true. This can be compared with when IKEA hired a consultant. The consultant felt he had to leave because according to his models IKEA wouldn't work - but IKEA did work.
  • After selling LinkExchange, Tony Hsieh began working as an investor at a company he had co-founded called Venture Frogs. They invested $27 million in 27 companies. 1/3 of those companies broke even, 1/3 went out of business, and 1/3 made money - but Zappos was the company that made almost all money. This distribution is common when you invest in uncertain companies - as we saw in How to invest like a Venture Capitalist in uncertain technology companies like Facebook and Google.
  • From LinkExchange, Tony Hsieh learned that a company's culture was important. To create a good culture, he recruited only people he liked and could hang out with on his spare time and could fit the company's culture. 
  • The definition of a good manager is someone you can fire and still go and take a drink with afterwards.
  • One trick Zappos had to determine if a new employee fit the company's culture was to talk with the cab driver who drove the employee to Zappos's office. If the employee didn't treat the driver in a good way, Zappos didn't hire him/her.
  • Zappos have designed their office to increase the number of encounters between employees. This is similar to the thoughts by Steve Jobs who said: "There's a temptation in our networked age to think that ideas can be developed by e-mail and iChat. That's crazy. Creativity comes from spontaneous meetings, from random discussions. You run into someone, you ask what they're doing, you say 'Wow,' and soon you're cooking up all sorts of ideas."

More articles in the same series: Lessons learned from the Foundation interviews