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Gini Dietrich

Seven Things I Learned from Tony Hsieh

By: Gini Dietrich | September 8, 2010 | 
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On Friday morning, the Entrepreneurs’ Organization hosted Tony Hsieh, the CEO of Zappos and author of “Delivering Happiness”. Daniel Hindin and I went to hear him speak and to see if we could learn something we hadn’t already considered about building Arment Dietrich and Spin Sucks.

I have to say, I was a tiny bit disappointed. Tony is not a great speaker. He’s not charismatic or charming. He’s very flat and a little monotone. I don’t know if it’s because he’d been on a bus for 10 days (for his THREE MONTH Delivering Happiness tour) and it was the end of the week or if that’s just the way he is, but I’ve never heard people say those things when they describe him so it was rather shocking to me. What he did, though, was tell funny stories and he’s brilliant. So I can put aside his faults for funny and brilliant.

I do find it extremely impressive that he’s built a company he can leave for three months. I’d love to be able to leave my company for three months to promote a book, go on sabbatical, or just be away to think. But I’ve not built that company…yet.

So let’s start from the beginning. A lot of the stories he’s told, I’ve either heard or read before through interviews he’s given. But the gist of it is that he’s always been an entrepreneur, starting with a pizza “shack” in his college dorms and ending with Zappos. In between there, he and some friends built a company called LinkExchange, which they sold in 1998 (just four years after graduating college) to Microsoft for $265 million. From that sale, he and his friends (er, partners) created an investment fund called Venture Frogs and it was that company that invested in Zappos when they had no sales in 1999. Everyone knows the happy ending – they sold to Amazon last year for $1.2 billion.

How do you build a company from no sales to selling for $1.2 billion in 11 years? He says it’s all culture. He says you have to be willing to hire and fire based on values, not on skill and, if you are, it works.

Following are seven things I learned that I’ll be applying to the growth of my business:

* Spend a good amount of time (they spent a year) understanding what the business is about and who works there in order to create values to achieve the vision.

* Create values that are so synonymous with the business, that when you Google them, Arment Dietrich is on the first page.

* Interview for skills and for culture…if there is a red flag in either of those areas, the person isn’t the right fit.

* Create interview questions around culture so everyone has the same chance, but also so your people who are interviewing are asking consistent questions.

* Training, training, training is the most important thing when a new person starts…spend five weeks putting them through training and then offer to pay them to leave.

* Create a promotion track that provides upward mobility every six months.

* Chase the vision, not the money (I think we do this one really well already!).

Tony recommends reading “Good to Great” and “Tribal Leadership” as part of your journey in building a business. I’ve read “Good to Great” and I agree it’s one everyone should read (even if you’re not building a business). I’ve not read “Tribal Leadership” so I’ll add it to my growing stack, er, my growing list on my iPad. And, if you’re in Vegas and want to stop by the Zappos HQ, they’ll give you one or both of those books for free.

Have you read “Delivering Happiness” or seen Tony speak? What do you think?

P.S. I’m trying out this affiliate link thing so the three books I mention are linked back to us.

About Gini Dietrich


Gini Dietrich is the founder and CEO of Arment Dietrich, an integrated marketing communications firm. She is the author of Spin Sucks, co-author of Marketing in the Round, and co-host of Inside PR. She also is the lead blogger at Spin Sucks and is the founder of Spin Sucks Pro.

33 comments
Tripp Frohlichstein
Tripp Frohlichstein

I had the privilege of doing media training for Tony in the early 2000s as Zappos was beginning to boom. I admired him from the moment I met him. He truly believed taking care of his customers was the right thing to do. I can't explain why he may have lacked enthusiasm in his speech because in our training, his passion came through. So many media trainings require helping the speaker understand his/her message so it can be effectively communicated. With Tony, it came naturally. He truly understand if it's good for the customer, it's good for the company.

Jelena Woehr
Jelena Woehr

I've always enjoyed reading Mr. Hsieh's writings, and I got a firsthand report last year from a manager who visited Zappos and learned about their culture directly from Tony. I'm sorry to see he isn't a stellar speaker--I'm a big fan of good public speaking (still in awe after seeing Steny Hoyer ply his wares this Tuesday; felt like going back in time to the era of LBJ and Tip O'Neill) and hate it when someone who has a lot to say doesn't say it well.

But, not everyone can be good at everything, and Mr. Hsieh's insights are intriguing regardless of his speaking ability. I'm a big fan of the Zappos policy of offering a lump sum payment to employees to quit at any time. I think that's something that could be implemented (*tugs out soapbox*) in the public school system, but using internship placements and retraining instead of cash payments. I say stop worrying about punishing "bad teachers" (though as a fan of Alison Green's blog, Ask a Manager, I now prefer "miscast" to "bad" when describing workers) and start getting them to speak up and plan their own transitions out of the classroom.

In business, the lump sum to quit seems like it'd nearly always ultimately be a savings for the company, if they need more than just warm bodies in order to operate at peak efficiency. It's a good way to kindly weed out people who aren't willing to handle adversity.

Edward M. Bury, APR
Edward M. Bury, APR

For the record, I purchase my shoes in a store. Always. But I've viewed reports on TV and read about Tony Hseih and the Zappos business philosophy. Two thoughts:

1. I would also believe Hseih subscribes to the belief that a smart business person is aware of change and modifies the business model to address changes in technology, the economy, social/political forces, etc.

2. It's business leaders like Hseih -- those who chart a different course from the norm -- who will (hopefully) help others to do business differently and shake up the economy from its doldrums.

Katie Fassl
Katie Fassl

Gini, These are some great takeaways (I have "Write Blog about Zappos Presentation" on my to-do list...your post has given me that kick-in-the-butt that I needed to get a move on :)).

Can I just say...I'm glad I wasn't the only one who expected Tony to be more of a "WOW" speaker. That being said, after the initial shock wore off, he kept me interested throughout his entire presentation; and I found him to be a really likable guy.

Tim Jahn
Tim Jahn

I've seen Tony speak twice now, and you're right, he's not the typical speaker most folks are used to in terms of a loud voice and exciting body gestures.

But the substance of what he presents through his stories is very powerful. Both times I saw him speak, it was basically the same presentation with the same stories, but even the second time, it hit home.

Like you said, Gini, the fact that he's built such a company that he can leave for 3 months and know things are going to continue to succeed, that's awesome.

Randy Hall
Randy Hall

Ok, I couldn't resist one more comment here. What's so important to take away from Tony is not that he offers people money to leave... but WHY he offers them money to leave.

I'm betting lots of people try to reproduce the gimmick without reproducing the mindset and it won't work that way.

Just 2 more cents,

Randy

Randy Hall
Randy Hall

I have not followed Tony all that closely but this discussion will change that for me. It's rare to find a leader that completely understands how culture effects success. Even more so to find one who is willing to stake his business on it.
Charisma is a nice to have for a leader. Understanding how to create a successful culture and sustain it is a need to have.

Randy

Erik Hare
Erik Hare

What I take away from this is that we're a social kind of animal that naturally wants to get along and work together when we see how we fit in. Talk of "values" is really a discussion of an environment where everyone naturally understands how they fit with everyone else. It's a meta version of bottom-up leadership to me.

It takes a lot to have that kind of trust, but the small businesses I've seen that work to build trust are always rich with leadership at all levels. It seems reasonable to say that success follows naturally. What I see from Hsieh is a deep understanding of human nature - rather than the usual force-fit of people into a corporatism that easily degrades into dysfunction.

When it's laid out well, it's a big "Duh!". That makes it more wise, not less. :-)

Deb Evans
Deb Evans

Gini, great take a ways from Tony's presentation! I agree with Daniel about Tony's dedication to happiness. I have read his book and had the pleasure of hearing him speak and meeting him in person. He comes across shy but very passionate.

I registered to take his tour in Vegas and requested a copy of his culture book (offered free on his website). I received confirmation that the book will be shipped shortly and it included a 4 minute video of how the "books are printed and processed with care." I will wait patiently. I also received a confirmation email of my tour request along with complementary shuttle service to/from my hotel. Tony rocks at customer service and so far I am a very happy customer!

Raymond Alvarez
Raymond Alvarez

This is so refreshing to read, especially considering I've been a fan of Zappos since learning two years ago it was a big user of Twitter.

One could tell there was a different culture here. Empowering employees is a tough one for many corporations. I ran a question up the flag pole on Linkedin. I'm including one of the responses here.

My thinking is the suits run a different show. Wrapping corporate culture around a company's communications function just seems like a lot of chores in pursuit of incongruity.

Friend Alan Eggleston made these salient points.

Many companies are still dealing with the old paradigm that communications are unidirectional - we talk, you listen. They can't get over the hurdle of opening the lines of communication so that they're bi-directional -- let's both talk, let's build community and work things out together. However, as social-media-savvy employees move up within organizations, the organizations are learning and the paradigm is shifting.

As companies see that shifting to strategies that embrace the benefits of open social media will benefit them financially, they will become less resistant and actually embrace those strategies. It just takes time. It's already happening.

Links:
http://www.e-messenger-consulting.com |leo://plh/http%3A*3*3www%2Ee-messenger-consulting%2Ecom/BaDu

Les
Les

Gini,

Thanks for a great post! Totally agree on creating and sharing a culture. Especially on the front end. As for hiring and turn over the $2,500 is nothing compared to the cost of a bad (or just the wrong) hire. My business partner likes to say "The longest time in a bosses life is the time between losing faith in someone and actually doing something about it".

Patti Knight
Patti Knight

I couldn't agree more with the Chase the vision, not the money and believe eventually the money will come.

Nancy Myrland
Nancy Myrland

Gini, thanks for summarizing what Tony talked about. I think you've chosen your 7 things wisely. They are all critical to business, and people within that business.

Now, on the 3 months off thing. Maybe we should partner so you can take 3, then I can take 3, and so on...

Daniel Hindin
Daniel Hindin

I agree he was a bit monotone and lacked the charisma that I would have expected from the CEO of Zappos, but I actually thought the subtleness of his delivery gave more power to the message.

In addition to the great points you make above, I was particularly struck by his dedication to the study of happiness. He believes that happiness drives all of our decisions (something I argued in a freshman philosophy class a long time ago!), and that understanding that will help guide you to satisfying both your customers and your employees.

I just love (and respect) how he has apparently combined theories from philosophy, science and business to build a $1.2 billion company. Very inspiring!

Vince DeGeorge
Vince DeGeorge

I think Tony is brilliant and the Zappos story is one that I find myself referencing over and over.

It should be the dream of every CEO to not only build the kind culture he has, but in doing so creating an all new way of doing business. Happy employees are indeed productive - and it shows in the enthusiasm of his employees.

How many have the vision to offer $1,000 to employees to leave? It's gutsy, challenges everything we know, but at its core makes complete sense.

As far as his charisma - eh, doesn't matter. I'll take what he brings to the table any day over a cheerleader, which I think was your conclusion as well.

Gini Dietrich
Gini Dietrich

Tripp, first...jealous! Secondly, I don't think it wasn't his passion that didn't come through. You can definitely tell he's passionate. He just was quiet, reserved, and a little monotone. I think two things were at play: 1. The speaker that "warmed up" the crowd was vibrant, loud, and charismatic so someone following her would have to have a bigger personality, which he does not (and it wasn't really fair) and 2. I think you have a perception of a speaker who is paid big bucks to get on stage...my experience is they're more like the warmer-upper speaker. But that doesn't mean the value he provided was diminished. He had great content and I think everyone walked away with even more respect of him. I was just surprised he wasn't more commanding of the stage.

Edward M. Bury, APR
Edward M. Bury, APR

Hello: I stand corrected. Should have also equated Ms. Dietrich with Buffet and Gates. Promise not to repeat this mistake.

Gini Dietrich
Gini Dietrich

Uh...EB? You forgot part of your sentence. It should read, "2. It's business leaders like Hsieh and Dietrich..."

Gini Dietrich
Gini Dietrich

Katie, first I think I saw you there, but by the time I worked through the crowd, you were gone. Booo! Secondly, how about that ghost blogging exchange??

Gini Dietrich
Gini Dietrich

Tim, I was a little bit disappointed in that he told the stories I've read about in his interviews, but two things: A) I got some new nuggets and B) I'd never heard the story he told about ordering pizza from Zappos at 3 a.m. VERY funny!

Gini Dietrich
Gini Dietrich

Randy, I recommend reading anything that is written about him. I've not yet read "Delivering Happiness," but I'd guess there are even more nuggets in there I can take away.

P.S. I printed this post and put it on my desk so I can see it every day while we define our values, our culture, and our hiring process.

Gini Dietrich
Gini Dietrich

Erik, I think the bigger idea here is not the talk about the values, but the living of those values. How many companies do you know that publicize their values and, when you Google one of them, said company is the first to pop up? That's super impressive to me.

Deb Evans
Deb Evans

Holy Crap, is right! My copy was at my doorstep! Did I tell you that we have a copy of Delivering Happiness floating around team? Another suggested reading. So far everyone LOVES it! Wait until I share the Culture Book.

Gini Dietrich
Gini Dietrich

Holy crap, Deb! I just got my Culture Book. HOLY CRAP! Wait 'til you see it. And you're right, the way they invite you to give them your email address and showing you the video while the book is en route are both great examples of excellent customer service!

Gini Dietrich
Gini Dietrich

Ray - love this thinking around the loss of "we talk and you listen." It kills me that we are a society of that kind of thinking, but it's rampant. Hopefully things do change.

John Heaney
John Heaney

I never realized the insight that one of my former bosses provided until I ran my own company, but he once told me: you never regret firing the wrong person, you only regret not doing it sooner.

Gini Dietrich
Gini Dietrich

Les, I am writing down what your partner says and posting it on my wall!

Gini Dietrich
Gini Dietrich

What I was really hoping Dan and Patti were going to say is, "But Gini, we already do these things really well!" Guess I have my work cut out for me...grumble, grumble, grumble.

Gini Dietrich
Gini Dietrich

Vince and Nick - He said they actually offer $2,500 after five weeks of training and that three percent take the offer. But his philosophy is that, if they've done their jobs correctly in the interview process, the people they've hired are the right fit and aren't there to get the quick cash. This is sort of the last test before you get to join the craziness.

Nick
Nick

I have to admit that offering an employee $1000 to leave following a five week training program for a job that is hard to find in Zappo's smacks a bit of gimmickry. Offering a substantial amount would really make the point, after all, who would go through any of the five weeks of (paid) training and say, "I'll take the $1000 and go back to looking, thanks". I will admit that it is effective, though, as it is widely lauded. I wonder how many people take the offer?

I am a big fan of their culture, however, empowering employees and working to create the worlds' best customer service is praise worthy and of course "the offer" is a part of that culture. I wonder if this culture is part of the reason Amazon paid such a staggering amount for Zappo's?

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