Tony Hsieh

CEO of Zappos

• Born: December 12, 1973
• Place of Birth: Chicago, Illinois
• Died: November 27, 2020
• Place of Death: Bridgeport, Connecticut

Primary Company/Organization: Zappos

Introduction

Internet entrepreneur Tony Hsieh sold his first company, LinkExchange, to Microsoft for $265 million in 1998. He subsequently cofounded Venture Frogs, then joined Zappos. Under his leadership, Zappos grew to a billion-dollar online shoe retailer that was dedicated to customer service. From a young age, Hsieh was involved in numerous flourishing companies, which he had inscribed with his own unique business and organizational culture. Hsieh's technical knowledge, creativity, leadership qualities, and entrepreneurial spirit made him a successful business innovator. Hsieh died from injuries after a house fire in 2020.

Early Life

Tony Hsieh (pronounced shay) was born the eldest of three sons to Taiwanese parents who immigrated to the United States. He spent his childhood in Marin County, California. According to several accounts, he demonstrated creativity and entrepreneurial behavior early. In 1995, Hsieh graduated from Harvard University with a bachelor's degree in computer science. His time in college provided him with the opportunity to meet diverse people and to practice his business skills in a pizza business he was operating from his dormitory. One of his best pizza customers, Alfred Lin, later became the chief financial and operating office of Zappos until he retired in 2010.

Life's Work

After graduating from college, in 1995 Hsieh started his first job with Oracle as a software engineer. However, within a year he quit and, in 1996, together with Sanjay Mandan, his roommate at Harvard and a business partner in his pizza business, founded LinkExchange, an Internet advertising network. LinkExchange's customers were able to place advertisements on the company's website. Within months, the number of customers and banner ads they displayed had exploded. The company succeeded and during this period reached almost half of all Internet users worldwide.

Only two years after the start of LinkExchange, in 1998, Microsoft approached the then twenty-four-year-old Hsieh and offered $265 million for the company. One of the main reasons for selling the business in 1999, according to Hsieh, was that the fast growth of the company, with its increasing number of employees, had had a negative impact on the organizational culture, and he no longer enjoyed working for the company.

The sale of LinkExchange to Microsoft made Hsieh a millionaire. He next cofounded a small investment company named Venture Frogs, through which he invested in approximately twenty Internet companies, among them Ask Jeeves, MongoMusic, MyAble, and Tellme Networks. Another of the companies in which Venture Frogs invested was Zappos, which was founded by Nick Swinmurn to sell shoes online. Hsieh was initially skeptical about the quality of this business proposal: Who would buy shoes unseen and unfitted? He soon realized, however, the immense size of the retail shoe market and its potential. He invested in ShoeSite.com, which before long changed its name to Zappos, based on the Spanish word for shoes, zapatos. Only two months after the company was founded, Hsieh's involvement in the company changed. Having started as an adviser and investor, soon he was working together with Swinmurn to run the company.

One of the first strategic decisions they made was to develop a brand identity for Zappos. They agreed that their competitive advantage should be centred on a highly satisfying customer service experience. In order to be able to control, manage, and improve the customer relationship directly, they changed the company's supply chain and invested heavily in their own warehouse instead of continuing to have manufacturers ship directly to customers. Since then, Zappos has offered a 365-day return policy, during which customers do not have to pay for shipping or return shipping. Zappos even goes as far as recommending competitors' sites and products if it cannot immediately make a pair of shoes available. Having gone through the experience of LinkExchange, Hsieh valued the atmosphere of a small, intimate company. The company's corporate culture encourages employees to work in an informal environment, establish collegial working relationships, and have fun getting the job done.

In 2006, Swinmurn left the company. Hsieh was left to run Zappos, which had reached $265 million sales in 2005. In November 2009, the economic recession and credit crisis reduced Zappos's inventory, endangering its cash flows. As a result, the company's board of directors sold the company to Amazon.com for more than $1.2 billion. Despite the change in ownership, Hsieh, who stayed as chief executive officer (CEO), remained loyal to the company. In a security email sent to its customers following a cyberattack on the company's internal networks, the management declared that the company had in excess of 20 million customer accounts in Zappos's database (2012). (By 2023, this number had risent to more than 30 million.)

Hsieh worked further on expanding Zappos's product line. He has continued working not only on the e-commerce success of that company but also on a $350 million project to rebuild a small downtown area of Las Vegas. Passionate about networking and social interaction, Hsieh opted to build the city a public space that will facilitate a melding of work and personal lives.

His plan, which involved other investors, was to construct a creative, relaxing, and fun place in which to live and work. In the meantime, Zappos rented the old City Hall and started major renovation work so that the company can open its headquarters on that site and provide work for approximately two thousand employees. The work was ongoing, and while restaurants and other buildings had been constructed, apartment buildings were not added until around 2018.

Personal Life

Hsieh resided in Las Vegas, Nevada. His public profile was large, and he encouraged employees to use social media in order to personalize the company's image.

Hsieh's involvement in social media reflected his philosophy of work and management: Among Zappos's core values, for example, is the mandate to “create fun and a little weirdness,” and to secure a job with the company requires not only a professional interview focused on skills but also an interview to determine whether the applicant's personality will fit in with the company culture.

Whether Hsieh pursued an entrepreneurial career because he did not want to be an employee or simply had a passion for following his personal dream is hard to say. Whatever his reasons, his dedication to establishing a unique corporate culture, to providing a satisfying workplace for his employees, and to customer service appeared to be linked in his book Delivering Happiness: A Path to Profits, Passion and Purpose. Published in June 2010, it was soon listed on the New York Times Best-Seller List and stayed there for twenty-seven consecutive weeks. In the book, Hsieh argues that profits and customer/employee satisfaction are not dichotomous; it is possible, he claims, to achieve both simultaneously, making everybody happy.

In March 2009, during an appearance on Celebrity Apprentice, Hsieh asked the two competing teams to create a comic book character for Zappos to be adopted for the company's marketing campaigns.

Hsieh died at the age of forty-six on November 27, 2020, after suffering burns in a house fire. Some news sources suggested that his use of drugs and nitrous oxide may have contributed to his death.

Bibliography

Chafkin, Max. “How I Did It: Tony Hsieh, CEO, Zappos.com.” Inc. 1 Sept. 2006. Web. 20 June 2012.

Dorn, Sara. "Tony Hsieh, Retired Zappos CEO, Dead at 46." New York Post, 28 Nov. 2020, nypost.com/2020/11/28/tony-hsieh-retired-zappos-ceo-dead-at-46/. Accessed 8 Mar. 2024.

Guzman, Zack. "Zappos CEO Tony Hsieh Shares What He Would Have Changed about His $350M Downtown Las Vegas Project." CNBC, 9 Aug. 2016, www.cnbc.com/2016/08/09/zappos-ceo-tony-hsieh-what-i-regret-about-pouring-350-million-into-las-vegas.html. Accessed 29 Oct. 2019.

Hao, Vivien. “In His Shoes.” Asianweek 4 Dec. 2008. Web. 20 June 2012.

Hsieh, Tony. Delivering Happiness: A Path to Profits, Passion and Purpose. New York: Business Plus, 2010. Print.

Perschel, Anne. “Work-Life Flow: How Individuals, Zappos, and Other Innovative Companies Achieve High Engagement.” Global Business and Organizational Excellence 29.5 (2010): 17–30. Print.

Vasanthi, Sravanthi, and Vara Vasanthi. “Designing an Organisational Culture: Tony Hsieh—Wrapping Zappo's Organisational Culture?” n.d. IBS Case Development Centre. Web. 20 June 2012.