Business Insider - Tony Hsieh Interview

http://www.businessinsider.com/henry-blodget-tony-hsieh-zappos-2010-10

Watched this 30min BI interview featuring Tony Hsieh from Zappos, pretty cool interview (fanboy.. =p)

It would be so awesome for Richard Branson and Tony Hsieh to do an airline together =) (Tony wants to start a Zappos airline?)

For a person who has so much success, Tony is remarkably humble and down-to-earth. Zappos is his second company after the sale of LinkExchange to Microsoft.

High tech vs High touch customer service

Tony was asked to elaborate on the difference between Amazon's similar focus on customer service versus Zappos. He summed it up as it being high tech versus high touch. Amazon tries to be as efficient as possible in solving customers' problems as fast as possible, while Zappos tries to have a highly engaging interaction with the customer every time.

Zappos also maintains a U.S. based call centre, despite the higher costs compared to outsourcing. This allows them to give a better customer experience.

He also reveals that despite all the hype about social media methods, a phone call is still one of the best ways to leave a lasting impression on the customer. You obtain the customer's undivided attention for 5 - 10 mins, which is much better than any advertisement.

I guess the paradigm shift comes when you start thinking about how to make customers happy, and when you view customer call centres as a profit centre, not a cost centre.

The human intuition

Zappos is mainly into "soft" goods such as footwear and apparel. Unlike "hard" goods like books and electronics, it is still highly dependent on the sense of merchandisers who have to buy inventory 6 months before fashion trends reach the masses.

Bad hires have a domino effect

Tony was also asked about how Zappos' hiring habits affected culture. He emphasized that hiring should be done based on cultural fit, not just on skillsets and experience. Bad hires have a domino effect. Bad hires make bad decisions that hurt the company. Furthermore, they may also hire other bad hires, which snowballs negatively.

To resolve this, Zappos hires for the long term and uses cultural fit as an indicator. They are perfectly happy to fire people if cultural fit is not seen, despite excellent job performance.

"Blah" core values vs committable core values

Often, corporate core values are shown during employee orientation and immortalized as bronze plaques hanging on walls. Nobody really pays attention to them.

To define Zappos' core values, it took them a year of discussion. Tony sent out an email to everyone and it was debated internally within the company as most people had different opinions. Zappos wanted to find commitable core values, not corporate core values.

The results are clear. If you do a google search for any of Zappos' 10 core values, Zapppos is almost always the top result.

Hiring for serenpidity

The core values also affect the interview process for cultural fit. For e.g., taking the core value of "Be Adventurous, Creative and Open-minded", interviewees are asked about how lucky do they perceive themselves to be.

This was inspired by the study conducted by Richard Wiseman (http://www.fastcompany.com/magazine/72/realitycheck.html)

(http://www.richardwiseman.com/) (Incidentally, Paul Buchheit has a similar personal article - http://paulbuchheit.blogspot.com/2010/10/serendipity-finds-you.html)

Culture

There are a few stages of company culture - namely, starting, building, maintaining and scaling. Zappos is currently not just concerned with maintaining it, but scaling and strengthening it as the company grows.

Work-life integration

Zappos allows its employees 10 - 20% of the time to hang out with each other. Initially, this met with some disbelief, as people felt that they had unfinished work left hanging.

However, subsequently, when asked about whether they felt they were more productive, they said that they felt more productive. This was due to lower communications costs and higher levels of trust, as people were doing favours for each other, not tasks.

Negotiations

Tony explicitly negotiated for no retention bonus, which ironically gave him more negotiating power over Amazon. His pay was also fixed at $36,000/year after the acquisition.

Good judgement

Tony also explained that Zappos does not have much policies, as policies often inconvenience the minority (1%) at the expense of the majority (99%). It is far better to rely on human judgement.

School

Tony tried to get decent grades while in school with the minimum effort, given that he was always interested in starting businesses.

Future expansion

Zappos is aiming for the apparel market, which is 4x the footwear market. That's $5 billion in sales.

Zappos also has a consulting company that helps companies find their own corporate culture.

Quote from Darwin

It's not the fastest or intelligent that survives, it's the most adaptable - Charles Darwin