Author: Tony Hsieh
Who should read it: Founders, Entrepreneurs, Managers, Coaches, Teachers
This review was first posted at VentureBeat's Entrepreneur Corner
Entrepreneurs are always trying to break new ground, so it is inspiring to look at how others have succeeded. Tony tells the story here of how he started his two very successful companies, the lessons he learned along the way and a model he has developed for creating intensely passionate corporate cultures. Unlike business books by researchers that observe trends, this book is about what Tony has learned personally and how he thinks other companies can benefit from his experience. Interestingly it pulls together many themes for my last few book reviews - Switch, Drive and Made to Stick.
Tony also likes reading and applying the latest learning from the emerging field of positive psychology (a.k.a. how to be happy). He is the first entrepreneur that I have seen to take many of the tenets from the positive psychology field and apply them to make his customers, partners and employees work together for a great, shared outcome: very forward-looking and clearly successful. His insights are helpful for anyone building an organization looking to deliver amazing results.
Why listen to the author?
Tony is a proven entreprereneur having sold his first business, Linkexchange, to Microsoft for several hundred million with a very small venture investment. His second business is Zappos which he still runs. He built this to over a billion dollar sale to Amazon. He is an avid reader of business books and works to incorporate proven lessons into his management approach. Tony is now looking to help other companies learn from his success.
The Big Ideas:
Develop Core Values – Tony woke up one day after having built a successful startup and realized he wasn’t happy with the culture he had built. Not excited about going to work every day he decided the best move was to sell his company. He decided that in his next company, Zappos, he would develop a set of core values among the team so he would always enjoy being with the people at work. He outlines the process he went through at Zappos to develop and ingrain the culture. It seems to have worked since he was initially reluctant to sell Zappos to Amazon.
Focus on a Core Competence - At Zappos, he wanted to not just build a company but rather to pursue an inspirational mission. In discussions with his founders, they concluded THE thing they would focus on would be insanely great customer service. With a reputation for amazing service they would be able to expand well beyond shoes to be an ecommerce vendor of a wide range of products. As a low margin ecommerce vendor of shoes this is an expensive and, at the time, risky decision. Not just an empty proclamation, they made three audacious moves to purse this goal: they walked away from 30% of their revenues overnight, they brought their warehouse capabilities inhouse (in Kentucky) and finally, they moved the entire company from San Francisco to Las Vegas (then almost 100 people).
Develop a great team – Tony realized that he would only be able to achieve his vision of delivering amazing service if he had the best people working together and that they were trained and focused on the goal. He calls this the “Pipeline” for the pipeline of talent. He has an innovative talent development program that starts with four weeks working on the customer service desk, incentive pay to leave after four weeks (to weed out the noncomitted), extensive training on the Zappos way of doing things and then a step by step progression to make sure that successful employees are seeing steady progress and career growth. I was very impressed with Zappos University, and ongoing program of distilling what Tony and others have learned from leading business books to help employees continue to improve. By continuously investing in the pipeline of talent, he will have a steady stream of future leaders to drive growth and realization of their shared vision.
Transparency - Probably one of the most interesting programs Tony put in place to promote, ingrain and promote the Zappos culture is that they annually publish a book about what the Zappos culture means to the employees and partners. By making it community generated and visible, he has a feedback loop to make sure that everyone knows what it means to work with Zappos and spotlight potential issues. They also host tours and share much more information with partners than most ecommerce vendors. The theme for these initiatives and others he mentioned are transparency – make your goals, actions and results visible to build trust.
Pulling it all together – Tony calls his program BCP which stands for Brand. Culture and Pipeline. In his view a company’s core competence becomes what it is known for, so that becomes the company’s Brand. The company’s core values and mission statement define a unified Culture so if people are really living to the values and mission, the culture will be easy to identify. Zappos has 10 core values; they are pretty interesting and, like all else in Zappos, a bit different. And the Pipeline of great talent, trained to execute against the core values and focused on the shared mission creates and unstoppable force. What is striking about Tony’s view is that thinks about very long time horizon to achieve his very ambitious goals so he can make long term investments in junior talent that few competitors would seriously pursue.
Long term View – This long term vision can be a problem for investors that have shorter time horizons. The result was that Zappos was bought by Amazon but Jeff Bezoz, Amazon’s founder and CEO had so much respect for the model that they agreed to run Zappos as an independent business, giving Tony and the Zappos team room to pursue their vision.
As an investor in a range of businesses, a constant is the importance of working with great teams. Founders and executives with a strong and coherent set of core values and a strong mission are the most successful. One of my companies had 5 well defined core values: drive, integrity, collegiality, humility and intellect. By embracing these values, we were able to manage a large scale recruiting effort growing to over 400 people with a homogeneous culture. These values, coupled with an inspirational mission enabled us to assemble a great team and grow dramatically in people and revenues. They also helped us build a set of lifelong relationships that have transcended that business.
Happiness is that state of consciousness which proceeds from the achievement of one's values. Ayn Rand