Keynote Speaker: Tony Hsieh • Presented By • Speakers.com • Advice for Entrepreneurs
Summary
TLDRThe speaker shares their journey, starting from college entrepreneurship with a pizza business to founding Zappos, a major online retailer. They highlight the company's unique focus on customer experience, culture, and happiness as key drivers of success. The speaker discusses Zappos’ strong values and their impact on business growth, emphasizing the importance of company culture and having a vision beyond profit. The story also includes anecdotes, like a customer discovering their spouse’s $62,000 lifetime spending on Zappos, underscoring the company’s dedication to customer service and culture.
Takeaways
- 🛒 Many men haven't personally shopped from Zappos, but their wives often do, leading to amusing discoveries about large spending habits.
- 🏢 Zappos' headquarters is in Henderson, near Las Vegas, but the company is preparing to move to downtown Las Vegas.
- 📞 Zappos emphasizes customer loyalty and service, with detailed metrics displayed in their call center to track customer interactions and performance.
- 🍕 The speaker’s journey with Zappos began in college, where they ran a pizza business, which led to meeting future Zappos CFO Alfred, who became a close partner.
- 💼 Before Zappos, the speaker co-founded LinkExchange, which they sold to Microsoft, but left due to the deteriorating company culture.
- 📈 Zappos focuses on company culture as its top priority, believing that a strong culture naturally leads to excellent customer service and business success.
- 💬 Zappos' growth is driven largely by word of mouth and repeat customers, with a strategy of investing in customer experience rather than paid advertising.
- 📚 The speaker references key books like *Good to Great* and *Tribal Leadership* to explain the importance of strong culture and vision in a company’s long-term success.
- 🌟 Zappos' brand philosophy centers around the 'three Cs': clothing, customer service, and company culture, all tied together by the goal of delivering happiness.
- 🔑 Great companies, according to research, share two traits: strong cultures and a vision that goes beyond just profits, which ultimately leads to greater financial success.
Q & A
What was the ratio of women to men in the audience during the Zappos survey?
-The ratio was about two to one, with more women than men.
Where is Zappos currently based, and where are they moving to?
-Zappos is currently based in Henderson, a suburb of Las Vegas, and they are moving to downtown Las Vegas to the former city hall.
What is the significance of the white boxes mentioned in the story about the executive from a major record label?
-The white boxes are Zappos packaging, and the executive noticed them appearing and disappearing from his doorstep, indicating his wife's shopping activity without his knowledge.
How much money did the executive's wife spend with Zappos over her lifetime?
-The executive's wife had spent over $62,000 with Zappos in her lifetime.
What business did the speaker and his roommate, Sanji, start during their college years?
-The speaker and his roommate started a pizza business in their college dormitory.
What was the role of Alfred in the pizza business during college?
-Alfred was a regular customer who would order large pepperoni pizzas, and later it was discovered that he was reselling the slices to other students.
What was the name of the internet advertising company that the speaker and Sanji formed?
-The internet advertising company they formed was called Link Exchange.
Why did the speaker and Sanji decide to sell Link Exchange?
-They decided to sell Link Exchange because the company culture had deteriorated and it was no longer a fun place to work.
What was the primary reason for the decline in company culture at Link Exchange?
-The decline in company culture was due to the company growing and hiring based on interviews and resumes rather than the 'friends and friends of friends' strategy, which did not preserve the original culture.
How did the speaker end up joining Zappos full-time?
-The speaker initially invested in Zappos and other internet companies, but found investing boring and missed building something. So, he joined Zappos full-time.
What is the number one priority for Zappos according to the speaker?
-The number one priority for Zappos is company culture, which they believe will naturally lead to great customer service and a strong brand.
What are the 'three C's that Zappos focuses on?
-The 'three C's that Zappos focuses on are clothing, customer service, and company culture.
What does the speaker suggest entrepreneurs focus on rather than money when starting a business?
-The speaker suggests that entrepreneurs should focus on what they are passionate about, even if they don't make any money from it for 10 years.
Outlines
📦 Zappos Customer Experience
The speaker starts by conducting a survey to gauge the audience's familiarity with Zappos, noting a high response rate. They mention the company's relocation to a new downtown location and invite visitors to take a tour. The narrative then shifts to describe Zappos's operations spread across three buildings, focusing on the merchandising area and the Customer Loyalty team, which is their call center. A humorous anecdote is shared about a record label executive who discovered his wife's significant spending on Zappos. The speaker reflects on his journey to Zappos, starting with a college pizza business and then moving to an internet advertising company, Link Exchange, which was eventually sold to Microsoft. The story highlights the importance of company culture and the impact of growth on it, leading to the decision to sell Link Exchange.
🚀 From Link Exchange to Zappos
The speaker recounts the challenges faced at Link Exchange as the company grew beyond 20 employees, eventually leading to a decline in company culture. They describe the hiring process that initially relied on friends and acquaintances but had to shift to more formal methods as the company expanded. The realization that the work environment had become undesirable prompted the decision to sell the company. Post-sale, the speaker, along with Alfred, another co-founder, started an investment business and invested in various internet companies, including Zappos. However, the speaker found investing less fulfilling and missed being part of a company's growth, leading to his full-time role at Zappos. The narrative also covers Amazon's acquisition of Zappos and the agreement that allowed Zappos to maintain its independence and culture. The speaker emphasizes the importance of company culture at Zappos, which they believe is the foundation for delivering great customer service and building a strong brand.
🎯 The Power of Company Culture
The speaker discusses the significance of having a strong company culture, as evidenced by research that shows great companies have cultures that align with their values, regardless of what those values are. They reflect on the early resistance to formalizing values at Zappos but emphasize the importance of doing so for long-term success. The research also points out that companies with a higher purpose beyond profits tend to perform better financially. The speaker advises entrepreneurs to pursue their passions rather than focusing solely on profit. The narrative concludes with a mention of the speaker's book, which is influenced by the principles from 'Good to Great' and 'Tribal Leadership,' and the importance of the three C's—clothing, customer service, and company culture—at Zappos.
Mindmap
Keywords
💡Zappos
💡Customer Loyalty
💡Company Culture
💡Customer Experience
💡LinkExchange
💡Acquisition
💡Core Values
💡Pizza Business
💡Good to Great
💡Vision Beyond Profits
Highlights
The majority of customers who shop at Zappos are women, often purchasing on behalf of others.
Zappos offers tours of their headquarters, emphasizing their unique company culture and inviting visitors to explore the inner workings.
The focus on Customer Loyalty is key, with Zappos referring to their call center as a 'Customer Loyalty team,' reflecting their service-oriented philosophy.
A customer spent over $62,000 at Zappos without her spouse knowing, demonstrating the level of repeat business and customer loyalty Zappos generates.
Before Zappos, the speaker was involved in a pizza business during college, where he learned entrepreneurial lessons that later informed his work at Zappos.
The speaker co-founded LinkExchange, which was sold to Microsoft. Despite financial success, the company's culture declined, leading them to sell the business.
Zappos' focus on company culture stems from lessons learned at LinkExchange, where poor company culture led to dissatisfaction among employees.
Amazon acquired Zappos, but Zappos was able to maintain its independent culture and brand identity, differing from typical acquisitions.
Zappos reached $1 billion in sales in 2008, with its growth driven by repeat customers and word of mouth, rather than heavy advertising.
Zappos’ core philosophy is investing in customer experience and service, leading to organic growth through customer referrals.
The company's number one priority is company culture, believing that if culture is right, everything else, including customer service, will naturally follow.
Zappos formalized its company culture into 10 core values, which guide hiring, firing, and day-to-day operations.
The importance of having a strong company culture, as supported by research from books like 'Good to Great' and 'Tribal Leadership,' is a core theme in Zappos' strategy.
Zappos teaches employees about business philosophies from books like 'Good to Great' and 'Tribal Leadership,' emphasizing their focus on growth and culture.
The speaker emphasizes that companies with a higher purpose beyond profit tend to be more successful in the long run, a principle that Zappos follows.
Transcripts
[Music]
thank you
thank you
wanted to do a quick survey first how
many of you have actually shot from
Zappos before
oh wow very cool so normally when I do
this survey to a random audience in
understanding this one's a little
different the ratio is actually about
two to one women to men and a lot of
guys I asked say they haven't personally
shot from us but a lot of times they're
wise or something others have and
actually a lot of times assign their
behalf and I was giving a tour to an
executive from one of the major record
labels a few years ago at Zappos and and
right now we're actually based in
Henderson which is a suburb of Las Vegas
and we're about a month away from moving
to downtown to the former city hall
which I'll talk a little bit about I
would definitely encourage you guys next
time you're in town to come take a tour
of Zappos we should be moved in by then
and we'll pick you up from the airport
in a Zappos shuttle give you a tour and
then drop you off at your hotel
afterwards and so I was giving this tour
and right now we're spread amongst three
different buildings and in the building
I'm in we go through the ground floor
which is our merchandising area and then
we go upstairs to our Customer Loyalty
team which is our name for our call
center
and I asked him had he shot from Zappos
before and he said no he hadn't
personally shot from us but he suspected
his wife had because these white boxes
would show up on his doorstep and then
they'd disappear and he had no idea what
was going on he didn't know if she was
buying stuff or exchanging things and
stuff or returning stuff and every time
he asked her he would just flat out
refuse she was just flat out refused to
answer him and change the subject so as
I'm giving this to her on this on the
second floor there's this white board
that you'll see and has all different
stats of our call center a number of
phone calls we took yesterday percent of
phone calls we answered in 20 seconds or
less
sales to the call center and so on and
as I'm going and explaining all these
different stats to him I turn around
and he's disappeared and like oh that's
kind of weird so I go back looking for
him
and look around for a little while and
then finally I find him turns out he had
actually gone halfway down one of our
aisles sat down next to one of our
customer service reps and forced her to
pull up his wife's account
and he discovered that she had spent
over 62 000 in her lifetime
so hopefully we weren't instrumental to
any divorce proceedings or
anything like that so um actually before
getting into Zappos and then talking
about downtown project wanted to talk
about what led me to Zappos and the
story actually begins with pizza this
was during my college years I lived in a
dorm there were probably three or four
hundred students in the dorm and on the
ground floor of the dorm they had this
kind of kitchen area eating area set
aside where every year students could
bid on having the right to operate out
of that space and when you're my
roommate Sanji and I won the bidding and
we decided to get into the pizza
business and so that meant that we had
to invest some pizza ovens hire
employees were basically other students
deal with suppliers and occasionally I
was making the pizzas myself
and this guy named Alfred who later on
actually ended up becoming the CFO at
Zappos he would stop by every night and
this is actually how he met he would
stop by every night and order a large
pepperoni pizza from me which wasn't
actually that weird I had heard about
Alfred's reputation for eating a lot he
had nicknames like human trash compactor
and monster and so on and uh and
actually later on when we became friends
uh actually witnessed this myself
there'd be 10 of us late night at a
Chinese restaurant somewhere and he
would literally finish everyone's
leftovers so not that weird he would
order a large pepperoni pizza but then
sometimes he'd come back a few hours
later and order another large pepperoni
piece of running and I thought okay he
has to pull an all-nighter or maybe he
skipped breakfast
well I found out several years later
Alfred was taking the pizzas upstairs
and selling them off by the slice
so that's why he became our CFO at
Zappos later on
so that was the pizza business and then
after that uh Sanji and I got together
and formed an Internet advertising
company called link exchange and we grew
that to about 100 or so people and then
ended up selling the company to
Microsoft two and a half years later but
what a lot of people don't know is the
real reason why we ended up selling the
company
and the real reason is because it just
ended up not being a fun place to work
at anymore and the company culture just
went completely downhill and I remember
when it was just five or ten or ten of
us we were kind of your typical.com
startup we were working around the clock
sleeping under our desks had no idea
what day of the week was but it's
actually really exciting as as we
started growing and and then as we
started hiring and uh as in our hiring
strategy was we would hire friends and
then friends of friends and I remember
there was one friend of mine that I had
known since high school and he was on
this cross-country road trip from New
York to Silicon Valley where we were and
we needed a little extra help for the
weekend and then that became a week and
then two weeks and then eventually he
actually ended up joining the company
full-time and never made his way back to
New York and so this whole strategy of
hiring friends and Friends of Friends
actually worked really well for us until
we got to about 20 people and then we
ran into a major problem and the problem
was we basically
ran out of friends so
then we had to figure out how do you
hire people based on interviews resumes
and stuff we'd never really done before
we were fresh out of college uh I think
you know did a decent job in terms of
hiring people based on the right skill
sets and experiences but we didn't know
any better to pay attention to company
culture and by the time we got to 100
people I myself dreaded getting out of
bed in the morning to go to my own
company which was definitely a weird
feeling and and then I was thinking if I
was feeling this way how much all the
other employees feel so that's really
what led us to sell the company and
shortly after sale I left Sanjay the
other co-founder left in in fact most of
the early employees all left within a
few months as it turned out this was
back in 98 during the whole.com the
first.com uh boom and craziness and so
we got super lucky with the timing and
it worked out well financially and I was
in the position thinking okay what do I
actually really want to do with my life
now and decided to get together with
Alfred and uh we decided to get a new
investment business and invested in 20
years so different internet companies of
which Zappos just happened to be one of
them but then over the course of a year
I realized that actually for me
investing was kind of boring I felt like
I was sitting on the sidelines all the
time and I really missed being a part of
building something so within the year I
actually ended up joining full-time I've
been with Zappos ever since many of you
may have heard that is actually almost
four years ago that Amazon acquired
Zappos but it's actually very different
from most of their Acquisitions and most
of their Acquisitions the plan is to
integrate the company being acquired
into the parent company and then over
time the original company kind of loses
its identity and joins the mothership
whereas for us we told them we'd only do
it if Zappos could remain independent if
we can continue to have our own culture
our way of doing business in in our own
separate brand and they actually agree
to that and I'm happy to report almost
four years later they've actually
remained true to their word and so if
you look at the history of Zappos start
out with no sales in 99 2008 was the
first time we hit a billion dollars in
Gross merchandise sales we're now doing
uh well over 2 billion on three billion
a year in Gross merchandise sales and
the number one driver of all that growth
has been through repeat customers and
word of mouth and our whole philosophy
is really focus on the customer
experience and customer service and
think about how do we wow our customers
and take most of the money that we would
have normally spent on paid Advertiser
and paid marketing and rather invest in
that invest into customer service and
the customer experience and then have
our customers do the marketing for us
through Word of Mouth and for all this
focus on customer service though
the number one priority of the company
is actually not customer service
our number one priority is company
culture and our whole belief is that if
we get the culture right then most of
the other stuff like delivering great
customer service or building a long-term
enduring brand or business will just be
a natural byproduct of that and there's
a lot of stuff we do culturally in terms
of hiring firing training and so on so
in terms of how we think of our brand at
Zappos we have something internally we
refer to as the three C's clothing
customer service and Company culture
and the way we think about it is whether
it's the happiness that customers feel
from getting that perfect outfit or
perfect pair of shoes or the happiness
that customers feel from getting great
customer service or the happiness that
employees feel from being part of a
culture where the values of the company
match their own personal values the
thing that we realize has all these
three C's together is that Zappos is
just about delivering happiness whether
it's to customers or employees and we
try to apply that same philosophy to our
vendor Partners as well and hence the
title of my book that came out a few
years ago
a quick summary of my book uh actually a
lot of it is based on these two other
books good to great and tribal
leadership which I actually wish had
existed prior to zap was being founded
because it would have saved us a lot of
trial and error and uh for any of you
that have not read those books would
highly recommend it we even teach
classes on these books to our own
employees that's how important I think
these books are and the reason why I
think it's important is because the
authors researched and looked at what
separated the great companies in terms
of long-term financial performance from
just the good ones or mediocre ones they
were actually kind of surprised by their
findings they found that the great
companies had two important ingredients
that the good ones are mediocre ones
generally did not have first ingredient
was that the great companies all had
strong cultures and for us at Zappos we
formalized the definition of our culture
into the 10 core values for anyone that
wants a copy of this presentation I'll
make it available later but what was
really interesting about the research
because because a lot of times people
come through they try our offices and
say okay happy for you Zappos you have
the strong culture and uh made the
fortune best companies to work for a
list and so on but the stuff you're
talking about would actually never work
at my company like we can't have all
these crazy decorations and and parades
and so on that you might see at a
Zappa's office but what was really
interesting about the research I thought
was that it they found it actually
doesn't matter what your values are
what matters is that you have them and
the power actually comes from the
alignment that you get from actually
having values and being able to hire and
fire People based on values it's
completely independent of their actual
job performance so uh advice to anyone
on any entrepreneurs on there is really
and for us at Zappos we actually didn't
roll out our values formally for uh
several years and if I could do it all
over again I would do it from the
beginning because because it was
actually one of those things a lot of us
myself included kind of resisted in the
early days because it felt like one of
those big corporate things uh that big
corporations do the second ingredient
that they found through the research
that separated the great companies in
terms of long-term financial performance
from just the good ones or mediocre ones
the second ingredient I actually found
really counterintuitive the second
ingredient they found was that the great
companies all had a vision that had a
higher purpose Beyond just money or
profits or being number one in Market or
beating the competition
and the ironic thing is by actually
having a vision that had a higher
purpose Beyond profits it actually
enabled these companies to generate
significantly more profits than their
peer group and so sometimes I'll get
approached by entrepreneurs that ask oh
what's a good Market to go and get into
where I can make a lot of money
and my advice to them is actually rather
than have money be your primary
motivator think about what would you be
so passionate about doing that you'd be
happy doing it for 10 years even if you
didn't make any money from it and that's
what you should be doing
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