Unlike fellow Harvardian Mark Zuckerberg, Tony Hsieh (pronounced shay) is not yet a household name, even among the legions of customers who delight in Zappos' large selection, free shipping and free returns. But he has become a celebrity in entrepreneurial circles, having sold his first company, LinkExchange, to Microsoft for $265 million when he was...
HENDERSON, Nev. — Tony Hsieh, chief executive of Zappos.com, the online shoe and clothing retailer, was sitting in an office he rarely uses at the company’s headquarters here, recollecting the high and low points of his childhood. He had just finished putting a roomful of corporate managers through the same exercise.
After pondering for a long moment, Hsieh, who sold Zappos to Amazon.com for more than $1 billion in 2009 and whose book, “Delivering Happiness: A Path to Profits, Passion and Purpose,” spent 27 weeks on The New York Times best-seller list last year, identified the high as a Halloween night in middle school, when a group of trick-or-treating friends ended up at his family’s home.
The low point: missing the last dance of eighth grade because he was taking a SAT test the following morning. “I remember being pretty disappointed,” he recalled.
Hsieh, 37, seems in some ways to have spent his career trying to re-create that
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Freewheeling boot camp
Halloween night while salving the wounds left by that missed dance. So there he was on a balmy midwinter night, hosting a party at his suburban Las Vegas home for a group of managers and would-be entrepreneurs who had paid $4,000 each to be marinated in Zappos’ wacky, free-to-be-me ethos for the company’s two-day Culture Boot Camp.
Hsieh circulated discreetly in a Zappos hoodie sweat shirt, jeans and black Donald J. Pliner slip-ons, wandering among the living room, with its enormous flat-panel television and custom-built scooter rack, a room done up like a hookah bar, and the back patio, where a shimmering pool was surrounded by Miami Beach-style beds.
The festivities were in keeping with Hsieh’s ongoing campaign to build his community, or, as he frequently writes in his book, his “tribe.” In the Zappos offices, costume parades are commonplace, as employees wind among cubicles plastered with posters and mementos that give the headquarters a teenage aesthetic.
Zappos recruits talk breathlessly of the Fourth of July barbecues and New Year’s Eve parties that Hsieh hosts every year at his home. And although he lives alone, an assortment of friends, business associates and people he’s met on book tours keep his five guest rooms in heavy use.
Unlike fellow Harvard student Mark Zuckerberg, Hsieh (pronounced shay) is not yet a household name, even among the legions of customers who delight in Zappos’ large selection, free shipping and free returns. There is not yet a movie cribbing his rise to dot-com success.
But he has become a celebrity in entrepreneurial circles, having sold his first company, LinkExchange, to Microsoft for $265 million when he was 24, and for turning Zappos into the largest seller of shoes online.
His profile is also growing: He appeared as a judge on “Celebrity Apprentice” two years ago, he has 1.8 million followers on Twitter (One recent post: “Swam in Silverton mermaid aquarium on my birthday! Wore costume b/c they don’t allow birthday suits.”), and his book appeals to a broad swath of teachers, students, parents and even dating gurus who see in it a broader message of self-improvement.
Now, Hsieh is hoping to spread his vision to downtown Las Vegas, where Zappos recently announced it would be moving its headquarters to the former City Hall. In an unglitzy area of the city rarely seen by casino-bound tourists, Hsieh envisions, among other things, a zip line connecting bars, clubs and the Zappos offices.
Reading “Delivering Happiness,” one could get the impression of Hsieh as a gung-ho Michael Scott type (if he actually motivated his employees on “The Office”). He misquotes from his favorite movie, “Pretty Woman” (“I was living the fairy tale,” his version of “I want the fairy tale”), describes elaborate office pranks and urges companies to “make WOW a verb.”
Yet in person, Hsieh speaks quietly and with little inflection. In a group, he calls little attention to himself and often lingers on the sidelines. “He draws energy from people,” said Alfred Lin, a Harvard classmate who was Zappos’ chief financial officer until last year. “But he’s not an overtly ‘Hey, I’m the center of the party kind of guy.’ “
At times, Hsieh comes across as an alien who has studied human beings in order to live among them. That can intimidate those not accustomed to his watchful style.
“I have been in job interviews with him where you are expecting more, and it can be awkward silences,” said Ned Farra, who manages relationships with other websites for Zappos. “He is not afraid of it. It is almost like he is testing you.”
Hsieh said that he deliberately surrounds himself with people who are more outgoing than he is, in part to draw himself out. “My view is that I am more of a mirror of who I am around,” he said. “So if I am around an introverted person, that is really awkward. But if I am around an extroverted person I will be whoever they are times point-5.”
On the night of the party at his home, Hsieh introduced Antonia Dodge, a “personality assessment consultant” to Zappos, to explain why he often appeared somewhat “staid.”
Hsieh has “a form of social phobia,” Dodge said. “But he gallantly walks over it by not letting it stop him and always pursues social situations. And second, he lubricates with tons of vodka.”
Indeed, Hsieh clutched a metal shaker full of red wine because he and two colleagues were following Tim Ferriss’ “4-Hour Body” diet, which prohibited hard alcohol but allowed two glasses of wine a day. Hsieh noted that the diet didn’t stipulate the size of those glasses. “I have been trying to find every loophole possible,” he said.
Outwitting the system is something Hsieh has honed from a young age. In addition to describing his youthful business ventures (worm farms failed, personalized photo buttons succeeded), “Delivering Happiness” recounts a history of scam artistry. To fool his Taiwanese-born parents into thinking he was practicing piano and violin, he recorded practice sessions and played them back on weekend mornings.
Hsieh’s father, Richard, said that at music recitals for friends and family, Tony, the eldest of three boys, performed his own compositions to disguise the fact he hadn’t practiced. “He has always been very creative,” the senior Hsieh said.
At the prestigious Branson School in Marin County, Calif., Hsieh and classmates figured out how to use a modem line in the computer lab to call a phone sex number. And at Harvard, where Hsieh was a computer-science major, he persuaded other students in a class on the Bible to divide up potential question topics for the final exam, then produced a study guide he sold for $20 a copy.
Friends say Hsieh wasn’t lazy, just interested in doing things in an unorthodox way.
“It was more because it was a fun thing to see how it would work out,” said Jill Wheeler, a classmate. And despite his reserved exterior, she said, “somehow he draws people in together.”
Jason Levesque, another Harvard friend who worked at LinkExchange, recalled Hsieh’s self-effacement. When inviting friends to play a video game, “he was obviously the best at the game, but he would sort of hide that in order to get everyone to play,” Levesque said.
Like Zuckerberg’s, Hsieh’s success has been built in part on his ability to anatomize the way people crave connections with others, and turn those insights into a business plan. He has never pretended to be interested in shoes and began his involvement with Zappos as an investor.
But by promoting the perks of a highly social company where workers get free sodas and popcorn, decorate their cubicles, are invited to share their ideas and can climb the career ladder from inside, Zappos is able to pay below-market salaries for its more senior workers.
“We want them to work for us for reasons other than money,” Hsieh said with a shrug.
Recruiters boast that it is harder to get a job at Zappos than to get admitted to Harvard, and the company rejects qualified applicants who don’t buy into the corporate philosophy.
Although his admirers credit Hsieh with having created a unique (and unified) culture at Zappos, others point out that what he is doing is actually simple, and perhaps not so original.
Nick Swinmurn, the Zappos founder, who left the company in 2006 because he grew weary of attending “meetings about meetings,” said Zappos’ wackiness was as much about publicity as strategy.
“One thing Tony is good at is he definitely catches on with what might seem interesting as a story,” Swinmurn said. “At the beginning you had everyone young and single, and we had beds for employees to sleep in and a ton of Red Bull, but that’s what every dot-com did.
“You can only talk about shipping shoes for so long,” Swinmurn said. “But if you take away the culture and keep the free shipping and the free returns, it’s the selection and the free shipping that keep the company growing.”
In his book, Hsieh implies that the company’s investors forced him to make the Amazon deal, although he insisted in an interview that the company continues to operate independently. At the point of the sale, Zappos reported $1 billion in annual merchandise sales (although its actual revenues were closer to $635 million because of returns), and profits of $10.8 million.
Amazon, which does not break out Zappos’ results separately, pays Hsieh just $36,000 in salary. His stake in Amazon is believed worth more than $550 million.
He says he has no plans to leave. “If we were not growing and just selling shoes, I would probably get bored.”
Busy with move
For now, he is consumed by the move to downtown Las Vegas, hatching plans for employee housing and a charter school.
Leading a small entourage through the Fremont East neighborhood of Las Vegas, about a 10-minute drive from the Strip, Hsieh gestured toward a street of bars and cafes. “You don’t even feel like you’re in Las Vegas,” he said.
His pride was evident as he talked about revitalizing the area. During a tour of a dark lounge that was fairly empty on a Wednesday night and a pulsating bar filled with a dreadlocked and pierced crowd, he was greeted warmly by the bars’ owners, whom he introduced as friends.
For all Hsieh’s emphasis on the importance of relationships, his romantic life remains a mystery. Close friends and employees either giggled nervously or balked outright at queries about it.
“It is just something we never talk about,” said Sean Kim, a friend from the Bay Area. They are close enough that when Kim and his wife decided to buy a home in a gated community in the Southern Highlands suburb of Las Vegas, Hsieh followed.
Each even made the purchases of their homes contingent on the closing of the other’s.
“He has a lot of close friends, and he loves a lot of people,” said Kim, who helps shape tax and legal strategies at Zappos. “That is just Tony.”
Hsieh said he limits his speaking engagements to about one a week and plans to ratchet back his involvement in the Zappos boot camps. But he makes a point of appearing at key company events to mingle.
At a quarterly awards party for employees who exceeded sales targets or were being promoted, he sipped a vodka and soda (it was his day off from his diet) and watched intently as various teams showed lighthearted homemade videos, including one where staff members satirized the television show “Glee.”
In a room that felt a bit like an evangelical youth conference, Hsieh seemed eager to demonstrate that he, too, was a fun-loving guy. He disappeared to the men’s room and returned with an iPhone photo of a miniature football goal that was placed in each of the urinals — an innovation Hsieh suggested to the managers of Nacho Daddy, where the party was held and in which he is a silent partner.
And he gamely joined several employees at the karaoke microphone, barreling through the lyrics of “Signed, Sealed, Delivered, I’m Yours” and “Take on Me” in an off-key voice.
Then he quietly slipped out from the party. Employees talked affectionately about him after he had gone.
“Sometimes I look at him, and I say, ‘He is such a dork,’ ” said Lauren Glassman, a buyer, as she downed a goblet of beer. “But at the end of the day, we are all dorks.”