I never thought that Tony Hsieh wanted to make a billion-dollar company. Deep down, I thought he wanted to make a billion people really happy — and he did.
When I was a college business adjunct, I had many discussions with my students about startups and what makes them work.
I also had a penchant for talking ad nauseum about how startups fail since most of them do. I felt people ought to brace themselves for difficult times.
Startups are odd beasts and there is no perfect formula. Of course, value creation is very important. We also love billion-dollar markets and low saturation. Dozens of things can make or break a startup.
But let’s say a few of the early challenges come into place. You have a great product, a visionary leader, maybe a little funding, and you’re more than ramen profitable.
Now what? You need more good people.
What happens when you find smart and scrappy talent to complete your mission?
The best answer for this was answered by Tony Hsieh: You create an engaging culture for loyal people to thrive. When most of your employees are happy, your customers are happy. When everyone’s happy, you can scale.
Hsieh Was The Guru Of Company Culture
“We thought that if we got the culture right, then building our brand to be about the very best customer service would happen naturally on its own.” -Tony Hsieh
Hsieh was known for making his company Zappos the happiest place to work. In fact, every year he’d release a Culture Book to show how important culture was.
Most people I know have never heard of these books. However, the students and clients that worked with me knew these books well. It was mandatory that we covered their brilliance. They are the perfect example of what creates a good company culture. I believe they’ll be an enduring legacy for Tony Hsieh.
It All Starts With Custom Core Values
A 2008 article from the Harvard Business Review talks about an odd, but effective way Hsieh hired people. Firstly, Zappos has a world-class hiring and onboarding program. Employees are enthusiastic and helpful to new hires. They really spend time getting to know teammates. Once fully immersed in the culture, new employees get what is called “The Offer”. It goes a little like this:
“If you quit today, we will pay you for the amount of time you’ve worked, plus we will offer you a $1,000 bonus.”
That sounds crazy, doesn’t it?
But it’s a good test. Knowing the costs of training new employees and how much loyalty matters to Zappos, this is a bargain. They get to cut their losses and find the right people for the company.
You see, if you took the bonus (yes, it’s an actual cash offer that has since doubled), you would have told the company something very important. It’s that you lack some of the company’s core values, which is a lose-lose situation.
Zappos has ten core values that the best employees adhered to because it works for their culture. They are:
- Deliver WOW Through Service
- Embrace and Drive Change
- Create Fun and A Little Weirdness
- Be Adventurous, Creative, and Open-Minded
- Pursue Growth and Learning
- Build Open and Honest Relationships With Communication
- Build a Positive Team and Family Spirit
- Do More With Less
- Be Passionate and Determined
- Be Humble
This was derived from a list of 37 items that Hsieh and his team came up with. The original first item was “Culture is everything,” which seemed to be the overall theme.
So taking the $1,000 bonus means you don’t care much about a few of these significant values. That’s a huge red flag, so it’s best to cut your losses.
Zappos is known for its legendary customer service and overall user experience. They get there through teamwork, which every one of these core values exemplifies. “The Offer” seems extreme, but I always thought it was an innovative HR solution to find the right people. So did Amazon. They use this same technique with their hires.
But it didn’t stop there for Hsieh. With his elite team of offer-deniers, he went on to provide the best experience he could for his employees and customers.
For customers, they get the red carpet at Zappos. And when they’re done with their visit, they are encouraged to leave their name tag with Lucille. She’s a giant ball of stickers that weighs over 100 pounds! That’s #3: Fun and weird.
For employees, you’ll see that in the culture book there are countless zany company events where people were living the core values. I imagine these events are the highlight of an employee’s month. Lots of laughs, food, and camaraderie. The fun does not stop there though.
Doing Meaningful Work Outside Of Work
Hsieh’s spirit of teamwork often took employees on adventures away from the office.
Employees got to work with several philanthropies in the community that they cared about. Though community work is standard in many big companies, Hsieh was doing it long before this trend and it wasn’t for the optics. Looking at some of the pictures and comments around these events, you just can’t fake that kind of gratitude and happiness.
He even had his own pet project to revive old town Las Vegas. This took up a lot of his time and money. However, Hsieh was proud of his city and wanted to help bring back even the most neglected parts of it.
When Hsieh sold his company to Amazon, he had an agreement with Jeff Bezos that the one thing Amazon couldn’t do was touch their cultural standards. What he had created worked. Keeping it as-is would ensure continued success and revenue. Bezos concurred and let Hsieh run his company just as he had for years.
In 2010 when Hsieh wrote his book Delivering Happiness, I thought it was a revelation. Hsieh wrote about delivering happiness to his customers and exactly how to do that. However, I never realized how much happiness he might have been delivering to his own family, friends, and employees by just being the caring person that he was.
Perhaps the greatest lesson I learned from Tony Hsieh is the summary of his ten core values.
Boldly show your love and care in your work and life.
If you do that, everything will work out for the best. I know my staff over the years has benefited from this advice. This is the kind of universal advice that everyone needs to employ now to get through our own challenges.
Hsieh’s Life And Business Lessons Are The Same
In Delivering Happiness, Hsieh writes something profound that permeates all relationships:
We believe that inside every employee is more potential than even the employees himself/herself realizes. Our goal is to help employees unlock that potential. But it has to be a joint effort: You have to want to challenge and stretch yourself in order for it to happen.
When I first started teaching, I had such a difficult time doing it. The content was easy. It was the classroom management of teens and millennials that had me in knots all the time.
But if you look at Hsieh’s statement and replace “employees” with “students”, “spouse”, “child”, “startup”, or “citizen” does the same sentiment apply? Absolutely. And that’s exactly how I looked at people and the way I moved through life. At its best, it was about partnerships, inspiration, and communication.
Reading and practicing what Hsieh wrote made me a better teacher and a better person. In this regard, Hsieh left something really great behind for people who knew him and complete strangers like me. We honor him by following his timeless advice about business and life.
Rest in peace Tony Hsieh, you brilliant man!
2021 Update: Despite the new information on Hsieh that focuses on his last years of life being turbulent, I maintain my position here. He built a visionary company to learn from. Perhaps his isolation from others and the distancing from the people he built this company lead to some bad decisions. That notion only reinforces the need for great culture!