Aimee Groth's book about the not-so-excellent adventures of Zappos CEO Tony Hsieh reads like the fever dream you might have after going on a bender at a TED conference. Every management trope of the last decade--the audacious goals and small bets, tribes and circles, primacy of passion and nobility of failure--are plucked from the abstract and rendered as human tragicomedy. If the phrase "world-changing" appears in your mission statement, you should take a gander at The Kingdom of Happiness: Inside Tony Hsieh's Zapponian Utopia.
Hsieh is famous for the successful experiments in management and culture that made Zappos a darling of both customers and employees. Business leaders bought his book, Delivering Happiness: A Path to Profits, Passion, and Purpose, and visited Zappos to learn more. Some signed on with the Delivering Happiness consultancy.
In 2009, Hsieh delivered Zappos to Amazon for $1.2 billion and dedicated $350 million of his own money to a grand venture. He would move Zappos--which he still ran--from suburban Henderson, Nevada, to Las Vegas and erect around it a "city district with happiness as the number one goal," writes Groth. Zappos had relocated once before: from San Francisco to Henderson in 2004 to take advantage of tax breaks and a work force focused on hospitality. Downtown Las Vegas is more uptown, a dreary hunk of urban decay that emerges just north of the Strip's more glamorous properties.
But the "Downtown Project" (DTP) was going to change that. It would become a melting pot of entrepreneurs, artists, and dreamers whose alchemy would produce new ideas, commercial value, and joy. The Kingdom of Happiness arrived one month after the deadline Hsieh initially set to assess his project's success. That date has been pushed back a year for reasons that become apparent.
(Asked about Hsieh's reaction to the book, a Zappos publicist sent this statement: "Several Zappos employees, including Tony, have reviewed the book and have collectively noted well over 100 pages that that we believe contain inaccuracies, misrepresentations, or flat out false statements throughout the final version. As a result, the book is not representative of Zappos or Tony or many others mentioned in the book, and is not officially endorsed by the company.")
Groth was a senior editor at Business Insider when Hsieh dangled the live-your-dream apple in front of her. (Business Insider is a content partner of this website.) She left New York City in 2013 and embedded in the Vegas petri dish, perhaps to realize some amorphous destiny--she talks vaguely about starting a news site or a church--but more concretely to nail a great story. Hsieh put her up in one of DTP's crash pads briefly, but soon she was on her own, couch-surfing among other community members. (She never started a business and never received any funding from Hsieh.) By the end, she is disillusioned. But at least her years in Vegas produced a book, which is more than most of Hsieh's followers walked away with.
Hsieh adopted the phrase "city as a startup" to describe DTP, an appealing image that suggests energy, innovation, and freedom from legacy systems and thinking. But Las Vegas was no blank canvas. Away from the Strip and the tourism industry, it was run-down and economically challenged. Much of the housing stock was either decaying or comprised unaffordable luxury properties. And, like most of the pre-existing population, Zappos's call-center workers didn't earn enough to patronize the kinds of cool but pricey small businesses that Hsieh helped plant, and which needed well-heeled foot traffic to survive.
Hsieh envisioned DTP as a community of startups. By 2014, its venture capital arm carried 60 or 70 investments. But startups require obsessive work, focus, and sacrifice--values not paramount in Hsieh's Vegas. At least at first, DTP prioritized return on community (ROC) over return on investment. As founding teams commingled at DTP events and worked on extracurriculars--for example, a community podcast--their businesses suffered. One of the few promising growth companies--Romotive, which was developing a smartphone powered robot--decamped fairly early. "ROC seemed to mean spending time at the bar," writes Groth, "which the Romotive team didn't do all that often because it was busy working on its startup."
Beyond the tech ventures, many downtown businesses Hsieh seeded were passion or lifestyle projects meant chiefly to attract interesting people to Vegas rather than to scale. Hsieh called them "community investments." Groth calls them "marketing expenses."
Real estate investment, Groth points out, was always the project's unsexy financial cornerstone. But in the book, Hsieh doesn't talk much about real estate or even about jobs or livability--core subjects in urban development. His concerns, instead, are creativity, community and--perhaps most important--culture. And here is where things get Fellini-esque. The culture Hsieh nurtured in Vegas was inspired by raves and festivals like Burning Man, which unite participants into "tribes" (an oft-repeated buzzword)--high on life, art, music, the moment, the mission, alcohol, and each other. Participants in these spectacles must have spent so much on costumes that it's no wonder few could afford to patronize the local artisanal donut purveyor.
To be fair, DTP wasn't about hedonism, although there was a fair amount of that. It was about creative combustion. Hsieh believes that if you collect a critical mass of smart, interesting people with smart, interesting ideas and set them bouncing off each other, magic happens. One of his favorite words is "collision": serendipitous interactions that ignite innovation. But for young founders, living in such close quarters--often in the same building--with their investors proved unnerving. And though Groth doesn't address this directly, the toll on efficiency must have been tremendous. ("Tony would often ask visitors from the media to meet him and his deputies serendipitously, not committing to a time or location," she writes, in one of the most chilling sentences I've ever read.)
Later, Hsieh abandoned ROC in favor of more prosaic, profit-focused goals. "But without the word 'community' the intentions behind Downtown Project are ambiguous," writes Groth. "There was no unity around the mission." Availability of money, crash pads, and enthusiasm dried up. The diaspora began.
In the book's afterword, Groff writes that Kingdom is not meant to be a traditional business book but rather "something that a progressive bookseller might place in the psychology or spirituality sections." In fact, there is not a lot of serious business going on here. A second strand of the narrative delves into Hsieh's experiment at Zappos with "holacracy," a self-organizing work model that eliminates titles and hierarchy in favor of distributed power and decision making. If holacracy did not evoke the same disenchantment among Zappos employees as DTP did among the downtown crowd, that is only because it never created comparable enchantment. But Groth's account is weighted toward the Vegas project, of which she was a part, rather than the shoe retailer's experiments, of which she was not.
Throughout, Groth tries to get a read on Hsieh, who emerges as a basket of contradictions. He scores "I" on Meyers & Briggs, yet craves stimulation on a scale that would send most introverts diving under a couch. He is interested in people but appears to display little empathy. He amasses followers but does not like to lead.
"For all the emphasis around culture and Tony's impassioned arguments about creating a better world with happier employees, sometimes it seemed that he couldn't be more apathetic about the whole thing," Groth writes. "In fact, I often wondered if Tony even believes in happiness."