And yet, this mild-mannered fellow leads a company that is entirely uninhibited. Interviews are held over vodka shots, bathrooms are plastered with "urine color" charts (ostensibly to ensure that employees are hydrated but also just to be weird and funny), and managers are encouraged to goof off with the people they manage. Zappos's 1,300 employees talk about the place with a religious fervor. The phrase core values can prompt emotional soliloquies, and the CEO is held with a regard typically afforded rock stars and cult leaders.
Hsieh tries his best to keep up with the goofy, libertine culture. Every day, he blasts a steady stream of playful messages to 350,000 people on Twitter. (Before taking the stage at a conference earlier this year, he posted this missive: "Spilled Coke on left leg of jeans, so poured some water on right leg so looks like the denim fade.") He has also become an accomplished public speaker who spends a good chunk of his time on the road giving talks, which are delivered without notes.
What most of Hsieh's admirers -- and even some Zappos employees -- don't know is that this openness doesn't come naturally. Hsieh has been exceptionally shy all his life and finds meeting strangers exhausting. (His trick to get over his shyness is to pretend he's interviewing you for a job.) Those seemingly off-the-cuff Twitter missives? He spends 10 minutes or so carefully composing each one. He takes his employees out to restaurants and bars not because he loves nightlife but because he thinks it sets a good example. "I just want to have a company where people can hang out together," he says, "and then come in to work the next day and not worry about whether they've done something stupid." Most CEOs make their companies in their own image; Hsieh seems to have designed his company to behave the way he wishes he could.
Hsieh has always been a little different. He grew up in San Rafael, California, and excelled from an almost creepily young age. In first grade, he taught himself to program, playing with a Radio Shack microcomputer that his father, Richard -- a Chinese-born chemical engineer with a Ph.D., an M.B.A., and 29 patents to his name -- brought home. The next year, Richard blew a month's salary and bought his son an IBM XT personal computer. By third grade, Hsieh's bedroom was littered with pages of software code for a bulletin board system -- a precursor to today's Internet message boards, accessed by dial-up modem -- that he ran for several years, tying up the household phone line and mystifying his parents. "He stayed in his room for hours at a time," says Richard Hsieh.
Hsieh started his first company, LinkExchange, shortly after graduating from Harvard with a degree in computer science. The company allowed amateur Web publishers to barter for advertising by agreeing to publish one another's ads. "It was just something to keep busy," he says. "But within a week, we knew we were onto something." In three months, Hsieh signed up 20,000 websites; he decided that the site could make money by selling ads as well as trading them. Though Link-Exchange was unprofitable, the idea had enough steam to pick up a $3 million investment from Sequoia Capital -- Moritz led the investment. By 1998, the company, which had revenue of about $10 million, would be sold to Microsoft for a staggering $265 million. Hsieh was just 24 years old.
And yet, despite this success, Hsieh found himself depressed. "The easiest way to explain it was that going into the office started to feel like work," he says. He felt increasingly that the people he had hired were not committed to the venture's long-term growth. "The Silicon Valley culture is, 'I'm going to work hard for four years and make millions of dollars and then retire,' " he says. Work, which once had felt liberating, had become a chore. He resolved that his next company would not be about a short-term payday. It would be about long-term growth, about creating a place to which he and his employees would want to come every day.
When you visit Zappos's headquarters in Henderson, Nevada, it's easy to miss Hsieh's desk. Not only is it tucked into a row of cubicles in the middle of the floor, but it's also smaller and more cluttered than any CEO's desk I have ever seen. There are stacks of unopened mail, empty Styrofoam cups, several unopened liquor bottles, and a sizable collection of self-help books -- titles include Mastering the Rockefeller Habits, The Time Paradox: The New Psychology of Time That Will Change Your Life, and 14,000 Things to Be Happy About. There are a few science titles -- part of Hsieh's quest for a happiness framework -- a few on food and wine, and one on marathon running, which he recently took up.
Hsieh is a relentless self-improver, which may help explain why, after selling LinkExchange, he didn't start a new company. Instead, he started 27. In 1999, he and Alfred Lin, a Harvard classmate, launched something called Venture Frogs. Though structured as a venture capital fund, it was more ambitious. Hsieh and Lin leased 15,000 square feet of office space in the same San Francisco building in which they both owned lofts, and they gave the space to the start-ups in which they invested.
Hsieh's involvement in Zappos started with a voice mail from a young man named Nick Swinmurn, who said he wanted to start an online shoe company. Hsieh had never been particularly taken with the idea of online retail, but when Swinmurn mentioned that catalog companies sold $2 billion a year worth of shoes, Hsieh got interested. In 1999, Venture Frogs agreed to invest $500,000, if Zappos -- the name is a play on zapatos, the Spanish word for shoes -- could recruit someone with shoe experience. Swinmurn found Fred Mossler, then a Nordstrom buyer.
Six months later, Swinmurn was out of money, and the site offered only three shoe brands. (Most orders were initially filled by a few local retailers.) "We were down to the last day, essentially," says Mossler. "And Tony called." Hsieh said he would keep the company afloat and offered to help. By the summer of 2000, Hsieh and Swinmurn were co-CEOs, and Zappos was operating out of Hsieh's living room. Says Hsieh: "It was the most interesting opportunity, and the people were the most fun."
This is also a delicate way of saying that Hsieh was not especially happy as an investor. A few of Venture Frogs' investments succeeded -- notably the search engine Ask.com and the restaurant reservation system OpenTable -- but as the dot-com bubble burst, most struggled to survive, and some were shuttered. Hsieh had been attracted to investing because it seemed to bring all the fun of start-ups on a larger scale; instead, it became a treadmill of meetings full of bad news. "I think it was much harder than he first imagined," says Moritz. What Hsieh wanted, he realized, was the unstructured fun of a new company. As he puts it, "I wanted to be involved in building something."
