You wouldn't expect the CEO of a billion-dollar company to live in a glorified trailer park. But Tony Hsieh is no regular businessman: his company, online retailer Zappos, is a direct reflection of his quirky, anti-status quo mindset.
Zappos' core values encourage people to "create fun and a little weirdness" and to "be adventurous, creative, and open-minded." This offbeat business style has established a thriving company culture and an unparalleled customer service reputation.
I recently caught up with Hsieh about how his minimalist lifestyle helped inform the structure of his business, and how hiring the right people is the biggest asset any business can have. Here's what he had to say.
You've been living in an Airstream for three years now. Why did you choose this lifestyle and why does it work for you?
When I first moved to Vegas in 2004, I lived in a big house in the suburbs. While it was great to have the space, I never really had serendipitous encounters with friends; everything had to be pre-planned and pre-arranged.
In 2011, I moved downtown and lived in an apartment building. I ran into more friends in the elevator and, if there was a friend at a local restaurant or bar, it would take me five minutes to walk there and say hi. I found that the more frequent encounters (which we've named "collisions") made me happier.
A few years ago, a bunch of friends and I decided to do a one-week experiment: we took over half an empty city block downtown (about an acre), and pulled in 20 Airstream trailers and 10 Tumbleweed tiny houses. We had a campfire going every night, people playing guitar and singing around the campfire, and all sorts of interesting people stop by to visit. After a week had passed, many people -- including myself -- decided to stay.
For me, it's always been about increasing the frequency of collisions. Anytime I walk out of my Airstream, there's something going on either by the campfire, in the community kitchen, by the pool (we built a new pool!), or next to the BBQ area.
We're now expanding beyond just residential. You can follow our progress online.
What did you need to have in place to implement Holacracy at Zappos? What can you tell other business owners about how to make it work?
Commitment, patience, and open-mindedness. Holacracy isn't just about a new set of rules; it's also about a new mindset for everyone, and a lot of the rules may seem strange and uncomfortable at first. In our experience, it's been easier and faster to form new teams, and harder to convert existing teams to Holacracy.
While the media tends to focus on Holacracy specifically, that just happens to be the technology that we are using today. Long-term, we're committed to the power of self-organization, and there are many technologies and tools (many that we've built internally) to help us make progress along that front. Cities are a great example of self-organization at work; they're resilient, they stand the test of time, and they scale well.
What's your secret superpower and why?
Zappos excels in culture and customer service. How do you retain your magic when you're acquired by a behemoth like Amazon?
Zappos, unlike many other Amazon acquisitions, is actually run independently from Amazon. We basically treat them as the equivalent of our board of directors. Amazon recognizes that we have different cultures and that our culture is part of what makes Zappos unique. They seek to protect that. This was something that we pre-negotiated as part of the acquisition.
We have a WTF (Willing to Fail) culture at our company. Tell me about the biggest failure you've made in your career. What did you learn and how did you recover?
I think the biggest category of failures has been in hiring. If you add up the cost of all the bad hires we've made, plus the bad hires those bad hires have made, plus the cost of all the bad decisions made as a result, it has cost Zappos well over $100 million. Even though most people tend to hire quickly and fire slowly, we try to do the opposite: hire slowly (to ensure the right fit), and fire quickly (when you know it's not a good fit).