At the Collision Conference in Las Vegas on Tuesday, Hsieh explained why. He doesn't want Zappos to function like a company at all. He wants it to be a city.
Cities, Hsieh said, evolve through a process of self-organization as they grow, not central planning. You might think the result would be chaos, but it's just the opposite. "The whole system just works, and it's really resilient and flexible," he said.
In fact, as cites get bigger they get more efficient: Every time a city doubles in size, productivity per resident goes up 15%, Hsieh claimed. Companies, in contrast, see productivity per capita fall as they grow.
Lest you worry about the jobs of all those managers, Hsieh clarified that they're not being let go. "The people themselves we want to stay but they need to find some other role that doesn't involve managing people," he said.
Hsieh is a little obsessed with cities. In fact, the Collision Conference, now in its second year, was named after Hsieh's practice of trying to engineer "collisions," or unplanned encounters, between people with different sorts of experience, both at Zappos and through The Downtown Project, his urban-renewal initiative in Las Vegas.