Editor's Note: We have updated this story to include comments from Zappos.

Tony Hsieh, the serial entrepreneur and head of Zappos, has famously strived to create holacracy--that is, a type of management structure in which a business effectively runs itself. But some say that Hsieh himself is far more authoritarian and even cult-like in his approach.

In her recent book, Kingdom of Happiness: Inside Tony Hsieh's Zapponian Utopia (Touchstone Books 2017), author Aimee Groth argues that Hsieh's leadership style checks several boxes on the cult-indicator checklist, a list of common features that most cults possess. There's some black-and-white thinking, and frequent changes in the way that business is conducted. There's also the fact that employees are kept as busy as possible--or at least prevented from spending much of their time alone.

"Without a doubt, it is a cult of personality," Groth writes of Hsieh's businesses. When reached for comment, a spokesperson for Zappos told Inc. that the company does not endorse the book. "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," she said via email.

In particular, Groth points to the Downtown Project's Las Vegas development plan, which was spearheaded in 2012, after Hsieh sold Zappos to Amazon for $1.2 billion. Hsieh invested $350 million of his own wealth into the Las Vegas metro area, including real estate, small businesses, and tech startups, with the goal of recreating the city as a major hub. Still, the revitalization efforts have scaled back in recent years.

According to Groth, the Downtown Project looks a lot like the "front groups" you'll find in some cults. Front groups are off-shoot businesses or organizations that cult leaders launch in an effort to improve their image, generate some income, and recruit new followers, according to the checklist. Additionally, members of the Downtown Project didn't have much of a sense of the overall purpose of the organization, just as cult leaders will attempt to control their followers by keeping them in the dark, Groth suggests. As the checklist asserts: "When joining a group, new converts are not told the 'whole story' concerning what will be expected of them as a member."

What's more, employees at both Zappos and the Downtown Project are encouraged to spend most of their time together--thus, in theory, making them easier to manage and control, she suggests.

Groth also points out that Hsieh tends to hire employees with little experience, but positive attitudes. That may also be symptomatic of a cult leadership style.

"If you ask people why Tony employs people who have no experience, many will say that he wants to give them a chance," writes Groth. "But the closer you go into his inner circle, the answer to that question changes. These people talk about how he hires neophytes he can influence. Most of them use the word control. I think it's some combination of both."

Published on: Mar 3, 2017