When Customer Service Brings You a Billion in Sales: Interview with Zappos CEO Tony Hsieh

When majority of Americas entrepreneurs are looking forward to that grandiose of a pay day, there is one that focus is pleasing the customer. Meet Tony Hsieh, the brains behind the multi-billion dollar company Zappos.com. He has transformed something that was just a whisper into a brand that has grown gross merchandise sales from $1.6M in 2000 to over $1 billion in 2008 by focusing relentlessly on customer service. Driven-Magazine.com had the preternatural opportunity to sit down and interview Tony Hsieh.


1. Many People know you as Tony Hsieh, the mastermind behind Zappos.com. Conversely we would like to know the real Tony Hsieh before Zappos.com.



Tony: Prior to joining Zappos, I graduated from Harvard University with a BA in Computer Science. Where I co-founded Venture Frogs with Alfred Lin. Venture Frogs is an incubator and investment firm that invested in Internet startups, including Ask Jeeves, Tellme Networks, and of course, Zappos.com. Prior to Venture Frogs, I also co-founded LinkExchange, an advertising network that was successfully sold to Microsoft for $265M in 1998.


2. What was the DRIVEN force that pushed you to become an entrepreneur?


Tony: I've always enjoyed building something and being creative.


3. We see that you attended the prestigious Harvard University, and

graduated with a degree in Computer Science. How was your experience

there, and has the education provided by Harvard helped you in your

entrepreneur endeavors?



Tony: The value of my college experience wasn't so much the classes I took as it was the people I met and my non-academic experiences, including running a pizza business from the ground floor of my dorm. It was in college that I met Alfred Lin, who is now our CFO/COO. He was my #1 pizza customer!


4. You were the co-founder of LinkExchange, which you sold it to Microsoft for $265M. Tell us how did you come up with the idea of LinkExchange.



Tony: Originally, LinkExchange was just a weekend project that my roommate and I were working on because we were bored.


5. Whats the story with Zappos.com, where did the idea come from?



Tony: The year was 1999, and our founder Nick Swinmurn was walking around a mall in San Francisco, looking for a pair of shoes. One store had the right style, but not the right color. Another store had the right color, but not the right size. Nick spent the next hour in the mall, walking from store to store, and finally went home empty-handed and frustrated. At home, Nick tried looking for his shoes online and was again unsuccessful.

Although there were a lot of "mom and pop" stores selling shoes online, what was interesting to Nick was that there was no major online retailer that specialized in shoes. So, since it was 1999 and anything seemed possible at the time, Nick decided to quit his day job and start an online shoe retailer... and Zappos.com was born! The original idea was to create a web site that offered the absolute best selection in shoes in terms of brands, styles, colors, sizes, and widths.

I was originally involved with Zappos just as an advisor and investor in 1999, about 2 months after the company was founded. Over time, I ended up spending more and more time with the company because it was both the most fun and the most promising out of all the companies that I was involved with. Eventually, I joined Zappos full time in 2000. Under my leadership and team, Zappos has grown gross merchandise sales from $1.6M in 2000 to over $1 billion in 2008 by focusing relentlessly on customer service.

(You can read Tony's open letter about our partnership with Amazon CEO Letter | Zappos.com)


6. Everyone wants to be a entrepreneur, please tell us some of the misconceptions novice entrepreneurs might have when starting a business.



Tony: I would say rather than focus on what will make you the most money or be best for your career, figure out what you would be passionate for 10 years and go pursue that. A lot of people work hard at building a career so that one day down the road they think it will bring them happiness. And most of the time, when they finally accomplish their goal, they realize that it doesn't really end up bringing happiness or fulfillment for the long term. One of the things that the research has shown is that people are very bad at predicting what will make them happy. If the ultimate goal is to achieve enduring happiness, it seems like it's worth spending some time learning about the science of happiness so you don't wind up in the same situation.


7. Once the mentee now the mentor, what advice can you give to entrepreneurs who are seeking to follow in your footsteps? Do you have a mentor program, in which you mentor aspiring entrepreneurs?



Tony: We have started a program called Zappos Insights. This is a subscription service where you can learn more about how we manage our culture, customer service, marketing, training, hiring, and business in general. You can learn more about it here:

Zappos Insights - Learn to create a strong culture

I would also recommend reading a lot of books to gain as much perspective as possible. Some of my favorite books are here: Zappos Library - Shoes, Bags, Watches - Zappos.com


8. Selling two companies in a 10 year span are signs of a serial entrepreneur. So what’s next for Tony Hsieh?



Tony: Right now all of my energy are focused on Zappos. 10 years from now, we're hoping that people don't even realize we started out selling shoes online. We just want the Zappos brand to be about the best service, which includes free shipping both ways and our 365-day return policy.