Zappos CEO Tony Hsieh on Selling to Amazon Vs. Microsoft, Fixing His Biggest Mistakes, and Why Harvard Entrepreneurs Go West
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it’s as if we swapped out our board of directors. If you come visit our offices, there’s no sign of Amazon at all.
X: Tell me more about the evolution of Zappos under the Amazon umbrella. How’s the company doing?
TH: We don’t have to worry about cash flow anymore or balance sheets, so that’s been really nice. It’s basically as if we view Amazon as this giant consulting company that has a lot of experience and resources that we can tap into as much or as little as we want, for free. We leave it up to each department to decide how much they want to do that. The only disadvantage has been—and this is not so much an Amazon thing as it is a public company thing—we used to be very open with our financials and share them with whoever asked. But because we’re part of a public company now, we can’t do that. But that would’ve been true if we’d stayed independent and went public on our own.
X: So you don’t have to call Jeff Bezos with an update every week?
TH: I see him once a quarter for two hours in a meeting with 10 people. So I don’t actually know him that well.
X: What personally makes you happy? How do you live a meaningful life?
TH: I personally enjoy being creative. Anything that involves thinking outside the box, going against conventional wisdom. Maybe it stems from my childhood issues with trying to prove my parents wrong and go a different path. They wanted me to get the MD or PhD, like all Asian parents; so being an entrepreneur was my way of rebelling against that.
X: What’s the biggest mistake you’ve made as CEO?
TH: I would say the biggest category of mistakes that I’ve made, and we’ve made at Zappos, has been in hiring. We’ve been around for 11 years. If you add up the cost of all our bad hires and the bad decisions they made—they also hired people, and so forth—over 11 years it has cost the company well over $100 million.
X: What would you ask the God of Business, if you could ask one question?
TH: I would want to know where all the people that we should hire are. Ultimately, for Zappos, that has been the limiting factor. Being able to hire people that are talented enough and fit our culture, and being able to hire them fast enough. If we could hire them faster than we can today, we’d grow really fast. A lot of businesses look at what their sales projections are and so on, and try to hire people into it. Whereas I think we really do it more as, hire the right people, and the sales will naturally be a function of how many great people you have. We’re about 2,200 people now.
X: How do you preserve the company’s interpersonal culture when you have thousands of employees?
TH: The only way to do it is if every employee views as part of his or her job living and inspiring the culture in others. That’s the only way it can scale. Otherwise it falls apart, which is what happens at most companies. For us, not only do we not want the culture to go downhill, but we actually want it to get stronger and stronger as we get bigger.
X: What are some of your favorite places to go around Boston?
TH: Pinocchio’s in Harvard Square. If you order the steak and cheese with everything—and you have to say it exactly in those words—that was my first introduction to the equivalent of Philly cheesesteaks. Every “Philly cheesesteak” I’ve had after that has been not even close.
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