Zappos CEO on corporate culture and 'Happiness'

Zappos CEO Tony Hsieh

TEXT OF STORY

Phone ringing

Man: The boss will see you now.

Kai Ryssdal: Today on Conversations from the Corner Office, a trip to meet Tony Hsieh, CEO of Zappos, the online shoe retailer.

Customer Service Representative: Alright Monica, I'm looking at your order for a pair of Donald J. Pliner Seemas. Is that right?

The main Zappos offices -- is mostly its customer call center, really -- are in a generic office park, just outside lost outside. Dozens of employees sit in cubicles, fielding calls about styles, sizes, purchases, returns, all that stuff. In a way, it's probably like most every other call center. Except here, each pod of cubes is wildly decorated, each with a different theme. There's a space alien motif over there. An homage to surfing over here. The 1950s live on down the way. You turn the corner, and between rows of desks and telephones, there's a group of people in party hats cheering on a co-worker playing ring toss.

Zappos employees, chanting: Ingrid! Ingrid! Ingrid! Aaaaaaaaaawwwwww!

And this is just the way CEO Tony Hsieh wants it.


HSIEH: For us our number one priority as a company is company culture, and our whole belief is that if we get the culture right, then most of the other stuff, like delivering great customer service or building a long-term enduring brand will just happen naturally on its own.

To see that culture firsthand, we went out to Vegas and took one of the 16 tours that Zappos gives of its offices every week.

HSIEH: This is our nap room. It's been proven that a 20-minute nap makes people more effective during the day.

As we make our way through the maze of cubicles and conference rooms, different departments introduced themselves with different noise-makers. Western wear rang cowbells for us; dinner bells announced the clothing team; and the travel team, for some reason, happily squeezed rubber ducks. Down the hall, in the lunch room, a woman was singing karaoke, pretty well too, actually.

At some point, you figure they are getting work done. But one thing you won't find is an office with Tony Hsieh's name on it. He works at a regular desk in a cluster of cubicles decked out in dark plastic jungle vines. It's known as "Monkey Row."

Ryssdal: I have to ask you the productivity question, because we are here surrounded by people who are, many of whom are working, but there's another sizeable group that's standing around chit-chatting. There's a party down the hall that's been going on for an hour. How does all this affect actually day-in and day-out selling shoes?

Hsieh: Probably the easiest example to give is when we do new management orientations, we encourage new managers to spend 10 to 20 percent of their time outside the office. So what you are seeing now, consider that... maybe "away from their desk" might be a better term. But a lot of that is actually outside the office, whether it's going bowling with your team or happy hour with the people you work with and so on.

The initial reaction we get from new managers is "OK, that's great, sounds like fun, but there's a lot of work to do. What about productivity?" And then we ask the managers that have done it, how much more productive and efficient is their team, because there's higher levels of trust; communication is better; people are willing to do favors for each other 'cause they are doing favors for friends not just coworkers. And the answers we get back range from 20 percent to even 100 percent more productive. So kind of a worse case scenario, you break even and you're having more fun doing it.

They're definitely having fun. Zappos has been ranked among the best places in the country to work. And all the high jinx don't seem to be hurting the bottom line either. Zappos took in more than a billion dollars in sales last year. It's actually been growing at time when most other shoe retailers are struggling.

Maybe because of that, Tony Hsieh has become an accidental management guru. People and companies pay thousands of dollars to come and learn the ways of Zappos corporate culture. Hsieh's even written a book about it a New York Times best-seller called "Delivering Happiness."

Ryssdal: It does seem, though, what is being created here by virtue of your role in this company and your public profile is sort of a two-headed operation. You have this website that sells shoes and now clothing and cosmetics and all kinds of other things, and you have you.

Hsieh: Well, we actually have a separate entity called Zappos Insights, and we help other companies figure out their own values and figure out their own values and develop their own strong cultures. 'Cause one of the reactions we get sometimes is, "OK, glad you have this strong culture, Zappos. Happy for you, but this would never work in another industry, in a non-Internet company" and so on. But companies from all over the country, or world even, fly in. For example, the Atlanta Refrigeration Company does refrigeration repairs out in the field, so in some ways you can't think of a more opposite company.

Ryssdal: They came here? The Atlanta Refrigeration Company?

Hsieh: Yup, they came here. And they went back and really focused on building a strong company culture, focused on delivering better customer service. And now they are reporting back that customers are happier, employees are happier, revenues are up, profits are up. It's just really neat seeing that this type of philosophy of essentially using happiness as a business model working in other companies and other industries.

The first decade it was around Zappos was an independent company. Last year, though, Hsieh and the Zappos board sold out to Amazon for more than a billion dollars.

Ryssdal: There was much consternation in the press, and I imagine in the company, about how that would change your culture. I would say that culture is probably intact, so let me ask you the counter-intuitive question: Have you guys changed to Amazon's culture at all?

Hsieh: I'll preface it with saying that Amazon is not trying to change our culture, and we're not trying to change Amazon's culture. But at the same time, both of us have a lot to learn from each other. And so the way we've structured it is we think of Amazon as this giant consulting company that has a lot of resources that we have access to. But it's up to us to tap into it as little or as much as we want to, and we actually leave it up to each individual department. Some departments, they will have maybe a half hour phone call once a quarter to check in, and others, like for example, our warehouse operations, there's a lot to learn from each other, because we approached our warehouse operations pretty differently in a lot of cases. So some of what we do has rubbed off onto Amazon and vice versa.

Ryssdal: Without looking can you tell me what kind of shoes you're wearing right now?

Hsieh: Well, yes, because I only have one pair of dress shoes. They're Donald Pliner.

Ryssdal: Oh man. Tony Hsieh, CEO of Zappos. Thanks a lot.

Hsieh: Thanks for having me.


Ryssdal: To hear my entire conversation with Tony Hsieh, listen to the extended interview. And, play our new footwear-inspired game. You have to pair up prominent executives with their shoes.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.

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