Markets rise and fall, but one thing is certain: Tony Hsieh is having way more fun at work than the rest of us. His résumé says “CEO of Zappos.com,” the online retailer, but Hsieh (pronounced “Shay”) could easily dub himself High Priest of Happiness or even Partier in Chief. No meeting is too serious for Tony (first names only, please, among Zapponians) to break out shots of Grey Goose or to introduce, say, a guy in a hot-dog suit who comes in doing backflips (this actually happened).
Wackiness aside, business is booming. The shoe and clothing website was topping $1 billion in annual merchandising sales when Amazon acquired Zappos in 2009. Now the customer-service-focused company is reportedly more than twice as rich, though it no longer discloses revenue. At the same time, Hsieh, 40, is investing $350 million of personal pocket change to revitalize the bleak downtown Las Vegas neighborhood surrounding Zappos headquarters. Real estate, restaurants, tech start-ups, a school, a health center, arts, music, even a 40-foot metal praying mantis that breathes fire during a nightly drum circle—it’s all part of Hsieh’s new urban utopia.
Anthony Chia-Hua Hsieh was born December 12, 1973 in Urbana, Illinois to hardworking Taiwanese immigrants who later moved to California’s Bay Area to work even harder. Tony’s dad was a chemical engineer and his mom a social worker; they demanded excellence from Tony and his younger brothers, Andy and David. A prestigious Marin County private school paved the way to Harvard, where Hsieh studied computer science but barely went to class. Fortune found him anyway. Campus jobs led to computing jobs and a tech start-up of his own, a banner-ad aggregator called LinkExchange, which Microsoft bought for $265 million when Hsieh was 24. In 1999 he nearly deleted a voice-mail message from a guy looking for investors in an online store called ShoeSite.com, which eventually became the Zappos of internet success stories. Today the company makes nearly every list of best places to work, though Hsieh remains just another guy in a Zappos T-shirt one cubicle over. He even answers phones sometimes in the company’s 24/7 call center.
Contributing Editor David Hochman, who last interviewed comic-book icon Stan Lee, hung out with Hsieh in downtown Vegas for several days at Zappos headquarters and at the Ogden, where Hsieh lives alone in a sprawling condo almost always open to employees and friends. The man Hochman encountered surprised him. “You go in expecting Tony Robbins or even Ronald McDonald because of the rah-rah corporate culture,” Hochman says. “But Tony is shy to the point of being awkward and much more an observer than a showboat. Then again, there’s enough mirth-making around Zappos—the name is short for zapatos, the Spanish word for shoes—to make work a fiesta, even if Hsieh doesn’t say a thing.”
PLAYBOY: Tutu Tuesdays, Kilt Fridays, Godzilla-size bottles of vodka everywhere. How does anyone get anything done around here?
HSIEH: You get used to it. When there’s an employee parade coming through the office or someone from finance brings a horse up to the 10th floor for Chinese New Year, it’s just another day at Zappos. You learn to adapt. It’s all about framing, really. When you need to party, you party. When you need to produce, you produce. And by the way, it’s the Year of the Horse.
PLAYBOY: Whatever happened to nose to the grindstone?
HSIEH: Work isn’t about being chained to your desk, staring at a screen. What we’re focused on is employee engagement. Plenty of studies show that the more engaged employees are, the happier and more productive they are. And the best predictors of engagement are things like whether you have a best friend at work and how much freedom you have on the job. It’s a powerful thing to know you can turn your work space into a tiki lounge and invite everybody to happy hour at five o’clock.
PLAYBOY: What’s to prevent employees from being wasted all the time?
HSIEH: We trust our employees to use good judgment, which 99.9 percent of them do. We’d rather not create policies to address the 0.1 percent at the cost of fun for the other 99.9.
At our quarterly merchandising-awards ceremony this year, people showed up early to grab a beer or wine. Then we spent an hour recognizing the people who met their sales numbers. We watched a few SNL-type skits some employees put together, and then we had happy hour afterward a block away.
PLAYBOY: Work hard, play hard?
HSIEH: Why not? We also encourage managers to spend 10 to 20 percent of their time outside the office with their team and the people they work with. When new managers hear this, they go, “What? How? Why? Where?” It’s one of those bad habits we have to untrain out of our employees. And productivity and efficiency go up anywhere from 20 to 100 percent. It’s because communication within departments is better and people are willing to do favors for each other, not just as co-workers but as friends.
PLAYBOY: Your employees must be hooking up like crazy. Do you have to police the office nap rooms?
HSIEH: We’ve had quite a few Zappos marriages, but again, we trust our employees. Our nap rooms are for resting.
Listen, if you’re not enjoying work, what’s the point? Prior to Zappos, I cofounded a company called LinkExchange back in 1996 and grew it to about 100 employees before selling it to Microsoft two and a half years later. A lot of people don’t know the real reason we sold the company: It ended up not being a fun place to work anymore. When we were smaller, in the early days, it was super exciting and fun. We were hiring friends and friends of friends. Then at some point we ran out of friends and had to hire people based on interviews and résumés, which we had never done before. We were fresh out of school, and work suddenly became a job. I dreaded getting out of bed in the morning, even though it was my company. That’s a terrible situation, and it’s why we got out.
PLAYBOY: You left $8 million on the table by not sticking around with Microsoft that first year as your contract stipulated. That had to hurt.
HSIEH: It would have hurt a lot more to waste my life waiting for the money. Trust me, I still walked away with more money than I’ll ever need for the rest of my life. [Editor’s note: Hsieh received $32 million.] But it was a philosophical shift too. We’d been offered millions before and always held out for more. But while hanging around after the sale, I thought about all the things I wanted to be creating and experiencing. That’s when I decided to stop chasing the money and start chasing the passion.
PLAYBOY: Following your passion is easy when you’re sitting on millions. What if someone’s out of work? They need to chase the cash.
HSIEH: I think it’s hard to give universal advice, because it depends on your expenses, how much savings you have, your work experience. But when you’re out of work, it’s essential to focus on your interests and passions.
Sometimes when I speak at a conference, people ask me what’s a good market to get into where they can make a lot of money. My advice to them is, rather than having money be your primary motivator, think about what you’d be happy doing for 10 years even if you didn’t make a cent. That’s what you should be doing. I think if you do that, ironically, it’ll greatly increase your chances of making more money, because your enthusiasm will rub off on employees and customers and have this ripple effect on your whole business.
PLAYBOY: You must be really passionate about shoes.
HSIEH: I have zero interest in shoes. If anything, I have negative interest in shoes. And fashion. My outfit is the same every day: a Zappos T-shirt, jeans and sneakers. What happened was I formed an investment company with my happy little core group of friends. We invested in about 20 different companies, and things went great for a minute, but pretty quickly I got bored again. I felt I was sitting on the sidelines. I missed building something. Of all the investments we had, Zappos was both the most promising and, more important, the company with the people I liked the best. I joined full-time within that first year and have been here ever since.
PLAYBOY: Is there any advantage in not being in Silicon Valley or some other tech center?
HSIEH: Zappos started in San Francisco, and in 2004 we decided to relocate to the Las Vegas area. Seventy people moved with us. We’re a customer-service company, and it was really hard finding people in San Francisco who wanted to do customer service as a career. Vegas is service-focused 24/7, so we knew it would fit with our core values.
PLAYBOY: Core values?
HSIEH: We have 10 core values that serve as a formalized definition of our company culture, and everything is driven by those ideals. They bond us like a family; they guide us through good times and bad. Some of our core values: Embrace and drive change. Build open and honest relationships with communication. Be passionate and determined. Be adventurous. Be open-minded. Embrace growth and learning. Have fun. Be humble.
PLAYBOY: Value number one is to deliver “wow.” What does that mean exactly?
HSIEH: When you think about getting a “wow” reaction from someone, it shifts your attitude. You can’t just do things the expected way to get a wow. You have to go above and beyond. You’re going for spine tingling, earthshaking. You’re shooting for emotional impact. It’s why we have this thing in our call centers called PEC, or personal emotional connection. You don’t want to think of your customer as a dollar sign. You want to truly and authentically connect to their humanity. That’s why our reps have the freedom to send flowers or handwritten notes or cookies just as a friendly thank-you or follow-up. It’s why one employee spent 10 hours on the phone with a customer in 2012.
PLAYBOY: Ten hours?
HSIEH: A little longer than 10, actually. I have no idea what they talked about for all that time, but I don’t need to know. What matters is that our people go the extra mile. I’ll call Zappos sometimes if I need an answer for something. If I’m with a bunch of friends at a bar and there’s a question we can’t answer, we’ll call Zappos and ask. I shouldn’t tell people that, but it’s true. If you’re looking for a great pizza place near you or want to know how many seats are in the theater you happen to be walking past, maybe give Zappos a call. You’ll be amazed when the person answering actually makes an effort. Our reps don’t have quotas. They don’t have scripts. They never up-sell.
PLAYBOY: Remind us again why you don’t go bankrupt doing things this way.
HSIEH: Interestingly enough, most phone calls that come in don’t result in an immediate order. Somebody might want to see if they can get something delivered by tomorrow or if we have a shoe in a certain color. They’re not calling to buy something. What matters is using each interaction with a customer to build a customer-service brand, to let our reps shine in each interaction. That way, we’re creating a moment, a memorable and favorable experience, and yes, that does bring customers back for more.
PLAYBOY: The promise of the internet was that we’d all be working remotely from hammocks somewhere and ordering pizza with a click of a mouse. But your company culture demands that employees show up and stick around.
HSIEH: We’ve always taken the view that we have to physically be together from an employee perspective. People don’t work as well remotely. The author Steven Johnson writes about something called the “adjacent possible”—this notion that great ideas bubble up from unexpected places and random interactions over time. We want employees all in the same physical space to have more collisions. In fact, we’ve done weird things to prioritize collisions over convenience.
PLAYBOY: I assume you’re not talking about car crashes.