Button-making, internet advertiser, shoe entrepreneur, Zappos CEO, Tony Hsieh

30 12 2008


You know, part of the reason why I started the Asian Heroes Project is because I didn’t know who my hero was. For over a decade now, I have looked up to folks like Richard Branson, David Novak, Warren Buffet, and  Kevin Rose. Today, with help from a friend, Jasmine Kuan, I might have found a hero who also happens to share my cultural heritage. Read on and be inspired.

His beginnings

At age 12, Tony Hsieh, CEO of  Zappos.com, ran a button-making business by sealing photos between a sheet of plastic and a metal disk. After advertising in a directory aimed at other kids, he was soon bringing in a few hundred dollars a month.

Pizza Partners

A lot of success stories in Silicon Valley were started by two guys. Hewlett-Packard. Apple. Microsoft. Oracle. Google. Tony found his partner in fellow Harvard classmate, Alfred Lin.

As a Harvard undergrad, Tony was selling pizzas out of his dorm. Another student, Alfred Lin, was equally enterprising: He bought whole pizzas from Tony, took them upstairs, and resold them by the slice.  Today, they work together at Zappos.com


In 1995, Tony graduated with a B.A. in computer science from Harvard. He went on to work as a Software Engineer at Oracle while starting an Internet advertising company called LinkExchange (www.linkexchange.com).

The Internet Link Exchange allowed anyone with a web site to advertise their site on banner ads on thousands of other participating web sites for free. In order to participate in the Link Exchange, members agree to insert some HTML code into their web pages. This will cause banners of other members to automatically appear on their site. Other members will be doing the same thing, and the end result is that members will all be displaying ads for each other, and everyone who participates wins! The number of times a site was advertised was directly proportional to the number of times that site has advertised for other sites.

To date, these services have been used by over one million users with a reach of over 50% of Internet connected households.  They grew the company to 100 employees and, in 1998, 24-year-old Tony Hsieh sold his company to Microsoft for $265 million.

Tony then went on to co-found Venture Frogs (www.vfrogs.com) with Alfred Lin. Tony met Alfred Lin (COO/CFO) at Harvard, when Tony was running a pizza business and Alfred was his #1 customer. Venture Frogs is an incubator and investment firm that reported making more than 20 investments — each ranging in size from $100,000 to $3 million — from a fund of some $27 million. Some of the companies receiving investment money from Venture Frogs: Ask Jeeves, Entango, NeoPlanet, and Fusion.com.

Fun fact? Tony has a restaurant too

At Venture Frog, Tony  Hsieh’s co-workers met and ate at the company’s restaurant wheres speciality dishes were named after well-known technology companies.

Tony hired his parents to run the restaurant. For them, it was a way to spend more time with their son.

Sometimes I visited him,” says Judy Hsieh. “He wasn’t available. He wasn’t there. He was on the phone. He was busy or he was sleeping by the desk on the floor. Doing this, I’m able to see him more often.

Zappos.com almost didn’t happen

A voice mail from a young entrepreneur Nick Swinmurn brought him to Zappos.com. First Tony was about to delete the mail:

Nick left a message saying he wanted to start a company that sold shoes online. I didn’t think consumers would buy shoes sight unseen, and Nick didn’t have a footwear background. It sounded like the poster child of bad Internet ideas. But right before I hit “Delete”, Nick mentioned the size of the retail shoe market – $40 billion. And the more interesting thing was that 5% was already being done through mail order catalogs. That intrigued me.

He soon invested $500,000 in ShoeSite.com (they soon changed the name to Zappos, after zapatos, which is Spanish for “shoes”). Within six months, he and Swinmurn were running the show together. Early this year, Swinmurn moved on, leaving Hsieh at the helm of a company that had sales of $252 million in 2005.

Tony originally got involved with Zappos as an advisor and investor in 1999, about 2 months after the company was founded. Over time, Tony 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 he was involved with. He eventually joined Zappos full time in 2000. Under his leadership, Zappos has grown gross merchandise sales from $1.6M in 2000 to $840M in 2007 by focusing relentlessly on customer service.

Which customer-service elements make Zappos.com stand out?

Tony says,

It’s free shipping both ways. We have a 365-day return policy. We promise customers that they’re going to get their shoes in four to five business days, but actually, for almost all of our customers, we do a surprise upgrade to overnight shipping.  […] On any given day, [repeat business] is about 75 percent of our orders.

Tony Hsieh will be the first to tell you he’s not motivated by money — he makes $36000 a year — but by the prospect of creating something different.

It doesn’t matter which position you [accept]. You can be an accountant or a lawyer, and you still go through that same training that our call center representatives go through […] If we want our brand to be about customer service, then customer service needs to be the whole company, not just a department.

In fact, customer reps are given $1000 to leave the company during the training if they feel that they don’t fit with the culture of customer satisfaction. He focuses on continuing to grow the business at a rapid pace while maintaining the culture and feel of a small company.

You can tell the most about people in the little details…

We figure the best way to have an open-door policy is not to have a door in the first place. I think, for employees, it’s good because they can just walk by and say hi or ask a question.

I think it helps humanize all of us and makes us more approachable. We have, for example, happy hours for different departments and the new classes, and I try to attend as many of those as possible. I also host a New Year’s party and a Fourth of July barbecue at my house every year, and all the employees are invited.

What’s next?  Tony Hsieh’s top 10 eCommerce Lessons (from http://www.good2work.com/article/6353)

  1. The e-commerce business is built upon repeat customers.
  2. Word-of-mouth really works online.
  3. Don’t compete on price.
  4. Make sure your Website is 100% accurate.
  5. Centrally locate your distribution.
  6. Customer service is an investment, not an expense.
  7. Start small, stay focused.
  8. Don’t be secretive. Don’t worry about competitors.
  9. You need to actively manage your company culture.
  10. Be wary of so-called experts. No one knows your customers better than you.

Follow him here. Also, from the Venture Frogs website:

Venture Frogs, LLC
1000 Van Ness, #201
San Francisco, CA 94109
Tel: 415-345-6260
Fax: 415-928-4606

If you are visiting their offices, they are located at 1000 Van Ness in San Francisco, at the corner of Van Ness and O’Farrell.

Image from: http://chrisguillebeau.com/3×5/files/2008/04/tony-hsieh-bw-photo.jpg




2 responses

6 01 2009

Another great article guys. You should think about setting up an RSS Feed – if it’s there I haven’t found it.

23 07 2009

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