VIEWS: 6 PAGES: 2 POSTED ON: 6/29/2011
Chapter 5 SHARING WITH AMAZON. TONY HSIEH Peter Hopkins: Now how has this played out for Zappos in cause there is a lot of learning. You know, there is some areas the context of the Amazon purchase last year? Just for context, that they are better at than we are and vice versa on the ware- Amazon purchased in all-stock transaction Zappos valued at housing side, but then there may be other departments where 1.2 billion, and around that there was a lot of discussion that they just do a quick phone call once a quarter, just check in, you had to have with your colleagues after the fact to explain and it’s much less interaction, but we really leave it up to each what this was all about to give them a sense of what was go- of our department or subdepartment owners at Zappos. ing on, and one of the interesting things you mentioned was that Zappos has a lot to teach Amazon in much the same way Peter Hopkins: And I was saying to you before the inter- Amazon has a lot to teach Zappos about different things. view started that our last interview we had Jason Fried at You said that Amazon really can teach us a lot about technol- 37signals. Actually, they have a relationship with Amazon and ogy and being the very cutting edge. We can teach Amazon Jeff Bezos in particular, not Amazon per se. Was anything a lot about culture and how it can really **** to its benefit in about Jeff Bezos and his particular view of been, which is very a range of ways. Explain that for the audience and also talk interesting, that helped you get over the hurdle of making this about the experience in the last year. How has that played out marriage, or was it really just about the essential aspects of thus far? the two companies? Tony Hsieh: And so as a precondition for even exploring the Tony Hsieh: Well, we actually have this document called the acquisition start… because most Amazon and I guess corpo- Five Tenets Document that we use internally, and basically rate America in general acquisitions are the plan is to inte- it spells out that we’re going to remain independent and the grate the company being acquired into the parent company, only decisions that Amazon can basically overrule Zappos on and eventually the company becomes…The identity becomes are ones that are legally necessary, so one example would lost, and we said, as a precondition, we would only consider it be that we, prior to the acquisition, one of our core values is if Zappos could remain independent, and we would continue about being open and honest, so we were very open in shar- to grow our brand, our culture and our way of doing busi- ing our financials and so on with whoever, but now that we’re ness our way, and so from our… And they remained true part of a public company, there are certain FCC regulations to their word. From our point of view, it’s as if we swapped where we can’t be as open as we were before. out our board of directors with a new one, and, yes, there is definitely a lot we can learn from each other. Amazon, I think, Peter Hopkins: And how do you see…? What is the vision really takes more of a high-tech approach. We take more of now in terms of the growth trajectory of Zappos in relation- a high-touch human approach, and we’re not, I guess, trying ship to Amazon? Amazon obviously is and wants to continue to necessarily change each other, but we recognize that there to be the leading global online retailer. Zappos is the leading is also a lot we can learn from each other, but the way it has retailer, online retailer, of a certain subsection of goods. How worked from our perspective is now it’s as if Amazon is this gi- do these two entities…? Where do you see these two enti- ant consultant company with lots of resources and knowledge ties going, and what do they look like in relationship to each that we can tap into as little or as much as we want to and we other? leave it up to each individual department or subdepartment to decide how much they want to do that. So for something, Tony Hsieh: Yeah, in terms of because we are so indepen- like, on the warehousing side, for example, the way we run dent from Amazon, I don’t know actually much of what their our warehouse is pretty different from the way Amazon runs internal plans are, but I can tell you from Zappos’s perspec- their warehouses. There is a lot of sharing back and forth be- tive. We started out in footwear and now doing over a billion Chapter 5 SHARING WITH AMAZON. TONY HSIEH dollars in gross merchandise sales there, and in the U.S., apparel is four times the size of the footwear market, so in theory at least, that should keep us busy until we hit five billion, and then I’m sure the footwear category will continue to grow during that time as well. So we’ve got plenty of work cut out for us for at least the next several years just focusing on expanding into clothing. Peter Hopkins: And do you see yourself still at the helm and kind of leading this group? Tony Hsieh: Yeah, I am still CEO of Zappos and have no plans to leave, and actually it’s interesting because we actually structured the deal, so it was not like most normal deals. Most deals, I guess—whether it’s Amazon or another company— they have a retention pool or bonus that they give to the top 5 or 10 executives and in order to keep people in the company. But for me, personally, I actually asked not to participate in the pool, and we actually spread the bonuses amongst all our employees. And my salary prior to the acquisition was 36,000 a year and it still is now, so and that’s the only…So there is really nothing keeping me at Zappos except for making sure that I’m happy. So in a weird way that actually gives me more leverage over Amazon in terms of they have to worry about making me happy because I don’t have any golden handcuffs or anything, and what makes me happy is feeling like we have our independence, can make our decisions at Zappos. Peter Hopkins: And are they supportive of this whole movement, this happiness movement and your efforts above and beyond Zappos in Las Vegas, Nevada? Tony Hsieh: Yeah, they’re support…I mean, I don’t think they know too much in detail about it. I’ll probably have con- veyed more information in this interview than they’re aware of, so.
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