Delivering Happiness A Path to Profits, Passion, and Purpose

Highlights

I went ahead and reserved the domain name Shoesite.com. With the site ready to go, I just needed one other thing—shoes. I headed down to the local shoe store, took pictures of their stock, and put them on the Web site. Every time someone bought something on the site, I’d buy it from the store and ship it to them. For a big believer in technology, I couldn’t have found a more primitive way to do it. But it worked. People started buying shoes. I didn’t have the faintest clue about the workings of the shoe industry, but I knew I was on to something. Even though I’d never bought a pair of shoes through mail order, statistics proved there were a ton of people doing it. I stopped thinking, Hey, this is a good idea, and started believing in it. Somehow, I had to make it work.

▶ 0:05

I noticed so many similarities between poker and business that I started making a list of the lessons I learned from playing poker that could also be applied to business: Evaluating Market Opportunities Table selection is the most important decision you can make. It’s okay to switch tables if you discover it’s too hard to win at your table. If there are too many competitors (some irrational or inexperienced), even if you’re the best it’s a lot harder to win. Marketing and Branding Act weak when strong, act strong when weak. Know when to bluff. Your “brand” is important. Help shape the stories that people are telling about you. Financials Always be prepared for the worst possible scenario. The guy who wins the most hands is not the guy who makes the most money in the long run. The guy who never loses a hand is not the guy who makes the most money in the long run. Go for positive expected value, not what’s least risky. Make sure your bankroll is large enough for the game you’re playing and the risks you’re taking. Play only with what you can afford to lose. Remember that it’s a long-term game. You will win or lose individual hands or sessions, but it’s what happens in the long term that matters. Strategy Don’t play games that you don’t understand, even if you see lots of other people making money from them. Figure out the game when the stakes aren’t high. Don’t cheat. Cheaters never win in the long run. Stick to your principles. You need to adjust your style of play throughout the night as the dynamics of the game change. Be flexible. Be patient and think long-term. The players with the most stamina and focus usually win. Differentiate yourself. Do the opposite of what the rest of the table is doing. Hope is not a good plan. Don’t let yourself go “on tilt.” It’s much more cost-effective to take a break, walk around, or leave the game for the night. Continual Learning Educate yourself. Read books and learn from others who have done it before. Learn by doing. Theory is nice, but nothing replaces actual experience. Learn by surrounding yourself with talented players. Just because you win a hand doesn’t mean you’re good and you don’t have more learning to do. You might have just gotten lucky. Don’t be afraid to ask for advice. Culture You’ve gotta love the game. To become really good, you need to live it and sleep it. Don’t be cocky. Don’t be flashy. There’s always someone better than you. Be nice and make friends. It’s a small community. Share what you’ve learned with others. Look for opportunities beyond just the game you sat down to play. You never know who you’re going to meet, including new friends for life or new business contacts. Have fun. The game is a lot more enjoyable when you’re trying to do more than just make money.

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didn’t know it at the time, but ten years later I would learn that research from the field of the science of happiness would confirm that the combination of physical synchrony with other humans and being part of something bigger than oneself (and thus losing momentarily a sense of self) leads to a greater sense of happiness, and that the rave scene was simply the modern-day version of similar experiences that humans have been having for tens of thousands of years.

▶ 3:31

“To dare is to lose one’s footing momentarily. To not dare is to lose oneself.” —Søren Kierkegaard

▶ 3:56

Be humble: “In the beginner’s mind there are many possibilities, but in the expert’s mind there are few.” —Shunryu Suzuki

▶ 4:04

Nick, Fred, and I looked at other areas in the business where we could try to cut expenses. Even though it would hurt our growth, we decided to cut most of our marketing expenses, and refocused our efforts on trying to get the customers who had already bought from us to purchase again and more frequently. Little did we know that this was actually a blessing in disguise, as it forced us to focus more on delivering better customer service. In 2003, we would decide to make customer service the focus of the company.

▶ 4:13

It was a valuable lesson. We learned that we should never outsource our core competency. As an e-commerce company, we should have considered warehousing to be our core competency from the beginning. Outsourcing that to a third party and trusting that they would care about our customers as much as we would was one of our biggest mistakes. If we hadn’t reacted quickly, it would have eventually destroyed Zappos.

▶ 4:42

“We had a customer e-mail us the other day,” I said. “He had ordered a pair of shoes that we had in our warehouse and we surprised him with a shipping upgrade so that he got his order in two days instead of our original promise of a week. He said he loved our customer service and would tell his friends and family about us. He even said we should one day start a Zappos Airlines.” “That’s pretty funny,” Fred said. “Have you read Good to Great by Jim Collins?” I asked. “No, is it a good book? I mean… is it a great book?” “Yeah, you should definitely read it,” I replied. “He talks about what separates the great companies from just the good ones over the long term. One of the things that he found from his research was that great companies have a greater purpose and bigger vision beyond just making money or being number one in a market. A lot of companies fall into the trap of just focusing on making money, and then they never become a great company.” “Well,” Fred replied, “making money would certainly be a nice problem for us to have right now.”

▶ 5:05

Fred looked at me. “By the way, do you have any other books you would recommend reading?” “Yeah, there are a lot of really good business books out there. I’ll give you a few of the ones that I really like.” Fred sent me an e-mail the next day. Date: February 17, 2003 From: Fred Mossler To: Tony Hsieh Subject: Books I was thinking about our book conversation. Maybe a cool way of encouraging people to read would be to create a board with everyone’s names down one side and recommended books along the top. When a person completes one, they would get a check mark in the box. Perhaps, you would take to lunch once a month, the people that have completed the recommended books? Or maybe they would get movie tickets or gift certificates for completing three books, etc. We could have a Zappos library with a couple copies of each of the books so people could check them out? We didn’t realize it at the time, but the idea of the Zappos library would evolve far beyond just a small set of books that a few employees would read. Five years later, there would be a hundred titles in our lobby available for free to all of our employees and visitors. Many of the books would eventually become required reading for our employees to help them pursue growth and learning, and Zappos would even offer classes to go over some of the more popular books.

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Top 10 Ways to Instill Customer Service into Your Company Make customer service a priority for the whole company, not just a department. A customer service attitude needs to come from the top. Make WOW a verb that is part of your company’s everyday vocabulary. Empower and trust your customer service reps. Trust that they want to provide great service… because they actually do. Escalations to a supervisor should be rare. Realize that it’s okay to fire customers who are insatiable or abuse your employees. Don’t measure call times, don’t force employees to upsell, and don’t use scripts. Don’t hide your 1-800 number. It’s a message not just to your customers, but to your employees as well. View each call as an investment in building a customer service brand, not as an expense you’re seeking to minimize. Have the entire company celebrate great service. Tell stories of WOW experiences to everyone in the company. Find and hire people who are already passionate about customer service. Give great service to everyone: customers, employees, and vendors.

▶ 7:21

In most companies, logging in to the computer systems requires a login and password. At Zappos, an additional step is required: a photo of a randomly selected employee is displayed, and the user is given a multiple-choice test to name that employee. Afterward, the profile and bio of that employee are shown, so that everyone can learn more about each other. Although there is no penalty for giving the wrong answer, we do keep a record of everyone’s score. Internally, we refer to this as “The Face Game.”

▶ 8:27

We’ve formally defined the Zappos culture in terms of 10 core values: Deliver WOW Through Service Embrace and Drive Change Create Fun and a Little Weirdness Be Adventurous, Creative, and Open-Minded Pursue Growth and Learning Build Open and Honest Relationships with Communication Build a Positive Team and Family Spirit Do More with Less Be Passionate and Determined Be Humble

▶ 8:58

At the end of the first week of training, we make an offer to the entire class. We offer everyone $2,000 to quit (in addition to paying them for the time they’ve already worked), and it’s a standing offer until the end of the fourth week of training. We want to make sure that employees are here for more than just a paycheck. We want employees that believe in our long-term vision and want to be a part of our culture. As it turns out, on average, less than 1% of people end up taking the offer.

▶ 9:21

Many companies have core values, but they don’t really commit to them. They usually sound more like something you’d read in a press release. Maybe you learn about them on day 1 of orientation, but after that it’s just a meaningless plaque on the wall of the lobby. We believe that it’s really important to come up with core values that you can commit to. And by commit, we mean that you’re willing to hire and fire based on them. If you’re willing to do that, then you’re well on your way to building a company culture that is in line with the brand you want to build. You can let all of your employees be your brand ambassadors, not just the marketing or PR department. And they can be brand ambassadors both inside and outside the office. At the end of the day, just remember that if you get the culture right, most of the other stuff—including building a great brand—will fall into place on its own.

▶ 9:50

So the challenge to everyone is this: Make at least one improvement every week that makes Zappos better reflect our core values. The improvements don’t have to be dramatic—it can be as simple as adding in an extra sentence or two to a form to make it more fun, for example. But if every employee made just one small improvement every week to better reflect our core values, then by the end of this year we will have over 50,000 small changes that collectively will be a very dramatic improvement compared to where we are today.

▶ 10:40

One thing I encourage you to do is to refer back to our core values document and make at least one improvement every week that makes Zappos better. Ideally, we would do this every single day. It sounds daunting, but remember improvements don’t have to be dramatic. Think about what it means to improve just 1% per day and build upon that every single day. Doing so has a dramatic effect and will make us 37x better, not 365% (3.65x) better, at the end of the year. Wake up every day and ask yourself not only what is the 1% improvement I can change to make Zappos better, but also what is the 1% improvement I can change to make myself better personally and professionally.

▶ 11:11

Sample Interview Questions at Zappos The applicant is willing to think and act outside the box. • “Give me an example from your previous job(s) where you had to think and act outside the box.” • “What was the best mistake you made on the job? Why was it the best?” “Tell me about a time you recognized a problem/area to improve that was outside of your job duties and solved without being asked to. What was it, how did you do it?” • The applicant is more creative than the average person. • “Would you say you are more or less creative than the average person? Can you give me an example?” • “If it was your first day on the job at Zappos and your task was to make the interview/recruiting process more fun, what would you do for those eight hours?” The applicant is willing to take risks in trying to solve a problem. • “What’s an example of a risk you took in a previous job? What was the outcome?” • “When was the last time you broke the rules/policy to get the job done?”

▶ 11:53

“If you have more than 3 priorities then you don’t have any.” —Jim Collins

▶ 12:55

“In the pursuit of knowledge, something is added every day. In the pursuit of enlightenment, something is dropped every day.”

▶ 13:00

Happiness is really just about four things: perceived control, perceived progress, connectedness (number and depth of your relationships), and vision/meaning (being part of something bigger than yourself).

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