From Earthworms to Amazon: How Tony Hseih and Zappos Create a Culture of Happiness

By Gregory VandenBosch


In his new book Delivering Happiness, Tony Hseih outlines his journey to achieve professional happiness on an individual level as well as his model for "delivering" happiness to his employees, customers and vendor partners.  It's a funny, wry, honest autobiography of a striving Asian American who's got the drive and ambition of his family deeply ingrained, and at the same time the irreverence of a slacker who's looking to create a "vibe" that makes the people around him feel like they're part of something special. From a failed earthworm farming venture to a successful teenage button making business, the book is chocked full of stories that provide an entertaining glimpse into the mind of an entrepreneur in the making. 

After telling the story of LinkExchange, an internet advertising cooperative he co-founded in 1996 with two of his Harvard classmates, the book shifts gears.  It's the reality of a $265 million dollar LinkExhange sale to Microsoft that leaves Tony, now wealthy and free, looking for his next adventure and his earnest search for personal happiness.  His time with friends partying, buying up real estate, investing in start-ups all provided highs, but the adrenaline rushes were short lived.  Tony wasn't building something.  He wasn't living with a higher purpose.  Overtime he ended up finding himself more and more involved with Zappos, a tiny little startup that kept losing money and was in desperate need of more and more of Tony's personal funds.  While Tony writes about the countless challenges the company faced in its early years, the message is really focused on how to create a company with a culture that sustains happiness for both it's employees and the customers it serves.  Hsieh clearly defines the company's culture with 10 core values that underlie all interactions:

1. Deliver Wow Through Service
2. Embrace and Drive Change
3. Create Fun and a Little Weirdness
4. Be Adventurous, Creative and Open-Minded
5. Pursue Growth and Learning
6. Build Open and Honest Relationships with Communication
7. Build a Positive Team and Family Spirit
8. Do More with Less
9. Be Passionate and Determined
10. Be Humble

The culture at Zappos is preserved at all costs.  And, the thing that Zappos figured out, and continues to deliver on, is the idea that people who don't fit the company culture are better off being paid to leave.  "Everyone that's hired, it doesn't matter what position--you can be an accountant, lawyer, software developer--goes through the exact same training as our call center reps. It's a four-week training program and then they're actually on the phone for two weeks taking calls from customers. At the end of that first week of training we make an offer to the entire class that we'll pay you for the time you've already spent training plus a bonus of $2,000 to quit and leave the company right now."

Paying new employees to leave may seem odd, but for Tony, it makes simple sense. "Really, the goal of that originally was to weed out the people that are just there for a paycheck."

In the end, the culture is about more than money. "It's not me saying to our employees, this is where our culture is. It's more about giving employees permission and encouraging them to just be themselves.

The book goes on to colorfully describe the company's growing pains and mounting tensions in the board room.  Despite explosive growth, a number of board members viewed the company's culture as a pet project — “Tony’s social experiments,” they called it.  The board’s attitude was that his “social experiments” might make for good PR but that they didn’t move the overall business forward. "The board wanted me, or whoever was CEO, to spend less time on worrying about employee happiness and more time selling shoes".  In the end, Tony was pressured to sell Zappos.  Fortunately for all, their acquirer, Amazon, seems to value and share what Zappos values.

The book is titled Delivering Happiness and the subtitle is A Path to Profits, Passion and Purpose. Tony Hsieh says in the book that research found that the best companies in terms of long-term financial performance are ones that are able to combine profits, passion and purpose. "There's three types of happiness and really happiness is about being able to combine pleasure, passion, and purpose in one's personal life. I think it's helpful and useful to actually think about all three in terms of how you can make customers happier, employees happier, and ultimately, investors happier."  So, if you’re an entrepreneur, thinking of becoming an entrepreneur, or just curious as to what it really takes to build a successful team, this book is a must read.  Happy reading.