CEO Q&A: Tony Hsieh, Zappos

Tony Hsieh, CEO of Zappos, talks about how the online retailer reinforces brand culture.

Tony Hsieh, CEO of Zappos, talks to Diana Bradley about how the online retailer reinforces brand culture and its new focus on community.

How did you arrive at Zappos?
In 1996, I cofounded an Internet company called LinkExchange and grew it to about 100 employees. I sold the company to Microsoft in 1998 for $265 million and then cofounded a venture investment fund called Venture Frogs. We invested in more than 20 Internet companies and Zappos was one of them.

In the course of a year, I realized that - for me - investing was boring. I felt like I was sitting on the sidelines and missed being a part of building something. So within a year, I joined Zappos full time and have been with the company ever since.

In 2009, we sold Zappos to Amazon for $1.2 billion, but the company has continued to operate independently.

How has the organization evolved since its launch?
One of my favorite quotes is, "A great brand is a story that never stops unfolding."

The Zappos brand has evolved quite a bit during the years. Back when we started the site in 1999, our goal was simply to build the brand to be about having the best selection of shoes online.

Then, in 2003, the main focus was on building the brand to be about the very best customer service and experience possible.

In 2005, we decided to add company culture to the brand, with the belief that an organization's brand and culture are really just two sides of the same coin. The brand is just a lagging indicator of the culture.

With our move to downtown Las Vegas last autumn, we now aspire to layer another element onto our brand: community.

Along with this, we are focused on clothing, footwear, beauty and accessories, home- ware, and other product categories, and customer service and company culture.

You are backing the Downtown Project, a $350 million real estate development and small business and technology investment project to revive downtown Las Vegas. How does this benefit Zappos staffers and the local community?
Every time the size of a city doubles, innovation or productivity per resident increases by 15%. But when companies get bigger, innovation or productivity per employee generally goes down.

Research has shown that a lot of innovation comes from something outside your industry being applied to your own. Integrating our employees into the downtown ecosystem will lead to more serendipitous encounters, collaboration, and co-learning opportunities, and, ultimately, more innovation and productivity.

How do you leverage social media to engage consumers?
There isn't anything special about our social strategy. We just interact with customers in whatever forms they want to communicate with us, which includes phone, email, live chat, Twitter, and Facebook.

Social media is making companies more transparent, which goes back to our belief that if we get the culture right, the other stuff, such as delivering great customer service or building a long-term enduring brand, will be a natural byproduct of that.

What has been your most successful PR campaign to date?
The Zappos brand was built by word of mouth, so PR plays a key role. Our AOR is Kel & Partners, and our San Francisco office also works with Inner Circle Labs.

The most successful campaigns we've had were ones where we weren't trying to get PR out of it. Instead, it was just a fun idea that just happened to get PR, such as our response to Kanye West when he had a rant about our product on a podcast last year.

Walk us through how you executed the response to West's dig at Zappos.
Kanye referred to our product as "shit," so we launched a new item on our site called "Sh-t Product," which was essentially a $100,000 plunger complete with product photos and a video demonstration. The item's description was, "The perfect gift for the man who has everything," and we provided a link from the product to his rant.

It was one of those random, fun ideas that a few employees came up with at 6am and an entire team set up a war room so we could launch a response by noon that day. I then emailed the staff and notified our PR team. With the video, we received more than 600 million media impressions; the response was almost universally positive.

What is the biggest challenge your brand has to contend with?
Zappos has about 1,500 employees so the company's biggest challenge has always been how do we scale our future.

Going forward, what is your main objective for the brand?

The goal is to be constantly unfolding through organic, authentic stories that are discovered by customers and passed on through a combination of word of mouth, social channels, and our PR team.

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