Pureplay

Zappos’ Tony Hsieh Talks Profits, Passion and Purpose.

What do P.Diddy and pepperoni pizza have to do with profit? Tony Hsieh tells us it’s all about being a sustainable, scalable company with a cause.

If you’ve ever been to a workshop by a CEO or corporate heavy-weight, chances are you’ve heard the words “incentivise”, “think outside the box” and “synergy” bandied around. Yet there was no corporate jargon when Tony Hsieh spoke to a packed house at the Business Chicks workshop in Melbourne this morning. Instead, he quoted P.Diddy’s advice to Notorious B.I.G. – “Don’t chase the paper, chase the dream.” Not your average business talk.

If Zappos were a religion, I would be a convert. Based on the reaction to Hsieh, I wouldn’t be the only one. When you look at the numbers they are impressive. Hsieh founded LinkExchange which he sold to Microsoft for US$265 million. Apart from the obvious financial benefits, Hsieh says he sold the company because “it wasn’t a fun place to work anymore.” He is still the CEO of pureplay shoe and apparel retailer Zappos which was sold to Amazon for over US$1.2 billion. A condition of the sale was that the core culture and principles would remain intact. Over 275,000 copies of his book Delivering Happiness have been sold in over 17 countries.

But it’s not the facts and figures that make me a “born again” Zappos follower. Maybe it’s the ex-lawyer in me, disgruntled after years of billing in six minute increments. Maybe I’m still bitter after working for a firm that constantly talked about “core values” and “culture” while it treated its employees like second class citizens. (Note to the unnamed law-firm, a Senior Partner swearing at underlings is not actually a recommended motivational technique.) Or perhaps I’m still reeling from the experience of having my private work emails read, printed and highlighted in pink by HR. (Note to self, it is unadvisable to point out the CEO’s typos via email to work colleagues, no matter how amusing.) I don’t think it’s just my past work experiences that make me a Zappos devotee. I think it’s because everything Hsieh says, just makes so much business sense.

Hsieh explained how his background helped shape his Zappos vision. Ever the entrepreneur, when he was in college he bought some pizza ovens and started selling pizza to other students in the dorm. One eager customer, Alfred, used to come in every night and buy a large pizza. Sometimes he’d order another one later in the night. It turned out that Alfred didn’t have a large appetite, but was taking the pizzas upstairs and selling them by the slice for a profit. Alfred became Zappos’ CFO.

When it comes to online retailing (and business in general), it’s easy to focus on profits. What Hsieh teaches us, is that when you focus on company culture and having a higher purpose, the profits will flow long-term. Happiness, as it turns out, isn’t just an ethereal concept spouted in self-help books and yoga classes. It’s a business model.

Hsieh says that when people look at the culture of Zappos, they respond by saying: “That’s great, but it would never work at my company.” For Hsieh, they are missing the point. It doesn’t matter what your values are, as long as you commit to them. This is what separates the good from the great – a genuine alignment with the culture of the company and being able to chase a vision rather than just chasing money.

It’s all very well to talk about ideas of happiness when your business has been bought by Amazon for billions. But what about the average struggling company? Do the same principles apply? Yes. “Every business has tough times,” says Hsieh, “but it’s the passion that will get you though.” Hsieh tells us there are three concepts you need for a sustainable business: profits, passion and purpose. Many businesses focus on profits without realising the importance of the other two facets.

Zappos, Hsieh tells us, is a customer service company that just happens to sell shoes. Cirque du Soleil is not in the circus business. It’s in the experience and emotions business. So if you’re not just in the online retail business, what business are you in?

Natasha Sholl

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Natasha is a content creator for The Media Pad, publisher of Power Retail. She has a background in law and communications and a passion for all things retail. Natasha loves analysing and problem solving all of the challenges and trends that come with new media and the online retail space. Natasha is a yoga addict and reluctant running devotee, both of which are offset by her serious caffeine addiction and obsession with baking. Follow Natasha on Twitter and Google+ or connect with her through LinkedIn

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