Zappos – the online shoe retailer – was an Internet success story. A company that treated its employees well, provided great customer service, a superior products and overall wonderful experience.
When Zappos was sold to Amazon.com in 2009 many wondered not just what direction the company would take – but why founder Tony Hsieh even sold in the first place.
Find out in this article, written by Hsieh, and adapted from his upcoming book – Happiness: A Path to Profits, Passion, and Purpose. Inc.
Here’s a preview:
The first time Amazon.com tried to buy Zappos, we said no without even thinking.
It was the summer of 2005, and Zappos, the start-up into which I’d poured the past five years of my life (and almost all of my money), finally seemed to be on the right track.
Zappos sells shoes and apparel online, but what distinguished us from our competitors was that we’d put our company culture above all else. We’d bet that by being good to our employees — for instance, by paying for 100 percent of health care premiums, spending heavily on personal development, and giving customer service reps more freedom than at a typical call center — we would be able to offer better service than our competitors. Better service would translate into lots of repeat customers, which would mean low marketing expenses, long-term profits, and fast growth. Amazingly, it all seemed to be working. By 2005, gross merchandise sales were $370 million, and we made the Inc. 500. We weren’t profitable yet, but we were close to breaking even, and our revenue was growing quickly.
At the time, we made almost all our money selling shoes, but our hope was that we’d eventually go into all sorts of other businesses. We saw Zappos as a global brand like Virgin — except whereas Virgin was about being hip and cool, Zappos would be about offering the best service. The plan was to grow sales to $1 billion by 2010 and eventually go public.
These ideas about the power of our company culture had yet to be proved. As I talked to Amazon founder and CEO Jeff Bezos, who visited our headquarters in 2005, I realized that to Amazon, we were just a leading shoe company. If we sold, we’d probably be folded into their operations, and our brand and culture would be at risk of disappearing.
That was why we told Jeff that we weren’t interested in selling at any price. I felt like we were just getting started.
Read the rest at Inc.com.