2008 A State of Flow


2008 was a crazy year and at the beginning, they had enjoyed a successful prior year.  They gave each employee ten percent of their income as a bonus.  Then the stock market and housing market crashed.  Zappos was still growing but found out they had hired too many and by the end of 2008 decided they needed to lay off eight percent of their employees.  It was a hard decision but the right decision for the company.  They would cut expenses as much as possible and they were fortunate they had a line of credit from three different banks.  Zappos paid the laid off employees for two extra months of wages and offering an additional amount for those employees who had been there longer than three years.  They also reimbursed laid-off employees for up to six months of co-repayments.  It was the right thing for Zappos to do.  E-commerce growth will continue to grow and they would come back.  They focused on maintaining their current customers rather than seeking additional customers.  Zappos would show the world what their company was capable of.  Hsieh was proud of his employees and hoped he would never have to go through this again.


Zappos built a pipeline of people throughout any department.  Any employee has an opportunity to become a senior leader in the future.  Employees must think of their job not as a career but as a calling.  At the entry level, employees must be passionate about the product they are responsible for.  Employees must go through several levels of training – which included the “Fred Factor” (someone who made a difference in your life).  Once the pipeline is filled there is always someone to fill a position if someone left the company.  They offered college students an internship which allowed them to determine if Zappos would be the right fit for them.

Profits, passion and purpose and taking it to the next level.

Zappos learned a great lesson that if your product or brand continually wow’s people, the press will find out about it.  Hsieh received speaking requests with all the publicity about Zappos.  He dreaded them but realized it would help build his company and brand and it was good for him.  With each speech he improved, but he wasn’t really comfortable doing it.  But then he realized no one knew whether he skipped a part or not.  People were encouraged hearing about Zappos in person.   Tony Hsieh realized that as long as he spoke about those topics he was passionate about he would have plenty of material to work with.  He later learned he had achieved a state of flow – a type of happiness when you lose a sense of time and even yourself.  He stuck with being passionate, told real stories and just being real. 


Hsieh started sending other employees from different departments to speaking engagements.  They try to share how they do things to help the audience build and grow.  All of this led to the reality they were changing other people’s lives and businesses.  Zappos has inspired others to do their business better and build their core values.  Zappos had built their business to over a billion dollar business in less than ten years.  In early 2009, they made Fortune 500 as one of the top companies to work for.  The Zappos Board wasn’t real sure about the core value culture but it was important to Hsieh.


The top ten questions to ask when looking for investors and board members:

  • Do you really need investors?
  • How involved will your investors be and how involved do you want them to be?
  • What value beyond money can investors provide?
  • What is the time horizon investors are expecting,
  • What are investors hoping to get out of their involvement?
  • Do investors buy into the mission and vision of the company?
  • Would they accept fewer profits if the vision could be fulfilled faster?
  • How flexible are the investors in their thinking?
  • Who controls the investors and board?
  • Do the core values match the core values of the company?

To Tony Hsieh Zappos was a calling and they bought out the Board of Directors.