Diversity – New Ventures.

After the sale of the company, many of the LinkExchange employees left at the same time.  Hsieh and some of his LinkExchange friends decided to buy a block of buildings and set up an office.  In 1999, Hsieh and Lin were approached by Nick Swinmurn with the idea of selling shoes online.  Swinmurn told them footwear was a 40 million dollar market and five percent was already being sold by paper market.  They didn’t know if the shoe idea would work out or not but they decided to invest so long as Swinmurn had a shoe expert on board.  It would be called Zappos.  They needed someone to handle shipping and they worked out a deal with UPS who believed in them.  But they were also working on 27 other investments.

Poker strategy

Tony Hsieh was looking for something else other than investments and discovered poker.  He didn’t know much about poker and started to research it.  There was a mathematically correct way to play a hand and he learned the basics.  With the exception of poker, the chance of winning at gambling is always stacked against the player.  Hsieh noticed the similarities between poker and business that could be applied to both: Marketing and branding – act weak when strong, act strong when weak; know when to bluff as your brand is important. Financials – be prepared for the worst scenario and go for the positive expected value, not what’s risky; play only with what you can afford to lose. Strategy – don’t play games you don’t understand; be flexible and be patient; read books and learn from others who have done it before and don’t be afraid to ask for advice.  The biggest thing Hsieh learned from poker, took him six months before he figured it out. What he learned came before he started the game and that was which table to sit at.  In business, one of the most important decisions is what business to be in.  If there isn’t a big enough market to sell to you won’t make it.  Chose to change tables or find the right business to succeed.  After he played poker for a while he went to Vegas to play, which was more interesting to him than playing in California.

Necessary changes

After a summer of playing poker, he realized it was time for him to move onto something new and to change tables.  Hsieh started day trading and investing but lost money.  He had been checking in with the handful of people working at Zappos.  Zappos wasn’t looking it’s best and no one was willing to invest.  They had to figure out something or let Zappos go out of business.  It was a tough call whether they should invest more into Zappos or let their other businesses go.  Hsieh contacted Zappos and said they could move into his loft for a few months and see if Zappos could make it work. This brings to a close another chapter in the life of Tony Hsieh.  Going forward,v can of Red Bull became Hsieh’s faithful companion whether he was working in the office or sitting at the bar.