22 / 09 / 2020

No ‘Happiness’ Ever After for Zappos (Or When the Shoe Doesn’t Fit)

When Amazon purchased Zappos in 2009, Zappos CEO Tony Hsieh described it as “Zappos and Amazon, sitting in a tree.” With Hsieh’s sudden departure from the company, we’re left to wonder: Was it something Jeff Bezos said? Surely it wasn’t the shoes…

Carey Smith | Founding Contrarian

It was surprising — and just a little sad — to read of the recent departure of Zappos’ longtime CEO Tony Hsieh: Surprising, because the news was accompanied by the words “effective immediately,” which are always cause for speculation; and sad, because Hsieh’s form of leadership was a reliable source of entertainment over the years. Now if we want barmy experiments in corporate structure to poke fun at, we’ll have to look elsewhere.

There’s no question that Hsieh was innovative. In 2002, Zappos built a huge fulfillment center not far from where I then lived, in Kentucky, with the largest carousel system in the world. And the company’s dedication to service seemed genuine. Who else gave customers a year to return shoes? As a former shoe salesman, let me tell you: nobody. Hsieh also introduced the curious concept of “quitting bonuses” for new hires who aren’t “feeling” the company, which I guess makes sense if you’re hiring lots and lots (and lots) of people at ground-level. And overnight shipping for free? Now it’s commonplace, but it sure wasn’t in 2007, when Zappos first offered it.

But Hsieh is probably best known for instituting holacracy, an organizational system that eliminated managers. It was the talk of the business pages, at least in its early days. But those of us who’d run companies could immediately foresee problems with Zappos’ holacratic manifesto, which proclaimed an all-for-one no-bosses structure that was as rigid and personal-incentive-deadening in its way as a Soviet five-year-plan. Sure enough, we learned later, nearly 20 percent of the staff had up and vamoosed in the aftermath of the company’s internal makeover. And over the years, various tenets of holacracy, including transparency, were swept under the rug with far less fanfare than they’d received when introduced. Isn’t that always the way?

It seems pretty obvious that there’s a story behind Hsieh’s resignation, and it will be interesting to read when it eventually comes out. His last book was titled, Delivering Happiness. Maybe his next will be a tell-all sequel about life behind the Amazon smile: Deliver Me From “Happiness.” Now that just might be a business book I’d want to read.