Frequently Asked Questions…answered by Tony!

We’ve put together some of the most commonly asked interview questions from the media and general public and asked Tony Hsieh, NYT Best-Selling Author and CEO of Zappos.com, to answer them. Here it is, in three sections:

I. Business/General FAQs

1. What does being an entrepreneur mean to you?

For me, running my own business meant that I would have more control and freedom over how I spent my time each day. It also enabled me to be more creative and act upon “out of the box” ideas.

2. You say Zappos is about delivering happiness, the title of your book. What shaped your “happiness” philosophy?

Most people are interested in making more money because they believe it will enable them to be happier somehow, because they believe money will give them more freedom, less stress, more free time, etc. If happiness is the ultimate goal, then it seems to make sense to focus on happiness. Also, plenty of studies show that more engaged employees are more productive, and one of the best predictors of employee engagement are the number of friends that they have at work, or whether they have a best friend at work, which all leads back to the importance of company culture and employee happiness.

3. What drives you to be creative and different?

For me, meeting lots of different people from diverse backgrounds always gives me new perspectives and insights, which I think helps me become more creative. The more perspectives you can have on a given challenge, the more creative you can be in addressing that challenge.

4. Do you ever regret your decision to leave Microsoft and giving up $8 million?

In general, I tend to regret the things I didn’t do, not the things that I did do that didn’t work out.

5. You took a huge risk of putting almost all of your personal funds into Zappos when Zappos was struggling. How do you decide whether you should take a big risk and what extent you should go in doing so?

For me, it just came down to whether I really believed in the future of Zappos and whether we had the right team to make it happen. Also, the worst case scenario was never really that bad. I was never in danger of starvation or being homeless.

6. Why is passion so important in doing business? In life?

In business, passion is what will get you through the difficult times. Also, your passion will rub off onto your employees, which will then affect your customers and business partners. In life, passion is what makes you feel alive.

7. What triggered you to make best customer service/customer satisfaction as one of Zappos’ core values?

I’ve always been passionate about customer service as a consumer. Over time, we realized that the better service we provided our customers at Zappos, the more loyal they were and the more we grew through word of mouth.

8. How does Zappos generate and maintain good profit margin while incurring higher cost?

Our philosophy is to take most of the money we would have otherwise spent on paid advertising or paid marketing and invest it into customer service and the customer experience instead, and let our customers do the marketing for us through word of mouth.

9. How do you instruct your call center employees to maintain a good customer service spirit without sacrificing their emotional balance?

As with many things at Zappos, we ask our employees to simply be real and use their best judgment. We don’t have specific rules or instructions for most of the things we do.

10. Even when a global crisis hit e-commerce in 2008, Zappos managed to achieve $1 billon dollar gross merchandise sales in 2009. Was there any new strategy or approach Zappos took at that time?

No, we continued to grow because of the investments we had made in customer service prior to 2008, not because of anything we did differently in 2008 or 2009.

11. Zappos does not appear to invest much in traditional marketing. What does Zappos’ marketing team do to help build the brand?

We do have a direct online marketing department as well as a brand marketing department that is focused mostly on offline marketing. However, most of the money we would have spent on paid advertising or paid marketing we invest in customer service and the customer experience instead.

12. You are a big fan of “social media” such as Twitter or Facebook. How should companies change or correct their social media strategies in order to adjust to the changing relationship between consumers/corporate branding/communication, and this fast changing environment?

Whether it’s with Twitter, Facebook, or whatever the next thing is, the easiest way to deal with everything is to just encourage employees to be real and use their best judgement.

II. Company Culture FAQs

1. Why do you believe company culture is so important?

For any company that wants to build its brand around providing great service, culture will make a huge difference. It’s hard to provide great service if employees are unhappy.

2. Traditional e-commerce companies tend to focus on low price transactions and are considered to be impersonal to do business with. However, you were able to breathe a human element into e-commerce, which is not typical. How did you come up with this approach?

We found that customers that are focused on just low prices were no longer loyal as soon as a competitor offered a lower price.

3. You argue that the culture of a company is its brand. Do you think this argument will still work for Zappos as the company grows bigger over the coming years?

Our goal is for our culture and brand to become even stronger as Zappos grows.

4. Zappos tries to hire only people who would fit into the Zappos culture. How do you encourage diversity if the Zappos workforce is homogenous?

For us, diversity is encapsulated in our core values that define our core values. For example, being “open-minded”, “humble”, and “pursuing growth and learning” all point towards embracing diversity.

5. What do you believe is the best way to have employees live their organization’s core values?

The easiest way is to simply hire employees whose personal values already match the organization’s core values. Then you don’t have to train them to live a different set of values.

6. It is very surprising that Zappos provides its important information to suppliers through its extranet. One would think sales information is the best weapon a retailer can have. Were you nervous about giving up that weapon?

One of our core values is to “Build Open and Honest Relationships With Communication”. Our biggest strength is our culture and core values, and so providing the information to our suppliers was more consistent with our core values than not doing so.

7. When Zappos was going through a hard time in 2008, you had a layoff. Given the company culture and that you feel like Zappos employees are family members, how did you convince employees that the layoff was unavoidable?

That was definitely a tough time for everyone, but we also had to do what was right for the long-term health of the company.

III. Personal FAQs

1. How would you encourage younger generations to have an entrepreneurial spirit?

Being an entrepreneur definitely requires a sense of adventure. If you are more concerned with job security, then being an entrepreneur is probably not the right choice for you.

2. Please name a few books you read recently that made strong impressions.

  • Happiness Hypothesis
  • Made to Stick
  • Good to Great
  • Tribal Leadership
  • Peak

3. Using the definitions provided in the book “Good to Great”, what kind of companies do you believe are great companies? Why?

Companies with strong cultures that perform well financially and have a higher purpose.

4. What is success to you? What is happiness to you?

To me, the definition of success is if you’re truly okay with losing everything you have.

5. What was your turning point in life? Or is it yet to come?

Every day has the opportunity to be a turning point.

6. You went through some difficulties and obstacles. Which was the hardest one? How did you overcome it?

In my book, I write about how hiking up Mt. Kilimanjaro (the tallest mountain in Africa) was one of the hardest things I’ve had to do, from a physical, emotional, and mental level.

7. What is the number one failure in your life?

Not making decisions faster or acting upon them faster.

8. As an entrepreneur and businessman, what is the biggest lesson you learned and what is the biggest mistake you made?

The biggest category of mistakes has been with hiring. If you add up the costs of all the bad hires we’ve made at Zappos, their bad decisions, and the bad hires they made, it has cost the company over $100 million.

9. Your parents are originally from Taiwan. Was there any special lesson they taught you that has helped you become a successful businessman?

I think one of the most important lessons I learned from them was to not be afraid.

10. Where do you see yourself in 10 years?

I generally don’t plan or think that far ahead, because things never turn out the way you think they will. Life is full of surprises, and my goal is to enjoy as much of it as possible.
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