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Putting Service First Got Zappos' Shoe in the Door


The Internet footwear seller has expanded into clothes and even electronics—and CEO Hsieh sees no reason to stop there

Since Tony Hsieh became CEO of Zappos.com in 2000, the e-tailer has sold shoes, lots and lots of shoes. More recently he added clothes, accessories, and electronics. And Zappos continues to grow in a recession. Ask Hsieh to describe his secret sauce, and he'll tell you that much of Zappos' success comes down to the company's culture and the unusual amount of openness he encourages among employees, vendors, and other businesses.

Hsieh, a major early investor in Zappos who takes home a $36,000 annual salary, describes his philosophy this way: "If we get the culture right, most of the other stuff, like the brand and the customer service, will just happen. With most companies, as they grow the culture goes downhill. We want the culture to grow stronger and stronger as we grow."

Potential employees at Zappos' Henderson (Nev.) headquarters get a sense of that right away. The job application for call center reps includes such questions as: How lucky in life do you consider yourself to be on a scale from 1 to 10? Hsieh is so confident about Zappos' appeal that he offers $2,000 to anyone who completes the week-long training program and doesn't want to stay. So far, few have taken it.

Once hired, workers are urged to communicate freely. Hsieh, 35, is an avid Twitterer and encourages workers to use the microblogging service. When Zappos had to cut 8% of its staff in November amid a worsening retail environment, people posted about it on Twitter.

In some ways he treats suppliers like employees, too. Desks are set aside for some of them on site, and they can access much of the same data as Zappos' buyers. "It's like having an extra 1,500 pairs of eyes to help us manage the business," he says. Even if some data end up with rivals, "the benefits outweigh any costs."

Recently, Hsieh launched Zappos Insights, a $39.95-a-month service for entrepreneurs who want to learn about Zappos' culture and business practices. "We're happy to share pretty much anything," he says.

Return to the Game-Changing Management Ideas Table of Contents

McGregor is BusinessWeek's management editor.

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