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Business, The Zappos Way

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— October 9, 2017

Business, The Zappos Way

  • Its customers know Zappos as a convenient source of footwear, bought with a few simple mouse clicks. But the online merchant is fast becoming as well-known as a model for corporate culture and a new paradigm for doing business as it is for its shoes and apparel.
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Inside the Nerve Center of the Online Retailer

Its customers know Zappos as a convenient source of footwear, bought with a few simple mouse clicks. But the online merchant is fast becoming as well-known as a model for corporate culture and a new paradigm for doing business as it is for its shoes and apparel. To that end, the company offers tours of its downtown Las Vegas campus, the chance to lunch with a Zappos employee and intensive multi-day workshops that include opportunities to grill Zappos chief executive Tony Hsieh and tap into his business acumen.

To better understand what makes the online retailer tick, we signed up for the $10 90-minute Zappos tour at its Las Vegas headquarters, skipping the $100 Chow and WOW lunch with an employee. Along with us on the tour was an employee of a major airline looking for ideas on how to adjust the airline’s corporate culture, as well as an Orlando couple who are longtime Zappos customers—they buy from Zappos monthly—and are impressed enough to take a tour on their Vegas vacation. Each person on the tour was asked to sign a nondisclosure agreement. When I identified myself as a magazine editor wanting to write about the tour, the Zappos tour guide, Synna Coito, said the NDA was meant only to guard Zappos trade secrets that might be overheard while on the tour; we weren’t likely to see areas where such secrets would be discussed, and Coito, whose official title is Culture Guide (#TeamFlower), told me I was free to report on what I saw and heard. Zappos’ corporate digs are housed in the old Las Vegas city hall—its gym is in the space that used to hold the police department’s jail cells. At the center of the main complex is a circular courtyard, where Zappos workers in jeans, some in shorts, and other casual dress come and go, giving the facility the look of a college campus between classes. Some employees have small dogs in tow. It’s a youthful-looking bunch, though the average age of a Zappos employee is 33, says Coito, an energetic native Hawaiian. It is in this plaza every Thanksgiving and Christmas where area homeless are served turkey dinners, and each given a pair of shoes and socks.

Zappos also offers prom gear and services—shaves, haircuts and dance lessons, for instance—for underprivileged teens. Zappos’ choice of downtown Las Vegas, to which it moved from a suburban business park in nearby Henderson, also reflects the online retailer’s outward focus on community, as well as on its constituency of employees. CEO Hsieh is the main investor in Downtown Project, a $350 million real estate, business and technology effort to revitalize neglected areas around its headquarters. Zappos brings the surrounding neighborhoods into its headquarters, too, with community events, such as a tacos and-beer party catered by local food vendors, set up on an open landscaped area the company calls its “backyard.” The Zappos/college analogy is one that Coito uses during her tour as she explains the freedom and loose environment the Zappos employees enjoy. While a high school curriculum is somewhat rigid, she says, college offers electives—“but you still get the work done.” The pecking order at Zappos, though it exists, is more subtle than that of conventional companies, and is designed to erode barriers and boost creativity. “We don’t have a traditional hierarchy of people,” she says. “We have a hierarchy of work.” The lack of barriers encourages employees from all sectors to chime in with their ideas. Zappos Adaptive, the division that supplies customers with special needs with reversible clothing, tear-away tags and tagless shirts, was the brainchild of an employee in finance. Mingling—among all ranks—is encouraged. To get workers to leave their comfort zones and meet their colleagues, even-numbered floors sport beverage vending machines while odd floors feature snack machines, Coito explains in a break room in the 10-story tower we are touring. More communication, the reasoning goes, spurs more creativity. “It forces these collisions,” Coito says of the vending machine placement. The physical signs of these corporate philosophies are on display at every turn. Large colorful murals and canvasses of art by employees and local artists hang on indoor and outdoor walls, like a large painting brings the surrounding neighborhoods into its headquarters, too, with community events, such as a tacos and-beer party catered by local food vendors, set up on an open landscaped area the company calls its “backyard.” The Zappos/college analogy is one that Coito uses during her tour as she explains the freedom and loose environment the Zappos employees enjoy.

While a high school curriculum is somewhat rigid, she says, college offers electives—“but you still get the work done.” The pecking order at Zappos, though it exists, is more subtle than that of conventional companies, and is designed to erode barriers and boost creativity. “We don’t have a traditional hierarchy of people,” she says. “We have a hierarchy of work.” The lack of barriers encourages employees from all sectors to chime in with their ideas. Zappos Adaptive, the division that supplies customers with special needs with reversible clothing, tear-away tags and tagless shirts, was the brainchild of an employee in finance. Mingling—among all ranks—is of Michael Jordan, along with one of the basketball great’s inspirational quotes. Sculptures, also by employees and locals, adorn the campus. Now and then, each of the company’s 10 core values appears artfully painted on a wall. Nowhere is the creative freedom more apparent, however, than at employee workspaces. Each worker is encouraged to go full throttle in bringing to life his or her personality. Desks—we saw the marketing department’s work area—are immersed in toys, streamers, superheroes, tiki torches, salt lamps, masks and life-size inflatables. At one desk, an office chair sits in the middle of a penned-in ball pit; the arrangement started as a prank by a colleague, but its target liked the setup so much, Coito explains, he kept it intact. The idea seems to be to make work as enjoyable as home—and to let work enable a more enjoyable home life. “Tony is passionate about taking care of us,” Coito says. At the campus café, Coito points to “Starbucks-like fare without Starbucks-like prices.” And lunch is one hour—“We want you to get yourself rebooted,” Coito says. Along those lines, a nap room is in the works. Car washes and detailing, dry cleaning and laundry services are all offered, at a cost, while employees are at work to make their time out of the office less focused on the mundane. Along the tour, Coito points out a “jam room,” to which musically inclined employees can bring their instruments. And there’s an onsite Weight Watchers, with full reimbursement for employees who attend 10 of 12 meetings. Similarly, Zappos covers pet adoption fees if employees adopt from local shelters.

Last year, Zappos exceeded the number of adoptions it pursued. “We cleaned out five shelters,” Coito says. Bringing dogs to work is encouraged, but the animals must pass a two-part assessment process: They can’t be biters and must show reasonable behavior in high-traffic areas. Badges are given to the animals that pass. Zappos takes its time bringing new employees into this highly desirable workplace. “We are very slow to hire—very slow,” Coito says. It took two years to hire a chief financial officer once. Every potential hire, no matter what the position, must go through four weeks of customer service training fielding phone calls, followed by a test. “We set you up for passing—it’s not a sink-or-swim mentality,” Coito adds, noting that prospects who pass are given a parade complete with balloons and Silly String confetti. Before being hired, prospects are brought into a room and asked if they are sure they want a job at Zappos. If they don’t, they are given one month of what would have been their salary. “We don’t want you to feel like you’re stuck here, because it can taint the entire culture pool,” Coito says, explaining the procedure. In his 2009 book, Delivering Happiness: A Path to Profits, Passion, and Purpose (Business Plus), Zappos CEO Hsieh says the company would rather not hire someone, even if he could immediately add to its revenues or profits, if that candidate did not fit the company’s culture. “Our philosophy at Zappos is that we’re willing to make short-term sacrifices (including lost revenue or profits) if we believe that the long-term benefits are worth it,” Hsieh wrote. “Protecting the company culture and sticking to core values is a long-term benefit.” Besides the hiring process, Zappos seemingly operates at a pace that leaves no time for employees to indulge a fear of failure. The airline employee on the tour, for one, was impressed at Zappos’ efficiency. “The way you don’t overthink things—it’s really nice,” he tells Coito.

Zappos is creating fans elsewhere across the business world, too. When Nature’s Plus President Jim Gibbons introduced his company’s new corporate culture initiative to its managers in June, he cited Zappos as a model. “Zappos is among a handful of companies that represent cutting-edge approaches to employees and the community at large,” Gibbons says. “It creates a welcoming environment that values employees and encourages them to want to come to work and do their best. At the same time, Zappos recognizes that it is part of a larger community, both locally and globally, that it wants to improve with charitable works. We share those values in the deepest way, and our employees have already begun to see tangible changes in those areas.”

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