Delivering Happiness

"If you get the culture right, most of the other stuff, like delivering great customer service or building a great long-term brand, will just happen naturally on its own."

— Tony Hsieh

Hsieh studied computer science at Harvard, cofounded LinkExchange and sold it to Microsoft in 1998 for 265 million dollars. With Alfred Lin he created Venture Frogs, a fund and incubator, and ended up as CEO of Zappos, an online shoe store he ran from 1999 to 2020 and which Amazon bought in 2009 in a deal valued at about 1.2 billion dollars. The book mixes his memoirs as an entrepreneur with the lessons of Zappos, and debuted at number one on the New York Times bestseller list.

On service, Zappos made decisions that contradict classic management:

• Invest in the experience instead of advertising. The money others spent on ads was used to surprise the customer, and to have the customer do the word-of-mouth marketing.
• Free shipping both ways, and returns up to 365 days. Remove the risk of buying shoes without trying them on.
• A call center open 24 hours, with no scripts and no time limit per call. The goal isn't to serve fast, but for the customer to hang up happy.
• Send the customer to the competition when Zappos didn't have what they were looking for.
• Surprises for frequent customers, like upgrading their shipping to next-day delivery at no charge.

Hsieh attributes Zappos's growth to repeat customers and word-of-mouth recommendation, more than to any campaign.

On culture, the lessons are:

• Ten values that can be lived and measured. The first is "Deliver WOW through service"; others are "Create fun and a little weirdness" and "Be humble." They don't hire someone talented but arrogant.
• Hire and evaluate for culture. Half of the performance review measures whether the person lives the values and promotes them.
• Everyone goes through the call center. Regardless of position, every new employee takes customer calls during training.
• The Offer. During initial training, Zappos offers new employees money to quit, an amount that reached $2,000. Very few accept, and those who stay do so committed.
• A culture book written each year by the employees themselves, telling what Zappos's culture means to them.

On happiness, Hsieh proposes that a company can design it for its employees and customers from four elements:

• A sense of control.
• A sense of progress.
• Connection with other people.
• Being part of something bigger than oneself.

He also distinguishes three types of happiness: pleasure, which is short-lived; passion, which comes from doing what absorbs you; and higher purpose, which lasts the longest.

The concept to master is that culture and brand are two sides of the same coin. The brand is what the customer perceives, and what they perceive depends on how each employee treats them at every touchpoint. That's why culture isn't delegated to human resources: it's everyone's job, starting with the CEO.

How to apply it? Gather your team and write between five and ten values that describe concrete behaviors, not generic aspirations. For each value, design an interview question for hiring and a criterion for evaluating. Then pick a touchpoint with your customers, like WhatsApp support or a return, and decide what would have to happen there for the customer to tell someone about it.

As a founder it will help you build the culture from the first ten employees, before it forms on its own. It will also help you see customer service as a growth investment and not as a cost center.