In Delivering Happiness: A Path to Profits, Passion, and Purpose, Tony Hsieh (2010) shows us how to make friends and succeed in business. And how does Tony define success? Not by the money he’s made by selling Zappos.com for $1.2 billion to Amazon.com. Instead, Tony has always defined success and happiness in terms of his friendships and the life experiences he’s had. To a cynic, this may sound like a meaningless PR statement. But time and time again, Tony gave up money to pursue his work interests and work with his friends. And Tony’s willingness to put people and experiences first – over money – is what ultimately led to the biggest financial returns for him and his friends.
Tony and his good friend, Sanjay, thought they had hit the jackpot when they graduated from Harvard with great job offers from Oracle: At $40,000 a year (good money in 1995), they would be making more than their other friends from Harvard. But soon, Tony found that his job – running routine statistical tests – was pretty boring. Moreover, no one seemed to even know who he was or care. He felt isolated. Sanjay was bored as well. So they started their own business – doing web design – on the side just to keep from getting bored. After a few months, they had some paying clients, but their income from web designing was still far less than they made at Oracle. Nevertheless, Tony and Sanjay decided to quit Oracle (a nerve-racking decision for Tony) and devote their time to their web design business.
Tony and Sanjay came up with the idea for LinkExchange, and in a couple of days, they developed a test program. LinkExchange allowed websites to advertise on
other participating websites for free: If a website showed a thousand banner ads, they
would get 500 free ads posted on other sites, and LinkExchange would be able to sell the
remaining 500 slots to advertisers. The site grew rapidly, and they were offered a million
dollars for the site after only 5 months. People interested primarily in money might have
taken the easy cash, but Tony and Sanjay enjoyed what they were doing and turned down
the offer. A few friends who had stopped by to visit began working with them on
LinkExchange. Soon, 25 people, mostly friends, were working with them. Not long after,
Yahoo’s founder, Jerry Wang, offered them $20 million, but Tony and Sanjay were still
having fun working together and running the site. Why sell when they were having a
great time? They turned Jerry down but accepter $3 million from another investor) for a
20% stake) so they could grow the business. Tony didn’t mind working long hours
because he was working with his friends.
Eventually, Tony ran out of friends to hire, and he had to hire strangers.
LinkExchange grew to about 100 employees. The new employees were smart but
connived and bickered over stock options and money. The friendly atmosphere was gone,
and Tony knew it was time to sell when he found himself repeatedly hitting the snooze
button in the morning. Microsoft bought LinkExchange for $265 million, with Tony’s
share being $32 million plus another $8 million, he found that the excitement was gone –
what he wanted was some new experiences – and he gave up the extra cash. Tony
realized that the happiest times in his life involved being creative and connecting with
others – making money wasn’t the key.
Tony and some of his friends became venture capitalists (fund name: Venture
Frogs) so they could help other people make their own dreams come true. They funded
20 entrepreneurial plans, most of which went bankrupt or were barely profitable. But one
of the businesses was Zappos.com. Tony invested in Zappos.com because he liked the
passion and excitement that Nick Swinmurn had for the idea of selling shoes over the
Internet. Tony began investing more and more of his own money in Zappos and began to
take on more of the hands-on leadership responsibilities. His advisors urged him to limit
his investments in Zappos.com, but Tony risked his own financial future because he felt
committed to the people he knew at Zappos.com. Tony had to sell a loft he used for
parties (a 40% loss over his purchase price) to help Zappos.com survive. Tony believed
in Nick, Fred, and the many other people he had gotten to know at Zappos.com. After 10
years of struggle, Zappos.com finally became big enough to be profitable.
Zappos.com became profitable because Tony learned his lessons from
LinkExchange about the importance of friendly interpersonal exchanges at work.
Zappos.com became one of Fortune’s 100 Best Places to Work For because tony
encouraged everyone to know each other and to form friends at work. When employees
logged on, they would be shown pictures of other employees and asked their names and
some questions about them. Zappos.com had a long list of parties and social activities
that employees could participate in. To weed out new recruits only interested in money,
Zappos.com offered new employees $2,000 if they decided to quit within the first few
weeks – few accepted the offer. Zappos.com’s turnover was unusually low because
people didn’t want to leave their coworkers – people who were like family to them. Also,
Zappos.com didn’t offshore its call center. Tony knew that friendly customer service was
actually Zappos’s core competency. Highly satisfied call center employees were able to
provide friendly service to customer and boost sales through word-of-mouth
recommendations and repeat business. When you’re happy and enjoy your job, you don’t
have to fake being cheerful to customers.
1. Is it important to work with friends? Why or why not?
2. Are groups more productive when everyone is friends? Is there a downside to working
with friends?
3. Tony proved his commitment to LinkExchange and Zappos by investing his own
money and by working hard – do you think his commitment spurred others to be equally
committed?
4. How could having parties and working with friends make call center employees better
at providing customer service?

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