How Tony Hsieh Changed Our Lives
Whether or not you realize it, Tony Hsieh changed your life. When he became the CEO of Zappos at the turn of the century the world of online shopping was nothing like what it is today. A handful of creatively named start-ups like ShoeBuy.com, OnlineShoes.com, and Shoes.com tussled alongside Zappos over the wide-open frontier of digital commerce. Tens of millions of dollars of venture capital poured into the category as investors saw a rare opportunity to grab early market share in an emerging industry. By 2015, nearly all of the early online shoe retailers were extinct or irrelevant while Zappos surpassed $2b in revenue.
When Tony took over at Zappos in the year 2000, less than 1% of all commerce happened online. The ecommerce experience was still nascent and consumers generally preferred shopping in stores. Footwear was a particularly tough category. While selling online allowed retailers to offer an incredibly broad selection, most consumers didn’t want to buy shoes without first trying them on to see how they looked and felt. People buying shoes in stores almost always wanted to try on multiple pairs before buying. It was a barrier that was holding the entire category back.
In 2003 Zappos made one of the most radical changes in the history of online commerce. Not only did Zappos offer free shipping on any size order, but they allowed customers to return any sized order for free for up to 60 days. With this one change, Zappos broke down the biggest barrier in the entire category. The change was so radical that competitors were not willing to offer the same to their customers. They worried about costs, logistics, investor pushback, and every other fear that came with radical innovation.
Tony and his team saw it differently. They realized that if they could provide customers with a radically different experience customers would shop with them over and over again. They were not hung up on the economics of every single order and focused on the lifetime value a customer would generate. It was perhaps one of the biggest gambles in the history of online commerce, but Tony’s fundamental belief that customers would reward businesses who gave them a radically better experience drove him to take a leap of faith.
The first time I shopped at Zappos was around 2005. I had just gotten married and my wife had been a Zappos customer for about a year. She swore by them. Being a size 14 shoe, I always had trouble finding shoes I liked in stores. I remember my disbelief when my wife first told me I could order as many pairs as I wanted to try on and return what I didn’t want. It didn’t make sense. How could a company offer that? How come no one else did? I remember the 5 boxes showing up to my house and the convenience of trying on shoes in the comfort of my home. I couldn’t believe how easy it was to return them. For the past 15 years nearly every single shoe I have purchased — casual shoes, basketball shoes, dress shoes, sandals — has come from Zappos. The same is true for my wife. This one simple innovation captured nearly all of my business for 15 years straight.
Over time, Zappos made countless other innovations to the customer experience. For example, most companies have measured the success of their customer support teams based on how quickly they could resolve issues and how many customers they could help in a given period of time. It was always viewed as a numbers game. Customer support was treated as a “cost center” for which needed to be optimized around efficiency. Tony didn’t see it that way. Customer support was another touch-point between the customer and the company and needed to be treated thoughtfully and with care. Tony shifted his company’s focus from speed and efficiency to happiness. Zappos is famous for having customer service calls that could sometimes last longer than an hour as agents simply shot the breeze with customers.
Tony’s innovations didn’t stop with Zappos customers. Tony understood that in order to create a revolutionary customer experience companies needed a radically different culture. Many of the cliches of today’s start-up culture were direct copies of or derivatives from practices at Zappos. Zappos was one of the first companies to have two interviews for every candidate: one for capabilities and one for culture fit. Zappos was one of the first start-ups to publicly define and hire for core values.
Tony’s vision and approach built the company that defined consumer ecommerce and start-up culture for the past 20 years. His book, Delivering Happiness, became a must-read for every ecommerce, DTC, and DNVB management team (and had a major influence on me). Zappos Net Promoter Score became the benchmark for the category. (When Pitching investors, I would nearly always compare our NPS score to Zappos). His ideas shaped commerce for some of the biggest ecommerce success stories of the past decade (Amazon, Chewy, Warby Parker, Casper, Stitch Fix, etc.). Entire customer-support infrastructures were created to allow companies to offer the same types of customer experiences as Zappos (ZenDesk, Helpscout, AskNicely, etc.)
This past weekend Tony tragically passed away at the age of 46. His impact and influence on Catch Co. cannot be overstated. Tony’s vision, passion, and bravery have built a legacy which may never be matched. Few other CEOs will ever inspire such radical change across so many companies so as to leave all future consumers better-off for it. Consumers owe him thanks for making our lives easier and happier through the innovation he spawned. Digital commerce companies owe him tribute for showing us the pathway to success — an unwavering and unrelenting focus on customer experience.
Rest in peace, Tony Hseih.
