Remembering Tony Hsieh: How the former Zappos chief’s unusual leadership style defined a business

Tony Hsieh

Tony Hsieh. Source: JD Lasica, socialmedia.biz.

This weekend, the entrepreneurial world was rocked by the news that Tony Hsieh, the former chief executive of shoe retailer Zappos, has died, aged just 46 years old.

The entrepreneur reportedly died in hospital from complications related to injuries sustained in a house fire earlier this month.

“Delivering happiness was always his mantra,” a statement distributed on behalf of DTP Companies, which Hsieh was working with, said.

“So instead of mourning his transition, we ask that you join us in celebrating his life.”

In a statement to Zappos staff, current chief Kedar Deshpande also spoke of the “tremendous impact” Hsieh had both on the business and those who worked with him.

“The world has lost a tremendous visionary and an incredible human being,” Deshpande wrote.

“Tony played such an integral part in helping create the thriving Zappos business we have today, along with his passion for helping to support and drive our company culture.”

Online tributes remember Hsieh as a revolutionary, a cultural leader and an inspiration as an entrepreneur and business leader.

“Your curiosity, vision, and relentless focus on customers leave an indelible mark,” Amazon founder Jeff Bezos wrote in a tribute on Instagram.

 

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Something of an eccentric, he is also remembered for his work on regenerating Downtown Las Vegas, where he transformed an abandoned car park into a co-living space inhabited by some 30 Airstream trailers and tiny homes, plus a couple of alpacas.

But, what was it about his leadership style that stood out so much?

Hsieh co-founded online ad network LinkExchange, which he sold to Microsoft for a reported $265 million in 1998.

In 1999, he joined fledgling online shoe retailer Zappos as chief executive, and 10 years later oversaw its sale to Amazon for $1.2 billion.

In August, he retired after more than 20 years at the helm of Zappos.

Hsieh was reportedly focused on maximising profits long-term, by focusing on company culture in the short term.

In 2015, he introduced a holacracy structure for the business. Employees had no assigned roles or job titles, there were no managers and no hierarchy, and staff enjoyed the flexibility to take on different tasks and move between teams.

It’s a decentralised system reportedly inspired by the idea of creating a city-like structure, intended to help boost productivity, and avoid getting bogged down in bureaucracy as a business grows.

“Every time a city doubles in size, productivity per resident goes up 15%,” he has said.

“The whole system just works, and it’s really resilient and flexible — whereas companies see productivity per capita fall as they grow.”

With about 1,500 staff members on board at the time, Zappos is thought to be the largest company to have adopted such a structure.

More generally, Hsieh was laser-focused on humanising the workplace, and operated under the belief that happy humans lead to business success.

His book, Delivering Happiness, was released in 2010, and debuted at the top of the New York Times Best Sellers list. It remained on the list for 27 consecutive weeks.

According to an article from Forbes, Hsieh’s key leadership lessons included defining the core values that guide each person’s decision-making process, training teams to be self-organised, driving engagement through perks, and a hire-slow fire-fast approach.

Ultimately, for Hsieh, in business and in life, it was about prioritising people — not in lieu of long-term gain, but in pursuit of it.

“Just because you can’t measure the ROI of something doesn’t mean you shouldn’t do it,” he wrote in his book.

“What’s the ROI of hugging your mom?

“The reason most companies don’t focus as much as they should on customer service or company culture is that the ROI is usually 2-3 years down the line.”

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