OFFERING HAPPINESS

Brief Summary
In 1999, Tony Hsieh (pronounced Shay) sold LinkExchange, which he co-founded, to Microsoft for $265 million. He later joined Zappos as a consultant and investor, eventually becoming CEO.
Zappos is an online retailer with gross sales of more than $1 billion annually. Zappos, which was named the top startup on Fortune magazine's annual "Best Companies to Work For" list in 2009, was acquired by Amazon in a deal valued at more than $1.2 billion.
In “Delivering Happiness”, Hsieh explains in business and life; He shares different lessons he's learned from running a pizza business, through LinkExchange, Zappos, and more. Fast-paced and down-to-earth, “Delivering Happiness” shows how a very different kind of corporate culture is a powerful model for achieving success, and how you can dramatically increase your own level of happiness by focusing on the happiness of those around you.It shows that you can increase it.
Ultimately, Hsieh shows how using happiness as a framework can help leaders in organizations of all sizes and types generate profit, passion, and purpose in both business and life.

What You Will Learn In This Brief Summary:

How to make customer service the responsibility of the entire company, not just one department?
How to help employees grow both personally and professionally?
How to apply research in the science of happiness to business management,
How to focus on company culture as the #1 priority,
How can attention to corporate culture lead to unprecedented success?

INTRODUCTION: FINDING MY WAY
Wow, I thought to myself. The room was full. I was on stage at our all-hands meeting, looking out at a crowd of 700 Zappos employees who were standing cheering and clapping. Many of them even had tears of happiness streaming down their faces.
Forty-eight hours ago, we announced to the world that Amazon had acquired us.
In November 1998, LinkExchange, the company I co-founded, was sold to Microsoft for $265 million two and a half years later. In July 2009, as CEO of Zappos.com, I announced that Amazon would acquire Zappos just after we celebrated our 10th anniversary. (The acquisition would officially close a few months later in a stock-and-cash transaction, with the shares valued at $1.2 billion on closing day.) Both The deals looked similar in the scenario: Both reached around $100 million a year. . From the outside, this looked like history repeating itself on a larger scale. Nothing could be further from the truth. We all in the room know that it's not just about money.
we knew Together we had built a business that combined profit, passion and purpose. And we knew it wasn't just about starting a business. It was about building a lifestyle that aims to distribute happiness to everyone, including ourselves.
At that moment, time stopped on stage. The collective energy and emotion of everyone in the room reminded me of the time I attended my first party 10 years ago, when thousands of people were dancing in harmony and everyone was feeding off each other's energy. At the time, the crazy community came together based on four core values known as PLUR: Peace, Love, Unity, Respect.

At Zappos, we have collectively determined our own 10 core values (see sidebar, page 2). These values connected us and have been an important part of the path that has brought us to this moment. As I looked at the crowd, I realized that everyone took a different path to get here, but somehow our paths continue to cross each other here and now.
He had succeeded. I realized that the path that brought me here started long before Zappos and LinkExchange. I thought about all the different businesses I've been a part of, all the people who've come into my life, and all the adventures I've been on. I thought about the mistakes I've made and the lessons I've learned.
Since all eyes in the room were on me, I tried to move towards where my path began. In my mind, I was traveling back in time searching for the answer. Even though I was sure I wasn't dying, my life was passing before my eyes. I was obsessed with solving this, and I knew I had to do it right now, before the energy in the room dissipated, before time stopped. I didn't know why. I just needed to know where my path began.
And then, just before reality came back and time started to flow again, I was able to find it.

CHAPTER 1: PROFITS
During my junior and senior year of college, I took charge of the QuincyHouse Grille, the ground floor dining area of the Quincy House dormitory. Our dorm housed approximately 300 students and the Quincy House Grille was a place where students could play foosball, pinball, and satisfy their late night cravings
It was the meeting point.
One of my roommates, Sanjay, used to run the grill with me. We were responsible for setting the menu and prices, ordering from suppliers, hiring employees, and sometimes making the food ourselves.
At the time, a city ordinance prevented fast-food restaurants from opening near campus, so I decided to take the subway to the next stop to the nearest McDonald's. I talked to the manager there and he sold me 100 frozen McDonald's hamburger patties and buns, which I loaded into a taxi.
I brought it to our home. For several months this was part of my daily routine. Since there was no other place on campus where I could get McDonald's burgers, I was able to get $3 in return for burgers that cost $1 to buy.
I finally got tired of going to McDonald's every day and decided to see what it would take to turn the grill into a pizza business instead. I learned that the margin on pizzas is very high. A large pizza costs less than $2 to make, but could have sold for $10 (or more with additional toppings) . And even more money could be made by selling pizzas by the slice. After doing some research, I discovered that investing in pizza ovens would cost around $2,000. It seemed like it was worth the risk, so I took a deep breath and wrote a check for $2,000.
I also wanted to make the Grill more of a place where people wanted to hang out, so I spent many nights recording music videos from MTV to videotape, pausing the recording whenever a commercial came on because this was the pre-TiVo era. Videos playing in the background were a big hit and along with the new pizza offering, we tripled sales at the grill compared to the previous year. I had recouped the $2,000 investment within a few months.
It was through the pizza business that I met Alfred, who would eventually join Zappos as CFO and COO. Alfred was actually my #1 customer and he would stop by every night to order a large pepperoni pizza.
A few years later I learned that Alfred was taking the pizza upstairs to his roommates and selling it by slices. I think that's why we hired him as our CFO and COO at Zappos.

Zappos Core Values
While each value has many subcomponents, we have broken down the most important themes into the following 10 core values:

Deliver WOW Through Service.
Embrace and lead change.
Create Fun and Some Weirdness.
Be Adventurous, Creative and Open-Minded.
Pursue Growth and Learning.
Build Open and Honest Relationships with Communication.
Build a Positive Team and Family Spirit.
Do More with Less.
Be Passionate and Determined.
Be humble.

Ideally, we want all 10 core values to be reflected in everything we do, including how we interact with each other, how we interact with our customers, and how we interact with our suppliers and partners.

The Thing Called World Wide Web;
Towards the end of my senior year at university, Sanjay introduced me to this thing called the World Wide Web. At the time I thought it was a pretty interesting and fun thing to explore, but I didn't pay too much attention to it.
Sanjay and I decided to meet mostly with tech companies. My goal was to find a high-paying job. I didn't really care what my specific job function was, what company I worked for, what the company culture was like, or where I lived. I just wanted a job that paid well and didn't seem like too much work.

SOMETIMES YOU WIN, SOMETIMES YOU LOSE
Sanjay and I received an offer from Oracle. On my first day of my actual job at Oracle, I was shown to my desk and told what my ongoing duties and responsibilities would be. I was making good money. And within a week, I also learned that it was actually easy money. I felt like I was lucky because I had a very easy schedule, whereas
Sanjay usually did not come home until 7 pm. Every now and then I would ask him how his work was and he would just shrug and say something like "No problem." “It's not that exciting.”
I told him that my job wasn't that exciting either, but maybe we could have fun together in the evenings and on weekends and work on something to help us deal with boredom.

The Idea Behind LinkExchange
The idea behind LinkExchange was quite simple. If you run a website, you can sign up for our service for free. Once you sign up, you add some special code to your Web pages, which causes banner ads to automatically start appearing on your website.

Every time a visitor comes to your website and sees one of the banner ads, you earn half a credit. So, if 1000 visitors come to your website every day, you will earn 500 credits per day. With these 500 credits your website will be advertised 500 times on the LinkExchange network for free. This was a great way for websites without an advertising budget to get additional visibility for free. We will need to keep the remaining 500 additional ad impressions. The idea was that we would grow the LinkExchange network over time and eventually have enough ad inventory that we would hopefully be able to sell to large companies.
Sanjay and I finished all of our computer programming for our experiment in one weekend, and then emailed 50 of our favorite small websites we found while surfing the internet, asking if they'd be interested in helping us test our new shuttle.
Surprisingly, more than half of the websites we emailed signed up to help us test the service within 24 hours. News about LinkExchange began to spread as people visited websites and saw banner ads. Originally intended to combat boredom We realized within a week that our project had the potential to turn into something big. We decided that we needed to focus all our energy on making LinkExchange a successful business.
Fast growing
The good news was that the people we hired were smart and motivated. The bad news was that many were motivated by the hope of either making a lot of money or improving their careers and resumes. They wanted to work hard at LinkExchange for a few years and then move on to the next resume building job at another company. Or if things go well, make a lot of money and retire. We continued to grow and hire more and more people and eventually in 1998 we had over 100 employees in the company.
One day, I woke up after pressing the snooze button on my alarm clock six times. I was just about to hit it for the seventh time when I suddenly realized something. The last time I procrastinated that many times was when I was afraid to go to work at Oracle. The same thing was happening again, but this time I was afraid to go to work at LinkExchange. This was a really strange realization for me. I co-founded LinkExchange, but the company was no longer a place I wanted to be. It wasn't always like this. How did everything change so quickly? What happened? How did we move from an “all for one, one for all” team environment to a team environment that is now all about politics, positioning and rumors?
Bidding War
We had built pretty good relationships with people from Yahoo!, Netscape, and Microsoft over the past two years. Each of these companies showed great interest in what we were doing and an interest in exploring strategic partnership opportunities. Surprisingly, all three of the companies said they were likely interested in investing. Even more surprising was that Netscape and Microsoft said they were more interested in buying the entire company outright.
We told them the price tag would be at least $250 million. I'm not sure how we arrived at that number but it sounded good to me and I guess it was a good sign that Netscape and Microsoft said they wanted to keep talking.
They eventually got into a bidding war.
In the end, Microsoft offered the biggest amount ($256 million), but it had some conditions. They wanted Sanjay, Alfred and I to stay at LinkExchange for at least another 12 months. If I had stayed the entire time then I would have walked away with close to $40 million. If I didn't, I would lose about 100 percent of this amount.
I would have to give up 20 of them.
Even though LinkExchange wasn't fun for me anymore, I figured I could stay here for another year at this rate.

The agreement was signed a few weeks after the start of our negotiations with Microsoft. Compared to other acquisitions that Microsoft has made; The acquisition of LinkExchange was accomplished in record time despite some behind-the-scenes drama within the company.

DIVERSIFY
Although connecting with my new group of friends played a huge role in increasing my happiness level, I missed actually being a part of creating something. Sitting on the sidelines and investing was boring.
Wanting Ed to be a part of building something and creating Venture Frogs Incubator (an incubator and investment company) had been a big part of building my own universe.

Creating a Universe
In addition to signing the lease for office space for our future incubator, Alfred and I also signed a lease for a restaurant in the same building that we will call Venture Frogs Restaurant. We hired a handful of employees to keep the incubation offices running.
We were creating our own universe.
As the Zappos team moved into our building (initially into a converted loft and later into an incubator office space) I had begun spending more and more time at the company.
In April 2000, high-flying dot-com stocks began falling in the stock market, causing widespread panic in Silicon Valley. Many companies have gone bankrupt, and the venture capital firms that we rely on to take our portfolio companies to the next level have scaled back and are unable to provide additional financing for nearly all of our investments he refused.
A few companies moved into our new incubator office space, but without additional financing they stopped paying their bills and went bankrupt a few months after that.
In the end, Zappos was the only company left in the incubator, and we weren't optimistic that other companies would come on board any time soon. It was a bad situation for our fund, the incubator, and Zappos.
A Success Story
Although LinkExchange was a bad experience from a cultural perspective, it was a financial success story. Alfred and I had used the credibility from the LinkExchange sale to raise $27 million for our first fund, so naturally we assumed it wouldn't be that difficult to raise money for our second fund.
We were wrong.
I started to doubt myself. I wondered if I had any luck with LinkExchange. Was I just a dot-com lottery winner in the right place at the right time?
Alfred and I continued to stay in touch with Michael Moritz of Sequoia Capital about Zappos and despite the progress Zappos was making, Sequoia was still not interested in investing.
I wholeheartedly believed that Zappos had a good chance of success. I felt like I had to prove to myself and Sequoia that LinkExchange's financial success was no accident, not just dumb luck. I wanted to prove to the world that I could do it again.
So I decided to take off my investor and consultant hat and put on my entrepreneur hat again. That year, I joined Zappos full time. I decided that Zappos would be the universe I dreamed of and wanted to help build. It would be the universe I believed in.
My search for the past few months has finally come to an end. At least I had figured out what I wanted to focus on for the next few years. I had discovered my new passion.
I was passionate about proving everyone wrong.

CHAPTER 2: PROFITS AND PASSION
The next two years were stressful at Zappos. We were just focused on surviving. We knew we had no choice but to succeed. We've been through the recession, the dot-com stock market crash, and 9/11. We felt like the universe was testing our commitment and passion at every turn.
Looking at the company's financial statements, it became clear that focusing solely on cutting expenses would not enable the company to achieve profitability. We needed to find a way to increase sales.
As I sat at my desk in the office, wondering what to do next, I turned to Fred [Mossler, Zappos executive] .
I broke the ice. “So… do you have any ideas on how to increase sales faster?”
Fred looked pensive. “I come from a business background. I would like to say that all we need is to find the right product, at the right time, in the right quantity, and sales will take care of themselves. The problem is we don't sell the brands or styles that I know will sell. We have the right products to offer to our customers
“We are not.”
“How do we get the right products?”
“The problem is that we can't deliver a lot of the brands we want to carry,” Fred said. “Their systems and warehouses are not set up to ship orders directly from their warehouses to our customers. Even brands that are able to deliver often sell out of their best items, so we can't offer those styles to our customers.”
I paused for a moment to think about what Fred had said. “So how come all brick-and-mortar stores can offer the best-selling brands and styles?” I asked.
“Because they own the inventory and they own it,” Fred explained. “Brick and mortar retailers place their orders in advance, pay for inventory, and assume inventory risk. If a retailer can't sell something, it's the retailer's problem, not the brand's or wholesaler's problem. But we can't do this
because this is not our business model.”
“So… what if we did this?” I said, thinking out loud. “What if we carried the entire inventory of the brands and styles you want? "How much do you think our sales will increase?"
“Oh, we could easily triple sales, no doubt about it,” Fred said without hesitation. “Probably more than that.”
“Okay, let's figure out what we need to do to make this happen. If changing our business model is what will save us, then we need to embrace and drive change.”
Improvisation Inventory
Fred was right. And much more. Our sales have more than tripled. We had gross merchandise sales of approximately $1.6 million in 2000. We achieved gross merchandise sales of $8.6 million in 2001. Our growth rate has surprised even us, and our new business model, which combines dropshipping and selling stocked products, has amazed everyone.
excited.
Even though our sales increased, our cash flow was still not positive because we had to pay for all the extra inventory we purchased to accelerate our sales growth. But we knew we were on the right track. Our strategy of combining in-inventory product with dropshipping product continued to support our sales growth.
We had gross merchandise sales of $32 million in 2002; this was almost four times what we did in 2001.
Internally for Zappos, we set an audacious long-term goal: $1 billion in gross product sales by 2010. This was a big number, but given our growth rates so far, we were confident we could get there. Everyone could feel it: We were at a turning point for the company.
Whatever will happen next year; It would either make or break Zappos.

GROWTH PLATFORM:
BRAND, CULTURE, PIPELINE
Over the years, the number one driver of our growth at Zappos has been repeat customers and word-of-mouth marketing. Our philosophy; Our idea was to take most of the money we would have spent on paid advertising and invest it in customer service and customer experience, allowing our customers to spread the marketing for us through word of mouth.
So what is excellent customer service?
It starts with what customers see first when they visit our website. In the United States, we offer free shipping both ways to make the transaction as easy and risk-free as possible for our customers. Many customers will order five different shoes, try them on with five different outfits in the comfort of their living room, and send back the shoe that doesn't fit or they don't like, free of charge. The additional shipping costs were expensive for us, but we actually viewed these costs as a marketing expense.

365 Days Return Policy
We also offered a 365-day return policy for people having trouble making a commitment or decision.
Contact information on most websites; it's usually buried at least five links deep, and even if you find it, it's a form or email address you can only contact once. We were taking the opposite approach. We put our phone number (1-800-927-7671) at the top of every page of our website because we actually want to talk to our customers. And we have staff in our call center 24/7.
When I attend marketing or branding conferences; It's kind of funny to hear companies talk about how consumers are bombarded with thousands upon thousands of advertising messages every day, because there's often a lot of confusion among companies and agencies on how to make their messages stand out.
There was an argument.

Customers Remember the Experience
There's a lot of buzz these days about "social media" and "integration marketing." As unattractive and low-tech as it may sound, we believe the phone is one of the best branding tools on the market. You have the customer's full attention for five to 10 minutes, and we've found that if you get the interaction right, the customer remembers the experience for a very long time and tells their friends about it.
Many companies view call centers as an expense that should be minimized. We believe this is a huge untapped opportunity for most companies, not only because it can result in word-of-mouth marketing, but also because of its potential to increase customer lifetime value.
When marketing departments make ROI calculations, they often assume that the lifetime value of the customer is constant. We viewed a customer's lifetime value as a moving target that could increase if we could build increasingly positive emotional associations with our brand through each interaction a person had with us.

CHAPTER 3: PROFIT, PASSION AND PURPOSE
At the beginning of 2009, we were included in Fortune magazine's "100 Best Companies to Work For" list. We were ranked at the top in 2009. We were so excited in our offices because this was an internal goal we set in the early days of the company, and it was achieved just one month after we reached our $1 billion in gross product sales. target, program was ahead.
Jeff Bezos, founder and CEO of Amazon, first contacted me in 2005 and visited us in Las Vegas. Even before we flew, we let him know that we had no plans to sell the company.

But when we started talking to Amazon in early 2009, it appeared that both parties had a different perspective than they did a few years ago.
On the Amazon side, they seemed more open to the idea of us continuing to operate as an independent entity so that we could continue to build the Zappos culture and business the way we wanted. They had been following our progress for years and saw that our business approach was working for us.
The most important thing on Zappos's side is; It was about continuing to do what we do for our employees and customers while providing access to Amazon's vast resources.
We have a potential purchase scenario in mind; Rather than selling the company, we thought of it as a great marriage.
Although our original goal was simply to buy out our boards of directors and the shares they own and represent, the more we thought about it, the more we realized it made sense to join forces. By doing this, all parties would be 100 percent aligned and with our existing board of directors
That was the challenge we were trying to overcome.
We were initially resistant to the idea of exploring an acquisition scenario with Amazon, but Michael Moritz convinced us that it would be mutually beneficial and could lead to the best possible outcome for shareholders and employees. (And as it turns out, he was right.)

Halloween Toast
On October 31st at 11:59pm (Pacific Time), after months of awaiting regulatory approval, the deal with Amazon officially ended. The total value of the transaction for Zappos shareholders was more than $1.2 billion, based on Amazon's closing stock price the previous day.
I was in New Delhi, India at that time. Alfred, Fred and I had planned a conference call together to commemorate the occasion. In keeping with Zappos tradition, we had planned to have a shot of Gray Goose vodka together over the phone.
We all toasted. It was official now. Zappos and Amazon were married. We could finally start working together to combine our respective strengths, such as art and science, high touch and high technology.
We were excited by the possibilities of what was yet to come.
We were excited about what we were about to build together.
The future was waiting for us.

END THE GAME
In 2007, I became interested in learning more about the science of happiness.
I started reading more and more books and articles on this subject.
And then one day it occurred to me. It was all about Zappos.
Happiness is really about four things: perceived control, perceived progress, commitment (the number and depth of your relationships), and vision/meaning (being part of something bigger than yourself).

Happiness Framework
The interesting thing about this framework is that you can apply these concepts to your business as well.
• Perceived control. In our call center, we were giving our agents a raise once a year, but they had no control over it. We then decided to implement a “skill set” system instead. We have about 20 different skill sets (similar to merit badges in the Boy Scouts), with a small amount of salary associated with each skill set.
There was an increase. It is up to each agent to decide whether to be trained and certified for each of the skill sets. If someone chooses not to receive any pay, then they remain at the same pay level. If someone is ambitious and wants to gain all 20 skill sets, we let the agent decide the right place to achieve that. Since then, we've seen our call center agents become much happier because they can control their salary and what skills they gain.
• Perceived Progress. In our merchandising department at Zappos, we were promoting our employees from the entry-level merchandising assistant position to the next level, purchasing assistant, after 18 months of employment (assuming they met all requirements to qualify for the promotion). ). We then decided to offer smaller, staggered promotions every six months rather than the equivalent of a previous single promotion. After 18 months (three smaller six-month promotion periods), the end result – in terms of training, certification and compensation – was still the same as the previous promotion program. Because there is a perception of ongoing progress, employees

We saw that he was much happier.
• Connectedness. Research has shown that engaged employees are more productive, and the number of good friends an employee has at work is related to that employee's engagement. This is one of the reasons why we put such importance on company culture at Zappos.
• Vision/Meaning. Good to Great and Tribal Leadership books; He was arguing that a company with a vision and a higher purpose beyond money, profits, or being #1 in the market is a key element of what differentiates a great company (in terms of long-term financial performance) from others.

We Offer Happiness to the World
My hope; The idea is that through Delivering happiness, established businesses will seek to change the way they do things, and entrepreneurs will be inspired to start new companies with happiness at the core of their business models, taking with them some of the lessons I learned. In addition to the lessons we've learned collectively at Zappos, there are also lessons we've learned personally. My hope is that more and more companies will begin to apply some of the findings from research in the science of happiness to make their business better and their customers and employees happier.
I hope this will not only bring you more happiness, but will also enable you to bring more happiness to other people as well.
I hope I've managed to get you to start asking yourself the right questions.
Do you work to maximize your happiness every day?
What is the net impact of your existence on the total amount of happiness in the world each day?
What are your values?
What are you passionate about?
What inspires you?
What is your purpose in life?
What are your company's values?
What is your company's larger purpose?
What is your higher purpose?
I hope you are inspired now…
…make your customers happier (through better customer service) or…
… make your employees happier (with more focus on company culture) or …
…make yourself happier (by learning more about the science of happiness).

LAST WORD
I try to ask myself this question as a guiding principle in life for everything I do: What would happen if everyone in the world acted the same? What would the world look like? What would be the net impact on overall happiness in the world?
This thought experiment; It was helpful for me as I pondered whether to share how we do things at Zappos, whether to feel bad for the waiter who accidentally brought my order wrong, or whether to hold the door open for a disruptive stranger from some distance away.
Same questions; Even if the default choice is to do nothing, it is equally important to decide what not to do.

Join the movement
Ideas of giving away happiness may end here. You can choose to do nothing and continue with the rest of your life, or you can be part of a movement to help make the world a happier and better place. The choice is yours.

SUMMARY FILE