The Power of Company Culture
Zappos: A Case Study
Zappos is an online shoe retailer that is renowned for its customer service and its amazing working culture. One of its founders Tony Hsieh talked about how they survived the dot-com bubble bursting and maintained their unique identity when acquired by Amazon on Guy Raz’s podcast How I Built This.
Zappos wasn’t the first company that Hsieh had made, having co-founded and run Link Exchange, a company that would let blogs have banner advertisements in the early days of the internet. They ended up selling to Microsoft because the company culture had become very strained as it grew. The founder even left the company before he could get all of his money as per the contract because he found the company culture to be unbearable.
What most people do not know about project management is that it includes organizational culture, not just work tasks. Changing company culture is also a project. If the founder had used project management to enforce company culture as they hired more people, then he would have gotten all the money from the sale and would have been better prepared for Zappos.
Hseih was not the original founder of the website, but rather one of the major funders after the original founder Nick Swinburg came to an incubator to get funding. When they tried to get more investors, they declined because it was just after the dot-com bubble burst and nobody wanted to fund another website. To fund Zappos, Hsieh had to sell real estate he had bought after the Link Exchange sale, which was inefficient and led to delays in funding.
The website survived and thrived, with a focus on customer service and a friendly company culture. Their success got to the point where Amazon wanted to buy out the company. Hsieh had gotten the company culture in a form that he was comfortable with, and didn’t want to sell to Amazon because Amazon tends to superimpose their own company culture on their acquisitions. In response, Amazon created their own competing website named Endless.
Despite all the resources that Amazon had at their disposal, Endless was unable to compete with Zappos and was rapidly losing money. In the end, Amazon agreed that Zappos would become a subsidiary with a company culture separate from Amazon’s.
While Hseih and Zappos had an unbeatable working culture, Hseih could have very easily found that Zappos’ company culture had become unbearable like in Link Exchange. Company culture shifts need to be intentional, and have a clear end goal in mind. Starting company after company and expecting the company culture to be automatically palatable is an exercise in futility.
