Entrepreneurship in Action

Building an Intentional Culture at Zappos

Tony Hsieh first joined Zappos, an online retailer of shoes, as an investor and adviser. He had recently sold the company he founded, LinkExchange, to Microsoft for $265 million. The main reason he sold his company? It was no longer a fun place to work! Hsieh’s involvement with Zappos grew, and he soon became its CEO. His top priority was from the start—and still is today—getting the culture of Zappos right.

The core of the Zappos culture is based on one word: happiness. Hsieh focuses on making his employees and his customers feel really good. Everything at Zappos focuses on sustaining a culture of happiness.

Building and sustaining the Zappos culture begins with the hiring process. A human resource manager conducts the initial interview, which is an assessment of the cultural fit of the candidate. If the person fails the cultural fit interview, he or she is not invited to meet with the hiring manager.

Every person who passes the cultural fit interview then goes through a process in which the prospective employee meets with the supervisor and team members several times. Interviewers use behaviorally based questions that assess a candidate’s potential ability to fit within the culture and to exhibit the necessary skills. Every prospect is also invited to at least one company event, often a party of some sort, to allow those who are not part of the formal interviewing process to meet the candidate. For some positions, the hiring process can last for months.

Once an employee is hired, the training process is also structured to support and sustain the Zappos culture. Every new hire—from a call center employee to a senior executive—goes through the same four-week employee orientation and training program. A team trains each new employee on each of the core values that are at the heart of the Zappos culture:

Deliver “wow” through service

Embrace and drive change

Create fun and a little 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

“At the end of that first week of training we make an offer to the entire class that we’ll pay you for the time you’ve already spent training plus a bonus of $2,000 to quit and leave the company right now,” says Hsieh.

Zappos rarely ever has to write a check. The company often goes more than a year before a candidate takes the buyout offer and leaves. Zappos uses the “quitting bonus” to ensure that the employees it hires are engaged and committed to the company and are a good fit with its unique culture.

As CEO of Zappos, Hsieh focuses on seven key levers to ensure that once people are integrated into the company, they help play a role in sustaining the Zappos culture:

Build a company, not a product. “I’ve never been interested in shoes,” says Hsieh. “My passion has always been customer service, company culture, and community.”

Motivate through inspiration. Zappos uses its mission and culture to inspire performance. “If you can inspire employees through a higher purpose beyond profits, that you’re doing something that can help change the world,” says Hsieh, “you can accomplish so much more.”

View your company as a greenhouse. Hsieh says that his role is to build a greenhouse that allows his employees to flourish and grow.

Encourage “collisions.” At Zappos, offices are set up to encourage interactions. Hsieh’s office is right in the middle of all of the other cubicles.

Make company values flexible. Zappos has its headquarters in Las Vegas, an office in China, and a warehouse in Kentucky. The core values have to be flexible enough to be effective regardless of an employee’s job function or geography.

Encourage employees to continuously learn.

Encourage employees to continuously learn. Zappos offers employees classes, some taught by Hsieh himself, on inspirational business books and other topics that challenge every employee to grow.

Offer a clear career path. Help employees see that they can advance in the organization and understand what it takes to do so. “Set expectations on both sides,” Hsieh says.

Zappos has created a book on its culture and core values. Each year, all employees are encouraged to submit essays that reflect on what it means to work at Zappos. The book is now almost 500 pages long. Hsieh uses the book as a way to preserve the culture, to get employees thinking about the meaning of their work at Zappos, and as way to demonstrate to the outside world the essence of Zappo’s culture.

Answer the following questions:

Why is it so important to be intentional about creating and sustaining a culture within a business venture? What does Zappos do to sustain its culture? What impact does Zappos’ new employee training program have on employee motivation and corporate culture? What are some other ways entrepreneurs can instill and sustain a culture within their businesses?