The Secrets to Zappos' Success

The rags-to-riches shoe company employs a life coach and shaves its employees’ heads.

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The success of online shoe retailer Zappos has been well-documented: It went from a struggling start-up in 2000 to getting acquired by Amazon in a deal valued at $1.2 billion in 2009. The face of the company, chief executive Tony Hsieh, an avid Twitterer and successful entrepreneur even before leading the shoe company, shares the secrets to his success in his new book, Delivering Happiness: A Path to Profits, Passion, and Purpose. He has long held that customer service is paramount, especially at a time when many companies are scaling back and outsourcing. Even Twitter, he says, serves as a way to "[improve] our relationship and connection with our customers."

Some of the company's idiosyncrasies are well-known, including a focus on customer service, free two-way shipping, and a tight workplace environment (some have even called it a cult), but others will surprise you. Here are 16 things you may not know about the company:

• The name "Zappos" comes from the Spanish word for shoes, "zapatos." Hsieh suggested adding an additional "p" to the name to help people pronounce it properly.

• Moving Zappos' warehouse from California to Kentucky allowed shoes to reach East Coast customers in two days instead of a week.

• Zappos maintains an on-site library to encourage employees to read books.

• In its early days, Hsieh kept the company alive by using his own money that he earned from selling his previous company, LinkExchange, to Microsoft for $265 million.

• A Zappos culture book, which is given to all new employees, describes the ethos of the company. It features 100- to 500-word essays by current employees.

• Employees are invited to post questions for the monthly "Ask Anything" newsletter. Questions have included: Why are women's and men's shoe sizes different? What other music have we considered having as our [telephone] hold music? Where do you see us in three years?

• The longest customer service call took almost six hours. (Hsieh doesn't say whether the representative was allowed bathroom breaks.) Another rep helped a caller locate a nearby pizza place that would deliver after midnight. On another call, the rep spoke entirely in third-person at the request of the customer. Hsieh says he considers the extra costs of running such a full-service operation as marketing costs, because good phone experiences encourage people to say positive things about Zappos to their friends.

• You can get an hour-long tour of the Zappos headquarters in Las Vegas—it's open to the public.

[See Want the Best Deals? See Twitter, Facebook.]

• Zappos employs a life coach.

• Zappos maintains an annual "Bald and Blue" tradition where men volunteer to get their heads shaved completely (or shaved down to a "number 1"), for no other reason than "just because." Hsieh also gets his head shaved.

• When Zappos employees log onto their computers, they don't just enter a login and password. They also have to try to match a name with a photo of a randomly selected colleague. The company keeps a record of everyone's score.

• Zappos regular asks employees whether they consider their co-workers to be like their "family and friends." The company also regularly offers workers $2,000 to quit, "to make sure that employees are here for more than just a paycheck."

• When applying for a job applicants are asked, "When was the last time you broke the rules or policy to get the job done?"

[See Why Customer Service Has Gotten So Bad.]

• Despite feeling that the company is like a family, Hsieh had to lay off 8 percent of employees in 2008. He says it was "one of the hardest decisions we ever had to make."

• When Amazon bought Zappos in 2009, Hsieh and a colleague personally bought Kindles for all current Zappos employees.

• Hsieh is a fan of raves and says working at Zappos sometimes reminds him of being at one. When he spoke to his employees shortly after the Amazon-Zappos deal was announced, he said, "The unified energy and emotion of everyone in the room was reminiscent of when I'd attended my first rave ten years earlier, where I'd witnessed thousands of people dancing in unison, with everyone feeding off of each other's energy."