About the author
Tony Hseik is the CEO of Link Exchange, CEO of the very successful Zappos Company, admired and studied by many people.
The author recounts the lessons of success and failure in his business process, and expresses his views on happiness in life and in business.
Part 1: Profit
1 – The journey to find profit
Like other Asian mothers and fathers, my parents have very high expectations for us, like wanting me to go to medical school and get a doctorate. But I am only interested in the business, thinking how to make money.
When I was nine years old, I told my parents to take me to North Sonoma, home to a nationally renowned supplier of earthworms, I was cherishing my dream of becoming their competitor. My parents bought a box of about 100 earthworms for over 30 dollars. I created a box of worms in my garden, the bottom is thin wire mesh, filled with mud and then dropped 100 earthworms into it. Every day I take the egg yolks and bury them in the box of worms so that they can multiply faster. Because I know professional athletes often eat raw eggs to increase energy. After 30 days I checked to see how the worms were multiplying, but there was absolutely not a single mother worm. My dream of getting rich from worms has disappeared, I am very sad. “My road to success has also been fraught with failure.” (Thomas Edison)
In high school, I worked as a newspaper delivery man, earning only $2 an hour. After that, I decided to make my own newsletter to sell to friends, 5 dollars each, but only selling 4 copies, I have to find and sell 4 more advertising pages to earn income. A few weeks later, I printed the 2nd copy, but my friends ran out of money to buy it, I only sold 2 copies, I decided to stop this business.
While reading Boy's life magazine, I discovered a $50 button-making tool that can turn a photo or paper pattern into shirt buttons, each for 25 cents. I advertise through mail order and delivery without a face-to-face meeting. I was successful. My monthly income is quite stable. When I graduated from middle school, I decided to give this job to my brother Andy, later Andy passed the job to his youngest brother, and finally, the youngest brother also had to quit when my father moved to Hong Kong.
When I finished high school, I read some magic books and I performed quite good, brand new magic tricks. Many people are curious to know how I do it. With that in mind, I advertised in Boy's Life magazine for $800 (also by mail), that I would provide the equipment and show instructions. After a long wait, I only received my $10 order. So 800 dollars lost. I thought I was the invincible king of mail order.
I decided to attend Harvard University as my parents wanted. In college, I enjoyed watching TV and movies as well as playing games. I often skip school and sleep in. In retrospect, during my first year of college, I didn't go to school much. To complete the prerequisites, I chose to enroll in a bible class, because this class had no homework, only a final exam, so I skipped school comfortably. Two weeks before the final exam, the professor distributes the outline for the students to study. I was confused, the difficulty revealed the wisdom, I sent messages to all the students, organized a research participation, each student only needed to prepare 3 topics. I gathered the articles, photocopied them, bundled them up, and sold them for $20 each. I didn't need to read any books, nor write my own, I had full research papers, and made money. I did well on the final exam. I discovered the power of crowds.
After that, the city issued a directive banning the opening of fast food restaurants near the school, taking advantage of this opportunity, Sanjay and I took the subway to the nearest station with McDonald's to buy hamburgers and cakes. dormitory for sale. But pizza is more profitable, buy one for $2, drink for $10. I invested $2,000 in this case, my sales are increasing. Alfred was our number one customer, he ordered a large pizza, a few hours later he ordered another. Alfred was nicknamed "the barrel of broth" by us because he ate a lot, it was absurd to eat 2 cakes in a few hours. Later, we discovered that Alfred bought pizza and cut it into pieces and sold it to his roommates, which was very profitable. In fact, Alfred made many times more profit than us, but less hard work.
It was thanks to Alfred's pizza business that I later chose him as the chief financial officer and chief executive officer when opening the Zappos company.
2 – Win this, lose that
When I graduated from college, both Sanjay and I were invited to work by Oracle company, with high salary and additional benefits. Sometimes I ask about Sanjay, like me, he finds nothing interesting. We talked about doing something together on the weekend to combat boredom. The idea of own business is very interesting, we decided to open an IMS company, designing websites for companies.
We approached and convinced the local Chamber of Commerce to design a free website for them from which to find customers. The first major client, Hillsdale, paid $2,000 to build their website. We really did! The decision to leave Oracle is a must. Not just for the money, but I wanted to run my own business and control my destiny.
At the end of the first week, we realized that we weren't really passionate about website design. The following weeks we felt stressed and depressed. On the weekend, in a bored mood, we decided to conduct a test program of the idea of Internet Link Exchange (exchange links on the internet), later renamed Link Exchange. In just one week, we saw great potential in the idea, and we focused our energies on turning Link Exchange into a successful business.
In August 1996, Lenny suggested we sell Link Exchange to Bigfoot for one million dollars in cash and stock. We are stunned, Link Exchange has only been established for five months and now has the opportunity to sell for such a high price. But we still bring the price up to 2 million dollars. The sale didn't work out, but Sanjay and I were very motivated to take Link Exchange further.
Jerry Yang, co-founder of Yahoo! come visit us. We are very excited and hope to sign an advertising contract with Yahoo!. But Jerry was not interested in the contract that he wanted to buy Link Exchange for twenty million dollars. We had to try really hard to stay calm when we suspected Jerry. We thought, if we get 20 million dollars, we won't have to do anything for the rest of our lives. But I built a company I love, I was stupid enough to sell it. We decided to turn down Jerry's offer.
During the next 17 months, we all slept very little, and we kept recruiting more employees. We made a mistake when we recruited people into the company, the company culture was gradually ruined, I had the feeling that things weren't as exciting as they used to be.
Microsoft offered $265 million to buy Link Exchange, with a few conditions attached. They want Sanjay, Ali and I to stay, I'll get another $40 million. The contract signing took place after only a few weeks of negotiations. We were not as happy as one would expect, but with a strangely relaxed and wistful mood.
Now what is this? What's next? Questions kept swirling around in my head: What is success? What is happiness? What am I working for? I don't need a lot of money anymore. I don't spend all the money I have, so why should I work for Microsoft? I review the happiest thing in my life has no period related to money at all. I learned that building a creative career makes me happy, close friendships make me happy, eating a baked potato after swimming makes me happy. Society and culture have poisoned us, making us thinkless, just default to admitting that the more money we have, the more successful and happy we will be. I chose to be honest with myself and decided to give up the money Microsoft paid to keep me. I don't know what I'm going to do yet, but I'm sure I'll do something.I decided not to pursue money, but to pursue my passion.
I am ready to turn to a new page in my life.
3 – Diversify
Many of us leave Link Exchange trying to find the answer to the question: “What to do now?”.
One day, I received a voice message from Nick Swinmurn, saying that he had just started a website called shoesite.com, an online shoe store similar to Amazon. I think it's a silly idea. The footwear industry generates 40 billion dollars a year in the US, of which online sales account for 2 billion dollars. We agree to invest in shoesite.com. We then renamed the site Zappos.
The real business idea here is to form partnerships with hundreds of brands, who will provide Zappos with their product portfolio. Zappos will take orders from customers online, transfer them to manufacturers for them to ship products directly to customers. We don't know if the idea of selling shoes online will work, but with Nick and Fred's passion, Alfred and I are ready to take the big gamble.
When I hadn't determined what to do next, I was superficially investing and trading in stocks. Invest money in stocks of companies I know nothing about and end up losing a lot of money. The initial investment to support new ideas and companies is exciting. Alfred and I have made 27 investments and have no money left in the fund. At the time, it seemed like any of our ideas sounded great, so the money in the fund went away quickly. In April 2000, shares of internet companies began to depreciate, causing panic throughout Silicon Valley. A lot of companies go bankrupt. We refuse to invest in companies in our invested portfolio. In the end, Zappos was the only company left in which we continued to invest, although not very optimistically.
I decided to step down from my role as an investor and a consultant, to continue being an entrepreneur. Later that year, I started working full-time at Zappos. The search is finally complete. I realized what I wanted to focus on. I have identified my new passion.
Part II: Profit and passion
4 – Strengthen your position
The next two years were difficult for Zappos. We only focus on the goal of how to survive. We are unable to solicit any additional external funding. A few months later, because I ran out of money, I had to use the money in my personal bank account to keep the company running.
We decided to scrutinize the expenses, not to hire more people, even to lay off some employees, to convince the rest of the employees to reduce their wages or not to receive them in exchange for shares in the company. company. We put extra beds in the rooms of the building to save money on rent for our employees. Motivating employees to be friendly, enthusiastic and hard-working to overcome difficult times. We are bound together by the goal of keeping the company from going bankrupt.
When the money in my personal account ran out, I sold my lands so I could continue to invest in Zappos. I ended up selling all the properties I bought except the house I was living in and the previous party area.
Need to change the business model to save the company. We decided to make customer service our main goal. We attract famous shoe brands to have good products to serve customers, convince them to sell to us in stock, open retail stores in parallel with online sales. We turned half the office into a warehouse. In order to have money to buy goods, I have to liquidate everything I have purchased and auction my farm.
We did the right thing. Our revenue has increased. People are very excited about the new business model. But we still don't have enough positive cash flow due to external shipping charges. In early 2002, the Elogistics Company in Kentucky cooperated with us. Having warehouses in Kentucky, we can cut shipping costs. During a shipment from a California warehouse to Kentucky, a truck derailed, overturned, the driver was injured, and all the shoes on the truck scattered on the highway, 20% of the cargo with a value of $500,000 was lost. lost white.
After that, the staff of Elogistics did not know how to manage, a lot of shoes in the day warehouse had many stains that could not be sold. The company faces extremely difficult times.
We liquidated our contract with Elogistics, rented a new warehouse in Kentucky, and had to move all of our products away again. Everything depends on the sale of my previous party space, otherwise the company will be completely bankrupt. Selling this property to me felt like the end of an era. It's hard not to feel sad, nostalgic. Because this place has given me so many wonderful experiences and memories of everyone.
When the purchase was completed, I transferred the entire amount to Zappos with a feeling of relief. We can survive another 6 months before needing more money.
Our strategy of combining product inventory with direct-to-customer product delivery continues to help us drive revenue. We had $32 million in sales in 2002, 4 times the year before. However, we know the situation is still tense. We persuade suppliers to extend payment for goods. I kept calling Wells Fargo to get more money, hoping they wouldn't flatly refuse like other banks. Thanks to their belief in our passion for the business, despite internal controversy at Wells Fargo, they finally lent us $6 million in June 2003. Our whole company breathed a sigh of relief. We escaped. Just like a dream.
We ended 2003 with total sales of $70 million, exceeding our plan. To reward everyone, we organized a trip to Las Vegas. The trip was also a turning point for the company. The following month, we decided to close our headquarters and move the entire office from San Francisco to Las Vegas.
5 – Prerequisites for development: Brand, culture, core force
When we were in Las Vegas, we couldn't rely on anyone. Therefore, company culture becomes the number one priority. We asked all employees to write down what Zappos meant to them, and then we gathered the ideas into a Zappos culture handbook. Every year, we republish and give away to our employees, suppliers and potential customers. This book contains honest criticisms and compliments, each reprint makes it easy to see how Zappos culture has changed over time.
The company always considers culture as an indispensable part of business activities, it represents the consistency between words and actions, and that is the Zappos brand.
The highlight of Zappos culture is customer service. Today, people see “social media” and “integrated marketing” as means of getting attention. They see phones as low-tech, but we believe phones are the ones that make the best impression. Over the phone, you attract customers in five, ten minutes if you present it properly, create emotions, surprise, customers will remember forever and tell friends. Every interaction is done for the sake of branding, not cost reduction. That is our difference. So we only care if our employees really bring satisfaction beyond expectations for every customer.
Today, thanks to the internet connection, people will share almost instantly a great experience about a certain company to millions of people, while advertising has only a limited effect.
So, culture is your brand.
Clearly defining the core values of Zappos becomes very important to be able to develop culture and brand. We want employees to do any job based on ten core values: Always deliver surprises through customer service, seize opportunities and change, create excitement and something a little out of the ordinary, taking risks creatively and openly, constantly learning and improving, establishing open and honest relationships with the media, building family and team spirit healthy, productive, passionate and determined, humble.
We focus on building our assets as core forces in each department with varying degrees, skills and experience. If employees constantly learn and improve themselves both in terms of personality and professional qualifications, employees will not stay at the company. Each department has its own training programs, the core group of training forces for the whole company. Employees are forced to take many courses in order to be promoted.
Its brand strategy, culture, and core force are the necessary launching pad for Zappos to survive and develop sustainably.
Part III: Profits, passions and goals
6 – Step into a new position
We continue to do what we always do: continuously improve customer service while strengthening the company's culture. But sometimes reporters write about us, and as more media coverage increases, I'm invited to speak at conferences. I strive to hone my public speaking skills, which have a positive impact, creating great relationships and business opportunities. From the feedback, we created “Study Zappos”, an online video service and “Zappos live speech program”. We realized we were in a great position.
But we had a hard time getting the board of directors (including investors) to agree with our actions. Most of the board members want us to focus solely on financial results. Denying their request would put me at risk of being fired. And Alfred, Fred and I don't want to sell the company. I found myself relearning the lesson I had learned from Link Exchange. We are thinking how to solve the board related issues, this is a challenge to overcome. We will buy back the board.
We calculate that, to buy control of the board, we need about $200 million. While looking for potential investors, Amazon contacted us. As for Amazon, they seem to have an open mind knowing that we want to continue to run the company as an independent entity with a culture and way of running Zappos the way we want.
We promote all-stock trading, which means that Zappos shareholders simply exchange for Amazon stock. To us, this is like the spirit of marriage, like couples who share a bank account.
We have found a way to bring happiness to everyone. We can work together to combine the power of art and science, of customer relations and of high technology. The future awaits us.
7 – End of the game
What is your goal in life? Regardless of your answer, I want you to answer the next question: "Why?", and then you keep asking "Why?". Keep answering those questions and you will find the answer most of us accept as “Find happiness in life”.
I've read psychologists' work on happiness, I'm really hooked, I've applied everything in this science to Zappos. The happiness of customers when receiving the goods is very satisfied, quickly, regardless of day or night. The happiness of Zappos employees when part of the company's culture and core values aligns with their own values.
Zappos wants to bring happiness to the whole world.
In reality, the happiness that people think they will achieve fades away quickly, meaning it doesn't bring them lasting happiness.
So you have to ask yourself, is what you want to pursue really bring you happiness?
The science of happiness also shows that there are things that can make you happier without you even realizing it.
Happiness actually consists of four things: controlling your destiny, controlling your own progress, deep connection of relationships and its vision or meaning greater than yourself.
Maslow's hierarchy of needs implements the level of human needs from low to high (material and immaterial needs, esteem needs and self-actualization needs: perfection, independence, creativity, morality, etc.) ...). However, the three conditions for happiness to manifest are: joy, passion, and higher goals. Expressions of joy are short-lived, and when motivation is lost, happiness levels drop. Happiness is expressed through passion as a flow, it lasts longer. Aiming higher is one of those things that is more meaningful and bigger than yourself, which research shows is the longest lasting form of happiness.
The similarity between the findings of happy people (joy, passion, goals) and the findings that make companies great sustainable companies (profit, passion, goals) is one. The most interesting things I discovered. I hope that young entrepreneurs and startups are inspired to make happiness the core value of your business models, like the lessons I have summarized at Zappos.
If happiness is everyone's goal, then why can't we change the world and make everyone and every business a better place!