I have just finished reading an advance copy of the new Tony Hsieh book “Delivering Happiness: A Path to Profits, Passion, and Purpose“. Here’s my review, coupled with some thoughts about business:
Tony Hsieh is the CEO of Zappos, an online retailer which did over $1 billion in gross merchandise sales in 2008.
Tony Hsieh is on a mission to change the world, by preaching a different way of doing business. Zappos built its reputation on outstanding customer service with a reputation of delighting the customer, aptly captured in the tagline of Zappos.com ” Powered by Service”.
“Delivering Happiness” is part autobiography, part business book, and part Zappos brochure.
Whatever was said in “Delivering Happiness” is nothing new. The only reason people are listening to Tony Hsieh is because he made it big twice, first by selling Link exchange to Microsoft in 1998 for US$265m, and then convincing Amazon to take over Zappos in a US$1.2b stockswap in 2008.
The first section of “Delivering Happiness” talked about his childhood and school experiences, and how he got started on his Internet businesses. Tony Hsieh is obviously a prodigiously smart kid. Learning his experiences, his entire career seemed very unplanned. He almost seemed to stumble upon his successes by accident. The sale of Link exchange was excellent timing as well, happening shortly before the dot-com crash.
I wasn’t too impressed by some of the decisions he took. He could have earned an additional US$40 million at Microsoft simply by staying on for another year after the takeover, but he chose to give it up and basically bummed around without any concrete plans. Instead, he spent most of his time partying and playing poker.
This nearly came back to bite him on the back side when he was forced to sell off his properties at firesale prices in order to raise cash to keep Zappos going. Zappos’s future was only secured upon a US$6 million bank loan. It seemed like small change compared to the US$40 million. Perhaps the money came too easy for him. After all, the entire Link exchange project lasted for less than three years.
Gushing about house and trance music and the happy vibes he felt at rave parties seemed rather superficial too. Get a group of people together, ply them with copious amounts of alcohol, and the genre of music probably wouldn’t matter.
One thing I’m sure about is that Tony Hsieh is a very sincere person. “Delivering Happiness” is written in a very down to earth style, you could almost hear Tony Hsieh speaking as if he is right in front of you. The book also contains a small number of grammatical and typographical errors, which he charmingly disclaims at the beginning. This is an advance copy after all.
The middle section of “Delivering Happiness” contained a chapter filled with excerpts from interviews with some of Zappos’s employees and vendors. They provided personal stories of how wonderful Zappos is. It’s a smart idea getting other people to provide testimonials, and some of the anecdotes were amusing. But after the third story, I was ready to skip ahead.
What was more interesting was the insider’s point of view describing the rapid growth surge in Zappos. It felt almost surreal to see his revenue numbers doubling every single year, while he talked about pre-emptive layoffs to contain costs. A sharp focus on reducing expenses was a key driver of their success, especially when Internet companies were boasting about their “burn rates” i.e. how fast they could go through the venture capital money they raised.
The last section of “Delivering Happiness” touched on the higher purpose of Zappos, which was in Tony Hsieh’s own words, to “deliver happiness”. He didn’t mean it in the materialistic sense of “retail therapy”, but simply that customers were delighted with the outstanding customer service, and his employees loved their work.
It felt a bit out of place, but he tacked on a small section on positive psychology at the end. Being a psychology graduate, I didn’t feel entirely comfortable with how Tony Hsieh combined various ideas into his own happiness framework. The upside is that it will help to publicise this relatively new field of psychology.
Usually after finishing a business or motivational book, I would feel energised and full of ideas. But for “Delivering Happiness”, I’m ambivalent. I’m just not convinced that his methods are for everyone. What do I mean?
Let me use the shipping and returns policy of Zappos as an example. They offer free shipping both ways, and have a no questions asked refund policy of 365 days. This policy was designed to encourage customers to order shoes over the Internet.
Now, buying shoes is a highly personal and intimate affair. You want to be sure that the shoes fit just right and that it looks perfect with your outfit. Instead of trying to replicate that experience over the Internet, what Zappos did was to make returns a painless and hasslefree process: the customer would simply order multiple pairs of shoes and return the ones she doesn’t want.
Would this model work for every company? First, let’s look at the factors in Zappos’s favour:
1. Shipping cost of shoes is low as they are light.
2. The majority of customers in the USA behave ethically.
3. Positive word of mouth spreads rapidly thanks to the Internet and social media tools such as Twitter and Facebook. The additional expense is incurred is seen as a marketing investment.
Right now Zappos is only operating in North America (they started in USA and have recently expanded to Canada). I would be convinced if they can replicate this business model in other countries, especially in Asia.
It is all very well to speak of a higher purpose in doing business, but I felt some of these actions were contrary to his spoken mission. The main example would be the pre-emptive layoffs despite the company being profitable and having positive cash flow.
His explanation was that they needed to reduce their debt liabilities, but I’m not convinced that a company which truly cares about their employees would take such a drastic step. Tony Hsieh did provide more attractive retrenchment benefits than the typical company, but that’s scant consolation to those who were retrenched.
Perhaps it’s a sign of the times, a traditional Asian company from a couple of decades ago would never dream of retrenching their staff. Lifelong employment with a single company was a very real phenomenon. Nowadays, even if the company wishes to keep the employees for life, no one would stay on.
Perhaps mindful of this, Tony Hsieh has devised a seven-year career plan for all his employees. As much as possible, he would hire staff at entry-level and provide a clear path of progression. Seven years would be considered a very long tenure these days. The duration is just nice: short enough to be attainable, yet long enough to keep turn over to a minimum.
As a business book or autobiography, “Delivering Happiness” is a bit skimpy on content. After all, Tony Hsieh is only 35 years old this year. I think of this as the first half of Tony Hsieh’s actual autobiography, which will probably be published in another 20 years.
In the meantime, I will be keeping a close eye on his progress at Zappos.
How to win a free copy of “Delivering Happiness: A Path to Profits, Passion and Purpose”
As part of his strategy of surprise upgrades, I received not one but two copies of the book “Delivering Happiness: A Path to Profits, Passion, and Purpose“. And I’m giving a copy a way to one lucky reader.
One lucky winner will be selected in 14 days time. I will open this up to readers from all around the world. Don’t worry, I’ll bear the shipping costs myself. 🙂
Good luck and have fun!