Tony Hsieh, longtime Chief of Zappos, passes away at 46

Tony Hsieh, longtime Chief of Zappos, passes away at 46

Amazon had approached Hsieh about an acquisition in 2005, and Hsieh refused

Tony Hsieh, chief executive officer of Zappos. Credit: Reuters Photo

Tony Hsieh, the 46-year-old technology entrepreneur and venture capitalist who built Zappos into a $1 billion internet shoes and clothing powerhouse, died Friday. He was 46.

The cause was injuries suffered in a house fire November 18 in New London, Connecticut, according to Megan Fazio, a spokesperson for The Downtown Project in Las Vegas, a revitalization effort which Hsieh oversaw.

Hsieh (pronounced shay) was apparently visiting family at the time. His death was confirmed by Zappos in a statement from the company’s chief executive, Kedar Deshpande. Further details were not immediately available.

Hsieh stepped down as chief executive in August after 21 years with the company, which began selling shoes online in 1999.

Having sold his first company, LinkExchange, an online advertising network, to Microsoft in 1998 for $265 million, Hsieh became a venture capitalist and invested in a San Francisco-based retail shoe startup, then called ShoeSite.com. He quickly took over as CEO and focused his efforts on building the company into an internet giant. (The name was changed to Zappos.com, an adaptation of “zapatos,” the Spanish word for shoes, according to the company website.)

In the nascent period of internet commerce, Hsieh was a visionary who realised that getting customers to feel comfortable and secure buying online was the key to success and growth.

To do that, employees in the call centre had to engage customers as if speaking to an old friend, with authentic-sounding welcoming banter. He also realised that buyers needed to try on shoes, so Zappos offered free overnight shipping and free return shipping, often sending customers multiple pairs at a time.

Hsieh surprised the Silicon Valley world by moving the company from San Francisco to a suburb of Las Vegas, where he built a culture of “fun and a little weirdness” that resulted in skyrocketing growth.

From $1.6 million in sales in 2000, Zappos surpassed $1 billion in revenues by 2009. In July 2009, Hsieh sold the company for $1.2 billion to Amazon.

Hsieh, a soft-spoken and introspective executive, developed a philosophy of business built around the idea that happy employees were the conduit to satisfied customers who would return again and again.

An avid reader, he wrote a bestselling book, Delivering Happiness, in 2010, describing his customer service philosophy.

During his tenure at Zappos, Hsieh launched the Downtown Project, aimed at revitalizing the once-neglected downtown section of Las Vegas and turning it into a vibrant area where Zappos employees would live. The effort grew beyond Hsieh’s original concept, and the area has attracted thousands of technology workers and entrepreneurs.

“Tony Hsieh played a pivotal role in helping transform Downtown Las Vegas,” Gov. Steve Sisolak of Nevada wrote on Twitter.

Tony Hsieh was born December 12, 1973, in Illinois to Richard and Judy Hsieh, who were immigrants from Taiwan. Tony, the oldest of three sons, grew up in the San Francisco Bay Area. He graduated from Harvard with a degree in computer science in 1995, and after a short stint at Oracle Corp., he co-founded LinkExchange.

Survivors include his parents and his brothers Andy and Dave, Fazio said.

Approached by Nick Swinmurn in 1999 with the idea of selling shoes online, Hsieh overcame initial scepticism and invested. As the concept gained traction, he contemplated ways to spur growth.

In a 2009 profile in Briefings magazine, Hsieh described himself as a lifelong sceptic who sneered at psychology and philosophy. But his computer science background led him to believe that happiness could be studied as a theory and a science. Rather than assuming happiness is achieved haphazardly, he began to read about the distinct characteristics that made people happy.

People assume that achieving a certain goal or winning the lottery will bring lasting happiness, he said, but it rarely does. “Most of the frameworks for happiness conclude that there are four things required: perceived control, perceived progress, connectedness (meaning the depths of relationships) and being part of something bigger than yourself.”

To that end, he argued that building a culture based on these tenets would be the key to Zappos’ long-term success. The company attracted both technology types as well as refugees from the gaming and hospitality industries in Las Vegas.

Zappos was extremely choosy in its recruitment, hiring just 1% of applicants. Word spread quickly about the environment, and people started showing up at the company’s headquarters to take tours.

Over time, Hsieh pushed the culture envelope. In 2013, he announced the company would eliminate all titles and managers to embrace a “holacratic” structure. This self-managing world without bosses had an appeal, but not to everyone. A few hundred employees, or 14% of the workforce, uncomfortable in that structure, accepted a buyout and left.

Hsieh refused to embrace the trappings of a conventional chief executive. He insisted on a $36,000 annual salary, and he sat in an unassuming cubicle among the other employees. When Zappos set up a new warehouse in Kentucky, he packed a pickup truck with materials, drove to Kentucky and got to work bolting together shelves and unpacking shoes.

Amazon had approached Hsieh about an acquisition in 2005, and Hsieh refused. But in 2008, with a recession hammering the economy, Amazon made a second overture, and this time, the Zappos board insisted that Hsieh take the offer. The feeling among some board members was that Hsieh’s business philosophy made for good public relations but would not spur growth in a difficult economy.

Visiting Jeff Bezos, Amazon’s chair in Seattle, Hsieh was impressed by the similarities in the two corporate cultures and also by Bezos’ offer to have Zappos operate as an independent entity with the same management team.

“I get all weak-kneed when I see a customer-obsessed company, and Zappos is definitely that,” Bezos said in a video welcome to Zappos employees. “I’ve seen a lot of companies, and I’ve never seen a culture like Zappos. That culture and the Zappos brand are huge assets that I value very much.”