Featured Business Leader Tony Hsieh

Featured Business Leader  Tony Hsieh


For innovative businessmen and businesswomen around the world, there are a range of goals and dreams. Some businesspeople, those with a variety of interests and passions in business – and this week’s Featured Business Leader, Tony Hsieh, is one of those varied entrepreneurs.

Born to Taiwanese parents in Illinois, and raised in the San Francisco Bay area of California, he had lofty aspirations from an early age. A Harvard University graduate holding a Bachelor of Computer Science, he left university and was immediately employed by computer technology corporation Oracle. Within 5 months, however, he found himself unsatisfied with the corporate environment, and left the safety of Oracle in 1996 to co-found an advertising network called LinkExchange.

LinkExchange was an internet advertising co-operative that took advantage of the ‘.com boom’ that occurred in the late 1990’s by offering businesses and websites the opportunity to promote themselves across a large variety of networks through the use of advertising banners. The business grew rapidly, and within 90 days of its launch LinkExchange had built a database of 20,000 participating web pages and had its banner ads displayed over 10 million times. 2 years after it began, both numbers had significantly grown, with LinkExchange recording 400,000 members on its site, and 5 million ads rotated daily. In November 1998, it was purchased by Microsoft for $265million US dollars – and like any enterprising businessman, Tony Hsieh used his share of the sales profit to help build his next venture.

He joined forces with another Harvard alumnus, Alfred Lim, to create a business known as Venture Frogs. Venture Frogs is an incubation and investment firm, which not only provides funding to entrepreneurs in the technology, e-commerce, and telecommunications industries, but also provides expert business advice for budding start-up operators looking to maximise the potential of their ideas. Venture Frogs as a organisation have invested in over 20 businesses including Ask Jeeves, OpenTable.com and, most notably, Zappos, the online shoe retailer that has taken America by storm.

Tony Hsieh’s involvement with Zappos was very nearly a non-event. The entrepreneur behind the idea of specific online retailing for shoes, Nick Swinmurn, approached Hsieh and Lim about his idea – and Hsieh was close to deleting the initial voicemail. Of the near-miss, Tony has said “I almost deleted the voice mail. Nick left a message saying he wanted to start a company that sold shoes online. I didn’t think consumers would buy shoes sight unseen, and Nick didn’t have a footwear background. It sounded like the poster child of bad Internet ideas.”

But then Nick started discussing the numbers – the retail shoe market in America at the time, was worth over $40 billion – and 5% of sales were already being made through mail order catalogues. As a curious businessman, Tony Hsieh couldn’t help but be intrigued by the idea – and he freely admits that he was suckered into the business.

The company started in 1999, with a $500,000 investment from Venture Frogs, as ShoeSite.com. They quickly changed their name to Zappos, a shortened version of the Spanish word for shoes, and within six months, Tony Hsieh decided to join the fledgling company full-time. Though he was advising and investing in other projects, he saw a growth potential in Zappos.com that he couldn’t refute. He was appointed CEO, and the business began growing steadily – in 2000, when Hsieh started full-time at the organisation, sales hovered around $1.6 million dollars. By 2009, revenue for Zappos.com had reached $1 billion.

In addition to building his company’s incredible sales figures, Tony Hsieh has been hugely influential in the way in which Zappos operates as an organisation – he placed a huge importance on the customer service offered, and creating a strong company culture. Of the importance of company culture, he’s said “our belief is that if you get the culture right, then most of the other stuff, like great customer service and building a great brand, will happen naturally on its own.”

And it has – Zappos.com is well-recognised for its superior customer service throughout the United States, and under Tony Hsieh’s leadership, it has been named in Fortune’s list of Best Companies to Work For, for the sixth time in as many years. Factors that contributed to this include the neighbourhood-like set-up of its headquarters in Las Vegas, the opportunities for staff development and the health and wellbeing support provided to all staff.

In 2009, Zappos.com was acquired by major brand Amazon in a deal that allowed Zappos.com to maintain its hard-fought company culture, by remaining as a separate independent entity from the online retail giant. The deal, completed as a stock and cash agreement, was worth over $1.2 billion dollars.

Zappos is a business that continues to grow, and so too does Tony Hsieh’s profile as an entrepreneur and savvy investor. I think there’s more to come from him yet – whether it’s within the Zappos business or through a new venture, it would seem to me that he takes calculated risks with his investments.

Are you a budding or current commercial investor? What types of businesses would you be willing to take a chance on and why? Let us know in the comments.

This article was written by Simone Ball on behalf of the Australian Institute of Business. All opinions are that of the writer and do not necessarily reflect the opinion of AIB. The following sources have been used to prepare this article: Fortune, Wikipedia, Retire@21, Zappos, Inc. and CrunchBase.

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