In the Zappos universe, managers are monkeys, culture is king, customers are fans, and work is fun.
And, for the record, Zappos is a real, profitable company. It is an online reseller of shoes, clothing and accessories including watches, handbags and eyewear, and it rang up $1 billion in gross sales last year.
Businesses of all stripes are paying attention to its customer-centric and employee-friendly approach to business — which seems to run counter to the prevailing economic currents, as cutting costs and services is all the rage these days.
A culture at the core
"You can’t have happy employees without having a culture that employees want to grow and develop," said Alfred Lin, Zappos chief operating officer and chief financial officer. And happy employees have a lot to do with happy customers, he noted.
Lin, who will deliver a keynote address at the Real Estate Connect conference in San Francisco in August, said a positive company culture can build a brand that is both believable and marketable.
"We have a belief that brand and culture are two sides of the same coin," he said.
Companies that try to manufacture a brand that is out of synch with the actual culture are really in a state of disconnect, particularly in this age of Internet transparency, Lin said.
Decades ago, a few people working on behalf of a big company would "decide what the brand was, buy lots of advertising, and project a brand image," whether or not it was a true reflection of the company’s culture.
These days, "People will talk about you on the Internet. If you’re a service provider … you can’t really hide. Hiding doesn’t really work in the Internet space.
"If people can see inside the company, and see what the company is all about — that ultimately is what the brand is, not what you say it is."
It’s important to realize that every company has a culture, and it’s important to constantly refine it, Lin said — Zappos has an annual "Culture Book" that is based on input from employees.
Companies get it wrong when they put culture and the relationship with employees on the backburner, he said.
Serving up customer service
While customer service is a cornerstone for Zappos (the name derives from "zapatos," the Spanish word for shoes), which has a headquarters in Henderson, Nev., Lin said the real estate industry in some cases falls short here.
"Most of the people I have dealt with in real estate are generally good people and well-meaning," he said, though they are "not generally the most customer service-oriented people unless there is a sale about to go through."
A page at the Zappos Web site proclaims, "Customer service is everything. In fact, it’s the entire company." It sounds like a catchy slogan, but Lin insists it runs much deeper than that.
Another page at the site describes the Zappos return policy: a 100 percent satisfaction guarantee, with the ability to return items up to 365 days from the purchase date — postage paid by the company (with some exclusions). The company’s call center, complete with live human beings, and warehouse operate 24 hours a day, seven days a week. And Zappos has a reputation for surprising buyers with free shipping upgrades.
"With many call centers you call in and you feel like you’re being read a script — not being treated as a human being," Lin said. Zappos works to "establish a relationship first" — "I think a lot of very successful brokers in real estate really understand that."
New employees are offered $2,000 to quit in the early stages of their employment — it’s a sort of test see if they’re a good fit for the company and vice versa. …CONTINUED
High touch may seem out of place in the online space, but Lin says the company has found its sweet spot there. The company launched in 1999 with a low-cost business model — "Even the founders thought of it as a flea market," Lin said, though that has changed.
Delivering ‘WOW’
Doing more with less is one of the company’s 10 "core values," though the company doesn’t claim to be a discounter.
According to a report at Inc.com, the average hourly worker at the company makes about $23,000 a year, and the salaries "are often below market rates," though the company does cover 100 percent of health care costs.
"If you’re going to be higher cost you have to be higher service and you have to … demonstrate that the value is there," Lin said. "We aren’t the low-cost place. We try to add value."
Among the other core values: "create fun and a little weirdness"; "deliver WOW through service"; "be passionate and determined"; and "embrace and drive change," to name a few.
Lin was not a company founder — he joined in 2005 — though he did help drive the company’s early growth through a seed investment.
Early entrepreneurs
Lin’s business partnership with Tony Hsieh, Zappos CEO, dates back to their college days at Harvard University. Hsieh purchased the rights to run the grill in the downstairs at Quincy House, one of the largest of the 12 residential houses for Harvard undergraduates.
Even in those days they shined in entrepreneurship — Hsieh decided it would be more profitable to operate a pizza oven than flipping burgers, and Lin became a reseller of Hsieh’s pizzas.
"Basically, I bought pizza from him and sold it by the slice," Lin said. "So that’s how we met."
Lin later traversed the country for graduate studies at Stanford University, and Hsieh contacted him about the possibility of opening a Subway sandwich franchise on campus there.
That idea passed (campus policy prevented it in those days and there was already a franchise near campus), and Hsieh moved out to California — and moved on from his food franchise ideas — to a job at Oracle.
Hsieh would later co-found Link Exchange; Lin joined him a year later; and the company sold to Microsoft for $265 million in 1998.
With money in their pockets, Lin and Hsieh got into the venture capital sector, founding Venture Frogs. That company invested $27 million in about 27 companies — $1 million apiece — and Zappos was one of the beneficiaries.
Tellme Networks, another Venture Frogs-backed company, sold to Microsoft for an estimated $800 million.
"One company I always loved the most is Zappos," Lin said, as it represented a good market opportunity, had "very passionate employees," and "a great culture." Hsieh had joined Zappos full time in 2000.
Monkeying around
And even as the company has grown, Lin said managers have worked to promote a family vibe for the workplace. Managers refer to themselves as monkeys — "We don’t have offices; we sit in a row called monkey row," Lin said. …CONTINUED
"We try to meet with every single new hire after they go through our training process. It’s our company, it’s our culture, it’s everybody’s responsibility to do the right thing. The best feedback, the best ideas, come from the bottom up," Lin said.
"It’s a user-generated culture. We have the same philosophy with our employees we have with the customers." Employees and customers alike are encouraged to contact managers through a variety of ways, be it e-mail or Twitter or live chat. The company offers tours. It has an online video channel. Managers Twitter. The company encourages its fans to post "I Love Zappos" logos on their personal Web sites.
The company wants its customers to be its fans, and to become its walking and talking advertisements.
"We do advertise," Lin said, though "advertising is not the main driver of our growth." People telling their friends, family members and entire social networks about Zappos is a powerful thing, he noted.
Hsieh has more than 500,000 followers on Twitter, though Lin said he "doesn’t try actively to promote Zappos." Instead, his posts are mostly funny and insightful and trivial and entertaining tidbits, such as this: "Bought salad to go at airport. When cashier told me I owed her $10.23, I almost threw up. But that would have made me hungrier."
People seem to identify with the company’s quirky and very human online presence, Lin said. "The connection gets stronger and stronger and stronger, and it builds itself." He said he has heard customers say that they "bought from Zappos because I feel like I know you guys."
Some recent company blog posts highlight the literal "mashup" of an iPhone in a blender, items that occupy the desk of a marketing department employee, and the cowboy attire donned by employees on "Zappos Spirit Day."
A video at the site describes internal "parades" that feature random acts of kindness for randomly targeted employees, complete with bullhorn callouts, a funky hat and a gift card.
Some observers have said it appears the dot-com boom never busted here at Zappos.
Lin said that he and Hsieh are constantly evaluating other companies to find business elements that could be adapted for use at Zappos.
"I often joke with Tony, ‘We don’t have any really original ideas.’ What we really do well — we try to learn as much as we can from everybody we meet and every company we see. (That’s) what has allowed us to stay sort of nimble."
Hear Alfred Lin speak about "Building a Brand that Matters" at the upcoming Real Estate Connect conference in San Francisco, which runs from Aug. 5-7 at the Palace Hotel. Click here for details.
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