Tony Hsieh Is Leaving Zappos After 20 Years, but He’ll Still Deliver Happiness

Tony Hsieh may be retiring from Zappos, but his mark on e-commerce is indelible.

The Las Vegas-based online clothing and shoe retailer, which Amazon purchased in 2009 for $1.2 billion, confirmed to the Las Vegas Review-Journal on August 24 that its firebrand CEO of two decades would depart the company, effective immediately. Chief operating officer Kedar Deshpande is set to take over as CEO.

While it’s unclear what exactly Hsieh will do next–a spokesperson said he plans to support philanthropic causes and entrepreneurs who are focused on social good–his efforts to elevate customer service and company culture will no doubt leave a lasting impression.

The internet is littered with examples of glowing Zappos customer reviews–from those praising the company’s vegan leather shoe options to kudos for its 2020 campaign to sell single shoes for people who don’t need the full pair. But that’s about what you’d expect. After all, the company’s philosophy has long been “We don’t sell shoes, we sell customer service,” and its No. 1 core value is “Deliver WOW through service.”

Employees are similarly taken with the company’s ethos. For well over a decade, they have authored Zappos’s annual Culture Book, where Zapponians–as they’re called internally–say in a few paragraphs what the company means to them. With about 1,500 employees, not everything makes it into the book, but it’s brimming with photos of happy employee outings, aphorisms, and cheerful wishes.

Hsieh’s own corporate culture book/autobiography, Delivering Happiness, debuted at No. 1 on the New York Times bestseller list in 2010, and remains a foundational tome for entrepreneurs. In 2009, Zappos launched Zappos Insights, a consulting firm that helps other businesses fine-tune their own company cultures.

Of course, Hsieh’s tenure at Zappos was not without problems. Its experiment with holacracy–a decentralized system meant to distribute decision-making throughout the organization–is today largely seen as a bust. Around 18 percent of the staff left the company after Hsieh in 2014 first ordered that Zappos would no longer employ “people managers,” and the company has been quietly backing away from the structure in recent years.

Meanwhile, Zappos’s key differentiator–that is, its laser-like focus on customer service and its emphasis on employee culture–has become mainstream. In 2008, Harvard Business Review reported that Zappos publishes its 1-800 number on every single page of its website and its call-center employees have free rein to do what it takes to satisfy customers. Today, startups are taking the idea even further. San Francisco’s Taika, a canned coffee startup, isn’t just plastering its phone number on its packaging–the phone number is effectively the brand. The New York City-based direct-to-consumer cosmetics company Arfa is even asking customers to help design its products and giving them a cut of the profits.

Hsieh has earned millions from his tenure at Zappos, but now he may stand to make a bit more, thanks to another of the company’s signature programs: the quitting bonus, in which new hires get $1,000 to leave at the outset of their employment if it’s clear they’re not a good fit. Amazon adopted the program several years ago, according to a 2014 shareholder letter from Jeff Bezos, but now offers new hires $2,000 to leave during their first year at the company and an additional $1,000 for each subsequent year, up to $5,000. 

“We hope they don’t take the offer; we want them to stay,” Bezos wrote. “The goal is to encourage folks to take a moment and think about what they really want. In the long run, an employee staying somewhere they don’t want to be isn’t healthy for the employee or the company.”