Sharing my broken, personal notes on Delivering Happiness by Tony Hsieh. Loving this Customer Experience movement and the direction corporations are moving to be customer centric and motivated to please people. Totally drives me toward a higher calling. Where does it drive you? Leave a comment below and let me know.
You made all this money, what will you do now.
Not for the money anymore, now about the passion.
Shoes was fragmented and not tech savvy market.
At first we were drop shipping,
How to ship?
throw ideas against the wall, see if they stick.
We made 27 investments, meet every two weeks with companies.
Poker, *hold’em poker.
Mathematics behind poker was like betting on
Fun challenging, books and experience.
Short term thinking and long term thinking.
Evaluating market opportunities.
Marketing branding activities.
Financials, always be prepared for worst possible.
Figure out the game when the stakes aren’t high.
Hope is on tilt.
Learn by doing.
Surround yourself with talented players.
Don’t be afraid
Most important decision is choosing which table to sit at.
What business to be in.
You could be the most efficient vendor of 7 finger gloves, but won’t have volume.
Compete against big competitors, you will lose.
Choose to change tables.
Same players every time, after time hold’em became normal.
Without focus or concentrated effort, inertia always wins.
Be able to change tables.
Craving building something.
Higher risk investment for Venture Frogs
Have them to move into the incubator.
Hustled for a full year, while tony decided to invest every four months.
Number and depth of relationships for friends.
Experiences are much more important than things.
Bought 810 to gather friends.
Deep connection at a rave, no judgment, appreciate each person for who they were.
Losing a sense of self leads to greater happiness.
Converse with strangers, people are interested in knowing
Always be willing to converse with others.
Focus on getting to know people as people.
Build relationships with those outside of business,
Almost always something happens to bring together that relationship.
Zappos had zero sales in 1999, 1b in 2008
Stop networking in the business sense, make friendships, genuine friendships.
Envision, create and believe in your own universe.
Raise a second fund, emailed to see how many were interested.
Peckerts law – * quotes at end of section one.
Nine month plan email.
Vc’s won’t invest in b2c, growth is constrained.
National ad campaign, features in site,
Get to profitability. Stay focused to get there. Stay on plan.
Follow hiring goal carefully.
Maximize gross profit, order size per customer, conversions,
Had to do a round of layoffs.
Laid off under performers and nonbelievers.
All for one, one for all.
Make customer service the focus of the company.
Figure out a way to grow sales.
Deus ex machina. A Greek miracle.
Right product, right time, right quantity.
Brick and mortar, take inventory risk,
changing business model, triple sales, daunting list.
1. Hire and grow buying team.
2. Convince brands to sell to us.
3. Update software
4. Staff to ship shoes.
5. Open physical store.
6. Get cash to purchase inventory.
Elogistics, ship from KY.
Distributor, reach 75% of customers within two days.
Problem with elogistics, Keith flew out on a dime.
Fred needed more brands.
Inventory couldn’t sit on loading dock.
Hiked Kilimanjaro, five different climates: rainforest, desert, snow, midlands,
End of an era.
What to do about Zappos.
One month left.
Sold loft for 40% below first purchase.
Bought a warehouse.
Never outsource your core competency.
Combine inventory with drop ship.
Audacious longterm goal, sell 1b of profit,
Greater purpose and bigger vision beyond business.
Best customer service and customer experience.
Apply service mentality to vendors.
Zappos library, 100 books available in lobby for free.
How serious are you about making this the best customer service?
Brands weren’t drop shipping with quality.
Easiest and hardest decision to cancel drop shipping.
Had enough money to pay vendors or employees, teetering between debt, and death.
Extended payment terms from vendors.
Wells Fargo gave them a $6M Loan- Revolving Line of Credit, first negative income loan in years.
Emailed employees, vendors and customers to share the good news.
Friends of Zappos,
Income/ Sales Record – 1999, 0/ 2000. 1.6/ 2001, 8.6/ 2002, 32/ 2003, 60? (actually did 70M)
Can’t celebrate past successes, must look ahead to the future.
Will reach 1B in sales by 2010.
Relentless focus of improving the customer experience.
Little things that keep the customer in mind will pay huge dividends.
Out Amazon, Amazon in the category of customer experience.
Focus on constantly improving the customer experience.
Never outsource your core competency.
CLT, customer service renamed Customer Loyalty Team.
Relocated headquarters to Vegas to keep the Team together.
Culture became the #1 priority.
Only hire people you would also enjoy hanging out with outside of the office.
Asked each person to talk about the Zappos culture.
– Zappos culture book. Every employee writes 1-2 paragraphs, 100-500 words, about the culture. Reproduced every year.
For orientation package of every new hire.
Transparent, none censored or edited. Includes both good and bad.
Document the evolution of culture.
Not every employee was excited about growth – Criticism being harder than before, expense reports necessary.
– Ask Anything.
Employees encouraged to ask anything, and answered at the monthly meeting.
Built out board of directors.
Invested time money and effort
Customer service, Culture, and Employee Development.
Brand, Culture, People. BCP
Cultivating a culture book.
If you had to describe your company in 2-3 paragraphs, what would you say?
“What does Zappos mean to you?”
Counter intuitive and somewhat risky.
Ten core values weren’t established yet.
This has become the brand book.
1. Culture book is not about the book, it’s about the culture.
If someone asked you to recite your mission statement at your company, could you?
How do you apply the same values in and out of the office?
– Would you be comfortable printing everything your employees, customers and vendors have to say about your business?
No culture book is worth much, unless it reflects culture and values already in place.
2. Short term investment, long term value.
Printing a book doesn’t necessarily pay for itself.
The investment paid off many fold.
3. Make it available to everyone.
www.deliveringhappinessbook.com – Available here.
Why do people want to know the idea of what’s behind the culture book?
4. Give your evangelists a voice.
Asked customers to get involved in the process.
People want to be in a book associated with a company like Zappos.
Lets customers and vendors know how important they are.
Brand – words and images speak for themselves.
The employees become the brand to the world.
A cult revolving around making people happy.
Pictures. Share what happens around the company every day.
6. No culture book is the same.
7. Ask employees, culture and others what your company means.
Take it and evolve it into something interesting.
Branding through Customer Service.
#1 driver of revenues. Repeat customers and word of mouth.
Invest advertising in customer service and referrals.
Offer free shipping both ways. – View those costs as a marketing expense.
Contact information is buried deep. Put Phone number at the top of every single page of the website.
The telephone is one of the most awesome experiences out there.
Call center is a huge untapped value in a company. LTV is a moving target, that can increase if we improve overall experience with us.
Not about buzz, it’s about engagement and trust.
Most of our efforts happen after the sale.
– Surprise upgrades to overnight shipping.
– Run warehouse 24/7, not the most efficient way, maximizing customer experience. Get orders to customers as quickly as possible.
– Create a WOW experience.
– View each contact as an opportunity to expand the brand.
– No scripts, no call time, goal is to create a Personal Emotional Connection, PEC. Empower your employees to do what’s right for your brand, no matter what it takes.
– Reps trained to research at least 3 competitors websites if a shoe is out of stock. Build a lifelong relationship with the customer one call at a time.
– Calls for a return, fashion advice, or a friendly conversation.
Social media and integration marketing.
Top Ten ways to instill customer service into your company.
1. Make customer service a top priority for the whole company, not just a department.
Customer service attitude needs to come from the top down.
2. Make wow a verb, part of everyday vocab.
3. Empower and trust your customer service reps.
Trust that they want to provide great service.
Escalations to a supervisor, need to be rare.
4. Realize it’s ok to fire customers who are insatiable or abuse employees.
5. Don’t use scripts, don’t measure call time, don’t force employees to upsell.
6. Don’t hide your 1800 number, a message to customers and employees.
7. View each call as in investment to build your customer service brand. Not an expense to minimize.
8. Have everyone celebrate great service, build your experience. Tell stories of wow experiences to everyone in the company.
9. Find and hire passionate people about great service.
10. Give great service to everyone. Customers, employees and vendors.
Give free tours to the public. Let’s people feel the culture. Employees chose to embrace and take to the next level.
Groups began to brainstorm how to make the tour a wow experience.
#1 priority at Zappos is the company culture.
– Have all employees walk through a central reception area to build more of a community, and increase chances of interaction.
– Second step to login, password, then a pic of an employee is displayed, keep a record of everyone’s score. “The face game.”
– Regular employee surveys. Agree or disagree. “I believe I have a higher purpose at Zappos.” etc.
– Research says using swearing as a method to release stress. Happier employees.
– The brand is a lagging indicator of a company’s culture.
Great experiences can be shared as much as bad experiences today.
Didn’t want the brand to be about shoes, clothes or retail but about customer experience.
Brand of Airline industry? Bad Customer service/ experience.
How do you build a brand for the long-term? Culture.
How do you build and maintain the culture yo want?
1. Hiring manager hires. – experience, skills,
2. HR interviews for culture fit.
Everyone goes through the 4 week training program.
History. Philosophy. Phone for two weeks, taking customer calls.
Offer the employees $2k to quit. (less than 1% take the offer)
Ten Core Values.
1. Deliver wow through service.
2. Embrace and drive change.
3. Create fun and a little weirdness.
4. Be adventurous, creative and open minded.
5. Pursue growth and learning.
6. Build open an honest relationships with communication
7. Build a positive team and family spirit.
8. Do more with less.
9. Be passionate and determined.
10. Be humble
Committed to these. Most are never heard after day one of orientation.
You must be able to hire and fire based on these.
Let all your employees be your brand ambassadors.
Get the culture right, the rest will fall into place on its own.
No formal core values for first 6 or 7 years. Very corporate thing.
Original list had 37 core values.
“Bottom up meets top down.”
“Built for change”
Emailed employees and asked for their input over a year.
Integrity comes from committing to and living out the core values.
Tested commitment in hiring process.
Willing to make short term sacrifices for longterm gain.
Emailed entire company to describe values.
Company employees must sign and live up to these values.
to live and deliver wow.
All ten core values should be reflected in everything we do.
Think, act and communicate.
Processes and strategies will change, but core values will not change.
Serve as framework to learn and grow.
Change employee handbook to make it sound like zappos.
Make at least one improvement to make zappos reflect core values.
Add a sentence to make a form more fun.
50k small changes if every employee makes one change a week.
Delivering wow through service.
To WOW you must differentiate yourself.
Something above and beyond what’s expected.
Something not average.
Wow with service and experience.
How could you wow more people.
Random act of Wow-ness.
Embrace and drive change.
Must be prepared to deal with constant change.
Embrace, encourage and drive it.
Plan for constant change.
Important that change is driven from the bottom up. From those dealing most closely with the customer.
Ever evolving. Must continually change to keep them guessing.
How do you plan and prepare for change?
How do you encourage and empower change from the bottom up?
Improve 1% per day, 3776% better at the end of the year.
Create fun and weird.
Unique and different.
Celebrate diversity, even in work. We function best when we can be ourselves.
What can we do that’s fun and weird?
Be adventurous, creative and open minded.
Develop and improve decision making skills.
Take risks, fail. If you’re not failing every now and again, you’re not working right.
Approach situations and solutions with an open mind.
How to infuse core values in process?
Dance music, drink, standup comedy, open moment, give away swag, 5 minute interviews.
Themed interview rooms.
Burnout comes from environment, rules and
See if you can think and act outside the box.
How’d you solve a problem without being asked to?
When was the last time you broke the rules to get the job done?
Unlock potential of employees.
There are no experts except for us.
We must be experts at figuring new things out.
Core value 5: pursue growth and learning.
Come up with ideas and just do.
Build open and honest relationships with communication.
How can you make your relationships more open?
The best team members take ownership of issues.
Do more with less.
Be passionate and determined.
True core values can align an entire organization.
Good to great.
Partners align to same goals and seek to achieve them.
People are your greatest asset. If you lose people, then you lose an asset. Focus on building a pipeline of sr leaders within the company.
Entry level, then pipeline. Pipeline is the asset.
Bcp strategy- brand, culture, pipeline.
Section 3: profits, passion and purpose.
Chtp 6: PR and Public Speaking.
Improve customer experience, employee training.
Focus on making sure your product or service continually wow’s people. PR is a byproduct of delivering a great experience.
Write out speeches, then began to speak off the cuff, slowly improving. Got to Flow.
Allowed other employees to share their individual stories, no censorship or corporate power-point.
Apply core values in talks. Share about how we do things. Allow audience to pursue growth and learning. Happy to share numbers and otherwise. Combine profits passion and purpose.
Began to change other companies and others lives. Can change the world.
– Implement core values.
Zappos insights and Zappos insights live, a two-day session.
Share rather than hoard brand.
Had to work with shareholders to understand efforts.
Called “Tony’s social experiments”
Ten Questions you should ask when seeking investors:
1. Do you really need investors? Do you need investors, could you grow more slowly?
2. How actively involved do you want/will investors be?
3. What value add besides money do you provide to the deal?
4. What is the time-line you’re expecting?
5. What are you hoping to get beyond financial return?
7. Would you except less profits if vision could be fulfilled faster?
10. Do core values of investors align with company?
Started Amazon from his basement.
Had to string electric cords to get enough power there.
When they launched the store, they made an early mistake.
Could order a negative quantity of books, we would credit their card.
Learned alot, body covered in scar tissue.
Initially had a bell to ring when every order was happening.
Everything I know:
1. You need to obsess over customers. Only reason amazon.com exists.
Put customer first, obsess over competitors, but customers first. Then work backwards.
2. Invent. Never accept either or thinking, find a solution that gets both things. Invent on behalf of customers. Not a customer’s job to invent for themselves. Kindle. EC2, Elastic Compute Cloud.
3. Think Long-Term. Must be willing to think long term. Rare. Initiatives might take 5-7 years before paying dividends, think in 5 to 7 year timeframes. Requires and allows a willingness to be misunderstood. Tolerate misunderstanding.
If we think we’re right, we continue, if we think we’re wrong, we change it.
End Game – Delivering Happiness
What is your goal in life?
If you ask yourself why enough times, you will get to… they believe that what they pursue in life will make them happier.
All pursuing happiness.
Interested in the science of happiness.
Read books and articles about happiness.
Always had customers tell us about happiness in a box.
Vision and Purpose, 2009, Delivering happiness to the world.
Fun to watch the purpose statement change.
People are bad at predicting what will provide sustained happiness.
Winners of the lottery, happiness reverts to before.
What you think you want to pursue will get you the goal it will get you?
Apply research to own life.
Apply knowledge to company.
Ran first marathon in 2006. Something I just wanted to check off.
Can preform better in a marathon, if you preform slower runs for long sustained periods. Common knowledge among M runners, but uncommon to us. Must train yourself in ways that go against your gut instinct. Probably can do the same thing with happiness.
Frameworks of happiness, for Tony:
1. Happiness is about four things: perceived control, perceived progress, connectedness, vision or meaning.
Perceived control: Used to give raises once per year, implement skill-set system with a small bump in pay for each skill. Let the rep decide which to attain, when.
Perceived progress: Used to promote from Merch assistant, to Buyer every 18 months, now we give 3 six month promotions, of the same value. Increase # and shorten timeframe for promotion.
Connectedness: Happiness hypothesis, happiness is from between, not within.
Vision or Meaning: Doing something that matters.
2. Peak, Chip Connelly, Maslov’s Hierarchy of needs, Once those are met, we are then driven by social status, creativity,
Expectations, desires, unrecognized needs.
Employee: Money Recognition and meaning
Investor: Transaction alignment, Relationship alignment, Legacy
Customer Hierarchy: Received correct item, Shipping,
3. Pleasure, Passion and higher purpose.
Pleasure: Always chasing the next high. Hard to maintain. Shortest lasting. When stimulus leaves, happiness leaves.
Passion: Peak engagement, second longest lasting, in the zone.
Purpose: Be part of something bigger, that has meaning to you.
Strategy, figure out and pursue higher purpose, passion then pleasure.
Happiness as a fractal. Any part is similar to another shape, if you zoom in or zoom out, the object looks similar.
Parallels great long term companies.
A simple mathematical formula draws them out.
Start companies with happiness at their core.
Hope that more companies will apply concepts in this field.
When you walk with purpose you collide with destiny.
Join the movement.
What would the world look like if everyone acted in the same way?
At what time in your life have you been happiest?
March 09, speech, how do you define happiness? why so important?
Delivering Happiness – A Path To Profits, Passion, and Purpose | by Tony Hsieh.