Jan 09 2013

CES 2013: Zappos CEO Tony Hsieh Explains Why Company Culture Matters

The startup hero behind the e-commerce heavyweight explains how he learned that culture comes first.

The annual Consumer Electronics Show (CES) that takes place in Las Vegas every year is a gadget wonderland, but it’s also tech-entrepreneur nirvana. Journalists, experts, veterans and wide-eyed freshman all flock to the trade show to network and pick up pearls of wisdom from their entrepreneurial heroes.

With that in mind, Tony Hsieh, the CEO of Zappos, probably qualifies as the e-commerce version of Superman.

During a talk with Startup America, Hsieh explained how he came to understand that a defined, focused and aligned company culture was key to making a startup successful. He learned this lesson firsthand when he worked at LinkExchange, an online banner advertising cooperative that was acquired by Microsoft in 1998.

LinkExchange, which Hsieh started with his college roommate in 1996, suffered a slow erosion of company culture. It got so bad that Hsieh began dreading going to work at his own company, he explained.

This death of the company culture shook things up so badly that it led Hsieh and his co-founder to sell the company.

“When it was just 5 or 10 of us, even when it was 20 of us, it was actually a lot of fun. We were hiring friends, and friends of friends, and working around the clock and growing.” Hsieh said.

“At some point, we made one hire that wasn't maybe great for the culture, and then that person made other hires, and then when we went from 20 to 100 employees, the company culture just kind of slowly started going downhill,” Hsieh added.

Zappos is known for its airtight focus on providing the ultimate customer service experience. And getting Zappos employees to align with this single cause is why Hsieh and Zappos continue to flourish today, he says.

While customer service as an ideal has worked for Zappos, Hsieh points out that what unites a company doesn’t matter, so long as the company is united.

“Companies that have strong cultures actually outperform companies that don’t, all other things being equal in the long run,” he said. “What the research has shown is that it actually doesn't matter what your values are. What matters is that you actually have them and that you commit to them as an organization.”

Watch the video of Hsieh’s chat with Startup America CEO Scott Chase at CES 2013 below.


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