Nick Swinmurn, a Bay Area entrepreneur, founded Zappos in 1999 after unsuccessfully trying to find a specific pair of shoes in several stores. He believed the internet could address the selection problems traditional shoe sellers faced by removing the physical constraints of shoes stores. He launched Zappos (whose name was an adaptation of the Spanish word for shoes, “zapatos”), despite having no experience in retail or the shoe industry, to provide access to a wide variety of shoe styles, colors and sizes.
Meanwhile, just three years after graduating from Harvard, Tony Hsieh (pronounced “Shay”) and Alfred Lin sold their internet ad-banner business, LinkExchange, to Microsoft for $265 million. In 1999, Hsieh and Lin founded a venture capital fund called Venture Frogs. Hsieh originally served as an investor and advisor to Zappos and then joined the company in 2000, serving as the co-CEO with Swinmurn. (Lin later joined as COO/CFO.) Swinmurn was intent on building the next internet retailing powerhouse and satisfying customers’ needs faster and more simply than ever before. Hsieh, on the other hand, was not focused solely on profits. He wanted to create a new universe, a company that was different from any other company he had known. His focus was on culture and employee happiness.
Recalling his outlook on the new position, Hsieh explained, “It was about: What kind of company can we create where we all want to be there, including me? How can we create such a great environment, where employees get so much out of it that they would do it for free?”
Casestudy by Stanford Graduate School of Business:
Zappos Happiness in a Box