Years later, the company’s founder asked a question: What if business profits and happiness were created by a radical reinvention of the workplace? No bosses, no titles, just creativity, equality and pure joy.
Was it all just a utopia? Perhaps. But that was the idea of Tony Hsieh, a visionary who tragically died in 2020 but who years earlier had eliminated hierarchies at his Las Vegas-based shoe company and tried to reinvent the idea of a “happy company.”
Matthew Syed, writer and presenter for the BBC, told the story of this entrepreneur for the BBC World Service’s Business Daily programme.
Hsieh’s childhood dream was simple: Be rich.
He was born in Illinois, USA, in 1973, to a family of Taiwanese immigrants.
His parents instilled in him values such as hard work, common among Asian children in the 70s.
As a result, he worked hard, got the best grades, played a variety of musical instruments, and watched just one hour of television a week.
His family’s plan was for him to pursue a respectable career in an office, but the rigid regime of his youth left him wanting to live more freely. So he decided that money would be the way to gain that freedom.
After graduating from Harvard in 1995, Hsieh co-founded a software company called LinkExchange.
In less than two years, he sold his company to Microsoft for $265 million. At 24, Hsieh had fulfilled his childhood dream.
But he didn’t just sell the company for the money.
“What a lot of people don’t know is the real reason we sold the company. The real reason was simply that it was no longer a fun place to work.“, said Hsieh years later.
When LinkExchange was born, the company was run by Hsieh and his 20-something friends, who had dedicated their lives to the company.
“We worked all day, we slept under the table, we didn’t know what time it was, we tried to remember to shower every now and then,” Hsieh said.
As the company grew, Hsieh faced a problem: he had no more friends to hire. So he ran ads and hired people with the right skills and experience.
But some time later, Hsieh realized that this decision had been a serious mistake.
When bringing new people into your company, you need to introduce hierarchies. Leaders need to push their ideas to ensure that everyone is aligned.
But Hsieh didn’t like to tell people what to do.. He liked the idea of people acting on their own beliefs, coming together around a common vision.
Who is Jeff Bezos
“When we got to 100 people, I didn’t want to get out of bed myself in the morning to go to the office and it was a weird feeling because it was a company I had co-founded, and if I felt that way, I wondered like the others workers felt,” said Hsieh.
When the entrepreneur became disenchanted with his own company, he learned a fundamental lesson.
He didn’t just need money to live. I also wanted to be happy.
The happiest company in the world
With this seemingly simple idea, Hsieh used money from the LinkExchange sale to fund his next project: Zappos, an online shoe retailer.
Hsieh planned to do with shoes what Amazon did with books. Zappos was an opportunity to bring happiness to everyone in the company.
“When I came to Zappos, I wondered how someone could finish their tasks in that environment,” recalls Alexis Gonzales-Black, who worked at the company for three years.
“I wondered what was going on. It was an explosion of glitter, unicorns, there were constant parades, people throwing candy at you,” he describes.
- ‘My company is valued at $5 billion and has no office,’ says UK’s youngest millionaire
- The ‘King of Donuts’ who went from poverty to wealth — twice
When leading LinkExchange, Hsieh hated waking up every day, but now she had finally built the happiest company in the world.
“It was known that it was more difficult to get into Zappos than Harvard. The company received tens of thousands of resumes a year. The process was rigorous, it was highly selective,” says Gonzales-Black.
Hsieh wanted generous spirits. Hsieh found out, for example, which candidates didn’t treat the taxi driver well on his way to the job interview.
The ideal candidate had to be a little “weird”. In interviews, they answered questions like, “On a scale of 1 to 10, are you weird?”
“I said, ‘I’m weird as hell: 11,'” recalls Gonzales-Black.
Other common questions were “what is your favorite bad word?” or “If you had a theme song for when you walk into a room, what would it be?”
At the end of the hiring process, Hsieh offered selected candidates $2,000 to not accept the job. He wanted people who were totally committed to their culture.
But Hsieh sold it to Zappos, who had turned into a “fauna” of free-spirited, creative and eccentric people, into a happy workplace.
In addition to happiness itself, there was a brilliant strategy at work: A happy employee actually gets the job done.
“When people can be themselves, that’s when true friendships are formed, not just peer relationships. And that’s when creative ideas emerge and employees are most productive,” said Hsieh.
The strategy was tremendously successful. In eight years, Zappos sales exceeded $1 billion.
“Within the company, there was an incredible desire to surprise our customers … to make them feel like they were the number one customer,” says Gonzales-Black.
Zappos caused such a stir that, in 2009, it caught Amazon’s attention. Assured that the tech giant would not change the company’s culture, Hsieh sold the company for $1.2 billion.
If at 24 Hsieh had become rich, now at 35, he was also happy.
But as the company grew, it struggled with the internal problem of hierarchy. How could large groups of human beings do things without big bosses directing them? And once you started empowering those bosses, what would happen to the happiness and creativity of those forced to follow orders?
The problem of hierarchies
Like many social scientists before him, Hsieh saw an inversely proportional relationship between hierarchy and happiness, between unequal power and prosperity.
Amazon bought Zappos in 2009 — Photo: Reuters
That’s why Hsieh tried to bring about a revolution, which he believed would challenge the foundations of management philosophy and perhaps the way humans work together.
Hsieh thought that one way to save happiness was to strangle hierarchies.
“Tony went to a conference and came back very excited about the idea of holocracy,” said Gonzales-Black.
Holocracy is a term coined by Arthur Koestler, author of The Ghost of the Machine, and has become a radical management philosophy thanks to American entrepreneur Brian Robertson.
Holocracy is a deeply decentralized way of running a business. There are no bosses or even positions.
The traditional hierarchy is completely abandoned. Instead, there are circles, self-managed teams that develop projects. Employees choose which circles to work in and often work in several.
Holocracy is radical, utopian and, until 2014, it had not been tested in a company the size of Zappos. But, according to Hsieh, this was the path to organizational utopia.
“It’s exciting and very destabilizing for a lot of people. If you’re someone who seeks stability in life, who goes to work knowing exactly what to do, holocracy can create a lot of noise around you,” says Alexis.
Holocracy also creates confusion when it comes to set people’s wages.
Also, in a system without hierarchies, no one really knows who was doing what.
In 2015, when Hsieh offered a bonus to anyone who wanted to leave the company, 18% of workers accepted. And 11% left without bonuses.
- Tim Cook, chief executive of Apple, receives ‘prize’ of nearly R$4 billion in shares
The happiest company in the world had lost nearly a third of its workforce in a single year.
“I thought the hocracy was the stupidest thing I had ever heard. I still think so. And I told him that,” says Paul Bradley Carr, an author and technology reporter, who was a close friend of Hsieh’s.
“Suddenly being told that there are no bosses and if you don’t like it you can leave, that’s not ‘having a choice,'” says Bradley Carr.
At first, it seemed like a big hit. But time has shown that people like hierarchies.
At companies like Zappos, the absence of formal rules masked a harmful power structure. There were no checks and balances. The most powerful could satisfy their whims with few limits.
“Many people felt trapped and intimidated by those who understood the system. What Tony did was not create a flat structure, a flat administration, but a system in which he was the boss and everything else was below him. . He was essentially a king,” adds Bradley Carr.
The irony is that, in seeking perfect equality, he inadvertently created the opposite.
In 2018, Zappos quietly began to move away from holocracy.
In 2020, an increasingly erratic Hsieh left the company. His dream had died.
Upon leaving Zappos, Hsieh began to spend his fortune on a personal system of “holocracy”. He invited people he liked—artists, writers, or entrepreneurs—and offered twice the highest salary they’d ever received to come live with him at his new ranch in Park City, Utah.
Plus, his drug use was getting out of hand, and none of the people around him—who always said “yes” to everything—were prepared to alert him.
He was the emperor whose subjects could not tell he was naked.
“If you’re as rich, successful and influential as Tony, it’s hard to know who your friends are. He definitely had good friends, but I don’t know how many were close to him. very different,” says Bradley Carr.
In November 2020, Hsieh died of smoke inhalation after a fire in a shed in his home. The door was locked from the inside, though whether it was intentionally or by accident is unknown.
The demonstrations on social media were extraordinary.
“I’ve written about many tech millionaires and Tony was like none,” says Bradley Carr. “I wish Silicon Valley billionaires were all like Tony Hsieh, spending their money in bold and ridiculous ways. He was just a wonderful human being and being exciting and interesting. It’s a cliché to say we’ll never see his light again. But never again. we will see the light of Tony Hsieh. ”
* This article is adapted from an episode of the BBC’s Business Daily programme, which you can listen to on here (in English).