What San Francisco/Silicon Valley can learn from the Twittering company: Zappos

Zappos Tour

Yesterday I was lucky enough to visit Zappos and get a tour and talk with some of their executives, including Tony Hsieh, CEO.

Up until now most of what I knew about Zappos was that they had a lot of people on Twitter (434 of their 1,500 employees are on Twitter with more joining every day).

I thought I was going to Zappos to study how Zappos uses social media and get an interview about that for Building43, the community Rocky and I are building for people who are fanatical about the Internet.

But within 10 minutes of walking in the front door I realized that there’s a lot more to Zappos than that they get Twitter. More on that later, because Tim O’Reilly demonstrates some of Silicon Valley’s worst beliefs about Twitter when his conferences advertise “learn the secrets of building 100,000 + followers.” Zappos does NOT believe that is the goal of Twitter, more on that later in this post. Aside: if you want to attend a Twitter Conference that focuses on real business value and community engagement, come to 140: The Twitter Conference. (UPDATE: Tim O’Reilly wrote me and said he totally agreed with me that focusing on followers is the wrong thing to do for a Twitterer and he has removed that language from his conference materials).

Before we even got to the front door tons of employees said “hello.” That’s weird, doesn’t happen at most companies, believe it or not. And the way they greeted each other told me something else was up here.

A warm greeting in Zappos headquarters

Then when we got into the front lobby we were warming greeted again, and then as we looked around, we saw this wasn’t going to be a normal visit to a normal company. There was a book store with books free for the taking. There was a popcorn machine. A Dance Dance Revolution machine. A “hall of fame” board for employees who had pushed “reply to all” too quickly. And a video display that showed off how many sales were made yesterday. I had never been in a corporate lobby like this before.

Then I hooked onto a tour given by Zappos’ Mayor, Jerry Tidmor. Oh, yeah, everyone has weird titles. Executives are called “monkeys.” One employee’s title was, simply, “fred.” Causes him a lot of fun when he tries to get a badge at conferences. UPDATE: here’s video of the beginning of that tour.

Along the way Jerry showed us office after office that was decked out with some fun weird theme. I had seen some of this at other places like Google and my new employer, Rackspace, but Zappos gets everyone into it. The lawyers’ offices even hold the Christmas tree (they have Christmas twice a year at Zappos. Why? Why not?).

In one office they set up a bowling alley. That was a lot of fun for the Rackspace employees who were here for discussions.

Total transparency

They are transparent with all their numbers. All employees know how they are doing and so does the public. The numbers are on a white board on the tour for all to see and take pictures of. This picture is of Jerry standing in front of the board with the up-to-date numbers.

During a lunch session with Zappos “monkeys” we asked how they handled a recent layoff. We noted that the employees who were laid off were incredibly positive. The answer: they did it in open with everyone understanding the reasons for it. They did it fast and didn’t drag their feet. So when they did it they had enough cash to give everyone a good severance package. They said if they had waited to see if business conditions would improve they wouldn’t have been able to do that.

Anyway, so what can Silicon Valley learn from Zappos?

1. You don’t need to be in San Francisco to build a great company. Zappos actually started in the same building as Craig’s List. They moved to Las Vegas because it was cheaper and because they saw they could build a better company. The other half of the company is a warehouse in Kentucky. That’s there because that’s where UPS is, so they can take your order in the evening and have it on your doorstep the next day.

Sign with one of core values

2. Focus on culture and build something for long term. Tony’s first company, Link Exchange, was sold because it wasn’t fun anymore, he told me. That’s why he focused so much on culture when he got involved with Zappos. I see so many companies who focus on growth and get exactly what they want: an unfun fast growing company that falls apart later.

3. Get rid of assholes. Zappos has a filtering system before, during, and after hiring to make sure they get rid of people who “don’t fit the culture.” That is the nice way of saying they get rid of assholes and they get rid of them quickly. They even pay candidates $2,000 after they go through training if they can admit they don’t fit into the culture.

Dr. Vic

4. Get a coach. Zappos has its own coach. His name is Dr. Vic. He meets with every employee. Takes their picture. Learns what they are about and helps them get their career moving. Plus he writes a blog for everyone else’s company.

5. Share with others. Zappos gives tours to everyone to share what they’ve learned. You can take the tour too, I highly recommend it if you are in Las Vegas. tours@zappos.com will get you a date and a time. Oh, did I mention they pick you up from the airport? And that they carry your bags? And that they are, well, um, nice?

Grab a book and learn

6. Train, train and train some more. Zappos has a whole department that puts together classes. Your pay goes up the more classes you complete. Plus they have all those free books in the lobby.

7. Enable all employees to be spokespeople. Every single new hire at Zappos is asked to start a Twitter account and post a few times to it during training. After that they don’t care if you keep it up. Why do they do that? They want to rub it in that EVERYONE in the company is a public spokesperson for Zappos, not just the CEO or PR team.

Zappos core values

8. Everyone lives by same rules. During the tour we heard of a new hire that was fired during training for not showing up on time and giving some lip. This was a high level technical person that they really could have used. Silicon Valley companies would put up with that kind of behavior. Not at Zappos. Everyone, from executive recruits on down are expected to live to the same rules.

9. The CEO’s office isn’t sacrosanct. Tony enouraged us to throw peanut shells on his office floor. Why? That happens every day, we learned, as tours come through. But it’s a subtle message that Tony isn’t above anyone else in the company and that his door isn’t just open, but that you can come in and mess up his work space.

The Casual department

10. Create a welcoming culture. Every department, as we walked in, said “hi” in a different way. Here’s the casual department who waved these little clappy hands at us. Other departments had other kinds of noise makers. The Fashion department took pictures of us while they played music.

Everyone on tour is a VIP

11. Everyone is a VIP. Both internally and externally everyone gets the VIP treatment. This means all sorts of little things all across the company. Vendors, when they come to Zappos, get their bags carried. That wins them accounts. In our case we had our tripods and cameras carried and our every need catered to.

Lunch with Zappos executives

12. Create an atmosphere for both goofiness and brilliance. Every conference room was decked out with personal touches. It gets you in the mood for creative discussions. Here Rackspace employees are meeting with Zappos employees and learning more about Zappos. Notice all the weird touches on the table, the walls. It’s hard to take yourself too seriously there.

13. Root out hubris and kill it. This is mostly a note to myself, but I know lots of San Francisco companies who this could apply to just as well, too.

14. Follow your employee’s and customers’ passion. How did Zappos get into clothing? Their customers and employees were passionate about it.

15. Don’t be religious about what’s working. Having 400 employees on Twitter is clearly working for Zappos but Tony, at one point, told his employees to talk to me about friendfeed. They are always looking for the next idea. By the way, here’s everyone who is saying something about Zappos on friendfeed. I love this quote from Forrester’s CEO, George Colony (Tony is speaking at the Forrester Conference today): “When asked why he was on Twitter, Tony Hsieh, Zappos CEO said: “People relate to people, not companies.”

16. Be religious about taking care of customers. Tony loves telling the story about when they got pizza ordered for them by Zappos help desk (they didn’t know who was calling). Every employee is empowered to take care of customers and get their problems solved.

17. Reward greatness. Every employee can give a $50 bonus to any other employee. Does it get misused? Not often and when it does it’s easy to solve.

18. Remember most policies are to take care of edge cases. They resist writing new policies at Zappos. When they do write a policy, they make sure it really is needed across the company. Usually policies get killed.

Anyway, there is lots of posts like this one about Zappos and why this company is so interesting. I didn’t get it until I went on a tour and saw it for myself. I’m a fan for life. I wish there were more companies like Zappos.

The fact that there isn’t tells us something about us. And I don’t like what I’m learning.

Back to that quote from the O’Reilly Twitter Camp home page: the goal of a good company as they get on Twitter should NOT be to get more followers. It should be to take care of customers and create an emotional attachment to the company through its people. Zappos gets this at a deep level. Boy do I wish more did.

Being creative after a layoff

I’m also now blogging about business stuff I’m seeing over on my Fast Company blog. Here’s one I did titled “You’ve Survived a Layoff at Work, How Do You Get Creative Again?”

A ton of ideas on how I’ve seen people get creative again after a layoff. On Sunday Loic Le Meur, CEO of Seesmic, admonished me and told me it’s very important to get back after a layoff and be optimistic again. Otherwise your work will suffer and people around you will see you as having less value.

He’s right, so I’ve been working on just that. Do you have any other ways you get optimistic after having a bad day at work?

What companies are you cheering for?

You might notice I’ve been playing around with different video systems this week. I rediscovered two companies I knew about but hadn’t really used yet: Blip.tv and TubeMogul. But now that I’ve used them I find I’m cheering for them.

What do I mean by that? Well, Fast Company just released its 50 most innovative companies list and I find I’m cheering for many of the companies on that list.

Especially during the recession I’m hoping that my favorite companies find ways to survive and thrive.

So, I’m wondering, what companies are you cheering for?

Oh, and why am I using TubeMogul? Gary Vaynerchuk, who does the most excellent WineLibrary TV video show and I were doing a panel together at CES and he said “you are a complete idiot if you’re not using TubeMogul.” I didn’t want to be a complete idiot anymore. 🙂 What does it do? It redistributes, and tracks, your video onto a number of different sites. That let me rediscover Blip.tv which has the cleanest player I’ve seen (it’s the player I used on the David Allen coaching blog post I just posted).

Pageonce: economic downturn winner?

Pageonce‘s CEO Guy Goldstein was on my WorkFastTV show this morning (the recording will be up on Monday, but I did a separate video with him afterward on Kyte.tv so you can get a sense of what his app does) and while we were talking he was reporting that he’s seeing a ton of usage BECAUSE of the downturn.

What does his app do? It’s an iPhone app (next week they are shipping on Blackberry too) that lets you watch all sorts of personal information. I call it a personal information dashboard.

Stocks. Bank accounts. Travel info. Restaurant info. And more.

You can see when your bills are due, what your account balances are, and more. All from your iPhone (it’s one of the top 10 productivity iPhone applications).

This is a three-month-old startup that shipped on the iPhone and already has 200,000+ users.

Seems to me this app, along with others from Mint and Billpay could be major winners as we pay closer attention to our finances.

What are other examples of apps that you are seeing winning in this economy?

The political topic that must not be discussed in USA

No, not a 17-year-old’s sex life. That’s fair game in today’s media world, it seems. No, not abortion or whether or not a candidate considered such or will legislate against choice to use it. That’s fair game too. No, not gun ownership or support of that. That’s been discussed at length. No, not whether some candidate was a member of the PTA. That is certainly up for discussion. Certainly energy policy is. Along with service to country and whether or not one party supports the military or the battle against terror, etc.

But what’s not being discussed? How about our nation’s policies toward innovation? I’ve watched a lot of the two political conventions. I’ve heard a few words about support for technology and science — quickly are forgotten in the noise about McCain’s vice presidential pick — but I’ve heard nary a word about how we’re going to ensure that the United States continues to be a place where innovation happens. Increasingly I’m hearing from industry leaders that our innovation leadership is under major attack for a whole lot of reasons. Immigration policy. Education system quality. Taxation and regulation. And on and on.

Yet we don’t openly discuss it. We’d rather talk about some 17-year-old’s sex life or download the latest shiny object from Google. Question: how did that shiny object get here?

So, yesterday I went and talked with one of the formost experts on innovation: Judy Estrin. She’s on the board of directors of Walt Disney and FedEx. She’s written a book on the topic, Closing the Innovation Gap.

Here’s the video shot with my cell phone of our 40-minute conversation about the topic. But, remember, you must not discuss this. It’s in the unwritten rules of politics this year. Instead, head over to Memeorandum and see what you are allowed to talk about. Today’s topic: whether the press is fair when dealing with Presidential Candidates.

Oh, and don’t link to this post. We wouldn’t want it showing up on Memeorandum or Digg now, would we? After all, it’s not on the “approved” list of things to talk about in this political season.

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