The Leadership and Artistry of Tony Hsieh

The shocking loss of Tony Hsieh, a legendary internet entrepreneur and management thinker, has inspired an outpouring of affection and remembrances. One particularly insightful tribute came from another much-admired innovator. Jason Fried, cofounder and CEO of Basecamp, tweeted out a message that captured what made Tony so special — and, to me, so complicated to explain. “From the first moment I met him, he surprised me,” Fried wrote. “He was an artist with a CEO title. … A model for how to live. He was a wonder.”

When well-known business leaders pass away, whether it’s long after they’ve left the stage — or, in Tony’s case, at the young age of 46 — there is an understandable rush to evaluate their impact. To do so for Tony requires thinking about him as an artist and not just the long-serving CEO of online shoe giant Zappos, as someone driven by big ideas and grand passions rather than business plans and stock-price targets. This helps make sense of his enormous competitive successes, his quirky organizational experiments, and his occasional setbacks and disappointments. As with so many artists, the things that made Tony so easy to admire were brilliant and messy at the same time, which is what makes his legacy so rich and his lessons so valuable.

I got my first in-person glimpse of Tony’s artistry back in May 2008, when I visited Zappos’s Las Vegas headquarters. I was out west doing a bunch of talks, had a free day, and contacted Zappos PR about seeing first-hand what this buzzy company, whose annual sales had just passed $1 billion, was all about. I heard back from the CEO himself, who offered to give me a tour and explain what he and his colleagues were building. That visit was the beginning of a decade-long conversation during trips to Las Vegas, at conferences, and over email, about branding, culture, innovation, social change, and so many other themes that defined Tony’s work.

That first tour was performance art of the first order, a formal walk-through that quickly became the workplace equivalent of a Las Vegas revue. I met Tony in the lobby and he grabbed a “tour flag,” hoisting it high as we set out. The offices, already buzzing with energy, became further electrified as we came through: One department we passed made a ruckus with whistles and hand-held clackers. Members of another department rang cowbells and shook pompoms. The fashion team played dance music and snapped photos as we walked by. The tour ended with a visit to the so-called Room of Royalty, where a guy named Dr. Vik, the company’s full-time life coach, outfitted me with a crown, sat me on a thrown, and snapped a photo as a keepsake.

Like so much about Zappos, the experience was both wonderful and weird, which is precisely why Tony’s company became so successful. His big idea was that online retail could be about much more than delivering price, quality, and selection, although Zappos offered all of that. Everything Zappos did (and does) was meant to amuse, amaze, surprise, and otherwise engage customers — “delivering happiness” in Tony’s words, which was the title of his best-selling book.

But Tony understood that you can’t build something special in the marketplace unless you also built something powerful in the workplace. To create a passion brand for customers — and to this day, I am struck by the passion of Zappos customers — Tony had to sustain a passionate culture among his colleagues. And as he explained to HBR in 2010, even the decision to move Zappos headquarters from San Francisco to Las Vegas in 2004 was based in part on what would make his current employees the happiest.

This greatness was not without its weirdness. Back in 1994, two years before Tony cofounded his first company (which he sold to Microsoft for $265 million), and five years before he joined Zappos as an advisor and investor, Jim Collins and Jerry Porras published their mega-hit Built to Last, which identifies the attributes of long-prospering companies. One of those attributes was a “cult-like culture” built on fervently held ideology, indoctrination, tightness of fit, and elitism.

I saw echoes of that analysis in the tightly-knit Zappos culture. It makes me think about how for decades, students at Texas A&M have recited a slogan to describe their famously distinctive (and cult-like) culture: “From the outside looking in, you can’t understand it. From the inside looking out, you can’t explain it.” I’d say much the same about Zappos. I genuinely admired the Zappos culture, but I could never imagine being part of it (and not just because I don’t do well with pom poms). I’m just not that exuberant and perhaps a bit too skeptical of my fellow humans to lose myself so completely in an organization.

The point is that Tony was not just an innovator, he believed in going to extremes. He built a company culture that was so intense, so outsized, so performative, that it was by design not for everyone, which is why he created his famous “offer” to new employees, who were literally paid to quit (without judgement) if they could not summon the necessary enthusiasm for life at Zappos.

Tony’s zeal also led him to adopt, in 2014, a radical model called “holacracy” — a thoroughly decentralized organization with no job titles, no managers, and no hierarchy. When his innovation met with resistance, Tony gave his colleagues a choice to commit to the idea or leave the company. Roughly 18% of the Zapponians chose to leave. Tony stuck with the model, although reports from earlier this year suggested that Zappos had finally begun “quietly moving away from holacracy.” And, of course, Amazon bought Zappos in 2009 in a deal worth $1.2 billion, a move Tony described in 2010 as allowing the company to “continue to build its culture, brand, and business. We would be free to be ourselves.”

I don’t mean to second-guess Tony’s belief in an extreme approach to organizational design. It’s not fair to celebrate radical thinking when it succeeds, and then disparage that same thinking when an experiment doesn’t work out. The point, for those of us who want to learn from Tony’s big ideas, is that breakthrough innovators tend to suffer setbacks as often as they unleash breakthroughs, which is why so few of us have the guts to follow in their paths. With an artist like Tony, for his contributions to be meaningful, they almost have to be messy.

Which brings us to his efforts to paint on a canvas even bigger than Zappos, his so-called Downtown Project to reimagine and redesign a long-neglected part of Las Vegas. In 2013, Zappos renovated and moved into Las Vegas’s old City Hall. Tony did not want an isolated, walled-off campus like the ones for Apple and Nike. What if Zappos could design a new headquarters, he wondered, and surround it with artists, geeks, entrepreneurs — not just Zappos employees, but people who might fuel the company with unpredictable kinds of energy and creativity?

Tony liked to say that he “prized collisions over convenience,” and that he had shifted his thinking “from ROI, return on investment, to ROC, return on connectedness.” He wanted the area near the new Zappos headquarters to be the “coworking and colearning capital of the world.”

When I heard Tony’s vision, and learned that he was investing $350 million of his own money to transform the neighborhood, it seemed genuinely thrilling. There was no denying the scale of his ideas or the depth of his commitment. (Tony actually moved from his spacious apartment to an Airstream trailer in an avant-garde trailer park that sprung up in the neighborhood.) Alas, the reality of the Downtown Project never quite met the glorious vision and its operations got plenty of criticism — although the neighborhood has come a long way. Its one-of-a-kind Downtown Container Park is a shopping-and-dining destination with stores and restaurants housed in repurposed shipping containers. It also hosts the “Life is Beautiful Music & Art Festival,” a massive outdoor event that, in 2019, was the world’s second-highest-grossing festival. “It’s a constant experimentation with new ideas,” Tony once said of the Downtown Project. “The whole point is that there’s no master plan.”

That’s a pretty good way to sum up Tony’s life and artistry. As an entrepreneur, he experimented constantly. And while there was never a master plan, there was always a profound commitment to humane and progressive values: a deep connection with customers, a powerful loyalty to culture and colleagues, a passion for life, a thirst to create. We are all richer for the company Tony built and the lessons he taught. His art will endure, but I will miss the artist deeply.