Tony Hsieh

Anthony Hsieh (; December 12, 1973 - November 27, 2020) was an American internet entrepreneur and venture capitalist who served as CEO of Zappos.com from 1999 until his retirement in August 2020. He built Zappos from a startup with $1.6 million in annual sales into a billion-dollar company renowned for its customer service and distinctive corporate culture, culminating in its $1.2 billion acquisition by Amazon in 2009.

Before Zappos, Hsieh co-founded LinkExchange, an online advertising network that he sold to Microsoft in 1998 for $265 million. His 2010 book Delivering Happiness became a New York Times bestseller and was widely praised for its insights into building a company culture centered on employee happiness and customer service.

Hsieh died on November 27, 2020, at age 46, from complications of smoke inhalation sustained in a house fire nine days earlier in New London, Connecticut. His death prompted widespread tributes from the business community and renewed attention to his unconventional approaches to management and urban development.

Early life and education

Hsieh was born on December 12, 1973, in Urbana, Illinois, to a Taiwanese American family. His parents, Richard and Judy Hsieh, had immigrated from Taiwan and met while attending graduate school at the University of Illinois at Urbana-Champaign. His father became a chemical engineer at Chevron Corporation, and his mother worked as a social worker. Tony was the eldest of three sons; his younger brothers are Andy and Dave.

When Hsieh was five years old, the family moved to the Lucas Valley area of Marin County, California. He attended the Branson School, a private college preparatory school in Ross, California.

Hsieh enrolled at Harvard University, where he studied computer science. He managed the Quincy House grill, selling pizza to students in his dormitory. His best customer, Alfred Lin, would later become Zappos' chief financial officer and chief operating officer. Hsieh was a member of the Harvard University team that won the 1993 ACM International Collegiate Programming Contest in Indianapolis, ranking first among 31 entrants. He graduated in 1995.

Career

LinkExchange

After graduation, Hsieh worked briefly at Oracle Corporation before leaving after five months to pursue entrepreneurship. In March 1996, he co-founded LinkExchange with college classmates Sanjay Madan and Ali Partovi. The company operated an advertising network that allowed members to advertise on other members' websites in exchange for displaying LinkExchange banner ads on their own sites.

As CEO, Hsieh grew LinkExchange rapidly. In November 1998, Microsoft acquired the company for $265 million. Hsieh, then 24 years old, received approximately $32 million from the sale.

Zappos

In 1999, entrepreneur Nick Swinmurn approached Hsieh and Alfred Lin with the idea of selling shoes online. Hsieh was initially skeptical and nearly deleted Swinmurn's voicemail. However, when Swinmurn mentioned that footwear was a $40 billion market in the United States, with 5% already being sold through mail-order catalogs, Hsieh and Lin decided to invest through their venture fund, Venture Frogs. Two months later, Hsieh joined Zappos as CEO.

Under Hsieh's leadership, Zappos grew from $1.6 million in sales in 2000 to over $1 billion in gross merchandise sales by 2008. The company became famous for its customer-centric approach, offering free shipping both ways, 365-day return policies, and a customer service philosophy that encouraged representatives to spend as much time as needed with each caller.

On July 22, 2009, Amazon announced the acquisition of Zappos in a deal valued at approximately $1.2 billion. Hsieh reportedly received at least $214 million from the sale. Amazon promised to preserve Zappos' unique management and culture. Hsieh continued as CEO until his retirement in August 2020.

Downtown Project

In 2012, Hsieh launched the Downtown Project, a $350 million initiative to revitalize downtown Las Vegas. He relocated Zappos' headquarters to the former Las Vegas City Hall and invested his personal fortune in transforming the area into what he hoped would become "the co-learning and co-working capital of the world."

The project invested in restaurants, bars, tech startups, real estate, and community spaces. It attracted national attention as an ambitious experiment in urban revitalization led by a tech entrepreneur rather than traditional urban planners.

Controversies

Holacracy implementation

In 2013, Hsieh began transitioning Zappos to holacracy, a self-management system that replaces traditional job titles and hierarchies with "circles" that employees move between based on their skills and interests. The implementation proved highly controversial.

In March 2015, Hsieh offered all Zappos employees three months' severance if they felt self-management was not for them. Approximately 14% of the workforce, including 20% of the technology department, chose to leave. The exodus raised concerns about the company's ability to maintain its operations and culture.

Critics argued that holacracy was too rigid and bureaucratic, with formal meeting structures that stifled natural conversation and human connection. Scores on Fortune's "Best Companies to Work For" survey fell on 48 of 58 questions, and Zappos dropped off the overall list for the first time in eight years. The company eventually retreated from strict holacracy implementation, bringing back managers while retaining some elements of the circular structure.

Downtown Project criticism

The Downtown Project drew criticism from multiple directions. Some longtime residents and business owners felt pushed aside by gentrification, with low-income workers and blue-collar entrepreneurs seeing themselves displaced by Hsieh's transformation.

Critics alleged that Hsieh fostered an environment where loyalty was rewarded and criticism was not tolerated. When three entrepreneurs connected to the Downtown Project died by suicide, author Aimee Groth, who had lived in the community, alleged that the events were "covered up" rather than openly addressed.

By 2014, reports emerged that new businesses brought in by the Downtown Project were "bleeding money" and that leadership had been handed off while 30% of staff were laid off. David Gould, a former Downtown Project executive, tendered a public resignation letter charging "decadence, greed, and missing leadership."

Years after Hsieh's death, boarded-up properties he had purchased in downtown Las Vegas remained vacant, attracting homeless encampments and fires.

Personal life

Hsieh never married but was in a longtime relationship with Rachael Brown, a prominent Zappos executive who had helped develop the company since its move to Las Vegas in 2004. Brown, originally from Connecticut, was also a professional cellist who performed with several Las Vegas ensembles.

According to court documents filed after his death, Hsieh suffered from social anxiety and used "alcohol as a social lubricant." His family alleged that beginning in November 2019, he began experimenting with ketamine, and by 2020 had developed a severe addiction to nitrous oxide, reportedly using as many as 50 cartridges per day. His family claimed his drug use caused "disorganized delusions and delusions of grandeur."

Death

On November 18, 2020, Hsieh was pulled unconscious from a house fire at Brown's waterfront home in New London, Connecticut, shortly after 3:30 a.m. According to fire investigators, Hsieh had been staying in a shed attached to the house after an argument with Brown earlier that evening. He was found surrounded by bottles of liquor, a marijuana pipe, nitrous oxide cartridges, and a whipped cream dispenser.

At 3:20 a.m., security footage showed Hsieh's brother Andrew knocking on the shed door and telling Tony it was time to leave for their scheduled trip to Hawaii. Hsieh could be heard asking his brother to come back in five minutes. Smoke filled the camera's view one minute later, followed by the sound of a carbon monoxide alarm.

Hsieh was transported to a local hospital and later airlifted to the Connecticut Burn Center at Bridgeport Hospital. He died on November 27, 2020, from complications of smoke inhalation. The Connecticut medical examiner ruled his death accidental. Fire investigators were unable to determine whether the fire was caused by "carelessness or even an intentional act."

Hsieh died without a will. His father Richard and brother Andrew were appointed co-special administrators of his estate. Multiple lawsuits were filed against the estate, with Hsieh's longtime assistant Jennifer "Mimi" Pham initially seeking more than $130 million before settling for a payment of $750,000 to the estate.

Legacy

Hsieh is remembered for his unconventional approach to business leadership and his emphasis on company culture and employee happiness. His book Delivering Happiness continues to influence discussions of workplace culture and customer service. The downtown Las Vegas area he transformed remains proof of his ambitious - if controversial - vision for urban revitalization.

Publications

• Delivering Happiness: A Path to Profits, Passion, and Purpose (2010) - New York Times bestseller on building corporate culture

See also

• Zappos
• Holacracy
• Amazon (company)
• Delivering Happiness

External links

• Zappos official website
• Delivering Happiness