Happy Feet - Inside the online shoe utopia
The New Yorker- Monday, September 14, 2009
Inside the online shoe utopia
On a recent afternoon at the Henderson, Nevada, headquarters of Zappos, America’s leading online shoe retailer, Katrina Jadkowski, a member of the company’s three-hundred-and-fifty-person Customer Loyalty Team, was on the phone with an elderly woman named Susie, from Aurora, Colorado, who wanted to exchange a pair of too-snug New Balance sneakers. “I just got back in town and I have an orthotics appointment,” Susie said, sounding a bit anxious about this newfangled shopping experience.
Jadkowski, a British-born, divorced former showgirl whose colleagues have nicknamed her Hurricane, arranged to have a UPS return label printed and a replacement pair, size 5½ EE, shipped free, overnight. “That’s just beautiful—I love this company!” Susie shouted.
Typing in the order rapidly, red flower decals on her fingernails, Jadkowski told Susie that it was Zappos’s tenth anniversary and upgraded her to V.I.P. status—which pretty much any Zappos shopper can attain, merely by asking. (The URL of the V.I.P. site is intended to encourage the intimate act of bookmarking, since a Google search for “sensible black pumps” or “running shoes” will also turn up the company’s competitors.) Male callers in particular seem to enjoy the upgrade, with its suggestion of velvet-roped back rooms. Susie, too, was pleased. “Oh, that’s fabulous!” she said. “This is super.”
The two women giggled conspiratorially for a few moments, and Jadkowski asked if there was anything else she could do.
“No,” Susie said. “Oh, I’m tickled.”
Jadkowski wished her a nice day and disconnected the call. “Sometimes you just need to let them natter on,” she said, not unkindly.
The Customer Loyalty Team, or C.L.T., is the nerve center of Zappos, whose thirty-five-year-old C.E.O., Tony Hsieh, has earned a zealous following by imposing an ethos of live human connection on the chilly, anonymous bazaar of the Internet. He talks about being the architect of a movement to spread happiness, or “Zappiness,” via three “C”s: clothing, customer service, and company culture.
“Eventually, we’ll figure out a way of spreading that knowledge to the world in general, and that has nothing to do with selling shoes online,” he told me after I visited the company over the summer.
Owning a large collection of shoes in various styles and colors has, in the past decade, gone from being considered a sign of ultimate imperial excess (Imelda Marcos) to a constitutional right of the average American woman, and Zappos is at least partly responsible. (So is “Sex and the City.”) Hsieh (pronounced “shay”) has changed the business so radically that, in July, Amazon.com, after trying to compete with Zappos by starting a shoe site called Endless.com, as if to sanction the new insatiability, announced plans to buy the company for ten million shares of stock (worth $790 million at press time) plus $40 million in cash. In an S.E.C. filing, Amazon vowed to leave Zappos’s management structure intact.
“There’re plenty of companies that don’t grow, and that’s fine for, like, your mom-and-pop corner store,” Hsieh said to me two weeks later, over the phone from Minneapolis, where he was addressing General Mills. (He has become a coveted “get” on the motivational-speaker circuit.) “But, for me personally at Zappos, the company needs to grow in order for the movement to happen.”
When he was asked how he and Amazon’s C.E.O., Jeff Bezos, will share power in the new order, he said, “Yeah . . . we’ll see.”
At its most rarefied, shoe shopping still takes place in hushed, pastel-carpeted salons, with salesmen (they are usually men—one doesn’t like to think too closely about why) staggering under stacks of boxes and kneeling down to insure the perfect fit before whisking away the charge plates of their waiting Cinderellas. Some people still consider pawing through the sale racks at Bloomingdale’s or the fluorescent-lit aisles of the Designer Shoe Warehouse an enjoyable contact sport. But Zappos and its imitators—shoes.com, heels.com, and the Gap’s inexplicably named piperlime.com—are shifting this public transaction into the comfort and privacy of customers’ living rooms. There, thanks to Zappos’s three-hundred-and-sixty-five-day return policy, we can all be Imelda Marcos, sifting through ceiling-high piles of boxes, and waiting in sweatpanted indolence for the UPS man to pick up our rejects.
Unlike most Web sites, including Amazon’s, which seem to be operated by spectral forces rather than by human beings, Zappos prominently displays a toll-free customer-service phone number. There are no limits on call times, and the resulting sessions occasionally resemble protracted talk therapy. On July 5th, a twenty-two-year-old C.L.T. member named Britnee Brown, who has been with the company for a little more than a year, took a call that was a record five hours, twenty-five minutes, and thirty-one seconds long, from a woman on the East Coast interested in Masai Barefoot Technology shoes, which purport to mimic supposedly salubrious barefoot-on-the-beach walking with curved rubber platforms. “We started talking about her sister,” Brown said. The call that set the previous record lasted more than four hours, with a woman afflicted by peripheral neuropathy who had trouble feeling her feet. “She told me childhood stories, things like that,” Jennifer S., the operator who handled that one, said in a video posted on YouTube. Zappos has advertised sparingly thus far, preferring word of mouth, and (unlike most companies) encourages employees to let it all hang out on Twitter and Facebook.
This marketing strategy seems to be working, up to a point. In the first half of 2009, not generally considered a bright spot for American retail, buyers of fashion footwear spent almost twenty per cent more through online-only channels than they had the previous year, according to the NPD Group, a market-research firm, while sales at shoe chains, department stores, and stand-alone shops were down about eleven per cent each. In 2008, Zappos surpassed a billion dollars in gross sales, an occasion that its fiercely clannish employees—who operate under a program of ten Core Values (No. 3: Create Fun and a Little Weirdness)—celebrated with clanging cowbells, followed by vodka shots at a local Claim Jumper restaurant. Because of the lenient return policy, however, net sales were only six hundred and thirty-five million dollars, according to the Amazon S.E.C. filing, and, after operating costs, net profits were $10.8 million, which explains why Hsieh, though he insisted that “the Amazon thing is not about the money,” might have been amenable to an infusion of capital.
The Henderson headquarters, three squat beige buildings surrounded by palm and flowering plum trees, have become an unlikely pilgrimage spot for businesspeople, tourists, and the odd celebrity, many ferried to and from their hotels on the Las Vegas Strip in a complimentary shuttle van. Inside, they are greeted by a concierge-like Help Desk of about a dozen support personnel, whose services include occasional free hugs. Apart from a smattering of shoe samples, there is no physical evidence of the company’s wares on the premises. (Merchandise is stored in and shipped from an eight-hundred-and-thirty-two-thousand-square-foot warehouse, roamed by robots, in Shepherdsville, Kentucky.) Visitors come to marvel at the spectacle of peppy, dedicated workers: a utopia of communal cheer and solicitude; trilled “Good morning”s and “Hi, pumpkin!”s; free vats of popcorn, nuts, and trail mix; and politely held doors. Entering the lobby, which was decorated with Christmas lights at the height of the desert summer, a stranger gets the feeling that amphetamines might be pumped through the central air-conditioning. On my maiden shuttle trip, the driver mentioned that the relentlessly upbeat vibe at Zappos—Core Value No. 7: Build a Positive Team and Family Spirit—had broken up her marriage. “My husband didn’t fit in with the culture,” she said. “He was too gangsta.”
Zappos was founded in 1999, during the first Internet gold rush, by a Bay Area entrepreneur named Nick Swinmurn. He’d been irritated when he couldn’t find a pair of brown Airwalks at his local mall. Hsieh, originally an adviser and investor through a concern called Venture Frogs, joined the company a year later. After graduating from Harvard, he’d operated an Internet ad-banner venture called LinkExchange with a classmate, Alfred Lin (now Zappos’s C.O.O.), which was sold to Microsoft for two hundred and sixty-five million dollars in 1998. Hsieh was rich, and bored. “I just liked working for Zappos,” he said. “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?” And, in fact, some Zapponians, as they are known, draw a wage as low as eleven dollars an hour.
The company’s name comes from the Spanish word for shoe, zapato, a word that also turned out to be fortuitously evocative of the way goods are “zapped” to customers. (Core Value No. 1: Deliver WOW Through Service.) A C.L.T. manager named Jane Judd, her eyes damp, described a Q. & A. session she had heard Hsieh conduct with some visiting Time Warner executives. “Our service isn’t everything it could be,” he’d said. “If we didn’t have to think about cost, the reps would personally get on a plane today and deliver that box.”
“I always call him my little Dalai Lama,” Judd said.
Soft-spoken and introverted, Hsieh has become an unlikely business guru: a young philosopher prince of the middle-management set, to whom he is fond of distributing an annual “Culture Book” of warbling testimonials collected from Zappos employees, as if it were the Gideon Bible, and recommending titles on the science of happiness, like “The Happiness Hypothesis,” by Jonathan Haidt, and “Happier,” by Tal Ben-Shahar. He is also writing a book of his own for Grand Central Publishing, tentatively titled “Delivering Happiness”—“a combination of talking about Zappos, the culture, core values, and the science of happinessss,” he said, stretching out the word. For Hsieh, happiness is a quantifiable quality that seems synonymous with “calm.”
“Generally, I associate drama with negative emotions, and I want to experience positive emotions,” he said.
It was a week before the Amazon deal was announced, to general shock within the company, where Hsieh, whose mother is a clinical psychologist, has promoted a culture of absolute transparency (Core Value No. 6: Build Open and Honest Relationships with Communication). He was standing at the back of a classroom filled with twenty out-of-town businesspeople who’d paid five thousand dollars apiece for a symposium titled “Zappos Insights Live”: a two-day “culture immersion” into the company. They’d been instructed to write two truths about themselves and one lie on an index card, then stand up and name their favorite movie.
“ ‘Forrest Gump,’ ” one of them, a gangly young man named Eric James, from a company in Colorado called PosterBrain.com, said, to murmurs of approval. A “Zappos Insights” leader read James’s card: “Pickled pigs’ feet was my favorite food as a kid.” (True.) “My first business was inventing magic tricks.” (True.) “I’ve visited over 100 countries.” (Lie.)
“For favorite movie, I’m gonna have to say . . . my life?” said a perky auburn-haired woman, Camille Preston, who works in executive development at a company called Aim Leadership.
“What would you be passionate about doing, even if you never made a dime?” he asked the assembled. “What is your goal in life? For almost everyone, it comes down to happiness.” He moistened his lips, and summoned a bouncing smiley face onto the screen. “What if you could go straight to the happiness?”
The visitors watched raptly, scribbling in white binders and drinking from bottles of Sparkletts water.
Later, after Italian food at the Palms hotel, the group repaired to the Playboy Club. As bored-looking Bunnies stood stiffly against pounding hip-hop music, James was having trouble finding the happiness.
“Steph, my ex-girlfriend—she up and left me,” he told Hsieh, who was standing near the bar, sipping a vodka-and-soda through a straw. “We’d just bought a car together and everything.”
“Well, what if you thought of a relationship as a corporation?” Hsieh said.
“Have you tested this, Tony?” James asked.
“No, this is theoretical. This is taking a logical approach. But it’s an interesting thing about companies and relationships. Maybe the only thing that keeps you together is the core values.”
James proposed that perhaps in the future Zappos might start an online dating service, like Match.com or eHarmony. Hsieh shrugged and said, “Sure, why not?”
“ZHarmony,” James said, with a hollow laugh. “Happiness in a box!”
The next morning, Hsieh met me in a small, colorful conference room nicknamed the Aladdin, for the casino. He was holding a can of sugar-free Red Bull in his left hand and a can of Pepsi One in his right. “I’ve always been a night owl—I never want to go to sleep,” he said. “It’s so hard to wake up.” He had on a T-shirt printed with the company’s logo—a graphic shoeprint—faded blue jeans, and black sneakers. When asked what brand the shoes were, he gestured helplessly and replied, “Just . . . sneakers.”
Hsieh’s success in the fetishized retail category of shoes is curious because of his utter disengagement from the product; when he talks about “platforms,” he is referring to a business framework, not to thick soles. As an undergraduate computer-science major, he worked as a software engineer for BBN Technologies, the company that, in the seventies, put the @ in e-mail.
“I’ve never been into shoes—and I’m still not,” he said. Zappos has begun to expand from shoes, as Amazon did from its base of books, into other categories of merchandise: handbags, clothes. “Kitchenware, housewares, whatever,” Hsieh said. But he’s not really interested in those things, either. “I much prefer experiences to stuff,” he said.
Hsieh drives a modest black Mazda 6. He used to go to raves; now he watches movies for fun. “I loved ‘Adaptation,’ ” he said. (Zappos Core Value No. 2: Embrace and Drive Change.) His one apparent indulgence is a baronial new house in the Southern Highlands, a gated golf community (although he does not play golf). It contains a panelled library with well-stocked, floor-to-ceiling bookshelves; a billiard room; and a pool, around which little puffs of mist hydrate the landscaping at regular intervals. This past Fourth of July, as the Amazon deal was percolating behind closed doors, he held a party for employees, with water guns. “Less raucous than usual,” the shuttle driver with the busted-up marriage reported.
(When I told Hsieh what the bus driver had said about her divorce, he remarked, “Maybe they weren’t the right fit and shouldn’t have gotten married in the first place. But Zappos helped open their eyes. Like Plato’s Cave.”)
Each of his house’s five bedrooms, like the office conference rooms, is themed to a glossy Vegas hotel: the Mirage, Circus Circus. The master suite is a close replica of a room at the minimalist W: black and gray and silver, down to a pillow on the bed emblazoned with the word “Wish.” There is a walk-in closet filled with shirts and slacks, and one suit, which Hsieh said he shares with a brother and wears only to weddings. He lives alone, aside from a stray calico cat with matted fur, which he has named El Gato and sometimes feeds. “Not mine,” he stressed. In this isolated pleasure dome, littered with Gatorade bottles and pizza boxes, he seems to be evading traditional adult value systems, living in a sort of suspended collegiate state. (In a letter to Zappos employees about the Amazon deal, he compared his feelings about the sale to those he experienced on graduation day.) “I had this weird recurring dream where for some reason I just forgot that I had a place in New York, like an apartment or something, but it was a very cool place, like the W, and I tried to go visit it,” he said. “But I didn’t have the key, I didn’t have anything I needed.”
Snobbery is not one of Zappos’s core values. The company has had trouble wooing certain luxury brands, like Jimmy Choo and Gucci, to the site, although Marc Jacobs, Alexander McQueen, and Proenza Schouler are represented, in a division marked Couture. The company has done better accommodating the country’s marginal: the freaks of nature as well as the fashion-conscious. Brick-and-mortar stores, under pressure to maintain a certain number of sales per square foot of space, do not tend to carry women’s size 15 or men’s sextuple-E widths, but Zappos has become a destination for the jock, the drag queen, the disabled.
Hsieh wants to help these customers reach their full potential. “Long-term, it’s not even about e-commerce necessarily,” he said. “I guess it’s about an experiential brand that’s really about making people happy, or improving their life somehow.”
He left to take a phone call at his desk, which is in a row of cubicles along with the Zappos rank and file. Then he invited Fred Mossler, a fellow-executive whose duties are so motley that he doesn’t have a title, to join us for lunch. A tall, tanned man of forty-three, with slicked-back hair and a slightly worried expression, Mossler looks, reassuringly, like a traditional shoe salesman. He began his career unpacking freight in a Payless stockroom, then moved to Nordstrom, which, like Zappos, started as a shoe store and is famous for its customer service. He was a buyer there when he was recruited by Swinmurn (who left the company in 2006 but remains a shareholder).
At the Claim Jumper, Hsieh ordered a steak sandwich but ignored the bread. Mossler got a turkey burger and reminisced about a night, early in the company’s history, when he and Hsieh were sharing a room at the Bellagio after a conference. “At about 3 A.M., I’m layin’ in bed, and I start to feel it kind of shake,” he said. “I open my eyes and look up, and there’s Tony on the wall with his feet on either side of my head, so I’m looking up into his crotch and . . . I just couldn’t really process that, so I closed my eyes and thought, It’s a bad dream, maybe it’ll go away. The next morning at breakfast, I’m talking to Tony, sharing my nightmare: ‘Gosh, I thought you were above me on the wall like Spider-Man.’ And he said, ‘Actually, it’s true. I had to get up in the middle of the night to use the bathroom and it was too dark to go across the room, so . . .’ ”
Hsieh shook some Tabasco into a ramekin filled with ketchup. “I’ve always been very good at climbing and scaling things,” he said.
Though he has become increasingly visible as the face of Zappos and spends almost all his time proselytizing its culture, Hsieh resists the idea that he is powerful, or that the perpetuation of the brand rests on his shoulders. “For any company or movement or religion or whatever, if there’s one person that personifies it then that puts that company or vision at risk, if the person, say, dies,” he said. “What’s gonna happen to Apple if something happens with Steve Jobs? That’s why it needs to be about a movement, not about a person or even a specific company.”
Every movement needs an influx of disciples, and Zappos, after laying off eight per cent of its sixteen hundred employees in the fall of 2008, has begun to hire again. The week of the “Zappos Insights” seminar, Dawn Hooper, a forty-year-old former massage therapist who was applying for a position on the Customer Loyalty Team, took a mandatory office tour, along with a retired United Airlines flight attendant named Skip Jourdan. Their guide, Annie Fedel, whose husband works in system administration for Zappos, became misty-eyed at the mention of Hsieh’s leadership. “People say, ‘I don’t know how you work here—isn’t it a cult?” she said. “And I say, ‘Absolutely not.’ ”
“Mmm-hmm, mmm-hmm,” Jourdan said. At one of the reception desks, a pretty, cleavage-baring brunette named Heaven challenged him to a hula-hoop contest. “Whip it!” she yelled. “Whip it as hard as you can!” They whirled their hips enthusiastically for a few minutes.
The tour progressed past a large flat-screen television on the wall projecting a map of the United States. Pictures of shoes were popping up all over: Michael Kors sandals in Sarasota, Florida; Minnetonka moccasins in Seattle; Nike Classic Sweet Low Canvas in the middle of Pennsylvania. “These are orders taking place right now!” Fedel said.
“Crazy,” Jourdan said.
Fedel next paused by a large bell hanging from the ceiling. She swivelled toward Hooper and said, “I need a volunteer to announce at the top of your lungs—something.”
“Oh, my gosh,” said Hooper, who had a tattoo of a hibiscus flower on her ankle. “I guess I should do it, but—my heart’s pounding.”
“Anything that floats your boat,” Fedel said. “Just let it rip.”
Hooper hesitated, then stepped forward and gave the bellpull a long jangle.
“I’m interviewing tomorrow for C.L.T.!” she screamed. The roomful of cubicle dwellers whooped, in a practiced way.
Zappos may not be a cult, but working there seems akin to sitting in a sports arena; you have to be prepared to stand up and do the wave at any time. Upstairs, the tour stopped in the office of Dr. Vik, an on-site life coach and retired chiropractor. The doctor was out, but Fedel insisted that everyone take turns selecting a tiara or a crown, sitting on a giant leather throne, then submitting to having a Polaroid photograph made. She told me later that job candidates taking the tour are closely observed; those who are brusque to the Help Desk personnel, for example, are weeded out immediately. All new hires sign a document verifying that they’ve read and understood the Core Values, then undergo a hundred and sixty hours of customer-loyalty training. At various points in the process, they are offered two thousand dollars in cash to quit. Workers who want to progress into management positions are required to take a hundred and forty-five more hours of classes, in subjects such as “tribal leadership,” “performance enhancement,” and “happiness.” (Core Value No. 5: Pursue Growth and Learning.)
One of these classes, held in a room called the Elvis Presley, happened to contain many bleary-eyed C.L.T. members who had just come from the graveyard shift, where Zappos’s basic assumption of human beings’ essential good nature sometimes rubs up against some uglier truths. Eric Zuniga, a spiky-haired guy wearing a polo shirt who formerly worked in the shoe department at Dillard’s, described a regular caller he’d nicknamed Jumping Jacks after the brand of patent-leather little-girls’ Mary Janes with a hook-and-loop closure that he covets. Another will ask about dog leashes. Then there’s the caller who, Zuniga said, will just “breathe kind of hard.” It turns out that there are limits to Zappos’s customer service: callers who truly overstep boundaries are sent to a top-secret eternal hold loop known internally as the Abyss.
For some employees, the news that their colorful little bricolage of a company had been bought by Amazon felt like a plunge into darkness.
“I thought it was a joke or something,” Zuniga said on the phone a week after the announcement.
“It was quite disturbing,” Hooper said. (She had been told that her hiring was imminent; the company was just waiting for some references to be checked.) She’d heard that the employees weren’t happy “because Hsieh always said Zappos was his baby and he wouldn’t sell out. Everybody’s wondering what’s going to happen now. It’s going to be so big. I hope that Amazon will take what Zappos has and not the other way around.”
Back at Jadkowski’s twinkly workstation, there had been no sign of anything ominous. A parade of “Zappos Insights” students in suits, some wearing purple crowns printed with the Zappos logo, was tromping through the office. Their “graduation” had been marked with a serenade from an in-house a-cappella group, the Zappettes. “Congratulations on your graduation. We know you’re filled with joy and elation,” they sang. “We just want to say, we’re glad you came our way.”
A blue light on the wall blinked, signalling high call volume, and Jadkowski readjusted her headset. “We’re having a great day at Zappos—how can I help you?” she said into the mouthpiece.
“Oh, hi,” a female caller from New York City said. “I go way back with Zappos. I’ve been shopping with you for years, and I was just wondering—do you do price matches anymore?”
Jadkowski explained that Zappos had discontinued this policy in February of 2008, after Hsieh decided that he wanted the company to be known for shipping and service, not discount prices.
Undeterred, the caller expressed interest in a peep-toed platform mule by Robert Clergerie called the Zount—size 8, in rust-colored suède, with a three-and-a-half-inch heel—which had already been marked down, from six hundred and fifty-nine dollars to four hundred and seventy-one. “A friend of mine said she saw it at Scoop for two hundred dollars, and I just wondered,” she said.
Jadkowski made a face and put the call on hold to do some sleuthing into the bargain hunter’s account history. The woman had bought $12,531.32 of merchandise from Zappos since 2005, of which she’d returned about two-thirds. There was an alert indicating that this wasn’t the first time she’d requested a price adjustment. “I think I’m not going to give it to her,” Jadkowski said briskly. “But let’s upgrade her!” She ran the decision by a supervisor and returned to the caller, who seemed sanguine. Indeed, she’d already put the Clergerie mule into her “shopping cart” and placed the order.
“But please, please—if you have any influence,” she begged Jadkowski, “tell them to mark it down, O.K.? And then call me back.”