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Tuesday, April 16, 2024

Tony Hsieh’s Unrelenting Pursuit of Amazon’s Billion-Dollar Idea

This story is adapted from Happy at Any Cost: The Revolutionary Vision and Fatal Quest of Tony Hsieh, by Kirsten Grind and Katherine Sayre.

By 2019, a decade had passed since Amazon purchased Zappos, and its executives had been patient. As Jeff Bezos had promised, the company had largely left Zappos, and its then CEO, Tony Hsieh, alone, a rare move that signaled his approval of Tony. Amazon had, in fact, learned from Zappos and its management experiments. At one point, Amazon executives had had preliminary discussions about integrating parts of holacracy into some of their other divisions. They seemed, on the whole, supportive.

Still, Tony worried about what he and other Zappos executives referred to as “Amazon creep,” the tech behemoth increasingly getting involved in Zappos’ business. Tony wanted to protect his employees from Amazon’s famously aggressive work culture and its layers of bureaucracy. Tony and his team were careful to call Amazon only if they really needed something. Sometimes even a simple question could turn into a conference call with half a dozen Amazon executives.

Tony reported to Jeff Wilke, then the head of Amazon’s worldwide consumer business and one of Bezos’ top lieutenants at the time. Wilke, then 53, was widely seen as a successor to Bezos and the second most important person at Amazon. An email from him could be panic-inducing—he dashed one off to his team anytime there was a shipping defect. He signed his emails with his initials, JAW.

The two, however, had a good relationship, and Wilke appreciated Tony as a business management visionary, often tolerating the antics he played in Zappos’ internal reports to Amazon. Tony would sometimes try to avoid discussing dry business metrics by stuffing Zappos’ updates with all the different management experiments the company was running.

Within the next two years, Wilke wanted Zappos to meet a series of business goals that had nothing to do with its culture or its management experiments. Rather, Tony would need to increase Zappos’ profits and its customer base. It was a goal for all of Amazon’s autonomous units; after a decade under the much larger conglomerate, Zappos should be meeting certain profit targets. It was now a “mature” company in Amazon’s view, and it was falling short. Zappos was profitable, but according to people familiar with the matter, it was hitting only about 30 percent of those targets and had no clear plan for improvement.

In typical fashion, Tony tried to think of ways he could meet the new business goals in a creative way, rather than just by selling more shoes. He started thinking about branching out into other business lines that could make Zappos more efficient and productive—basically saving money to make money. He needed the next $1 billion idea.

To try to help boost his productivity, his solution was to hack sleep. In other words, he didn’t sleep very much at all. He believed that rest should be measured by sleep cycles, not by hours, and he calculated that a person has five sleep cycles lasting about 90 minutes each in a seven-and-a-half-hour time period. As a workaround, he would sleep only six hours, or four and a half, representing four or three sleep cycles, at night and take a 20-minute nap in the afternoon or evening, which he considered another sleep cycle.

“You’re tired so you can go straight into REM sleep and kind of hack it that way,” he told a blogger for the shared office space company WeWork in 2019. (The Centers for Disease Control and Prevention recommends that adults get at least seven hours of sleep a night.) Tony purchased the Oura smart ring, popular in Silicon Valley, to “optimize” his sleep, allowing his concerned friends to access the data. They found that some nights he wasn’t getting even four hours of sleep, more like two or three.

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In 2019, worried about that trend and his increased alcohol use, some of his friends attempted to help him. Garrett Miller, a longtime Zappos employee and close friend, gave up alcohol himself in an effort to inspire Tony to do the same. Each night, he would try to get Tony to return to his Airstream trailer earlier than usual to encourage him to sleep. It was nearly impossible, though; Miller couldn’t be around him all the time, and with Tony’s entourage large and growing, he was always surrounded by people who wanted to meet him, or musicians and movie stars passing through Las Vegas, as well as employees or friends out to party. At Zappos, Tony had long before integrated alcohol into the very fabric of the company, and there was no easy way to extricate himself. He had even built a bar called 1999, for the year Zappos was founded, near the lobby of the company’s headquarters building, which also now housed a games arcade.

Tony’s close circle of friends had shifted over the years, and stalwarts such as Alfred Lin, Fred Mossler, and Jenn Lim were no longer around as much. Mossler had left Zappos in 2016 to start his own high-end shoe company with his wife, Meghan, called Ross and Snow; they also had several investments around town, including the popular downtown Las Vegas eatery Nacho Daddy. Lin had left Zappos around the time Delivering Happiness, Tony’s autobiographical book, had been published in 2010. He became a venture capitalist at Sequoia Capital in Silicon Valley, the banner firm that had long before funded Tony’s earlier company, LinkExchange. Even Phil Plastina, the head of the Dancetronauts, had stopped visiting the Airstream trailer park as much, as he was unfamiliar with the new, mostly younger group of Tony fans, a mix of Zappos employees and people Tony had met around Las Vegas.

Tony’s longtime preoccupation with youth and surrounding himself with fun people had turned into something of an obsession. He began hanging out with a 17-year-old former waitress, Juliette Bajak, at the Airstream trailer park. Even though he explained to concerned friends that he was just mentoring her, it seemed like a strange friendship, even for Tony. (People familiar with Juliette Bajak said that she also viewed the relationship as platonic and Tony as her mentor.)

Many of the people around Tony just assumed that it was normal for him to drink so much—hadn’t he always? He tolerated alcohol well. He rarely appeared intoxicated and could have the same conversation at midnight that he had at 3:00 pm. His energy and charisma also swept away most people’s concerns. Tony’s fans latched onto his public persona, while his real self faded.

In the last decade, he had become a sort of business god, known for his big ideas, eccentric lifestyle, and happiness mantra, and any character flaws weren’t worth noting, or examining, by the people feeding off his wealth and energy. He was intensely idolized, and he was also beginning to believe in his own greatness.

From Happy at Any Cost: The Revolutionary Vision and Fatal Quest of Zappos CEO Tony Hsieh, by Kirsten Grind and Katherine Sayre. Copyright © 2022 by Kirsten Grind and Katherine Anne Sayre.  Reprinted by permission of Simon & Schuster, Inc.

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