Soft-spoken Zappos CEO Tony Hsieh had some surprisingly harsh criticism for the TC50 companies he saw today: Why aren’t you trying to change the world? I asked him more about that in our backstage sidestage interview during the TC50 cocktail party. “To be fair, is selling shoes changing the world?” I asked. Watch the clip after the jump to hear his answer.
I pressed Hsieh on details about his relationship with Jeff Bezos and Amazon. He can’t really comment because the US Justice Department hasn’t yet ruled on the deal, but he did admit “I’ve always thought Jeff was a lovely man.” So that’s how it works in that soon-to-be corporate family.
The most interesting admission may be his advice for start-ups: Do you really need venture capital?
TC50 and Tony Hsieh from sarah lacy on Vimeo.
‘Do you really need venture capital?’
That is a great quote. I’ve met founders that are just focused on raising money (or give the impression that it is the goal). I personally think that a profitable company is a better indicator of success then one that managed to raise X amount of funding with no revenue.
Good point…totally agree with you.
This point is often lost in the shuffle, and the related question is why you need to raise funds?
Here are some relevant observations http://www.fund...raisefunds.html
yeah.. but if you wanna go big.. you need VC. Most startups suck lets face it target small market.
If you wanna change the world u need VC. Google DID, Yahoo, MIcrosoft, all the big ones did.
But if there is a compelling reason to raise funds, then the question becomes when to do so.
When you have the right traction, the chances of raising funds improve. Many try to raise funds too early, wasting time better spent building the business. Which can get them to the point where they actually don’t need the money
It is easier to attract talent with funding. It gives prospect and current employee an extra security. When you work at a start-up the chances of loosing your job within a year is very high. The majority of start-ups never make it
I wish every post came with a Ferris Bueller reference.
“To be fair, is selling shoes changing the world?”
Funny!
To be fair, shoes is only the particular item he’s moving … service and dealing with customers like customers would like to be dealt with is what they really sell.
No really, they sell shoes!
They are really selling the prospect of expanding out the realm of possible products successfully delivered over the interwebs (that were otherwise considered not effectively possible) though the increased focus on exceptional service, gaining client trust and empowering new clients to be a marketing resource for them. Effectively, redirecting the exorbitant cost of marketing and feeding those savings into customer service which results in more free, positive word of mouth marketing.. and the feedback loop goes round and round until you get acquired by amazon. How much more effective is someone you know & trust telling you something good about a product/service as opposed to an ad? and how many of you who shopped there before have recommended the service to someone that trusts you?
If your looking for a litmus test for success, remember, Amazon survived the toughest part of the the past several years on sheer size. How many niche e-commerce sites around through that same period are still around?
Think how much better all products and services would be if everybody shifted marketing budgets into improving the product/service instead of trying to acquire new customers by sheer traditional sales tactics.
So yeah, they were just selling shoes, but they had to change the world to do it.
““To be fair, is selling shoes changing the world?””
Why not ? Anything can change the world if that thing manage to change the social behaviour and perception of the users or even business process, model.
Is selling a commodity like Mp3 Player changing the world ? Just look at iPod. iPod did change the world of how users perceive Mp3 player and music delivery (through iTune).
Great interview Sarah and enjoy these little clips…looking forward to the next batch tomorrow and should be fun to interview Kevin!
Chasing capital is a waste of time in most cases. Entrepreneurs should focus on product and building community/revenues. The money will follow a great product/service.
I think the biggest myth contributing to this mentality is the fallacy that you need to spend 100% of your time/energy/capital on a project, do or die style, rather than grow it slowly with your limited resources of time, money, and love.
To often we are looking for instant hits but this is mostly a pipe dream.
I am not saying don’t be committed, however, shooting your load in one big pop usually ends in tears or better yet, a crappy discontinued product.
Just my two cents…
I agree with you…thanks for sharing.
You’re very welcome. I have wasted plenty of my money/time/hair on tech start-ups so I am not just speaking from an ivory tower
Tony did quite well without VC money.
http://www.trendslate.com
“We’re (Zappos) not about selling shoes…”
Wow. Hsieh has got his CEO BS down! Even if you take him at his word that Zappos was about customer service, has their customer service “changed the world”?
Changing the world takes time…
If Hsieh Zappo’s customer service changes a customer life, then yes, they would have changed one person’s “world” and who knows how many other related “worlds”?
Changing one life, one world at time is Hsieh’s way of changing the world.
What’s your way of making a difference…?
People are growing increasingly accustomed to the kind of service Zappos provides, and other retailers are taking notice – in some cases, changing return policies and shipping levies as a result. Might not be a cure for cancer, but this is definitely moving the world in the right direction: away from the transaction-first, impersonal trade where the customer feels screwed and toward a voluntary exchange where the customer enjoys the experience so much that they want to give money to the retailer. The creation of wealth alone on such a large scale is good for the world.
Good interview…thank you.
Get a life.
Get a business plan.
Get a business started.
Get leads or potential customers.
Get real paying customers with invoices.
Get generating revenue in order to get money in your bank account.
Then think about raising more money.
Or get lost.
Selling shoes online is not a game-changer.
But doing it so successfully , that IS .
How many people can make a better burger than McDonalds ?
A Lot.
But can you sell better ?
I’m going to be the Zappos of socks.
… then I’ll go around telling people to change the world.
Tony – sense. stop. making. it.
If he doesn’t sell shoes having your photo taken with loads of shoes is a bit odd, is shoes just a fetish of his?
Shoes are a metaphor, they symbolise a shift in power from the West to the East which will change the world.
He is a smart man, I have no doubt he may go on to do something world changing in the future.
Of course you need VC. You get some old nobodies who dont know anything about technology, throw a few buzzwords around, and then sell out your company for the few millions they give you and retire.
I like Zappos as much as the next customer but I’m waiting to see how they can really start to make money. $1 billion in gross sales; $10 million in profits. My tiny little ecommerce company does $3 million in gross sales and $300,000 in profits. My customer service people may not go home every night talking about how much they love me or their job or the company but they go home with a lot more money in their pockets than Zappo’s customer service reps.
1) Make a shoe website
2) ????
3) Profit
Wow, don’t look for capital, coming from a rich guy who had a multi-million exit from a company that took over 62 MM in funding. I keep on hearing CEOs who had a successful exit say don’t take funding, it is so easy to say when you have millions in the bank.
Entrepreneurs are often of the mind that every problem can be solved by creating a company.
Wish someone of Hsieh’s status and success would point out that in order for a product or service to “change the world”, one needs neither VC funding nor profit motive.
Interesting stuff. “It was not in a bathroom in Seattle”
I think the thing that separates great CEOs from good ones is thinking they’re changing the world, even if they’re selling shoes. You know Jobs, Gates, Beezos, Ellison set out to change the world, and by golly, they did. I doubt Hsieh will reach those heights, but at least he’s aiming high and has already been quite successful.