ZAPPOS! Archive

A Special SarahLacy.com Tony Hsieh Retrospective

I've always loved this blog because practically no one reads it. It's a nice contrast to writing a column for the largest business magazine, blogging for the largest tech blog, and hosting a show for the largest site on the planet. (BusinessWeek, TechCrunch, and Yahoo respectively.) But ironically, it's this blog-- and not those other mega-platforms-- that is responsible for my relationship with Zappos and its CEO Tony Hsieh.

One of my very first posts was about Zappos and their TV commercials, which I thought sucked. I'd never covered Zappos, wasn't a big fan personally of ordering shoes online and frankly, didn't know that much about the company. I got an immediate flood of responses from people defending the company-- and these weren't trolls. These were just passionate Zappos fans that wanted me to understand what I was missing. The most impressive comment I got was on a ho-hum Sunday afternoon from Hsieh. It was a PR masterstroke. No one reads this blog and there was no chance what I'd written could do any harm to his brand, but he wanted to engage nonetheless. And it was light and jokey, inviting me to come visit Zappos headquarters next time I was in Vegas. I did him one better and invited him to be on my Yahoo show the next time he was in town.

I still don't order shoes much on Zappos. But as a reporter, I've had Hsieh on TechTicker, blogged about him here and on TechCrunch, used him as an example in keynotes about companies that use social media exceptionally well, mentioned him in BusinessWeek columns, and on other national TV shows. We've even co-hosted parties in Vegas.

What I found captivating about Hsieh was how he thought differently from any other CEO I've met in the Valley. It's common to meet entrepreneurs in the Valley who are great coders or great product visionaries, but finding that kind of contrarian thinking about management, cash flows, marketing and brand is rare.

So obviously, I've had a lot to say about the company's decision to sell to Amazon. Here's a round up of my coverage on the subject:

My TechCrunch post as the deal was breaking
My TechCrunch post about Draper Richards-- a firm that could have owned more than anyone else, but demanded loan repayment instead of equity back in 2001. DOH!
My TechCrunch post about what everyone made from the deal. (Hsieh has responded to my outing his $218 million + fortune by forwarding me all financial management and investment pitches he gets.)
Last, my BusinessWeek column about why this acquisition is one of only four I've seen make total sense in all the time I've covered startups.

There was  a bit of debate about that BW column, because I noted Hsieh didn't have a traditional "lock-up." In other words, he doesn't make any less money if he quits Amazon tomorrow or stays for ten years. This is incredibly rare in startup deals. A commenter noted he does have one, as stated in the S4. Actually that's only a restriction for when he can sell his Amazon shares-- no public company would allow you to dump them all at once because it would hurt the stock. But it has nothing to do with whether he has to work at Amazon at the time he sells them, which was the point.

Anyway, a huge congratulations for Hsieh, Zappos CFO Alfred Lin, Sequoia and the Zappos team. Moving on to a new story now I promise!

The CES Party You Don't Want to Miss

So, even though I've covered tech for quite a while, I've never been a gadget reporter and hence always avoided going to CES. For those who don't know, CES is the Consumer Electronics Show in Las Vegas. In the wake of the dot com bust, as the housing market took off, and we all felt richer it became the must-attend tech conference. It didn't hurt that it was the golden age of gadgets with flat panel TVs, DVRs, iPods, iPhones, and Tasers. Yes, Tasers. There's endless footage of curious reporters getting Tased at CES for some reason.

What was the reason? I don't know. Because every January, I've been happily back in San Francisco at a desk, not standing in mile-long cab lines. Now that CES is allegedly on the wane, I didn't even give attending a second thought. Until one night when I was having dinner with Brian "Pocket-Sized Ricky Ricardo" Solis and Somewhat Frank Gruber and they convinced me by ordering a second bottle of champagne, promising we'd all co-host an epic party, and I wouldn't even have to get Tased. I never host a party in Vegas without involving Tony "My TV commercials suck, but I'm awesome otherwise" Hsieh, because that's like doing a mob hit in Jersey without calling Tony Soprano. (I'm not sure that metaphor makes sense. It's early. But you know what I mean.)

Flash-forward a few months and a big check from Intel and we're all set to have the CES kickoff party this Thursday night. Tickets are free but extremely limited, so watch Twitter. We will each Twitter the Eventbrite link at 2 p.m. pacific time today. They will go quick. Did I mention free drinks? Yeah, it's going to be awesome.

Here's a clip from my last Vegas party with Tony:


Vegas Baby from sarah lacy on Vimeo.

And here's a slightly more substantial video shot yesterday where Paul Kedrosky and I discuss CES's questionable relevance at a time when none of us have money for gadgets.

OpenTable: So Web 1.0 It Hurts.

I have written a few times about my total dislike of OpenTable.com-- a site I adored when it first came out. Please. Someone take them down with a better product that caters to its users and not just the restaurants that buy its software. I will personally invest in the idea. OK, that's not true, because my freezing 100-year-old Victorian house takes all my money. But I'll throw you a launch party or a parade or something.

My problem in short:

OpenTable was founded amid the dot com bust and survived. Good for them. But it was infected with a lot of the worst of Web 1.0 thinking, particularly the belief that biz dev deals and partnerships with other businesses were more important than users. Back in the late 1990s, with a few exceptions like eBay and Craigslist the idea of a "community" mattering wasn't really a necessity of building a consumer Web business. It was enough that users could communicate, find things and buy things in the comfort of their living rooms using the brand new Web. Combine that with the crash and you had an environment that required any surviving company to find a way to make money quick and focus on users and features later. That's the story of OpenTable: A company that is ostensibly a consumer business, but actually makes its money from selling software and hardware reservation engines to restaurants.

Make no mistake, users: The company knows who signs the checks.

More from ZAPPOS!

On the origins of the company:

And on its future:


By the way, my friend Tim points out the environmental toll of all that shipping and returning. The problem with taking away the financial stigma is you increase it dramatically. Since I KNOW Tony reads this, dying to know his response. (As is Tim)

ZAPPOS! CEO SPEAKS!

After the crazy-enthusiastic response I got to this post, I've decided to always write ZAPPOS! instead of Zappos. I also decided to do a few interviews with CEO Tony Hsieh for TechTicker. Here's the first piece. I'm still not sure the economics of ZAPPOS! will work long term, but I give Tony a lot of credit for following his own vision and not giving into the capital-efficiency craze. (And my husband is buying some shoes right now...) At least he's building something interesting which is more than I can say for a lot of me-too Web companies. More segments on TechTicker today.

Enjoy!

What about Semi-Spam?

Ok, Ok, Owen Thomas will likely read this and think I'm being bitter or haughty or nasty again or whatever. (Qualities ValleyWag knows nothing about of course!) But amid the discussion about Facebook and Twitter needing spam control, how are we defining spam? Because a lot of business folks (especially Valley ones) borderline-abuse these services for business gains. Ultimately, I guess it's in the eye of the follower. I like when bloggers I follow Twitter-tease new entries because I don't have all day to go between blogs. But I can't help but feeling "spammy" when I do it.

And, like, I know there's a "Jason Nation" and all that's apparently such a force it needs a logo. So clearly those people like endless Calacanis "COMMENT ON THIS PHOTO OF MY BULLDOGS NOW" missives. But does everyone?

Part insightful analysis of what ails Silicon Valley and part madcap journey to far flung hubs of aspiration and innovation, Sarah Lacy takes us around the world in 180 pages to find the fascinating people who are creating the new wealth in a new world of start ups and ventures that America ought to be paying a lot more attention to.
Brilliant. Crazy. Cocky.

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Srah Lacy

Sarah Lacy is an award-winning reporter who has covered high-growth entrepreneurship for more than fifteen years. She is the founder, CEO and Editor-in-Chief of PandoDaily.com, the site-of-record for the startup ecosystem. She lives in San Francisco.

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