The Zappos Story
A happy tribe built a $1.2 billion company
In 1999 while shopping for shoes Nick became frustrated when the high street retailers he visited did not have the right size and colour of the Airwalk Chukka Boots he required. Confident he was not the only customer having this problem, Nick quit his day job to set up an online shoe retailer ShoeSite.com and left a voicemail for Tony Hsieh at Venture Frogs. Tony in his book “Delivering Happiness : A path to Profits, Passion and Purpose” heralds Nick’s factual voicemail as the hook that led Venture Frogs to invest $2m. The factoid was that 5% of the $40 billion shoe business was already being done through mail order. ‘That was my big statistic. People were already buying shoes without trying them on.”, Nick shared in an interview with Footwear News.
Over the coming five years the company experienced exponential growth under the new company name, Zappos, with Tony as co-CEO. Year 1 saw $1.6m in gross sales, Year 2 $8.6m rising to $184m by 2004. This five year growth attracted a $35m investment to enable further scaling and by 2008, within nine years, Zappos celebrated USD $1 billion in annual sales. In 2009, Amazon acquired Zappos for $1.2 billion.
So what Superpower did the Zappos Founders adopt to go from zero to hero in less than ten years?
The power of a tribe. Hiring the right people passionate about a collaborative way of working where everyone’s idea and opinion mattered, layered with the hypothesis that if the company was good to the employees this would translate through to a happy customer experience. Better service, repeat customers, low marketing costs, long term profits and fast growth. The catch phrase ‘Delivering Wow’ was at the heart of the Zappos culture.
From an early stage Tony took a tribe led approach, from crowdfunding the company’s ‘10 Values’ from Zappos people through to enabling everyone to be active on their social media accounts sharing their life at Zappos. Tony quotes, “There’s three types of happiness and really happiness is about being able to combine pleasure, passion, and purpose in one’s personal life. I think it’s helpful and useful to actually think about all three in terms of how you can make customers happier, employees happier, and ultimately, investors happier”. By hiring a tribe of passionate people keen to live and work in a happiness culture led to exponential growth.
Where are they today?
Nick left Zappos in 2006 and has set up a number of companies since. Tony is the billionaire CEO who famously lives in an Airstream caravan on the Zappos site, called the Downtown Project in Las Vegas, another Zappos social experiment which became successful among employees. His book ‘Delivering Happiness’ is a New York Times bestseller and is seen as a handbook for many corporations on how to build successful community tribes. After 21 years, in August 2020, Tony announced his retirement as CEO of Zappos and plans to support philanthropic causes and entrepreneurs who are working for social good.
Entrepreneurs with a problem solving mindset are driven to create solutions. Products are used daily that trigger thoughts like, ‘this would be better if….’ and ‘if only this was faster…’ yet the majority of us accept the status quo. There are a minority who decide to take action, create and launch a new product. What drives these entrepreneurs? Do they have a unique outlook and approach.
The GOPRO Story
The invention of a passionate surfer leads to sales of 35 million cameras
As a passionate surfer, Nick wanted to film his action on the water in order to demonstrate his skills and fulfil his desire of ‘going pro’. Initially filming with a camera attached to his hand with rubber bands, he was inspired to create a belt to attach the camera to his body. He used his mother’s sewing machine to create the first prototypes and raised money by selling seashells out of his mobile van. In 2002, the idea for GoPro was born. His passion to find a solution that could successfully film on the water took GoPro from a niche product for surfers into the mainstream enabling anyone keen to capture their activities on film. Go Pros fast growth, from selling out of a mobile van to becoming a billion dollar company has made Nick a billionaire.
Where are they today?
With so much content being created by GoPro users, the company started its transformation to become a media company in 2014 broadcasting its content to YouTube, Virgin America and XBox Live and the Playstation network. In 2019, GoPro celebrated selling its 35 millionth HERO camera since the launch of the first HD HERO in 2009.
Nick Woodman’s surfing passion led to the creation of the world’s most versatile camera that empowers people to be creative, capture their adventures and share it globally.
Through the Jill and Nicholas Woodman Foundation donations have been made to a variety of causes, from child abuse prevention to entrepreneur and community building projects.
The POWER OF PROBLEM Exercises
Is this your persona?
‘I’m driven to create something new to solve the problem’.
The top 3 reasons Start Ups fail to reach five years relate to sales, management skills and cashflow. Let's dive into a fast track strategy that any company can adopt to overcome these issues.
The Power of a Partnership
A partnership can take many forms ranging from a collaboration, an alliance or a joint venture where you combine resources for rapid strategic growth.
A partnership fast tracks you from being a sole company sailing alone in the ocean to being part of a strong fleet sailng to a shared destination faster, better and stronger.
Virgin Group leverages the Power of Partnerships
Over the years, the Virgin Group have successfully formed partnerships with many companies to gain traction in new markets and is a shining example of how to achieve rapid strategic growth. In a partnership, Virgin brings the power of it's brand name to the table while the company, typically an leader in it's field, brings the infrastructure, people, resources and knowledge.
The King of Partnerships is Sir Richard Branson.
He is the only entrepreneur to create 8 separate billion $ companies
in 8 different industries.
Virgin Joint Ventures
•Total 400 companies, founded 46 years ago, employs 50,000+ people
•Joint ventures have included:
3 steps to powering up your business
Whether you are a two man band in your first year or 50+ people in your third operating year, the power of a partnership leads to rapid strategic growth.
Step 1 : DETERMINE your need
Brainstorm 3 reasons why a partnership would fast track your company. What gaps do you currently have? What are your key areas of weakness or pain points? Do you need people, expertise, technology? All these questions help gain clarity on the WHY.
Step 2 : DISCOVER like minded companies
Now you have clarity on the WHY, research like minded companies in your sector. Collate a list of at least 10 companies that would be an ideal fit. Seek companies with similar brand values and ethics as yours as this makes the initial introductions easier and more effective.
Step 3: DIVE IN
Contact each company and share your partnership vision with them. Outline the WHY first followed by the HOW. Positively share your insights, research and the financial deal on why you believe you are STRONGER TOGETHER.
During a Q&A session, at Apps World London, I was asked for some ideas on how a Start Up could tap into the Power of a Partnership to raise brand awareness. Watch to learn more.
The number of Start Ups launching continues to accelerate each year however the survival rates are still low, with many capsizing before five years.
The construction sector chance of survival is only 44%, the health sector 50% and the tech sector has one of the highest rates of failure with 92% start ups failing before three years.
So why are Start Ups failing?
The top three reasons are:
1. Market problems
The product does not meet a market need. This it typical when a entrepreneur chooses to create a new product based on their own passion for it. For example, if you love flowers you may set up a florist without establishing if there is a demand for another florist in the area.
Another reason is the potential customer does not feel the product adds significant value to them; it is a 'nice to have' not a 'must have'. The product is a 'vitamin', a nice to have that a customer will purchase if they have the money or desire. Products that are 'aspirins', a must have, are more likely to cause the customer to buy as it helps them solves a problem or overcome human suffering.
2. Poor management
Typically Start Up teams burst onto the scene with bags of enthusiasm, passion and determination to be successful however due to lack of experience or skills gaps flounder after two years. Solo founders take 3.6x longer to reach scale stage compared to a founding team of 2.
3. Run out of capital
There are many reasons Start Ups fail and running out of capital makes it into the Top 3. It is easy to over forecast demand for a new product in the first year. Until a new product is launched and the customer appetite is established, forecasts are just that, forecasts. Immediately adjusting your cash burn rate to the lower sales levels is required to avoid a capsize. Sounds obvious yet many Start Ups suffer as a result of not responding quick enough to the reduction in sales.
If you find yourself suffering from one or all of these reasons, the wise words of Napolean Hill offer great advice.
'When defeat comes accept it as a signal that your plans were not sound, rebuild those plans and set sail once more towards your coveted goal' - Napolean Hill