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Three Lessons from web start-up legend Tony Hsieh

Friday, 24 February 2012 | By Adam Franklin

If there’s anyone to emulate when it comes to running a start-up, it would have to be the CEO and entrepreneur behind the Zappos success story, Tony Hsieh.

 

Zappos is an online shoe store that he sold for $1.2 billion after 10 years. Before that, he sold his first web start-up for $265 million after just two years. It’s safe to say that Tony knows a thing or two about the web and start-ups. And, thanks to Business Chicks , Tony Hsieh toured Australia last week.

 

Here are three key things any start-up can learn from Tony:

 

1. Corporate culture is everything

 

Tony told a story about his first web company, Link Exchange. He really loved working there while they were growing to about 20 people, since most of the people working there were his friends.

 

However, by the time they grew to 100 people, he didn’t enjoy going to work anymore. The culture had deteriorated so badly that he wanted out, and so he sold the company to Microsoft for $265 million.

 

In hindsight, it turned out to be a stroke of genius, as he sold just before the dot-com bubble burst in the late ‘90s.

 

But up until that point, he didn’t appreciate the importance of corporate culture.

 

Contrast this to Zappos, the company Tony runs today. His number one priority is culture and everything else is a by-product. He actually hires and fires people according to how well people fit the culture.

 

2. Social media helps build culture

 

Tony was an early adopter of Twitter and totally endorses social media. Zappos’ simple but empowering social media policy is to “be real and use your best judgement”. Trusting your staff to use social media responsibly is a huge advantage when it comes to building a positive corporate culture.

 

In fact, Tony has set up a webpage where all the Zappos employees’ personal tweets aggregate, so that everyone can ‘see’ the Zappos corporate culture with their own eyes.

 

Additionally, Tony encourages staff to spend 10-20% of their time doing “non-work” related things, as socialising with colleagues helps to build trust and increases productivity.

 

3. Invest marketing dollars into customer service

 

Tony proudly talks about all the money he “would have spent” on marketing that he has instead invested into customer service. This ensures his customers have a tremendous experience with Zappos and want to tell their friends. As a result, his customers actually do the marketing for him, with the positive word of mouth amplified through social media.

 

These three tips have helped Tony Hsieh turn Zappos into a billion dollar success story. Hopefully, these lessons can be applied in your start-up too.