Tony Hsieh on Learning From Mistakes

Two weeks ago, Tony Hsieh, CEO of Zappos.com, agreed to respond to readers’ questions. Today is the third installment to those questions, here are the first and second installments.

Be sure to read our other interviews in our leadership series.

Also, feel free to jump to other parts of the interview found below:

Interview Questions from shmula.com blog readers
Tony Hsieh, CEO of Zappos, Part 1
Tony Hsieh, CEO of Zappos, Part 2
Tony Hsieh, CEO of Zappos, Part 3
Tony Hsieh, CEO of Zappos, Part 4
Tony Hsieh, CEO of Zappos, Part 5

Comment by Dave on November 26, 2008 @ 6:36 pm
What are your plans for international expansion? Which markets do you see first, and why?

We actually ship internationally today, but it’s from the US so shipping and duties/taxes make it expensive. To do it right, we would need to set up warehouse operations in other countries, which we aren’t planning on doing anything soon. Right now we’re focused on expanding into other product categories beyond shoes in the US (such as clothing).

Comment by kc on November 26, 2008 @ 8:40 pm
This is a general business question: What is your advice on working within a de-centralized organization and being charged with growing the e-commerce portion (approx. 15% of the whole) within the realm of a traditional company offering little support or understanding of the business model?

If you can get the support and funding for it from the parent company as essentially a separate business, I would try to get the green light to build out your own culture, HR policies, etc. and have the parent company leave you alone and let you run your own show as long as you’re meeting your financial goals.

Comment by Ben Shin on November 26, 2008 @ 9:04 pm
Hi Tony – Zappos started with the shoe category and is now selling other stuff. In one sense, Zappos is becoming more and more like Amazon. What is different between Zappos and Amazon?

While it’s true that we’re in many of the same product categories, we don’t really think of Amazon as a competitor. Wal-Mart and Nordstrom are both in many of the same product categories, but nobody thinks of them as competitors.

Amazon is really more about being a market place where you can find the best value. There are many 3rd party sellers offering products on Amazon.com.

For Zappos, we just want our brand to be about the very best customer service and customer experience, which is why we’ve stayed away from the “easy money” of having other 3rd party sellers on the Zappos.com site, because we can’t control the customer experience as well when dealing with 3rd party sellers.

Comment by Edward Cullen on November 26, 2008 @ 9:05 pm
Have you seen Twilight yet? Did you like it?

I have not seen it yet!

Comment by Jeremy Hanks on November 27, 2008 @ 2:29 am
What are your thoughts about drop shipping/supplier direct fulfillment? Id imagine that at some point as you expand into other categories, youll find yourself limited by space and $ that youre willing to tie up in inventory. How would Zappos approach a strategy to use virtual inventory as a way to provide deeper SKU options for your customers? – Jeremy Hanks, Cofounder Doba

This is not something we would consider doing under the Zappos brand even though it would result in more sales and higher profits because we can’t control the customer experience.

Comment by Nathan on December 1, 2008 @ 11:49 am
What leadership lessons have you learned in your time as CEO? Also, what mistakes have you made and how did those mistakes change you and change the company?

I think the biggest lesson I’ve learned is that there is a lot more hidden talent and potential in your employees than you think. It’s just about building the right culture and figuring out how to unlock all of that talent, which isn’t always an easy thing to figure out.

We’ve made a lot of mistakes at Zappos, but in general I think we do a pretty good job of learning from those mistakes. If we weren’t making mistakes, then I would say we weren’t taking enough risks.

Our biggest mistakes in the past have probably been related to hiring the wrong people, especially those that were bad for the company culture. It’s actually made our culture stronger today because we want to try to avoid making the same mistakes.