“Our strategy of combining inventoried product with drop-shipped product continued to drive our sales growth,” he explained. Sales rebounded, but they soon faced another big decision. “If we hadn’t reacted quickly, it would have destroyed Zappos.” “Outsourcing that to a third-party and trusting that they would care about our customers as much as we would was one of our biggest mistakes,” Hsieh recalled. Being unable to promptly fulfill orders nearly bankrupted Zappos – and Tony.

A woman told him: “Envision, create, and believe in your own universe.” Hsieh and Lin did just that with Zappos, putting in more of their own money to lead it through the dotcom bust, the ensuing recession, and 9/11.īig mistake: “As an e-commerce company,” Hsieh wrote, “we should have considered warehousing to be our core competency from the very beginning.” Instead, Zappos outsourced their warehouse inventory to eLogistics, who did a poor job. “I had decided to stop chasing the money,” he said “and start chasing the passion.”Īt this time, Hsieh started getting into rave culture and the acronym PLUR: Peace, Love, Unity and Respect. Hsieh, bored with the company, turned down a bigger golden parachute to walk away early. Eventually Microsoft bought it for $265 million. Months later, Yahoo!’s Jerry Yang offered them $20 million – and they turned it down. They made a $2 million counteroffer that got turned down. Within months, a buyer offered them $1 million. On weekends, they started experimenting with coding and built an early web ad platform called LinkExchange.

After Harvard, he and Sanjay took jobs with Oracle back in the Bay Area during the height of Internet Mania. Luck is what happens when preparation meets opportunity. “We ended up hiring him as our CFO and COO at Zappos,” Hsieh explained. His best customer was Alfred Lin – who he later found out was bringing the pizza back to his house and selling slices to his roommates to earn an even higher margin. They experimented with the menu, making more pizzas because they were more profitable. A standout student, he got into Harvard, where he co-managed the Quincy House Grill with his friend Sanjay.

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