You can read and post comments here! (Read the email I sent to employees first.)

I was in Washington, DC last week and spent several days participating in inauguration-related events with various people including Evan Williams, the CEO of Twitter. So I thought this would be an opportune time to write about a topic that I've been thinking a lot about over the past few months: how Twitter has contributed to my own personal growth and made me a better person, and how you can take the same principles and apply them to yourself if you'd like.

I've talked a lot in the past about how we've used Twitter at Zappos for building more personal connections with both our employees and our customers. In fact, we recently debuted on FORTUNE MAGAZINE's annual "100 BEST COMPANIES TO WORK FOR" list, and they began and ended the article talking about our use of Twitter to build more personal connections with people. That in itself is its own reward that has both personal and business benefits, but for this blog post, I wanted to share my stories and thoughts on how Twitter has helped me grow personally.

For me, it comes down to these 4 things:

1. Transparency & Values: Twitter constantly reminds me of who I want to be, and what I want Zappos to stand for
2. Reframing Reality: Twitter encourages me to search for ways to view reality in a funnier and/or more positive way
3. Helping Others: Twitter makes me think about how to make a positive impact on other people's lives
4. Gratitude: Twitter helps me notice and appreciate the little things in life

The great thing about all 4 of these things is that not only have they helped me grow as a person, but they've also led to me being generally happier in life. And the benefits aren't just personal -- they also spill over into what we want the Zappos brand and business to be about: Zappos is about delivering happiness, whether for customers (through customer service) or for employees (through company culture). It's been interesting thinking about how all of my personal learnings about happiness can be applied to delivering happiness in the business world as well.

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#1 - TRANSPARENCY & VALUES

What would you do differently if you were always on camera? I'm not talking about being on a reality TV show, but what if there were a permanent public record of everything you do or say from now on that anyone in the world could view at anytime? How would you act differently in certain situations? Would you be friendlier to people? Would you be less negative and less judgmental?

If you were always on camera, then everything you did would go towards shaping your personal brand, whether positive or negative. What are your personal values, and what values do you aspire to?

At Zappos, we have 10 core values that act as a formalized definition of our company culture. Our core values weren't formed by a few people from senior management that sat around in a room at a company offsite. Instead, we invited every employee at Zappos to participate in the process, and here's the final list we collectively came up with:

1) Deliver WOW Through Service
2) Embrace and Drive Change
3) Create Fun and A Little Weirdness
4) Be Adventurous, Creative, and Open-Minded
5) Pursue Growth and Learning
6) Build Open and Honest Relationships With Communication
7) Build a Positive Team and Family Spirit
8) Do More With Less
9) Be Passionate and Determined
10) Be Humble

The cool thing about the Zappos core values is that I've used them as my own personal values as well. So it makes tweeting really easy for me... Whether I tweet about something personal or something related to Zappos, if I'm living my life through these 10 core values, it all goes towards building the Zappos brand while shaping me personally as well.

A lot of marketers are initially mystified by how Twitter, in which you're limited to 140 characters or less per tweet, can actually help a company build a brand when you're so restricted in the length of your tweet. Here's the analogy I like to use:

Think of each tweet as a dot on a piece of paper. Any single tweet, just like any single dot, by itself can be insignificant and meaningless. But, if over time, you end up with a lot of tweets, it's like having a lot of dots drawn on a piece of paper. Eventually there are enough dots for your followers to connect them together. And if you connect the dots, in the aggregate it paints a picture of you and/or your company, and it's that total picture that is your brand.

I have to admit, like probably most other people, when I first joined Twitter I felt a bit uncomfortable publicly announcing what I was doing and what I was thinking. But because radical transparence was part of the culture of tweeting, I decided to give it a try and be as transparent as possible, both for myself personally and for Zappos. It was also consistent with Zappos Core Value #6: "Build Open and Honest Relationships With Communication".

What I found was that people really appreciated the openness and honesty, and that led people to feel more of a personal connection with Zappos and me compared to other corporations and business people that were on Twitter.

By embracing transparency and tweeting regularly, Twitter became my equivalent of being always on camera. Because I knew that I was going to be tweeting regularly about whatever I was doing or thinking, I was more conscious of and made more of an effort to live up to our 10 core values.

A lot of people use Twitter to complain or vent, but I generally try to avoid doing so because it's not in line with our core values. What I've noticed is that it's also caused me to complain a lot less in real life, and because of that, I've found that my own personal happiness level has gone up.

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#2 - REFRAMING REALITY

That's not to say that I don't get into situations that I'm not initially happy about. But now anytime something that used to get me upset or frustrated happens, I try to find the humor in the situation and think about how the situation can be reframed. I've found that almost every "bad" situation is actually an opportunity that can be entertaining to my followers on Twitter, which also forces myself to see things in a different light.

For example, last year I was staying at a hotel in Mexico and somehow managed to lock myself out on the balcony of my hotel room. I was stuck there for 45 minutes before I was finally rescued. This would haven normally been a very frustrating experience, but because I had my cell phone with me, I was able to tweet about it and it actually ended up being a very enjoyable 45 minutes as I tweeted about the progress of my situation and read all of my followers' responses to it:

Went 2 my room after my speech, came out 2 balcony. Balcony door somehow locked behind me so now I am trapped outside. @ zappos_fred 2 rescue [http://twitter.com/zappos/status/812279213]

Hotel front desk is telling @zappos_fred it's not possible for me to be locked out on balcony. I assure you it is, I am not pretending. [http://twitter.com/zappos/status/812287969]

Hotel security finally believed @zappos_fred, rescued me after 45 mins. Asked 4 ID so I could come in from balcony. No ID = stay on balcony [http://twitter.com/zappos/status/812292469]

in fact, I now almost looked forward to situations that would normally be frustrating, because I've learned that almost any situation can be reframed to be funny as a tweet, which then makes the situation in real life funny as well. For example:

Airport bathroom: guy tries washing hands - auto faucet motion sensor broken. He tries voice recognition instead by yelling "Wash!" at sink [http://twitter.com/zappos/statuses/806944443]

If it weren't for Twitter, I would have instead probably been a bit annoyed waiting in line behind this man who was unfamiliar with motion-activated sink faucets. But instead, Twitter forced me to search for and find the humor in the situation by taking a step back and realizing that it actually was a pretty funny situation.

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#3 - HELPING OTHERS

One of the great things about Twitter is the instant feedback loop. Within 5 minutes of sending out a tweet, you can find out whether people enjoyed or appreciated your tweet. When I first started using Twitter, I used to just tweet about what I was doing. Most of my tweets were very "me-focused", because the guideline Twitter gives is to answer the question "What are you doing right now?"

Every once in awhile I might share an inspirational quote or funny story or link to an interesting article. What I found was that those types of tweets also garnered the most responses. So today, with most of my tweets I try to do at least one of the following:

• Cause my followers to smile with something funny
• Inspire my followers (for example, with an inspirational quote)
• Enrich my followers' perspectives (such as with a link to an interesting article)

In other words, I've become a lot less "me-focused" and instead do a lot more thinking and asking myself, "What can I tweet about that would brighten the day for my followers or enrich their lives somehow?"

And by regularly putting myself into the mindset of asking what I can do for others, it inevitably ends up spilling over to my regular life outside of Twitter. And somewhat ironically, becoming less "me-focused" has actually increased my overall level of happiness for myself personally.

---

#4 - GRATITUDE

In my research into the science of happiness, many studies have shown that gratitude activities (such as keeping a gratitude journal) helps people increase their overall happiness level in life. There are many ways to be thankful, and many things to be thankful for, but one technique is to make a more conscious effort to notice and appreciate the little things in life.

For me, because I try to tweet every day, I've found that I'm always looking for opportunities to have something to tweet about. So I end up noticing and appreciating things that I would normally not even give a second thought to. Here are examples of some tweets I've sent about things I've noticed that I would have normally ignored or forgotten about:

http://twitpic.com/rcli - Guy in New York with a cat on his head. Apparently this is normal. [http://twitter.com/zappos/status/1046534414]

http://twitpic.com/13fn1 - It's so cold that the NY street food vendors' tomatoes & lettuce are frozen [http://twitter.com/zappos/status/1124243255]

At Vegas airport. While in bathroom, I had an AMAZING revelation: Toilet seat covers are shaped exactly the same as life vests! [http://twitter.com/zappos/status/1109483429]

Enjoying just hanging out at home for my birthday. Looking at the full moon which is closest to earth today, happens once every 15 years. [http://twitter.com/zappos/status/1054918866]

So now, anytime I notice something that would normally be inconsequential, the very act of tweeting forces me to spend some time appreciating what would have otherwise been ignored or forgotten. And because of that, I've learned that every day, there are many, many opportunities to notice and appreciate the little things in life.

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So for all of the reasons I've outlined above -- Transparency & Values, Reframing Reality, Helping Others, and Gratitude -- I'd like to say thank you to Twitter for helping me grow as a person.

Tony Hsieh - CEO, Zappos.com

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SOME QUESTIONS FOR YOU

Some questions for you to consider thinking about: What are your personal values? What do you want your personal brand and values to be? How can you use Twitter as a tool to help you grow as a person and be happier? If you've ever vented on Twitter, do you think you would be happier if you thought of Twitter as a tool for you to reframe your perspective? I'd love to hear people's thoughts and comments below!

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Follow me on Twitter: @zappos

Want to learn how to get started on Twitter? Take a look at the beginner's guide I wrote!

It's official! Zappos.com made FORTUNE MAGAZINE's "100 Best Companies To Work For" list for 2009 - and we're actually mentioned on the cover!

To give a little bit of history, FORTUNE puts out this high profile list every year. Making this list was one of the most important goals that we set for ourselves during the early days of Zappos, and we're all super excited to show up on the list for the first time in our company's history! To qualify, a company has to be at least 7 years old and have at least 1000 employees. We came in at #23 this year, making us the highest ranking newcomer for 2009.

Here's a link to the actual article (it's 2 pages, you need to hit the non-obvious "2" button to get to the second page, or just use the second link):

http://money.cnn.com/2009/01/15/news/companies/Zappos_best_companies_obrien.fortune/index.htm
http://money.cnn.com/2009/01/15/news/companies/Zappos_best_companies_obrien.fortune/index2.htm

Here's a link to a video FORTUNE also put up:

http://money.cnn.com/video/ft/#/video/fortune/2009/01/21/fortune.bctwf.zappos.fortune

Here's a link to another article FORTUNE put up about our core values at Zappos:
http://money.cnn.com/2009/01/21/news/companies/obrien_zappos10.fortune/

And here's a link to our official press release:
http://www.earthtimes.org/articles/show/zapposcom-debuts-on-fortune-magazinersquos,688804.shtml

More background information about Zappos:
http://about.zappos.com

Zappos Blogs:
http://blogs.zappos.com

Or follow me on Twitter!
http://twitter.com/zappos

Thank you EVERYONE for helping shape the Zappos culture into what it is today. It's hard to believe that within a 30 day period, we hit $1 billion in gross merchandise sales AND finally made FORTUNE's list of "100 Best Companies To Work For"! We'll be coming up with a special commemorative t-shirt celebrating both over the next few weeks!

Tony Hsieh, CEO

Building a brand today is very different from building a brand 50 years ago. It used to be that a few people got together in a room, decided what the brand positioning was going to be, and then spent a lot of money buying advertising telling people what their brand was. And if you were able to spend enough money, then you were able to build your brand.

It's a very different world today. With the Internet connecting everyone together, companies are becoming more and more transparent whether they like it or not. An unhappy customer or a disgruntled employee can blog about bad experience with a company, and the story can spread like wildfire by email or with tools like Twitter.

The good news is that the reverse is true as well. A great experience with a company can be read by millions of people almost instantaneously as well.

The fundamental problem is that you can't possibly anticipate every possible touchpoint that could influence the perception of your company's brand.

For example, if you happen to meet an employee of Company X at a bar, even if the employee isn't working, how you perceive your interaction with that employee will affect how you perceive Company X, and therefore Company X's brand. It can be a positive influence, or a negative influence. Every employee can affect your company's brand, not just the front line employees that are paid to talk to your customers.

At Zappos.com, we decided a long time ago that we didn't want our brand to be just about shoes, or clothing, or even online retailing. We decided that we wanted to build our brand to be about the very best customer service and the very best customer experience. We believe that customer service shouldn't be just a department, it should be the entire company.

Advertising can only get your brand so far. If you ask most people what the "brand" of the airline industry as a whole is (not any specific airline, but the entire industry), they will usually say something about bad customer service or bad customer experience. If you ask people what their perception of the US auto industry is today, chances are the responses you get won't be in line with what the automakers project in their advertising.

So what's a company to do if you can't just buy your way into building the brand you want? What's the best way to build a brand for the long term?

In a word: culture.

At Zappos, our belief is that if you get the culture right, most of the other stuff -- like great customer service, or building a great long-term brand, or passionate employees and customers -- will happen naturally on its own.

We believe that your company's culture and your company's brand are really just two sides of the same coin. The brand may lag the culture at first, but eventually it will catch up.

Your culture is your brand.

So how do you build and maintain the culture that you want?

It starts with the hiring process. At Zappos, we actually do two different sets of interviews. The hiring manager and his/her team will do the standard set of interviews looking for relevant experience, technical ability, fit within the team, etc. But then our HR department does a separate set of interviews, looking purely for culture fit. Candidates have to pass both sets of interviews in order to be hired.

We've actually said no to a lot of very talented people that we know can make an immediate impact on our top or bottom line. But because we felt they weren't culture fits, we were willing to sacrifice the short term benefits in order to protect our culture (and therefore our brand) for the long term.

After hiring, the next step to building the culture is training. Everyone that is hired into our headquarters goes through the same training that our Customer Loyalty Team (call center) reps go through, regardless of department or title. You might be an accountant, or a lawyer, or a software developer -- you go through the exact same training program.

It's a 4-week training program, in which we go over company history, the importance of customer service, the long term vision of the company, our philosophy about company culture -- and then you're actually on the phone for 2 weeks, taking calls from customers. Again, this goes back to our belief that customer service shouldn't just be a department, it should be the entire company.

At the end of the first week of training, we make an offer to the entire class. We offer everyone $2000 to quit (in addition to paying them for the time they've already worked), and it's a standing offer until the end of the fourth week of training. We want to make sure that employees are here for more than just a paycheck. We want employees that believe in our long term vision and want to be a part of our culture. As it turns out, on average, less than 1% of people end up taking the offer.

One of the great advantages of focusing on culture is when reporters come and visit our offices. Unlike most companies, we don't give reporters a small list of people they're allowed to talk to. Instead, we encourage them to wander around and talk to whoever they want. It's our way of being as transparent as possible, which is part of our culture.

We've formally defined our the Zappos culture in terms of 10 core values:

1) Deliver WOW Through Service
2) Embrace and Drive Change
3) Create Fun and A Little Weirdness
4) Be Adventurous, Creative, and Open-Minded
5) Pursue Growth and Learning
6) Build Open and Honest Relationships With Communication
7) Build a Positive Team and Family Spirit
8) Do More With Less
9) Be Passionate and Determined
10) Be Humble

Many companies have core values, but they don't really commit to them. They usually sound more like something you'd read in a press release. Maybe you learn about them on day 1 of orientation, but after that it's just a meaningless plaque on the wall of the lobby.

We believe that it's really important to come up with core values that you can commit to. And by commit, we mean that you're willing to hire and fire based on them. If you're willing to do that, then you're well on your way to building a company culture that is in line with the brand you want to build. You can let all of your employees be your brand ambassadors, not just the marketing or PR department. And they can be brand ambassadors both inside and outside the office.

At the end of the day, just remember that if you get the culture right, most of the other stuff -- including building a great brand -- will fall into place on its own.

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Do you have a story about how your company's culture has positively or negatively impacted your company's brand? if so, leave a comment below!

You can also find more information about how we manage our company culture at Zappos at: www.zapposinsights.com

Follow me on Twitter: @zappos

---

The following email was sent to our employees yesterday:

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To: All Zappos Employees
Subject: Moving forward

Last week was a tough week for everyone, as we went through the process of
laying off 8% of the Zappos family. At the same time, it was also
heartwarming hearing all the stories of Zappos employees and ex-employees
getting together for drinks Thursday night after the layoffs as well as
over the weekend.

The economic environment we're in right now is unlike any we've ever
witnessed in our lifetime. These are extraordinary times, and America is
not out of the woods yet. Many people expect 2-3 million Americans to lose
their jobs before we hit the bottom of our current economic cycle.

As difficult as times may be, if there's one thing I've learned in life,
it's that things are never as bad as they seem or as good as they seem. In
most cases, this perspective usually comes long after a "bad" or "good"
event has occurred.

This is actually the second time we've had to do layoffs across the board
at Zappos. We've been around for 9.5 years, and the first time we had to
do layoffs was during the early years of the company, when we laid off
about half our staff due to a bad economy and our inability to raise
funding. At the time, we still were not profitable.

However, the layoffs we did in the early days forced the team that
remained to become much stronger, and because we did not have a lot of
money at the time, it forced us to focus on servicing our existing
customers instead of trying to acquire a lot of new customers. Ultimately,
it was the catalyst for transforming Zappos from being just about shoes to
a company focused on customer service and company culture. It started a
domino effect that ultimately made us who we are today.

Moving forward, we have a similar opportunity. We have the opportunity to
make our culture stronger than ever before. It's something that will
require everyone's involvement and effort, but based on our history, I
know it can be done.

We also have the opportunity to make the company healthier than ever
before. As we come up with innovative and creative ways of generating
more revenue, profits, and cash flow, we will be prioritizing them based
on what will be most beneficial to our company.

One question that has come up is whether we will be doing another round of
layoffs after the new year. There are currently no plans to do so. When we
laid off 8% of our employees last week, we chose that number because we
felt that it would cut our expenses enough to get us through all of 2009,
based on our current financial forecasts. As mentioned in my previous email, our layoffs were done proactively to ensure that we would be
profitable and cash flow positive in 2009.

As part of reducing our 2009 expenses, and to bring us all closer
together, we are in the process of moving people so that everyone in our
Las Vegas offices will be either in the 2280 or 2290 building, which are
next door to each other. The moving should be completed over the next
couple of weeks.

We've got a busy holiday season ahead, and while everyone will be busy and
working hard with their individual jobs, let's also make a conscious
effort to think about how we can help each other out even more than usual,
not just within your department, but cross-departmentally and throughout
the entire company as well.

Remember, this is not my company, and this is not our investors' company.
This company is all of ours, and it's up to all of us where we go from
here. The power lies in each and every one of us to move forward and come
out as a team stronger than we've ever been in the history of the company.

Let's show the world what Zappos is capable of.

• Tony Hsieh, CEO

Dear Investors, Employees, Partners, and Friends of Zappos:

With the WSA shoe show coming up next week, I thought it would be
a good time to send out another company update.

As I mentioned in the last update at the beginning of this year,
our goal is to break $1 billion in gross merchandise sales for
2008. The economy has been tough, but so far we are still on track
to hit that number. Back in 2003, we had set a the goal of hitting
$1 billion by 2010, so we're very excited that we're on track to
hit the $1 billion milestone ahead of our original goal!

For those who don't know, here are our historical gross
merchandise sales numbers:

1999: Almost nothing
2000: $ 1.6 mm
2001: $ 8.6 mm
2002: $ 32 mm
2003: $ 70 mm
2004: $184 mm
2005: $370 mm
2006: $597 mm
2007: $840 mm
2008: Over $1 billion (goal)

Here are some of the highlights so far for 2008:

• We grew our customer base to a total of over 8.2 million paying

customers, meaning that almost 3% of the US population has
bought from Zappos.

• With our focus on customer service, our customers continue to be

extremely loyal to us. On any given day, approximately 75% of
our sales are from repeat customers.

• We now carry more than 4 million items in our warehouse!

• We began our partnership with Merrell, and are now selling them

on our site.

• We completed our magalog for fall, and will be dropping 1

million copies of it in a few weeks. We're very excited about
this because the quality is a big step above our previous
magalogs. Special thanks to our vendor partners who
helped support our magalog project!

• We continued to grow sales in all of our categories, especially

our non-footwear categories, including apparel, handbags,
sunglasses, watches -- even cookware and electronics! Our
apparel category is up 250% from last year, making us a "head to
toe" destination for many of our partners and customers.

• We've continued investing in our warehouse operations to handle

other product categories, including the implementation of
technology from Kiva Systems.

• We ran a television ad campaign in the spring which has helped

with our branding efforts. You can see the commercial here:

http://www.youtube.com/watch?v=uxBWfqDAQkg

• We've been doing a lot of work behind the scenes for our new

technology platform which we are internally calling "Zeta".
Among many other things, Zeta offers better search and browsing,
and you can take a sneak peak at Zeta here:

http://zeta.zappos.com

• Our "Powered by Zappos" program continues to grow and will soon

be moved over to our new Zeta platform, which will enable us to
help power more of our vendors' ecommerce operations.

• Our company blogs have taken a life of their own and have turned

out to be a great way for us to share our unique company culture
with the rest of the world:

http://blogs.zappos.com

• The 2008 edition of our culture book has just arrived. Every

year, we ask all of our employees to write a few paragraphs
about what the Zappos culture means to them, and except for
typos, it's unedited. This year's edition is bigger and better
than ever before! Be sure to pick up a copy if you ever stop by
our offices!

• We continued and improved our unique training program for new

hires in Las Vegas. All new hires in our Las Vegas office,
regardless of what department they were actually hired for, must
first go through 4 weeks of Customer Loyalty training (answering
phone calls from customers) upon joining the company.

• We officially turned 9 years old as a company!

• We were recently featured as the lead story on ABC Nightline:

http://abcnews.go.com/video/playerIndex?id=5328179

Our focus continues to be on building our brand and our culture
around providing the very best customer service and experience.
Our hope is that 10 years from now, people won't even realize that
we started out selling shoes online. In fact, our business doesn't
even have to be limited to just the online world.

If we can build Zappos so that our brand is simply about the very
best customer service and the very best customer experience, the
sky's the limit as to what we can eventually accomplish. Right
now, we are just scratching the surface of what's possible. In the
ABC Nightline story, there's even a mention of the possibility of
a Zappos Airlines later down the road:

http://abcnews.go.com/video/playerIndex?id=5328179

Thank you everyone for all of your support and getting us to where
we are today! I'll be sending out another update after the year is
over, and look forward to reporting on our progress!

---

Tony Hsieh
CEO - Zappos.com

---

Our lawyers want us to put in the following disclaimer, so here it
is:

This email contains forward-looking statements that involve risks
and uncertainties, as well as assumptions that, if they ever
materialize or prove incorrect, could cause our results to differ
materially from those expressed or implied by the forward-looking
statements and assumptions. These risks and uncertainties
include, but are not limited to, the risk of economic slowdown,
the risk of over or underbuying, the risk of consumers not
shopping online or at our web site at the rate we expected, the
risk of supplier shortages, the risk of new or growing
competition, the risk of a natural or some other type of disaster
affecting our fulfillment operations or web servers, and the risk
of the world generally coming to an end. All statements other
than statements of historical fact are statements that could be
deemed forward-looking statements, including statements of
expectation or belief; and any statement of assumptions underlying
any of the foregoing. Zappos.com assumes no obligation and does
not intend to update these forward-looking statements.

---

There are lots of rumors flying around about the p-1603. So I just want to post my version of what really happened. Now that the photo shoot is over, I'm trying to think back on how I was conned by the photographer into posing in them.

The photo shoot started out innocently enough. The photographer chose one of the conference rooms at Zappos headquarters and told me to just relax and be comfortable, and he took normal shots of myself and Brent sitting or standing casually in our normal clothes and shoes. We did various shots in the conference room for about half an hour, and a couple of them were pretty fun poses. There were a few shots of Brent wearing a Viking hat and me wearing a Burger King-like crown.

When it looked like the whole photo shoot was over, the photographer said "Oh, and just one more thing... I want to do a quick shot outside if you don't mind." Sounded innocent enough, so I agreed.

And then he said, "But outside, I'd like you to wear different shoes, do you mind wearing something more colorful or bright?"

And I said, "I don't think I have colorful or bright shoes that fit me here at the office."

And then he said, "That's okay, anything is fine... you could just have something like these high heels near you."

I'm not quite sure what happened after that. I think I blacked out. There's a 15-minute period of my life that just disappeared. The next thing I knew, I was sitting on a bench with Brent gingerly removing the thigh high boots off of my legs and the photographer telling me that those were great shots and I looked really good.

And next thing I know, my photo was uploaded by a passing employee on our company blog.

So that's my story and I'm sticking with it.

We talk a lot at Zappos about WOWing our customers, but I found this blog post by Stephen H who works in our creative services department that I wanted to share, because it really demonstrates how building a culture of WOW at Zappos applies not only to our customers, but to our employees as well. Here's Stephen's post:

Hawaii... or bust. \\ By Stephen H. \\ Wow, what a day. \\ On March 31st like an April Fools joke that was sent too early, Aloha Airlines ceased operations and entered bankrupcy protection, stranding people who had booked inter island and other misc flights with the carrier. When that happened I received a number of concerned calls and messages from friends and coworkers who knew that I was soon to be married this coming Sunday, and that the following evening I would be traveling with my bride to spend 5 nights in Honolulu, HI. \\ "No, I flew ATA, it's all good" \\ On April 2nd like an April Fools joke that was sent too late, ATA Airlines ceased operations and entered bankruptcy protection. \\ I woke up to those same messages repeating themselves, including the SMS, voice mail, and twitters of the ever diligent Kelly who is the sole member of my team at Zappos.com. To say I was numb was an understatement. I don't really wear my emotions on my sleeve, so I guess waking up and telling my fiance knowing that she probably is going to burst into tears out of frustration/anger/disbelief (pick 2) was a cathartic way of dealing with it. Given the messages in front of me, I did what all people in this day and age do... \\ I Googled it. \\ The results confirmed my fears, I hopped over to Expedia hoping to find something rearranged automagically, perhaps a notice saying ‘oh snap, here ya go, another flight'. Having looked at the seating assignments not 10 hours prior as I was on my way to bed, I briefly let myself wonder if we'd get the same seats, or be split up on our replacement flights. I found my itinerary unaltered so I read a couple more news articles hoping to find a quick and easy resolution. ATA does a lot of work with Southwest, so there was some hope, or maybe just confusion, that they might be of assistance on this seemingly dire occasion. \\ The Expedia hold music wasn't so bad. I say that because after the 2 calls I eventually made to them, I can't tell you what it is. Being not memorable and at the same time not aggrivate you into remembering a tune is certainly an accomplishment. Roughly 45 minutes of this music in my ear, and then Expedia picked up. They explained the various fees I would have to pay if I had to cancel the entire package, and gave me an 800 number for Southwest where they were offering assistance. I did no cancelling yet, as I wanted to know the solution before taking advantage of it. Southwest is a great company with great service, so surely they have an option for me given the connection with ATA all the articles mentioned. \\ So I called Southwest... \\ I hear great things about the service at Southwest. They've come and toured the Zappos facility here in Las Vegas, and we recently had our CEO Tony Hsieh and others go and visit their facility in Texas. Thankfully, I have never really needed their customer service, and have only been exposed to cheery flight attendants and those who tend to their gates at McCarran and Sky Harbor when I was in college. I had a lot of time to think of this stuff, because the hold time was nothing short of amazing. \\ Then, 1:31 (on hour and thirty-one minutes) into some evil hold music, it disconnected. \\ No way. There's no way this great company with great service has something on their system that just bumps people if they've been on hold too long, right? Surely there are backup teams, some extra call centers that can be leveraged, I don't know, something... but was this a fluke? At an hour and a half, disconnected? Without any real choice, I called the number again, hit speaker, and resumed browsing through message boards of distressed passengers. \\ I've been on the receiving end of this kind of stuff having worked in a DirecTV call center during Hurricane so all I could imagine was a flustered rep waiting to pick up the phone just seconds after a former ATA passanger cried on their shoulder or screamed in their ear. Maybe if ATA only served Pocatello, ID and La Junta, CO things would have been simpler, but no... it had to be a Hawaiian airline... the second in just days. These aren't people just visiting loved ones or on business trips (though there are plenty there too) but instead are families, lovers, and friends embarking on trips that will change their lives. Well, lives got changed a little earlier than expected I think. \\ So yeah, I'm still on hold... let's talk about this music. Just thinking about this music turns my world a shade of red, as I begin to go into a rage and at the same time want to build an elevator because that's what my mind is hearing, elevator music.... that subtle soothing but not nice enough for you to stick around tone. This was then accentuated by the overmodulated sound of a Blackberry speaker... not to mention the false hope you get every 8 or so minutes when the music ends... only to start again after 3-4 seconds of silence and an an almost imperceptible click. \\ An hour passes. \\ So at a total of 2 hours and 30 minutes I am beginning to wonder... do I call back on the other cell phone in case I get disconnected again? Was still in disbelief that I had been disconnected and was tending to some growing paranoia that it would happen again. \\ At 1:38 (one hour and thirty-eight minutes) of my second call, a nice woman answers the phone. Just over 3 hours of holding and I am finally talking to the savior of all things aviation. She explained that because I had no part of my flight involving Southwest (just a round trip, no stops, with ATA LAS to HNL) that all we could do was dispute the charges on our credit card, and rebook a flight with another carrier at full price. \\ Resigned to defeat, I poked around online for flights. I had been doing this for a while anyways, I mean I was on hold for so long I had to entertain myself somehow and what better way to do so than to stare at the flights you might have to now overpay for. Our tickets were purchased in January for about $440 each, and there were flights from $1000 to $1200 per person on the various travel sites. \\ Now there were none. \\ Even if I had unlimited funds, on our given days, the results were null. After having a wide selection of flights to choose from, even overpriced, there were now zero. Called mom and updated her. A conversation earlier in the day had sent her to a travel agent, where they'd found one flight that was equally as overpriced. Poked around for alternate dates, not much luck there either. Kara was leaving for work early so we decided to meet at my Mom's and make new honeymoon plans. My job was to cancel the existing plans now that we knew there were no fights. \\ 20 minutes later I was canceled and the nice guy at Expedia was able to cancel the package without any fees, including things previously declared nonrefundable like our full trip of the island. I knew I was in good hands when he said he was the manager of a McDonalds for 8 years, but he exceeded my expectations. He was a good guy and in good spirits and I appreciated the service he provided, kudos to him and Expedia. "I am going to cancel this part anyways, and if they get mad at me they know where to find me" was one memorable quote. \\ The objective once I was with Kara and my Mom was to decide on what to do from here. Mom had disputed the charges, and we'd canceled the trip. Back to square one. We decided to go ahead and shoot for something early next month, 5/3 or so.... \\ And then the phone rang. \\ Sari manages the design portion of my department at Zappos. She is on the phone.... and had found a flight and was offering to book it for us as a wedding gift. We took a look at our options given the time frame and the situation we'd been put in... and accepted. She effectively saved our honeymoon, and for that I'll forever be grateful. If she ever reads this (and sure, I'll send her a link, but really, who's going to get this far down the page....?) I just want to reiterate over and over: \\ THANK YOU! THANK YOU! THANK YOU! \\ Working at Zappos has provided me many memorable experiences, whether that be with our customers or my peers, this will go down as the biggest WOW I've ever had in my nearly three years there. Again, thank you Sari. \\ A big thanks also go to the people I was venting with, or who there there supporting me as I went through what seemed like the longest Thursday of my life. Now next week I can only hope will be the inverse... the best Thursday of my life... my first as a newlywed, in Hawaii.

I spoke at the Underground 4 conference in Los Angeles this past Friday... the audience seemed to be composed of mostly entrepreneurs, so I gave a slightly different presentation titled "Getting to $1 billion". The core of the presentation was still about the importance of company culture and customer service. After the presentation, I got to meet a lot of interesting people, and many of them told me that they were going to focus a lot more on company culture at their companies, so it was great to hear that!

Here's the presentation I gave:

I'm at the Zappos outlet store in Las Vegas right now (Dean Martin location) and Alfred (COO/CFO of Zappos) is dressed up as an Easter bunny, handing out candy to the kids!

I gave a presentation at SXSW earlier today titled "Top 10 Lessons Learned in E-Commerce." The powerpoint of the presentation is here:

I had set up an account on Twitter (username: zappos), and I had used the track feature ("track zappos"). It was interesting seeing the comments about the presentation afterwards for people that were twittering and using the word "zappos". Most of the comments were positive (people seemed to enjoy hearing about the Zappos philosophy on company culture), but there were also a couple of negative comments, including one twitterer that said he left the room early.

Speaking of which, someone just sent me this link from Valleywag that said Jeff Bezos (CEO and founder of Amazon.com) was in the room.

Seeing all the Twitter comments about Zappos during the presentation, I thought for future presentations, it might be interesting to display all the Twitter comments in real-time, even asking audience members to vote on which topics to talk more about... It would be a way to make future presentations relevant to what each audience actually wants to hear.

I received the following email from Kelly, one of our employees... It's great to see the Zappos core values going beyond just our customers!

---

Last night I took my 7-year-old daughter (Hannah) to go see the preview
of Disney's "College Road Trip" movie... at the movie, several radio
stations and Disney reps were handing out gifts.. well, the Disney rep
must have not planned on having many kids attend, since she ran out of
the much-coveted kid's gifts... my daughter was lucky enough to get
one... while many other children were running around showing theirs off,
some of the kids were sad that they did not get one... one little girl
in particular was in tears... My daughter walked up to her and said "my
mommy works at Zappos and her company believes that we should treat
everyone kindly and try to spread happiness. I would like you to have
my gift if it will make you smile. I don't need it. Now smile and have
fun at the movie." and she gave her a hug.

Next generation of Zappos ???

---

I received an inspiring story from Martha, who works on the graveyard shift... I thought I would share it on my blog. Here's what Martha emailed me:

---

Tony,

I just have to share with you something that happened last Tuesday morning when I got off work.

But first, we have to go back to 1984 when I spent 7 weeks traveling around Europe. I had spent all of my money by the time I got on a plane in Frankfurt, Germany. We landed in London and had to get off of the plane while we were there for about an hour and then we were going on to Los Angeles. I got thirsty but knew that I only had my lucky dollar and a bunch of foreign coins in the bottom of my handbag. I spotted a snack bar and a sign said "FOREIGN MONEY ACCEPTED." I got a coke, and started drinking it as I waited in line to pay. I had drank more than half of it when I got to the register and spotted a sign that said "NO FOREIGN COINS, PAPER CURRENCY ONLY." I had nothing but my lucky dollar and was not going to part with it. I tried to get the cashier to take ALL of my coins which would surely been enough to cover the price of the coke times over but she said no.

Finally, a gentlemen in line behind me said that he would pay for my coke. I thanked him and tried to give him all my foreign coins. He would not take them and told me to just do a favor for someone else. He said just do random acts of kindness for others. Throughout my life I have tried to follow his suggestion as much as possible. It doesn't always mean paying for something for someone, many things you can do are free. Examples: Bringing your neighbor's trash can back from the curb, bringing their newspaper to the door, opening a door for someone, or just putting a smile on someone's face. It can involve money. Examples: The person in front of you in line may need a penny or a few cents so that they don't have to break a dollar, pay for someone's coke, etc.

Okay, back to what happened on Tuesday morning. I stopped at Walgreens down the street. I had a ton of stuff to get. When I got to the register, 2 people got in line behind me. I let them both go first rather than wait on me. Then it was my turn. I was about a third of the way into being checked out when an older gentleman got in line. He had 2 cans of peanuts, some salve and a chapstick. I turned to him and told him to give them to me. He had a strange look on his face and asked me why. I told him that I was going to pay for them so that he didn't have to wait for me to get checked out. He asked why. Out of my mouth came "It's a random act of Wowness" I totally meant to say "Random act of kindness," but because of working here at Zappos, the word "WOW" came out. Rather than correct what I said, I just went with it. He handed me his items, I had the cashier scan them and put them in bag and I gave them to the gentleman. He said "Tell me about this "Random acts of Wowness" I explained that it was doing nice things for people, even strangers. I briefly told him about my experience in London. He was so grateful, thanked me and left the store. Then the cashier asked me more about this "Random acts of Wowness" I explained that I worked at Zappos and that we WOW our customers.

I feel that I shared this Wowness with 2 people and that they BOTH will play it forward. (Have you seen the movie "Pay it Forward?") I had such a great feeling when I left the store.

On Friday morning when I left here at 7:00 am I stopped in the same Walgreens. I had barely gotten in the door when I heard, "Hi Martha." I thought that someone from work was there. I looked around and realized that it was the same cashier from before. I said to him "I'm surprised that you remembered me and my name." He said "I wrote your name down from the credit
card receipt and of course I remember you, you're the person who told me about the "Random acts of Wow or Kindness." He said that he had told other people about it!

I was so WOWed by this cashier! He got it. I feel that he will be WOWing other people now.

• Martha C.

---

Thanks for the story, Martha. It's great to see that our WOW philosophy is extending beyond how we treat our customers at Zappos!

This past Friday and Saturday, Alfred and I hosted a 1-hour all hands
meeting in Vegas and in Kentucky. For Vegas, we rented out the Henderson
Pavilion, and it was the first time in over 5 years that we had gotten all
the departments together. In Kentucky, we rented out a movie theater and
it was the first time we had gotten all the shifts together. For both
locations, it felt like we were one big family, and it was really neat
seeing everyone together and feeling the energy of the crowd.

We went through our financials for 2007 and made a surprise announcement
about the bonus we were going to give to everyone for helping us beat our
operating profit goals for 2007: Each employee would receive a bonus check
equal to 10% of whatever he or she made in 2007 -- roughly equivalent to 5
1/2 weeks of pay! The response from both crowds was amazing!

We then went over our goals for 2008, and spent about half an hour taking
questions from the audience. The public version of our powerpoint
presentation is here:

http://www.slideshare.net/zappos/zappos-all-hands-2008-02-29-public

We spoke with some employees after each of the meetings, and it was great
hearing what they planned on doing with the surprise bonus check. Some
people were planning on saving most of it, while others were going to use
it to pay off medical bills that they were previously stressed about
figuring out how to pay. When back at the Vegas office, the daughter of
one of our employees came up to us to say "Thank you for the trip to
Disneyland with my mom." It was great to hear the stories of how we were
able to positively affect our employees' lives!

Dear Investors, Employees, Partners, and Friends of Zappos:

With the WSA shoe show in Las Vegas starting later this week, I thought it would be a good time to send out another company update.

I'm happy to report that we finished 2007 with approximately $840 mm in gross merchandise sales, exceeding our goal of $800 mm! (I say "approximately" because we are still in the process of closing the books for 2007. See the end of this note for more details.)

I'm also happy to report that, once our audit is complete, we are expecting 2007 to be the first year where we make a decent operating profit. (For the previous few years, we had been running the company at close to break-even in order to maximize our growth.)

It looks like 2008 will be the year where we can reach our goal of over $1 billion in gross merchandise sales -- a goal that we first set back in 2003. For those of you who don't know, here are our historical gross merchandise sales numbers:

1999: Almost nothing
2000: $ 1.6 mm
2001: $ 8.6 mm
2002: $ 32 mm
2003: $ 70 mm
2004: $184 mm
2005: $370 mm
2006: $597 mm
2007: $840 mm
2008: Over $1 billion (goal)

I've been sending out a company update about once every 6 months for almost 5 years now. I thought it would be fun to look back and share some excerpts from the very first "Friends of Zappos" update from 2003, when we were well below the $100 mm mark:

• begin clip from 2003 --

If we spend our money carefully and continue to constantly
improve the customer experience, we will reach over $1 billion
in shoe sales a year in the not too distant future. I know $1
billion sounds impossible at first -- but so did our current
sales volume 3 years ago. But the reality is, it's actually not
that crazy a number, and it's a very achievable goal: By 2010,
total footwear sales in the U.S. will be over $50 billion a
year. Online footwear sales will be 10% of that -- $5 billion a
year. If we continue to be the leader in our space because of
our relentless focus on improving the customer experience, then
there is no reason why we won't be doing at least 20% of all
online footwear sales by then.

• end clip from 2003 --

I thought this was interesting because today, various estimates from 3rd party research companies actually estimate our market share of the online footwear market at somewhere between 20% and 30%.

Here's another excerpt:

• begin clip from 2003 --

Although we happen to sell shoes today, we've built and will
continue to build the platform for a great customer experience.
This will allow us to one day expand into other categories
beyond just shoes. But for now, it's important for us to remain
focused on being the leader in online footwear sales, in terms
of both selection and service.

• end clip from 2003 --

Back in 2003, we didn't have a specific time frame for expanding into other product categories. In 2007, we started expanding into even more categories, and by the end of 2008, we expect to be selling all of the following, some of which are already on our site:

• Footwear
• Apparel
• Sunglasses
• Watches
• Bags
• Bedding/Linens
• Cosmetics
• Luggage
• Electronics

In looking back on the past year, here are some of the highlights from 2007:

• In December 2007, we broke $100 mm in gross merchandise sales

(in 1 month) for the first time in the company's history, and
had our first $5 mm day.

• We now have over 7.4 mm paying customers, representing

approximately 2.5% of the US population. Or put another way,
approximately 1 out of every 40 people in the United States is a
customer of ours.

• Of all the Next Day Air packages shipped in the United States by

UPS in 2007, approximately 1 out of every 75 was a Zappos
package.

• We launched Nike on our web site. We're extremely happy with

the new partnership, and look forward to continuing to grow it
over time!

• We purchased 6pm.com, which is positioned as our discount/outlet

web site. Old inventory that is not sold on Zappos.com now
moves to 6pm.com. This allows us to maintain Zappos as our
premium brand: Zappos stands for the very best service and
selection, whereas 6pm stands for low prices and selection.

• We now have over 1500 employees, and plan to grow to close to

2000 by the end of the year. In Las Vegas, we will soon be
expanding into a 3rd building to accomodate our growth. In
Kentucky, we will be expanding our warehouse operations into an
additional 200,000 square feet.

• We launched our Canada site:

• canada.zappos.com

• We are now operating 4 different vertical web sites, each with

its own separate 1-800 number and specialized staff:

• couture.zappos.com
• running.zappos.com
• outdoor.zappos.com
• rideshop.zappos.com

• As we expanded into other product categories, we've added many

great apparel brands, and plan to continue to add many more in
2008.

• We launched our "Powered by Zappos" program for 3 more brands:

• stuartweitzman.com
• tarynrose.com
• reportshoes.com

• We continued and improved our unique training program for new

hires in Las Vegas. All new hires in our Las Vegas office,
regardless of what department they were actually hired for, must
first go through 4 weeks of Customer Loyalty training (answering
phone calls from customers) upon joining the company. It's
extremely expensive for us to do this, but since we want the
Zappos brand to be about the very best customer service, we
believe it's important for everyone hired in our Las Vegas
office to go through the training (even accountants, lawyers,
and software developers).

Looking ahead into 2008, we plan on continuing to grow primarily through repeat customers and word of mouth. We will continue to build our brand and our culture, because in the long run, brand and culture are the same thing. Every great, enduring company has a strong culture, and we hope to one day be one of those companies.

By the way, one of the comments we've gotten from people that visit our offices is that they had no idea prior to visiting what the culture at Zappos was like. So, to help share our culture with the rest of the world, we've recently launched an "Inside Zappos" blog:

http://blogs.zappos.com/

It's meant to be "fun and a little weird" -- one of our core values at Zappos. Hope you enjoy learning more about us!

This has been a long update, so I will end it here. Thanks to all our customers, employees, vendors, partners, and investors for getting us this far... 2008 will be an exciting year, and I'll be writing another update about 6 months from now to update everyone on our progress.

---

Tony Hsieh
CEO - Zappos.com

PS: Our CFO and Finance Team know that most of you don't really care about the technical financial details, but our accountants and auditors would really prefer that we put in the following technical clarifications for those of you who do care, so here it is:

Gross merchandise sales is a non-GAAP metric. We use it to express the total demand across all of our web sites and stores.
This number measures the dollar value of the orders placed in the year before accruing for certain items such as returns, and it ignores certain timing cut-offs that are required by GAAP for revenue recognition purposes. If we were a public company, we would have to reconcile gross merchandise sales to the nearest GAAP metric (net sales), but we are currently a private company so the gross merchandise sales number should be viewed just as an interesting number that we want to share with our friends.

We understand that the mention of the purchase of 6pm.com may mean different things to different readers. Since you are reading so far down into the fine print, we presume that you must really care about the details of the 6pm.com transaction, or you are just really bored. Technically, our purchase of 6pm.com was not an acquisition of a company. It was a purchase of certain assets, mostly intangible assets. For further technical clarification, we purchased a small amount of inventory and a whole bunch of intangible assets including the 6pm.com domain name, certain trademarks, the customer list, and customer order history.

Still reading? Here are some fun disclaimers to read about:

This email contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they ever materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by the forward-looking statements and assumptions. These risks and uncertainties include, but are not limited to, the risk of economic slowdown, the risk of over or underbuying, the risk of consumers not shopping online or at our web site at the rate we expected, the risk of supplier shortages, the risk of new or growing competition, the risk of a natural or some other type of disaster affecting our fulfillment operations or web servers, and the risk of the world generally coming to an end. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including statements of expectation or belief; and any statement of assumptions underlying any of the foregoing. Zappos.com assumes no obligation and does not intend to update these forward-looking statements. Congratulations on making it through all the fine print. You can thank our lawyers for that.