We Study Billionaires - The Investor’s Podcast Network - TIP 095 : Billionaire Tony Hsieh's Book - Delivering Happiness at Zappos (Business Podcast)

Starting point is 00:00:00 We study billionaires, and this is episode 95 of The Investors Podcast. Broadcasting from Bel Air, Maryland. This is the Investors Podcast. They'll read the books and summarize the lessons. They'll test the waters and tell you when it's cold. They'll give you actionable investing strategies. Your host, Preston Pish, and Sting Broderson. Hey, how's everybody doing out there?

Starting point is 00:00:30 This is Preston Pish, and I'm your host, the investors podcast and as usual I'm accompanied by my co-host Stig Broderson out in Denmark. I think most people out there Stig probably think that we have stopped reading books because we haven't done a book review in a very long time. I don't know when the last time I sent an email out to the community for one of our summaries, but it's been a long time. So we are very happy to be back in the saddle reading books and reporting on what we learned from reading some of these influential books. And this week, we have a phenomenal book. And you guys know, we'll tell you if we don't like them. But this one here was absolutely awesome. And this one was by the billionaire,

Starting point is 00:01:10 Tony Shea, who was the founder of Zappos. I want to say his net worth is really close to a billion. It might even be maybe slightly under. But he wrote a book and the name of the book is delivering happiness, a path to profits, passion, and purpose. And I can say this is probably one of the top books that I've read in 2016. Stig's not in his head. You agree? Stig. Yeah, 100%. And sometimes, Preston, you feel like you were sitting with a problem one way or the other and just read the right book. And I think that was the case with for us when it came to a living happiness. Yeah, absolutely. So we'll get into what this book is all about. But to quickly summarize what this book is, this is all about creating a culture within a business that really kind of represents your

Starting point is 00:01:58 mission and your purpose. And he could not have written a better book. If you haven't read this and you're in any type of management or leadership position within a business, you have to go out and read this book. This is like a mandatory read as far as I'm concerned. So without further ado, what we're going to do is we're just going to hop through some of the chapters here and talk to you about what it's all about. So the book starts off.

Starting point is 00:02:21 And the thing that you're really going to like about Tony's book is you're going to like the writing style. It's very easy to understand. He's a storyteller. So it keeps your interest. You know, the books that we really struggle with, the one that kind of comes to mind for me that of a writing style I don't really particularly care for is Peter Drucker's, the effective executive.

Starting point is 00:02:41 That was just more like, this is what you need to do. And it's not in this like story kind of like learning a way. But Tony Shea writes in this manner that's like a. story and man it keeps your interest and it's really fun it's it's light reading okay so the book starts off with tony shay kind of talking about himself as through childhood and his upbringing and so from a very early age he was motivated to make a profit he was motivated to make money and he doesn't really get into why he necessarily was motivated to make money but i think maybe it was he just wanted to

Starting point is 00:03:19 maybe prove himself and maybe just kind of get attention maybe is what it was. He also did some interesting stuff with programming. So whenever he became a high school student, he was doing computer programming. He was making $15 an hour. And he obviously was very smart. He was obviously very different in the way that he thought. And he got accepted to Harvard. So very interesting story.

Starting point is 00:03:42 So then he goes to Harvard University. And he talks about how he didn't even go to any class. And the reason I'm telling you the story is just to tell you how, like, unique Tony is the way that he thinks. So he's going to some class and it had to do, was it like study of like the Bible or something? I can't remember what the class was. Was that right, Stig? Yeah. Was it like where the story where he was talking about the virtual study group?

Starting point is 00:04:08 Yes. So he goes to Harvard and he's taking this class. I think it was something about like he had to take a whole course on the Bible or something like that. And he just had no. interest in this class at all. And so he maybe attended two classes for the entire semester and like literally skipped every other class. But there was no test. There was just a final exam that he had to take. So the teacher comes up with like 50 different questions that could be asked on the test. And the question that was actually administered during the test would be one of those 50 questions.

Starting point is 00:04:42 And so Tony's starting to go through this. And it's like two days or three days before the actual test occurs. And he's going through this and he's like, well, if I can just answer these 50 questions, then I can go in there and do this. Well, he starts going through and he can see that like each one of these questions involves like a serious understanding of the material in order to answer it. So what Tony does is he develops a virtual study group that harnesses the minds of everyone in the class across the entire school to participate. And the way he set it up was if you participate and you answer one of these questions, I will consolidate all of these different questions across all the different students and I'll come up with a study

Starting point is 00:05:25 guide that basically answers all 50 questions and then I'll distribute it back to the people that provided one of the responses. And so what he did is he developed this 50 page study guide, or not 50 page, but 50 answer study guide to all these students. He never shut up for one of the classes and he goes in and he just totally rocks this exam because he created this study guide that allowed him to basically answer the question. So this kind of tells you about who Tony is the way he thinks. Like he's not a person that really just marches to the beat of the drum and files in the formation and follows everybody else.

Starting point is 00:06:03 Like this dude is somebody who is always asking, well, why do I have to do that? Kind of like the founders at Google when we read the book on Google is like, well, why do I got to do that. That doesn't make any sense. I don't want to do that. That doesn't sound like fun. And so this is, this is his personality. And this really kind of comes out in the first chapter. Yeah. And as we continue through the first section, and by the way, there are three sections in this book. The first one is called prophets. The second one is called profits and passion. And the third section is called prophets, passion, and purpose. And that's just how we will go through this book. But the very first section about profits. And in consideration of what Preston said,

Starting point is 00:06:42 whenever he left Howard, Tony got a job at Oracle. And in a way, it was actually a good job. He was getting paid 40K a month, and it was a job that suited his profile somewhat well. It wasn't a hard job. He said that he was actually running tests on computers, and he would typically go in like 9 o'clock in the morning. He would run a test. It would take like 5 to 7 minutes to set up. And then the test would be like three hours. And basically, within those three hours, he would, well, eventually he would go home and take a nap, but he would actually just be, you know, emailing friends, early lunch, hanging out. And then after those three hours, he would start up a new test again, five to seven minutes, and another three hours. So he said that the first month he was doing that, he felt

Starting point is 00:07:30 like he had the best job in the world. And he was leaving like it, I don't know, four o'clock or something after doing more or less nothing. And if you're sitting out there and thinking, wow, that sounds like the best job in the world, you know, I can see why, but I think you'll probably realize, at least that was Tony did. It's boring, right? It's not challenging and it's not fun at all. So that's actually why he eventually started his own company. And together with his roommate, and that was actually the same roommate that he had in college, his name was Sanjay. He started a company called Link Exchange, and it was like an early Internet advertising company. And I think, correct me if I'm wrong, Preston, but it was within like six months or four months, something like that.

Starting point is 00:08:16 They actually got an offer. It was like a million dollars. Like it was a lot of money, right? Yeah, they got an offer for a million bucks, and it was, they'd only been doing it for a little bit. Now, sorry to interrupt, but just to kind of give people some context on what this linkage exchange was, is early on the internet, this is Google Ads. sense now is what this has really kind of morphed into. But Tony Shea was one of the original programmers on these banner advertisements that would pop up on your website.

Starting point is 00:08:40 So if you owned a website, he'd give you this snippet of code and then it would run advertisements on your website and it would cost you nothing. You would just get a commission of every click or any sale that that banner led to. So he was one of the lead programmers on this way back in the day. And that's what Stig's referring to here where he had somebody offer him a million bucks within the first six months. Yeah. And then this is even more impressive.

Starting point is 00:09:02 So after a year, Yahoo actually came to him and said that he was willing to offer him and Sanjay $20 million. And eventually he declined. But I think his thought process about this was really interesting because he was asking himself, if I could make a $20 million. Well, he would probably get $10. But never mind, if he could get $10 million, what would he do? And he said, well, I would probably buy a condo because right now he was sharing an apartment. He also said that he might want to buy a big screen TV. He said that he might want to travel, and he said that he might want to start up a new company.

Starting point is 00:09:39 But then he was thinking, well, I can actually afford a big screen TV, but I don't want to watch TV. I can't actually afford traveling, but I don't have time for traveling because it's so much fun with my company. And it's so much fun with my company that I actually don't need a condo because I'm never home anyway. So he was basically saying, why would I sell a company that I'm really excited about to fund a new company that he might be excited about? And so that was actually his train of thought. And actually he ended up declining a very generous offer, you know, $20 million after just one year. So I like how you frame this stick because what you're really getting into with Tony that I didn't necessarily recognize until we kind of had this discussion was just how in depth his thinking is. So, you know, a lot of people do this, what they call first order thinking, where they say, I want a large screen TV and I want an apartment and I want this.

Starting point is 00:10:38 And so then they do it. But they don't think about really the second, third, and fourth order impact of after that decision's made. What comes after that? What's the follow on piece of that? And really, that's where Tony is like really apart from a lot of other people that you just kind of read about and maybe the way that they talk is. And he describes it so well in his book where he talks through that location. So now I buy the big screen TV. Well, I'm not home because the thing I really want to do is build my company.

Starting point is 00:11:06 So that means that that's probably just a poor decision. And he really kind of goes through and thinks through these future events that would occur if that decision's made. Then what happens. Then what happens. Then what happens. And it's amazing to hear him. And we'll get into it more where he's talking about happiness and asking yourself, why so many times, where he just continues to think through things

Starting point is 00:11:27 at just such a different level than most people. Yeah, and eventually he actually ends up selling this company to Microsoft. And you might be thinking, so why is he doing that if he's really excited about this company? But it actually turns out that eventually he's not excited about it. He had this story where he keeps putting his bug on snooze. And he said that he did like, I don't know, six or eight times. And he was thinking back and said, why can I get up in the morning? And when was the last time I was hitting the snooze buttons called it six times?

Starting point is 00:11:58 It was back at Oracle. And again, he was asking himself, this shouldn't be right. I've created my own company. It should be a lot of fun. But he realized that it was not fun anymore. He said that the first, called the 25 people he hired, there was a lot of fun. There was friends. They have the same vision.

Starting point is 00:12:14 And then because they were growing so fast, it attracted a lot of people that were not interested in the vision of the company. They just wanted to make a quick buck. and they were very interested in stock options. They were not interested in where's this going. So he actually ends up selling this to Microsoft for $265 million. And then actually, I was taught a new term. It's a VIP, and it's not a very important person.

Starting point is 00:12:39 Apparently, it's a term that you use out there in Silicon Valley, and it means vest in peace. And basically what that means is that if you're a founder or something, you should be sticking around if there's anything going wrong, and you will get paid a handsome sum for that. So Microsoft actually offered him $40 million if he would stay with them for 12 months. And if he didn't, he would actually lose eight of those millions.

Starting point is 00:13:03 And he was like, it doesn't matter if I had $32 or $40 million. So why should I spend a year of my life doing something I don't like? I think it was really insightful. And he said that the feeling he had whenever he sold the company was basically relieved. It was not like big accomplishment or this best thing that had happened. He was just he was relieved about the situation. Yeah. I liked how you described that, though, because when he was talking about when he was working at Oracle was like, oh, my God, this is like torture for me to go in and I'm making good money, but I'm doing nothing and I'm not enjoying it. And he talks about the progression where he was working at link exchange and how he loved it at first. And then when he was offered, you know, a million dollars, he was still having a blast. And then by the time he got to the point where the company was, you know, this huge market valuation, he wasn't having fun anymore. He was just, you know,

Starting point is 00:13:52 he was burn out. And he was making his decision off of that opposed to really any type of monetary decision. Like if he's enjoying it and he's having fun, he has no choice but to be successful and growing it. But he knows whenever that's expended and he's not enjoying it anymore, that it's at its end of the road. So he's making his decisions off of that, which really kind of goes to the title of the book, delivering happiness. Yeah. And then in the second section, we talk about what Tony's actually doing with all that money. Because Tony's he's actually thinking what is really that drives me. And you probably wouldn't to be surprised. He's talking about entrepreneurship, starting great projects, and one of those great projects

Starting point is 00:14:33 that's Sappos. And I've got to be honest, I wasn't too familiar with Sappos before reading the book. Did you know the company, Preston? No, I had heard of Zappos before, but I had no idea what it sold, what it did, or anything like that. But, you know, after reading the book, now I know it started off as a shoe company where they were selling shoes online, then it kind of turned into like a major retailer, almost like Amazon. Yeah, and I think like if you go into their site, well, we actually go to this later. They actually bought up by Amazon later in the story, but you can think of it as sort of like Amazon.

Starting point is 00:15:06 And it's just started out with shoes just as Amazon started up with books. And I think section two is probably the best section in the book because it's about strategy, It's about culture and it's about values. And I thoroughly enjoyed Section 2 of this book. The main thing I wanted to talk about is really customer service as a vision and strategy. And the first time I read this in the book that Sapo's strategy is customer service. I was thinking I read this multiple times before. But I think the way that they were very actionable about customer service is something I really admire.

Starting point is 00:15:43 So first of all, Tony, he's saying, well, we actually have some data and it shows that a customer in the lifetime cycle being a customer with us, they actually call our customer service once. So why should we look at this as a cost, as a lot of other companies are doing? Why not look at this as marketing? Why not use it as a great place to create connections? Why hide it? Why not put it on every single page on Sappos? It's the best marketing. And I really love this. So to begin with every new entry at Sapo, they are starting the first few weeks in the call center, and they're actually speaking to the customers. Because he's saying that everyone in the company should be about customer service.

Starting point is 00:16:26 They don't measure call time. I don't know if you ever felt like you were speaking to customer service and like you felt like they couldn't hang up on you soon enough. I definitely experienced that more than once. And that was basically what he was saying. He said, we don't use any scripts. We don't measure call times. And we don't upsell.

Starting point is 00:16:46 And I think that's definitely something that was surprising for me to read. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord. And every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is. From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering its 18th year bringing together activists, technologists,

Starting point is 00:17:21 journalists, investors, and builders from all over the world, many of them operating on the front lines of history. This is where you hear firsthand stories from people using Bitcoin to survive currency collapse, using AI to expose human rights abuses, and building technology under censorship and authoritarian pressures. These aren't abstract ideas. These are tools real people are using right now. You'll be in the room with about 2,000 extraordinary individuals, dissidents, founders, philanthropists, policymakers, the kind of people you don't just listen to but end up having

Starting point is 00:17:54 dinner with. Over three days, you'll experience powerful mainstage talks, hands-on workshops on freedom tech, and financial sovereignty, immersive art installations, and conversations that continue long after the sessions end. And it's all happening in Oslo in June. If this sounds like your kind of room, well, you're in luck because you can attend in person. Standard and patron passes are available at Osloof Freedom Forum.com,

Starting point is 00:18:19 with patron passes offering deep access, private events, and small group time with the speakers. The Oslo Freedom Forum isn't just a conference. It's a place where ideas meet reality and where the future is being built by people living it. If you run a business, you've probably had the same thought lately. How do we make AI useful in the real world? Because the upside is huge, but guessing your way into it is a risky move.

Starting point is 00:18:45 With NetSuite by Oracle, you can put AI to work today. NetSuite is the number one AI cloud ERP, trusted by over 43,000 businesses. It pulls your financials, inventory, commerce, HR, and CRM into one unified system. And that connected data is what makes your AI. smarter. It can automate routine work, surface actionable insights, and help you cut costs while making fast AI-powered decisions with confidence. And now with the NetSuite AI connector, you can use the AI of your choice to connect directly to your real business data. This isn't some add-on, it's AI built into the system that runs your business. And whether your company

Starting point is 00:19:24 does millions or even hundreds of millions, NetSuite helps you stay ahead. If your revenues are at least in the seven figures, get their free business guide, demystifying AI at netsuite.com slash study. The guide is free to you at net suite.com slash study. NetSuite.com slash study. When I started my own side business, it suddenly felt like I had to become 10 different people overnight wearing many different hats. Starting something from scratch can feel exciting, but also incredibly overwhelming and lonely. That's why having the right tools matters. For millions of businesses, that tool is Shopify. Shopify is the commerce platform behind millions of businesses around the world and 10% of all

Starting point is 00:20:09 e-commerce in the U.S. from brands just getting started to household names. It gives you everything you need in one place, from inventory to payments to analytics. So you're not juggling a bunch of different platforms. You can build a beautiful online store with hundreds of ready-to-use templates, and Shopify is packed with helpful AI tools that write product descriptions, and each other. even enhance her product photography. Plus, if you ever get stuck, they've got award-winning 24-7 customer support. Start your business today with the industry's best business partner, Shopify, and start hearing

Starting point is 00:20:43 sign up for your $1 per month trial today at Shopify.com slash WSB. Go to Shopify.com slash WSB. That's Shopify.com slash WSB. All right. back to the show. I don't know, Preston. What was your take about this whole vision about customer service being the main theme within the company? So I thought this was like, it takes something that's just so counterintuitive and flips it on its head. So like as a company that would be, you know, selling shoes online, you would think that having, I know if I was a CEO, I'd be

Starting point is 00:21:21 looking at, okay, well, we've got to be able to handle people that want to do returns and everything else and this is a huge expense. This is something that you just like look at. and you just roll your eyes because you know it's just going to suck the blood out of your company. And Tony took that, that customer service piece of working with these people that are not happy with maybe the product that they purchased. And literally just totally flipped it on its head and said, this is the centerpiece of our entire company. And this is where we're going to make our long term value and competitive advantage. And so like Stig said, he said, we're going to make this our marketing. So when people call here, we're just going to wow them to the point where they can't even believe the customer service that they're getting.

Starting point is 00:22:07 And it's so good that they won't want to shop anywhere else. And so let me tell you about my personal experience, Colin Zappos. So I read this book and I was just like, this is amazing. Like this idea is just like this is something you read about, but it would probably really fail on application. But so I call them up because I wanted to have Tony on the show for this interview. I want to interview him about this. Well, Tony decided no, but let me tell you about the process of calling them. So I was like, you know, I could send them an email, but I just want to call their call center and just hear what this is all about, you know.

Starting point is 00:22:42 So I call them up and I forget the name of the guy that answered the phone, but he answers the phone, hey, welcome to Zappos where we're delivering wow and all this other stuff. And I say, hey, man, how's it going? He says, I'm doing great. How about yourself? And I was like, well, you know, I have a podcast and we, you know, we study all these different billionaires and we're interested in having Tony come on the show. And the guy's like, oh, man, that's awesome. That sounds great. And I said, well, can you give me, you know, his contact information or whatever?

Starting point is 00:23:13 He's like, yeah, no problem at all. He's like, here's his email address. He's like, shoot him an email and just let him know. And maybe he'll do it. He's a pretty busy guy, so he might not be able to do it. But, you know, he'll get back to you. somebody will get back to you. And I said, okay.

Starting point is 00:23:27 And then he says, is there anything else I can do for you? Is there anything that you need help with or, you know, anything I can do at all? And I said, no, you answered my question. That was amazing. And this guy was so nice and just so energetic, so excited to be on the phone with me. It was the exact opposite of any experience I've ever had on any type of customer service call ever. So, like, that was my one experience. Now that maybe I got the best guy in the company.

Starting point is 00:23:54 Maybe I got the worst guy in the company and everyone's even better than him. I don't know. But for the one time that I called there, I was blown away to be quite honest with you. It was phenomenal. So, like, this is real. And I'll tell you what, call them. If you want to buy a new pair of Nikes or whatever, maybe you're out there and you just want to try this out.

Starting point is 00:24:13 Call their company. Just cold call them. Their numbers right at the top of their website. Call them up and just, even if you're not buying anything, just call them and get a taste of this because it's crazy. It's amazing. It's like the coolest thing ever. So that's my, that was my experience with Zappos.

Starting point is 00:24:28 I'm so happy that you told this story, Preston, because Tony's he's actually telling a gratin story where he wants to test whether or not his vision for the companies can really, as you're saying, Preston, be used in practice. And he's saying that he was sitting at a hotel, I can remember where. And he was calling the call center and said, could you help me figure out where I can buy a really good pizza? And apparently this person, the call center, he was like, yeah, and his head was spinning like, what am I going to do here? And then hopefully he was thinking bad at the values and really being there for the customer. So he was sitting there making a Google search for Tony saying, yeah,

Starting point is 00:25:08 you know, if you're staying in this hotel, this pizzeria has delivery here and there, and you need to do this before 11 o'clock or this one before 12 o'clock. And it was just, it was a hilarious story. And I'm so happy, Preston, that you had a chance to test that they were actually as friendly as Tony he is saying they are. Yeah, it totally was. And so the person that Tony was with in the story that Stigs tell and he's there, yeah, our customer service is so good. You could call them and literally order a pizza. It has nothing to do with buying shoes. They'll find you a pizza place that's close to wherever you live in whatever city you're in.

Starting point is 00:25:45 Like, that's how dedicated they are to help you out. it has nothing to do with necessarily the product that they're trying to sell. And my experience, you know, calling in was was pretty much that that is true. So this is amazing. Like this is crazy. So then he talks about a person doesn't order and they pay for three-day shipping. Well, if Tony was able to get the product to them a day earlier or in one-day shipping, they will do that. So like their goal is to set whatever bar you think that you're going to get in

Starting point is 00:26:17 customer service from dealing with them. And if they can beat it or exceed that, they're going to do it every single time. And so his opinion is that's how they create brand loyalty. That's how they create this Amazon effect, if you will, of people continuing to go back to their site because they had such a positive experience, either through calling, customer service, returns, whatever. And that's how he, that's what he feels his competitive advantages with his business. So this is my final point on this, is going back to just thinking in a unique direction is what I really kind of took away from this is, you know, my initial inclination is if I was in his shoes, is that customer service is like the thing that's just going to, you know, just be your annoying thing that you have to deal with as, as the owner of the company. And Tony totally flipped it on its head. He thinks differently.

Starting point is 00:27:10 When the crowd is thinking in one direction, Tony's thinking in the exact opposite direction. He's saying, okay, this looks like a weakness. So how can we turn this weakness into the most important element of our business? And so that's what this is talking about. And, you know, Charlie Munger, we talk about Charlie all the time. He says, invert, invert, invert. Figure out a way to take whatever you think your weakness is and flip it into your greatest strength. So one of the takeaways that I really took from this section was the idea about a cultural,

Starting point is 00:27:45 book. And what is a culture book? Well, it's basically an unedited book of everyone's thoughts on what the culture is at Sappos. So he's saying, well, I could tell my employees what our core values are. I could tell you that this is the culture, but culture's people. So he actually did something that I think would take a lot of queries. He was sending out an email to everyone in the organization and told them to send back an email with what they thought the culture was. was. And you could send this as being anonymous and it will still be in the book or you could put your name on it. And it would go in unedited. And that is what he did. Most people said something nice. Some people said something that was less nice, but he still published everything. And I think that is so

Starting point is 00:28:33 courageous to do and a thing that just shows how much you respect your employee's opinion. And I think you can only do this if you have a really, really strong culture. And then he's basically saying something that's really stuck with me. And it was something I actually spoke with Preston about before this podcast episode because we are building our own organization right now. And Tony, he is saying, when you get the culture right, do we actually figure out the rest? And I think that was so insightful. I never thought about it like that.

Starting point is 00:29:04 You know, whenever I was in grad school, I was learning about values. and I was thinking, it's just some corporate buswords. But I think that was so insightful, especially after trying to work in various organizations, really maneuvered within the different cultures. I think he's so right about that one. So I had the same opinion whenever I was younger and you'd read about this culture and you're like, oh, my God, let's have a class about culture, you know, and you just kind of roll your eyes.

Starting point is 00:29:32 But now I look at it and I see how insanely important it is. And here's one of the main reasons why is, you know, when you look at a company that's growing, and a lot of the times some of these companies, they can't hire people fast enough because there's such a demand for their product or service. And so they're desperate for filling a seat. And so then they just, you know, they interview three people and they have to make a selection because they got to fill the seat. And I'll tell you, that point in a company's life cycle where it's growing like a weed and they're filling seats because they have to in order to meet the demand. And that is where I think a lot of companies make the big mistake. And the big mistake is this. They're filling their seats because they feel like they've got to fill the seats.

Starting point is 00:30:17 But what they're really doing is sometimes they're making a bad selection of people that don't fit the culture, that don't necessarily have the skill set that's really required to do the job. And they're in such a rush to meet a certain timeline and to grow so fast that they're actually filling the ranks of their organization with people that. that really aren't the best people for the job. And they're people that just bring a bad culture with them. And you know who that person hires whenever it grows even more? They hire more people just like them. And so I guess this is what I tell you,

Starting point is 00:30:51 especially if you're in a company that's growing like this, is leave the seat vacant. Just wait. You've got to wait till you get the right person for the job. And more importantly, the person that has values that are similar to yours because when you don't get that person, you're literally almost like putting a cancer inside of your organization. And as that organization continues to grow, that cancer is going to grow and it's going to hire

Starting point is 00:31:17 more people like themselves. And obviously, like I think most people are very good and most people out there are the right person for the job. But I think when the companies get in a growth scenario, they open themselves up to this potential. and to always be mindful of that. And, you know, in Tony's book, he talks about their hiring process. And I love this.

Starting point is 00:31:42 I absolutely love the way that they go through their hiring process. So, you know, they look at it's really important to them whether the person has the credentials to do the job. Do you have a finance degree if you're going to be working in, you know, HR and working, you know, money and all that kind of stuff? That's important. But the thing that was more important to them in the hiring process wasn't necessarily. whether you have the background and the education in the area that you're about to be hired. It was more important to them was the values of who you are and whether it's a fit for the culture that they've been cultivated and what they truly value as their most important asset at the company. So this is how they interview people.

Starting point is 00:32:23 When you come in and you're waiting to come into the room to be interviewed, what they're really paying close attention to is how you interact with the administrative assistant. how you interacted with other people when you walked in the door. Then when you come in, they, you know, they're looking at how you answer some of the questions and they have certain questions that they're asking to get a feel for your values as a person. But then, you know what they do? They say, well, let's go out to lunch. Let's have lunch together. So then they take the person out to lunch.

Starting point is 00:32:51 And you know what they're really paying attention to? They're paying attention to how you interact with the waiter. They're paying attention to how you interact with other people in the social setting. Are you a person that's actually nice? or do you treat the waiter who's coming over and bringing you food like a jerk? That was what they were really paying attention to. They're paying attention to those little things that really talk about who you are as a person and how you treat other people.

Starting point is 00:33:19 And that was really the interview. And I'll tell you, I freaking love this because I think it really gets to, how do you feel people within your organization with ones that are like yourself and ones that are going to treat customers and treat vendors and treat anybody that they interact with with mutual respect and not like they're more important than somebody else. And so what they find is a lot of the times when they're trying to fill executive spots in their company, when they're trying to hire somebody that's, you know, a very high paid salary position, when they have people that come from other companies and try to fill that void, they're almost always a bad fit for their company. And so what they do is they hire an enormous amount of people from lower ranks within their organization because they want that person that represents their values and their culture and that have worked there for five years and understand it and get it. And so they have a lot of self-promotion within the company to hire ranks instead of out-hiring people into executive positions, which I totally get. I think it makes total sense.

Starting point is 00:34:25 I think that when you look at maybe the value of Zappos, it is. It's truly this culture. It's their customer service, yes. And that's the thing that they really sell on their banner of their site. But I think even deeper than that, I think it's the culture that Tony has created and the people that he has placed inside of that company to grow and cultivate the people below them. It is a very harmonious machine that has fantastic results and it has happy people working there. Yeah, I think their competitive advantage is really the culture and not the people. And they might be confusing when I say that because I just said that culture is people, right?

Starting point is 00:35:05 But what he's actually saying is that a lot of corporations actually say that the people are the most important asset. Now, it's just a problem with this statement because what happens if someone leaves the organization? That means that you are losing an asset. And what has happened when the business is growing, well, I'll outgrow an employee and his skills would be obsolete. So what he's talking about is that the pipeline that they're having, the culture is, really the competitive advantage. And this is really comes back to what Preston talked about. They will hire a lot of people at the intro level. They were actually offering them $2,000 to quit within the first four weeks just to ensure that they really want to be there. Then he's saying,

Starting point is 00:35:44 we will just keep on training our employees up to team management and they can actually get there in five to seven years. That way we ensure we always have the right culture, first of all. We can always teach him the competences, but the culture should always be there at the very beginning. That's the very foundation of your organization. And I love that point. Yeah, I totally agree. This book, I'm telling you, folks, you need to read this book because, you know, Stig and I are hitting on some of the points, but we're capturing 5%, maybe not even that, of the total learning that can take place in this book. And just so, you know, we're going to send out our executive summary on this.

Starting point is 00:36:20 We have, what is it, five pages here, five page executive summary of what we captured from this book. We'll send out to everybody on our email list. So if you're not on our email list, sign up, we don't send out any marketing, any spam or anything like that. We just send out our book summaries and, you know, market information that we think is important to you. If it's not value to you, we're not emailing it to you. So sign up on our email list. Okay, so let's go to the last section of the book here, Stig. I think the main point from the last section.

Starting point is 00:36:48 And the last section is called Profits Passion and Purpose. And I think there's a lot of talk about the whole process of Sappo's being sold to Amazon. And the reason why this actually happened was he felt he was under a lot of pressure from the board of directors. And a lot of the shareholders, they were owned by a fund and they wanted to sell it at a higher profit. And they weren't so interested in anything else than profits. And he's saying, you know, that's perfectly fine. You know, they're shareholders. They want to have a profitable business.

Starting point is 00:37:23 Why should they care about culture? Why should they care about Tony actually going out and having a lot of talks about how you can change the culture in your business? So he actually is saying that his vision is actually to change the corporate culture, not only for Sappos, but also for other companies. And he got a lot of resistance from the board of directors saying, why should be paying you for that? which he completely understands. So he was actually looking to be bought off by a company that shared the same values. And apparently one day, Jeff Bezos calls him. And he wanted to buy Saps in cash.

Starting point is 00:38:01 Now, Tony said he doesn't want that because that felt like he was just selling his company. No, he felt like, yes, he wanted to be bought by Amazon because that way he can also maintain the control. but he actually said that they should trade shares. It should feel like a joint account. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up and customers now expect proof of security just to do business. That's why VANTA is a game changer. Vanta automates your compliance process and brings compliance, risk, and customer trust together on one AI powered platform. So whether you're prepping for a SOC2 or running an Enterprise GRC program, VANTA keeps you secure and keeps your deals moving. Instead of chasing spreadsheets and screenshots, VANTA gives you continuous automation across more than 35 security and privacy frameworks. Companies like Ramp and Ryder spend 82% less time on audits with Vantta. That's not just faster compliance, it's more time for growth. If I were running a startup

Starting point is 00:39:05 or scaling a team today, this is exactly the type of platform I'd want in place. Get started at Vanta.com slash billionaires. That's Vanta.com slash billionaires. Ever wanted to explore the world of online trading, but haven't dared try? The futures market is more active now than ever before, and plus 500 futures is the perfect place to start. Plus 500 gives you access to a wide range of instruments, the S&P 500, NASDAQ, Bitcoin, gas, and much more. Explore equity indices, energy, metals, 4X, crypto, and beyond. With a simple and intuitive platform, you can trade from anywhere, right from your phone. Deposit with a minimum of $100 and experience the fast, accessible futures trading you've been waiting for.

Starting point is 00:39:55 See a trading opportunity. You'll be able to trade it in just two clicks once your account is open. Not sure if you're ready, not a problem. Plus 500 gives you an unlimited, risk-free demo account with charts, and analytic tools for you to practice on. With over 20 years of experience, Plus 500 is your gateway to the markets. Visit Plus500.com to learn more. Trading in futures involves risk of loss and is not suitable for everyone. Not all applicants will qualify. Plus 500, it's trading with a plus. Billion dollar investors don't typically park their cash in high yield savings accounts.

Starting point is 00:40:34 Instead, they often use one of the premier passive income strategies for institutional investors, private credit. Now, the same passive income strategy is available to investors of all sizes thanks to the Fundrise Income Fund, which has more than $600 million invested in a 7.97% distribution rate. With traditional savings yields falling, it's no wonder private credit has grown to be a trillion-dollar asset class in the last few years. Visit fundrise.com slash WSB to invest in the Fundrise Income Fund in just minutes. The fund's total return in 2025 was 8%, and the average annual total return since inception is 7.8%. Past performance does not guarantee future results, current distribution rate as of 1231, 2025.

Starting point is 00:41:23 Carefully consider the investment material before investing, including objectives, risks, charges, and expenses. This and other information can be found in the income fund's perspective. at Fundrise.com slash income. This is a paid advertisement. All right. Back to the show. So I like this because it really comes down to this. How do you fire, if you're the CEO of a company and you hate your board of directors,

Starting point is 00:41:50 how do you fire them? How do you get rid of them? And this is how Tony Shea did it, is he basically did this deal with Jeff Bezos and basically was able in a, he got a position where he was able to, get rid of the board and get them away from him so they can stop talking about profit margins. And he can just do his thing and run his company and have fun. And make money, obviously, be profitable, but do it in a manner that he wanted to do it the way he wanted to do it. He didn't want to have to listen in the answer to some board of directors and, you know, have them constantly saying he needs to increase his margins.

Starting point is 00:42:25 And so I want to talk about this idea because this is something that I caught a glimpse of whenever we were at the Berkshire. Hathaway shareholders meeting with Warren Buffett. I really think this is his sales pitch. You know, how does he bag these elephant companies? And I'm sorry to transition to Warren Buffett, but the parallel here is too strong. So how does he bag elephant companies? You know how I think he's doing it? I think this is his play.

Starting point is 00:42:53 This is his sales pitch, if you will. He goes to CEO whoever, who has a very large and influential position. Some CEOs have a lot more power than others. So he goes to these CEOs that have a lot of power in these kind of companies. And he goes and he basically says, listen, are you tired of dealing with your board? Are they driving you nuts as far as margins and just, you know, trying to take the company in a direction that you know will ultimately destroy the brand or your competitive advantage over time? If so, let me be your top cover. Let me come in and buy you.

Starting point is 00:43:26 And I will not bother you at all. I will not, you know, I'll send you an email, you know, once a quarter just to check up and see where things are at. But I will leave you alone and let you run your company. And I think that's his sales pitch. I think that's how he's able to start these negotiations and basically fire these boards and get all these competing interests out of these CEO's hairs. And it's just a really interesting conversation. Now, whether you believe, you know, whether you agree with that or not, that's totally up to you. But that's kind of maybe the way I'm seeing the way Buffett's operating.

Starting point is 00:43:58 We saw the same thing play out with Tony Shea and Jeff Bezos, which tells me Jeff Bezos might be kind of in this line of business of doing that kind of stuff as well. But it's really interesting to see this happen because it's such an obscure idea. Like, how do you fire a board a director? Well, this is how these guys are maybe going about it at times. The last thing that we wanted to talk about, and Stig's smiling at me. The last thing that we wanted to talk about was the happiness portion of this. And so this was really at the very end of the book. Tony gets into this discussion of what is it that we're ultimately?

Starting point is 00:44:28 after. So going back to his example that Stig was talking about. So he's like, well, I want to buy a large screen TV. I want to buy an apartment. So Tony says if you ask yourself why enough times, you ultimately get to the crux of the issue here. And so he says, let's just walk through this. Well, why do you want a big screen TV? Well, because then I can watch the, you know, the NFL games more and I'll enjoy that. Well, why do you want to watch the NFL game? Well, because I have fun and I have friends over. Well, why do you have friends over and why do you want to do that? Well, it ultimately comes down to because I want to be happy. And so he says that if you ask why enough times of like, whatever that is, you want a fancy car, you want to have a million dollar business, you want to

Starting point is 00:45:10 have whatever, you name it. Ultimately, it comes down to you want to be happy. And so Tony gets into this discussion. And he's like, well, what is happiness? What gives a person happiness and what is probably the most vital way to achieve happiness. And so what he discovers, and he talks about some like statistical proof where he goes into some of these studies that were done with people, where a person won the lottery. And he said, the people that won the lottery call it, you know, a couple million dollars or whatever. He says, you know, at first they say that their happiness was elevated from where it was before they had won the lottery. It was a lot higher. Then they take the survey again six months later and the happiness that they would say on a scale from

Starting point is 00:45:56 one to ten is a little bit lower. And then by a year later after they had won the lottery, they say that their happiness is pretty much exactly back to where it was before they had won the lottery. And so what Tony's getting at, and he basically describes this in the book as material objects and things will bring you short-term happiness. And so then he talks about, well, what would be something that would give you enduring and long-term happiness. And so the thing that he arrives at is that when you give to other people and you help other people achieve things that they want to have or they want to do, that has the ability to bring you not just short-term happiness, but enduring happiness.

Starting point is 00:46:41 And so the thing that he really gets at is that's something that you can do right now and that's something you can do today. Whereas the other stuff that brings you short-term happiness is something that you have to work extraordinarily hard for sometimes in order to achieve. And so he really gets to the heart of what it's all about. And that's helping other people out as well as helping yourself out. It has to be a mutual win-win kind of thing. But this discussion that he has at the end of the book is something that I mean, you have to almost reread and reread again to really kind of capture everything that he's saying here because it's so profound. found and so insightful. I mean, this is just one aspect of this book. I'm telling you, this book is

Starting point is 00:47:24 probably one of the best books we've read in a long time. Tony specifically talks about four factors. And this relates to what Preston said at the very end of the book, what can really give you sustainable happiness. And he's saying, well, the first one is perceived control. You need to feel like you have perceived control over your life. And the way that he effectuates that within Sappos is in terms of pay. So he's saying, I want to make it extremely transparent what people are making. And he's saying, for instance,

Starting point is 00:47:55 the first intrad level, there are 20 skill sets you can acquire. If you have this skill set, it's like a small course, you would perhaps get 60 cents more or a buck 50 or whatever it is. You will continuously experience small bumps in your pay. So they are actually in control of what they're getting.

Starting point is 00:48:14 Next thing, that is perceived progress. And he's saying that originally they had a program that where after 18 months you would go from, I think it was assistant buyer to buyer. And he said that he actually realized that by giving them three promotions instead, and you would end up after 18 months with exactly the same paying title. People were happy about that. They could easily see the progress because it was only in six months and not the full 18 months. So that's how he effectuated that. Then the third thing was in-depthness. And when Tony talks about that, he's saying, you need long, deep relationships with your friends.

Starting point is 00:48:53 And hopefully you can find good friends within the company. So he's actually placing a lot of emphasis on how do we develop deep relationships within the company? Because that's something that will give you sustainable happiness and make you stay in the company, contribute to the company from there on. And then the last thing, that's vision. vision meaning you should feel that you are part of something bigger. And I think that really comes to the very core of every good corporation. If you really feel you are part of something bigger than yourself, that's really where you see a lot of good things happening.

Starting point is 00:49:26 That's really where you see enduring happiness. Think about spending eight hours a day on doing something that you don't see the meaning of aside from collecting a paycheck. That's going to be some long and hard days. That's all we have for this book. So we'll see you guys next week. So at this point in the show, what I want to do is I want to introduce two of my really good friends who are out there and they're actually starting their own podcast. And I want to help them promote their podcast.

Starting point is 00:49:52 So I want to introduce them to our audience so they know who you guys are. And the name of their podcast is the leadership podcast. And as you guess, they're probably going to be talking about leadership. So we've got Jim and Jan. And I want to turn the mic over to them so that they can briefly introduce themselves and kind of give you a little glimpse of what. they're trying to do with their show. So Jim, take it away and tell everyone about yourself. Thanks, Preston. I'm Jim Vasseloplis. I've been in the tech business for a number of years, run companies, built companies, sold companies, and really had a lot of fun doing that and have

Starting point is 00:50:28 taken a keen interest in leadership through the year. So in concert with Jam, we decided let's start this podcast to interview people and learn from the best leaders in the world, much as you learn from the best billionaires in the world. All right, Jan. How about you? Yeah, hey, everybody. This is Jan Rutherford. I split my time between Denver and Portland. And I entered the Army at age 17 and spent nine years as a special forces soldier and

Starting point is 00:50:53 officer and then on to military intelligence. And for the last 25 years really was on the business side. Big corporations, small and mid-sized company. Last full-time gig is a CEO of an IT company focused on health care. and for the past few years have been out on my own doing leadership development. And these days I deliver a lot of keynotes, work with a lot of executives and their teams. And my favorite thing I do is actually the Crucible Expedition, where we take special operations soldiers and high-level executives out into the wilderness

Starting point is 00:51:26 and let magic happen when it comes to leadership. All right. That's awesome, guys. So here's the thing. You guys are standing up this podcast, the name of it. If people want to listen to your show, they can go into iTunes, they can go into Stitcher, and they can type in The Leadership Podcast, and it should show up there. It should be easy to find for you. And that's my two good friends, Jim and Jan's new show.

Starting point is 00:51:53 If you want to learn all about leadership, that's what they're going to be working on. So, guys, thanks for joining us. Thank you. Yeah, I hope a bunch of our listeners come over and give your show a listen. and learn a lot from you guys. So thanks so much for joining us, and I really hope everyone enjoys your show. Thanks for listening to The Investors Podcast. To listen to more shows or access to the tools discussed on the show, be sure to visit www.com. Submit your questions or request a guest appearance to the Investors podcast by going to www.com.com. If your question is answered during the show, you will receive a free

Starting point is 00:52:31 autographed copy of the Warren Buffett Accounting Book. This podcast is for entertainment purposes only. This material is copyrighted by the TIP network and must have written approval before a commercial application.

We Study Billionaires - The Investor’s Podcast Network - TIP 095 : Billionaire Tony Hsieh's Book - Delivering Happiness at Zappos (Business Podcast)

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.