JANUARY

2011

Delivering Happiness
A Path to Profits, Passion and Purpose
by Tony Hsieh

Uniquely You

Learn how to shape your own path

to success.
QUICK OVERVIEW
In Delivering Happiness, Tony Hsieh uses personal stories to recount his journey
to becoming CEO of Zappos.com. He also shares insights on why you should have
a passion for what you do, regardless of the amount of money you are makingor
walking away from.
From his childhood experiences as a worm farmer to his stint as a poker player,
to becoming a multimillionaire and the CEO of a company that has been ranked
as one of the Best Companies to Work For by Fortune magazine, Hsiehs path has
followed his passion for what he believed was right for him. In the end, his objective
is to do business in a way that allows him and his co-workers to be a happy and
productivetribe.

Business Plus
2010, Tony Hsieh
ISBN: 9780446563048
246 pages, $23.99

SUCCESS Points
In this book youll learn:

APPLY AND ACHIEVE

Tony Hsieh learned from his poker-playing days that choosing the right table was
one way to ensure success. In the same way, choosing the type of business to build
or represent is of critical importance. If youre a business owner, take a moment to
consider whether your business reflects your core values. If you are an employee or
independent contractor, are you choosing to align yourself with an organization that
has a culture and message which meshes well with your own? Greater happiness (and
reduced stress) is often the result of working and living in a way that harmonizes
with your core values. What do you need to do to create alignment between your
values and your work?

Why the type of

business you create
is the most important
decision you can
make for your future
How your personal
happiness and
your professional
happiness are linked
Why defining core
values for your
company is crucial

Page

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Delivering Happiness

d played a little bit of poker in college, but like many

people, I always just considered it to be a fun form of
gambling and had never bothered to actually study it.
Back in 1999, poker was not yet a mainstream activity.
Most people had never heard of the World Series of Poker,
and TV networks like ESPN were not yet broadcasting poker
tournaments to the masses.
One of the most interesting things I learned about playing
poker was the discipline of not confusing the right decision
with the individual outcome of any single hand; but thats what
a lot of poker players do. If they win a hand, they assume they
made the right bet, and if they lose a hand, they often assume
they made the wrong bet.
For the fi rst few months, I found poker both fun and
challenging, because I was constantly learning, both through
reading different books and through actual experience
of playing in the field. I started to notice similarities
between what was a good poker strategy and what made
for a good business strategy, especially when thinking
about the separation between short-term thinking (such as
focusing on whether I won or lost an individual hand) and
long-term thinking (such as making sure I had the right
decisionstrategy).
I noticed so many similarities between poker and business
that I started making a list of the lessons I learned from
playing poker that could be applied to business:

Evaluating Market Opportunities

Table selection is the most important decision you
canmake.
Its okay to switch tables if you discover its too hard to
win at your table.
If there are too many competitors (some irrational or
inexperienced), even if youre the best its a lot harder towin.

Marketing and Branding

Act weak when strong, act strong when weak. Know
when to bluff.
Your brand is important.
Help shape the stories that people are telling about you.

Financials
Always be prepared for the worst possible scenario.
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The guy who wins the most hands is not the guy who
makes the most money in the long run.
The guy who never loses a hand is not the guy who makes
the most money in the long run.
Go for positive expected value, not whats least risky.
Make sure your bankroll is large enough for the game
youre playing and the risks youre taking.
Play only what you can afford to lose.
Remember that its a long-term game. You will win or lose
individual hands or sessions, but its what happens in the
long term that matters.

Strategy
Dont play games you dont understand, even if you see
lots of other people making money from them.
Figure out the game when the stakes arent high.
Dont cheat. Cheaters never win in the long run.
Stick to your principles.
You need to adjust your style of play throughout the night
as the dynamics of the game change. Be flexible.
Be patient and think long term.
The players with the most stamina and focus usually win.
Differentiate yourself. Do the opposite of what the rest of
the table is doing.
Hope is not a good plan.
Dont let yourself go on tilt. Its much more costeffective to take a break, walk around, or leave the game
for thenight.

Continual Learning
Educate yourself. Read books and learn from others who
have done it before.
Learn by doing. Theory is nice, but nothing replaces
actualexperience.
Learn by surrounding yourself with talented players.
Just because you win a hand doesnt mean you dont have
more learning to do. You might have just gotten lucky.
Dont be afraid to ask for advice.

Culture
Youve gotta love the game. To become really good, you
need to live it and sleep it.
Dont be cocky. Dont be flashy. Theres always someone
better than you.
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Delivering Happiness

Be nice and make friends. Its a small community.

Share what youve learned with others.
Look for opportunities beyond just the game you sat down
to play. You never know who youre getting to meet,
including new friends for life or new business contacts.
Have fun. The game is a lot more enjoyable when youre
trying to do more than just make money.
Aside from remembering to focus on whats best for the
long term, I think the biggest business lesson I learned from
poker concerned the most important decision you can make in
the game. Although it seems obvious in retrospect, it took me
six months before I fi nally figured it out.
I learned the most important decision I could make was
which table to sit at. This included knowing when to change
tables. I learned from a book that an experienced player
can make ten times as much money sitting at a table with
nine mediocre players who are tired and have a lot of chips
compared with sitting at a table with nine really good players
who are focused and dont have that many chips in front
ofthem.
In business, one of the most important decisions for an
entrepreneur or a CEO to make is what business to be in. It
doesnt matter how flawlessly a business is executed if its the
wrong business or its in too small a market.
In a poker room, I could only choose which table I wanted
to sit at. But in business, I realized that I didnt have to sit at an
existing table. I could defi ne my own, or make the one that I
was already at even bigger. I realized that whether in poker, in
business, or in life, it was easy to get caught up and engrossed
in what I was currently doing, and that made it easy to forget
that I always had the option to change tables. Psychologically,
its hard because of all the inertia to overcome. Without
conscious and deliberate effort, inertia always wins.
I started to force myself to think again about what I was
trying to get out of life. I asked myself what I was trying to
accomplish, what I wanted to do, and whether I should be
sitting at a different table. From my poker experience, I knew
it was never too late to change tables.

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YOUR CULTURE IS YOUR BRAND

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

We simply continued doing

what we had always done:
constantly improving the
customer experience while
simultaneously strengthening
our culture.
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 cant possibly
anticipate every possible touch point that could influence the
perception of your companys brand. For example, if you
happen to meet an employee of Company X at a bar, even if
the employee isnt working, how you perceive your interaction
with that employee will affect how you perceive Company
X, and therefore Company Xs brand. It can be a positive
influence, or a negative influence. Every employee can affect
your companys brand, not just the front-line employees that
are paid to talk to yourcustomers.
At Zappos.com, we decided a long time ago that we didnt
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
shouldnt be just a department; it should be the entire company.
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Advertising can only get your brand so far. So whats a

company to do if you cant just buy your way into building the
brand you want? Whats 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
customerswill happen naturally on its own.
We believe that your companys culture and your companys
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.
We formally defi ned the Zappos culture in terms of
10CoreValues:
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 dont really
commit to them. They usually sound more like something youd
read on a press release. Maybe you learn about them on Day 1
of orientation, but after that its just a meaningless plaque on the
wall of the lobby.
We believe that its really important to come up with core
values that you can commit to. And by commit, we mean that
youre willing to hire and fire based on them. If youre willing
to do that, then youre 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.
In the books Good to Great and Tribal Leadership, the authors
looked at what characteristics separated the great companies
from the good ones. One of the most important ingredients
they found was a strong company culture. Core values are

essentially a formalized defi nition of a companys culture.

As it turns out, it doesnt actually matter what your
companys core values are. What matters is that you have
them and that you commit to them. Whats important is the
alignment that you get from them when they become the default
way of thinking for the entire organization. Your personal
core values defi ne who you are, and a companys core values
ultimately defi ne the companys character and brand.
For individuals, character is destiny.
For organizations, culture is destiny.

Five Ways to Instill

Customer Service into
Your Company
Make WOW a verb that is part of your companys
everyday vocabulary.
Realize that its okay to fire customers who are
insatiable or abuse your employees.
View each call as an investment in building your
customer service brand.
Celebrate great service. Tell stories of WOW
experiences to everyone in the company.
Give great service to everyone: customers,
employees and vendors.

TAKING IT TO THE NEXT LEVEL

We did not invent the idea that having a vision that had a higher
purpose was important. We did not invent the idea that having
a strong culture and core values was important. But through
tours, the culture book, public speaking, Zappos Insights, Zappos
Insights live, Twitter and our blogs, we found ourselves in a
unique position: We had scaled our business from nothing to over
$1 billion in gross merchandise sales in less than ten years, we had
a strong set of integrated core values, and our culture of being
open and honest and pursuing growth and learning was leading
us to share, rather than hoard all the corporate knowledge and
learning we had accumulated over the years.
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Delivering
Book Titile Happiness

In early 2009, we made Fortune magazines 100 Best

Companies to Work For list. We were the highest-ranking
debut in 2009. At our offices, we were thrilled because that was
an internal goal we had set in the early days of the company,
and it came just a month after we hit our $1 billion in gross
merchandise sales goal, well ahead of schedule.
But at the board level, we were at stalemate. The board
wanted a fi nancial exit, but internally at Zappos we didnt want
to exit. We wanted to continue to build, and we were in it for
the longhaul.
I realized I was relearning another version of the same lesson
from LinkExchange, when our company culture went downhill:
the importance of alignment. A strong culture and committable
core values are important because they create alignment among
employees. I was now learning that alignment with shareholders
and the board of directors was just as important.
This was just another challenge we needed to figure out.
So we came up with a plan. We would buy out our board of
directors.
We figured it would cost about $200 million to buy out our
board of directors, so we started looking for potential investors.
When we started talking to Amazon in early 2009, however,
both sides seemed to have a different perspective, compared
with several years ago. On the Amazon side, they seemed to be
more open to the idea of us continuing to run as an independent
entity so that we could continue building the Zappos culture
and business the way we wanted to. They had been following
our progress over the years and saw that our approach to
business was working for us. On the Zappos side, what
mattered the most was continuing to do what we were doing
for our employees and our customers while gaining access to
Amazons vast resources.
In our minds, we thought of a potential acquisition scenario
more as a great marriage than as selling the company. Both
companies cared deeply about being customer-centric. We just
had different approaches to it.
Even though our original goal was to buy out just our board
of directors and the shares that they held and represented, the
more we thought about it, the more that joining forces seemed
to make sense. By doing so all parties would be 100 percent
aligned, which was the whole challenge that we were trying to
overcome with our current board of directors.

Page

If it werent for Amazon, Im not sure how we would have

ended up resolving our alignment issues with the board. We
might have remained at a stalemate. But as it turned out,
our misalignment with the board turned out to be a blessing
in disguise. It just goes to show that you never know when
something you perceive as a negative will ultimately turn out to
be a good thing.
July 22, 2009, was the day we were planning on signing and
announcing the pending acquisition to our employees and the
world. It felt like we were about to launch a rocket to the moon.
Finally, at the predetermined time, I sent an e-mail to our
employees. About twenty minutes afterward, I sent a follow-up
e-mail letting our employees know that we would be having our
all-hands meeting two days later.
The room was packed. I was on stage at our all-hands meeting
looking over a crowd of seven hundred Zappos employees. We
spent an hour covering everything that was in the e-mail I had
sent out two days earlier and answered additional questions our
employees had. As a surprise to our employees, Alfred and I
announced that we were personally paying for and giving every
employee a Kindle, Amazons electronic book reader. And
then, as a fi nal surprise we also announced that Amazon was
paying for a big bonus to all of our existing employees to thank
everyone for their hard work.
Without any prompting, everyone in the entire room
spontaneously jumped from their seats, standing up cheering
andclapping.
To me, that one moment represented success far beyond what
I could have possibly imagined would have been achievable ten
years ago. The moment signified far more than that. The unified
energy and emotion of everyone in the room was not just about
my own personal happiness, and not just about the happiness of
Zappos employees. We were about much more than just profits
and passion. Collectively, this marked the beginning of the next
leg of our journey to help change the world.
Half intentionally and half by luck, we had found our path
to profits, passion and purpose. We had found our path to
deliveringhappiness.

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Delivering
Book Titile Happiness

ACTION STEPS

Get more out of this SUCCESS Book

Summary by putting what youve learned
into action. Here are a few questions and
thoughts to help you get started.
1. Are you working toward maximizing your happiness
each day?
2. What are you passionate about?
3. What are your companys values?
4. What is your companys higher purpose?
5. Integrate core values into every part of your business.
6. Build a positive team and family spirit/culture for your
company regardless of its size.
7. If you get the culture of your company right, most of
the other stuff, including building a great brand, will
fall into place on its own.

About the Author

In 1999, at the age of 24, Tony Hsieh sold
LinkExchange, the company he co-founded, to
Microsoft for $265 million.
He then joined Zappos as an advisor and investor.
Eventually he became CEO and helped Zappos grow
to more than $1 billion in gross merchandise sales

Recommended Reading
If you enjoyed this summary of Delivering Happiness,
you might want to check out
Good to Great by Jim Collins
Tribal Leadership by Dave Logan
Rework by Jason Fried

Page

annually, making Fortune magazines annual Best

Companies to Work For list.
In November 2009, Amazon.com acquired
Zappos.com, Inc., in a deal valued at $1.2 billion.
2010 SUCCESS Media. All rights reserved. Materials may not be reproduced in whole or in part
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Delivering Happiness by Tony Hsieh 2010 by Tony Hsieh.

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