Recently I read couple of books back to back which chronicled the rise of two different unrelated companies – Starbucks (Pour Your Heart Into It) and Zappos (Delivering Happiness – A path to Profits, Passion, And Purpose).
Zappos was acquired by Amazon in 2009 for $1.2 bn
Zappos was acquired by Amazon in 2009 for $1.2 bn
Both of these books were penned down by their founders and have the same theme more or less. Reading them in quick succession provided me an opportunity to spot the similarities, common mistakes made in the rise, development of these companies. It is important to note that both these companies worked in different sectors – in beverage and shoe retail business and started their journey in different timeframes.
Firstly, a few things from the Zappos journey which caught my attention.
The way Tony Hsieh has written it is phenomenal and it is so engaging. It feels as if someone my age, someone with the same mindset as me has written it because I felt I could relate to almost every emotion, every thought process which he shared. Not to say that Howard Schultz in Pour Your Heart Into It did a bad job - Just that I could relate more to Tony’s story and at places Howard Schultz’s book became a bit theoretical.
Both Tony and Howard mentioned that when they started their ventures, it was like they knew almost everyone by their first name and when they grew in size they could see new faces almost every day and the familiarity with people at workplace decreased rapidly. However, Zappos introduced a new measure to deal with it – every time an employee had to log in into his system not only he had to enter the username and password but also had to recognize a random employee face which was displayed. In case he didn’t know – the employee’s name and department was displayed. Over a period of time this would help everyone associate faces with names thus increasing bit of familiarity.
I like this creative way of tackling this problem and I understand it might not be completely practical that each time you login you are presented with a “Guess Who” puzzle. Maybe it is a good idea to do it once a week on Fridays when the atmosphere is already a bit relaxed.
Tony also describes how he as the company grew was approached for public speaking at conferences to share his experience of growing as a company. I was pleasantly surprised to read that the few mantras he adopted to become a skillful speaker are the same as what I learned in my stint in Toastmasters. He emphasized on personalizing the speech and not getting rattled even if he missed a portion of the script as anyways the audience never knows if you skipped something.
Zappos which started delivering shoes which was unheard during that time placed a lot of importance on customer experience. This is something which is practiced by successful giants like Amazon and Flipkart as well. The fundamental principle is to – “Under promise and Over deliver.”
Since I read the Zappos book right after the Starbucks one – I was able to see something in common in how these companies evolved into successful enterprises.
- Amongst all the teething problems a new company faces – the biggest
problem is the financial crunch. It cannot be avoided and it takes skillful
handling of situations to steer away from crisis.
- It is important to take lot of risks. Both Starbucks/Zappos launched
new beverages/delivery style models which had no guarantee that they would work
out fine. But to be successful a company needs to break new ground and try out
new things and take risks.
- Lot of innovative, successful ideas come from normal employees – not the
management ones. So it is important to have an open structure in the
organization and employees are encouraged to share ideas and suggestions.
- Extending the above point – The management should have Honest and open
communication with the employees. This builds trust and keeps everyone on the
Howard Schultz the Starbucks CEO – during one of the early years, directly shared with the employees in a meeting at the start of holiday (peak) season that the company was going to miss its targets. This helped braced the employees for the tough times ahead and breed the feeling of “we are in this together”. The company missed its targets but the direct openness increased togetherness within the company and they beat their own targets next year.
Similarly, Tony Hsieh (Zappos) directly shared with its own employees in a companywide email as they struggled with cash crunch that they had to lay off 8% off its employees as it would help them stay cash positive for the next financial year. The impressive thing is he didn’t use corporate jargon like – restructuring/reorganization, which is common place nowadays. Clearly spelling out the reasons allows the employees to trust you and you at least have a chance that they can see the company’s viewpoint.
- As the company grows from a startup to decent sized organization – it is
very important to hire people who are a perfect fit to the company’s culture.
Many people look to jump in just to make a quick buck for 2-3 years, add to
their resume and venture towards greener pastures. But it ends up blowing a
hole in the culture and the fabric of the organization. The vision which the
company adopted gets relegated to just plaques and annual reports.
- Lastly, I find that making the customers happy should be the ultimate goal of any successful company. Not only Starbucks and Zappos tried to do that – if you look around every big successful company has adopted this mantra in their own way.
Starting a new company is like venturing out into the sea with a small boat but as the company grows braving the adversities it becomes a medium/big sized ship. And then it is very difficult to change its direction. So a lot of importance has to be placed in the starting years on company culture, and the commitment to the company’s vision.
A lot of other factors (tangible and intangible) decide how a startup blossoms but I realized that the above ones play a crucial role and shouldn’t be missed.