Zappos executives are looking for a way forward

It will never be easy to succeed Tony Hsieh, the famous CEO of Zappos, who has turned a tiny online shoe seller into a massive $ 1 billion fortune through his obsessive focus on literature. corporate chemistry and happy employees. But Kedar Deshpande took over at a particularly difficult time.

Zappos, owned by Amazon, has navigated remote work and struggled with pandemic changes in the way people shop when Mr. Hsieh abruptly retired in August after two decades, leaving Mr. Deshpande to Appointed as CEO. Then, in November, tragedy struck: Mr. Hsieh, 46, died from injury in a house fire in New London, Conn., Causing a shockwave across the company of about 1,500 people, also like technology and business people.

Since then, it has been reported that Mr. Hsieh has been acting erratic for months and that friends have considered intervening last summer. The revelations have brought new scrutiny into the circumstances of his departure from Zappos.

Deshpande, who was previously the chief executive officer of Zappos, said when Mr. Hsieh told him last summer that he wanted to pursue other projects, he didn’t decline.

“From my experience working with Tony, Tony has always believed in what he wants to change,” said Deshpande in an interview, the first being chief executive. “I asked him, ‘Hey, Tony, are you sure?’ And he said, ‘Yes, I want to retire’ – so that’s the end of the conversation. “

Now, Mr. Deshpande, 42, is tasked with leading Zappos through the end of the pandemic and entering the next phase of the company as an online retailer, without direction. lead by Mr. Hsieh. He also had to show whether the Las Vegas company’s “fun and a little weird” culture could exist without its chief architect.

“The Covid situation and everything else going on makes it very difficult, especially with a culture built on the physical intimacy and happiness attached to that,” Deshpande said in Interview with Zoom, from your home in Henderson, Nev. But he said he is optimistic about the future, especially given the decade he has spent at Zappos in various roles.

“Culture is not just about one or two people,” he said.

There was clearly no long-term succession plan when Mr. Hsieh resigned. Zappos’ board of directors, made up of Amazon and Zappos employees, elevates Mr. Deshpande to this role. The company was founded in 1999, which has long been operating as an independent unit within Amazon, acquired it for $ 1.2 billion in July 2009 and does not disclose its finances.

Erik Gordon, a professor at the University of Michigan’s Ross School of Business, said it would be difficult for someone to replace a CEO with an odd personality like Hsieh, who predicted that Zappos’ culture would face with some changes under new leadership.

Mr. Gordon said: “The person who took over from the founder, who created the culture doesn’t have the authenticity or moral authority as the founder. “Will he be able to maintain a slightly oddly cheerful spirit and a positive teamwork?”

(Mr. Hsieh did not start the company, but was regarded as the founder based on his involvement as an investor and CEO from its early days.)

Mr. Deshpande, from Aurangabad, India, came to the United States to obtain a master’s degree in computer engineering and joined Zappos after working at General Electric and PepsiCo. He joins the growing list of South Asian executives in the United States, at companies like Microsoft; Google’s parent company, Alphabet; and Gap.

Zappos, taking its name from “zapatos”, the Spanish word for shoes, is an early e-commerce success story under Mr. Hsieh, who wrote a bestseller in 2010, “Bring happiness: The path to Profit, Passion and Purpose. “It argues that a company’s top priority should be its culture and keeping employees happy is translated into success with customers.

The company, which moved from the Bay Area to southern Nevada in 2004 and now has a downtown Las Vegas campus, has developed a reputation as a fun, quasi-cult workplace where employees regularly interact at work and outside the office. The company claims that getting a job at Zappos is harder than getting into Harvard.

Deshpande says Zappos employees have become more intimate in a number of ways over the past year as they put their families or pets into remote work mode.

Mr. Deshpande, who has two young daughters, said: “When we run Halloween competitions, the whole family participates. He describes packages Zappos sends to employees and their families for activities such as planting an herb garden or conducting scientific experiments.

He predicts that employees will start back in the office after July 1 and be able to develop schedules that incorporate some remote work and some in-person work.

While Zappos didn’t have to grapple with drop-offs at physical stores like many other retailers did, it soon hit a pandemic when shoes and clothing turned into a belated mindset; Last March, few people bought high heels. Sales have rebounded since then, driven by demand in the so-called performance and home category – think running and hiking shoes, pajamas, sportswear and slippers.

Deshpande said he is not sure when demand for heels will return, but predicts that people will continue to want comfort as the economy reopens.

Zappos has introduced and expanded ways to deal with online shopping bottlenecks during the pandemic, such as allowing some customers to return through UPS’s home pick-up service and helping with bartering. easier. It has also been observed that the average duration of calls with customer service reps has increased as people have more time in a closed world. They also left more detailed reviews on the product.

One of the company’s biggest goals and a top priority for Mr. Deshpande for the coming years is to find a way to make online shopping less transactional and more like a browsing experience than any People searching in malls and department stores. That includes developing new digital magazines that look like “vertical” – like what media companies create – such as “The Ones”, which are tailored for female sneakerheads and advertised as “powered by Zappos”.

Zappos is also behind VRSNL, a chic website with its own web address and no display link to the shoe page. It features products from designers like Dolce & Gabbana and Proenza Schouler. The company has been putting new efforts into product detail pages and informational videos serving audiences like newcomers and even co-developing merchandise and campaigns with the brands it carries.

“What online can’t deliver, what physics offers today, is around these different experiences,” says Deshpande. “In my opinion, until you really go ahead and deliver these experiences, people will go back to reality, and they’ll stay online for trading experiences only” .

The company calls these efforts “experience trade” and says the portfolio is driving 25% of its investments. In addition to driving consumers to explore more, Zappos is also trying to make online shopping more engaging – all with the aim of getting consumers to spend more money over time.

“One of the challenges is that when someone goes ‘online’, say someone is searching for a jacket, we show them their inventory side by side – like a $ 30 coat. , $ 50, $ 100, $ 300, “says Deshpande.” It’s been a very disorienting experience. “

In his opinion, all efforts are in line with Zappos’ obsessive focus on the service over the past 20 years, which he predicts will maintain focus on for the next 20 years.

Deshpande said, while the company is still grieving Hsieh, its employees will continue to show the values ​​he has championed. He points to an example during the holidays when an employee mentioned children missed meeting Santa during a pandemic, leading to multiple departments efforts to set up Santa Zoom meetings for kids. children all over the country.

“For me, Tony’s legacy is to bring happiness to everyone,” said Deshpande. “The culture that he has created or pioneered, it will survive.”