How To Not Be An SMB Anymore

According to Tony Hsieh, CEO of no-longer-small-business Zappos, the answer is all about company culture.Dedicated bMighty readers may recall that I blogged about online shoe retailer Zappos.com last spring -- citing the company's unusual policy of offering to pay all trainees to quit after the first few weeks.

Well, I caught Hsieh'spresentation at the Web 2.0 Summit this afternoon, and it turns out that despite upping the offer from $1,000 to $2,000, the 9-year-old firm now has some 1,600 employees, and thus no longer qualifies as a small to midsize business.

Good for them. How did they do it?

Hsieh claims it has nothing to do with selling shoes. In fact, he hopes that in 10 years, people won't even know the company started out selling footwear. Instead, Hsieh said, it's all about offering "the very best customer service and customer experience." That means free, surprise upgrades, perhaps to overnight shipping, so a customer unexpectedly receives the next day. It means putting the 800 number at the top of every Web page. "We actually want to talk to customers," Hsieh explains. "The telephone is one the best branding opportunities out there." And Zappos doesn't have call center scripts or set minimum call times.

With all that, though, company culture is Zappos' number one priority. "Culture and brand are two sides of the same coin," Hsieh says, adding that customers can sense when a brand is not authentic.

To ensure Zappos' culture stays strong even as it grows, the company conducts two complete sets of interviews for any new hire. One set is standard, the other is purely about the culture fit. All applicants must pass both.

Once hired, all applicants must go through the same four weeks of training designed for call-center employees, including spending two weeks taking calls. Despite those rigors and the plethora of call-center jobs in Las Vegas, only 2-3% of new hires take the money and run.

It doesn't end there. Performance reviews are 50% about the culture, Hseih says, and Zappos will "fire people if they're not good for the culture."

In fact, that's the key measure of what constitutes a company's core culture and values. Are you willing to hire and fire based on them? Interestingly, though, the key is simply to have a strong culture, Hsieh say, "it really doesn't matter what it is."