Tony Hsieh of Zappos.com: Passion, Purpose and ProfitAugust 5, 2011
Is the future of sustainable growth in corporate America linked to how happy we are to go to our jobs every day?
Tony Hsieh, CEO of Zappos.com, says it is.
Research on happiness at work illustrates that personal job satisfaction is closely linked to feeling like we are part to a higher purpose, or that we’re doing something that we really believe in.
Groups of happy people working together with shared values and a common purpose will lead to growth and success of companies across the country — something we need to see more of in this difficult economy.
Sounds good, doesn’t it? To find out how that works in the real world, Dylan caught up with to Tony Hsieh, CEO of Zappos.com and author of “Delivering Happiness: A Path to Profits, Passion and Purpose.”
“Zappos is a business that reflects the values, or one of the businesses that reflects the values,” says Dylan. “But values go far beyond overnight delivery of any particular item or good and really go to an exploration of your own passion, your own purpose, and your own desire and ability to realize your own potential.”
Here were the takeaways from our conversation with Tony Hsieh about the principles he built Zappos culture on:
1. The basic principles of happiness apply to both personal and corporate life. According to Tony, “happiness is about being able to combine pleasure, passion, and purpose… in order to build a long-term sustainable growing business, it’s about being able to combine profits, passion, and purpose. So there are these weird parallels, actually, between the research that’s come out of the science of happiness and the research that’s come out of what makes for a long-term sustainable growing company.”
2. Money does buy happiness… but only to a point. “Once people’s base needs are met, once they’re not worried about putting a roof over their head and putting food on the table, that additional money actually doesn’t buy happiness. There’s actually some evidence that a lot of additional money will actually increase your stress and bring your happiness levels down because you’re too busy trying to worry about how to protect it,” says Tony.
3. Doing meaningful work isn’t just about money or paying the bills. “when people do something that actually contributes to a higher purpose that they really believe in, that actually – research has shown that actually is the longest lasting type of happiness.”
4. People don’t know what will satisfy them in the long term. “The stuff that most people intuit, they believe in their minds that it will make them happy, but when they actually get there, they find it’s not quite as long-lasting or aren’t quite as happy as they had imagined all these years. Lat lottery winners, their happiness right before winning the lottery compared to a year later, and a year later, it’s actually about the same or it may be even a little bit lower than it was before they won the lottery,” says Tony.
5. Take money out of the picture to figure out what will make you want to go to work every day. “It’s actually one of the interview questions when I’m interviewing people — basically, the question is: If you were to win the lottery tomorrow, what would you want to do with your life? Some people say, “Well, I would travel around the world and go to this country or this country,” or “I would go and teach kids.” And what’s interesting about the responses is in most cases, they can do that today. They don’t actually need to win the lottery to do those things that they’ve been putting off most of their lives,” says Tony. “I think it’s a helpful mental exercise just to take money out of the picture and really focus on what will really make you happy.”
Dylan: Welcome to Episode 67 of Radio Free Dylan -- a few days ago on the program we had Zappos founder Tony Hsieh whose primary message, whose real message -- whose real core message is -- if you can identify your purpose and persue it with passion with people who share your values, the result will be money. It’s as if money is the exhaust -- it’s not the purpose, it’s not the causality. It’s the exhaust. Take a listen.
Tony: I’ve never thought of it in terms of using the word exhaust -- but yes, I like that.
Dylan: It’s like if the car runs well, if the machine runs well, the byproduct from the machine it happens to just – money happens to spill out the back of it because the purpose and the passion is being fulfilled through shared values.
Tony: Right, and you have the – and people align and decisions just get made so much faster because there’s alignment and values.
Dylan: There’s a perception in American culture, in American wealth, in American reality that having a lot of money, having possession of a lot of money by definition will make you – will relieve you of personal pain and suffering in some way and release a sense of happiness in you—If I win the lottery, if I sold my company for a million-jillion dollars, which you have done, if I could wherever it might come from, you seem to argue more that money is only as valuable as your ability to use it to pursue a high purpose, or a purpose.
Tony: It’s not actually an argument. I’m more just summarizing research that’s actually been done, and you can choose to ignore the scientific research or not, but there’s actually been research that has shown money does actually buy you happiness up to a certain point, and recent publication have cited that number is actually at around $70,000. But, in general, what people have found is that once people’s base needs are met, once they’re not worried about putting a roof over their head and putting food on the table, that additional money actually doesn’t buy happiness and there’s actually some evidence that a lot of additional money will actually increase your stress and bring your happiness levels down because you’re too busy trying to worry about how to protect it. And instead beyond getting your basic needs met, things like the number and depth of your relationships are much more important and doing something that you’re passionate about, like so passionate about that when you’re doing that three hours pass and it seems like it’s only been 20 minutes and you lose a sense of time, those types of things. And for some people, that might mean painting, for other people, that might mean running, but really finding what it is that you’re truly passionate about. And then, as you mentioned, doing meaningful work, doing something that has a high purpose, that isn’t just about making money or paying the bills. And when people do something that actually contributes to a higher purpose that they really believe in, that actually – research has shown that actually is the longest lasting type of happiness. So there’s actually a few different types of happiness, and it’s interesting because, as I was reading through the research, I realized that happiness is about being able to combine pleasure, passion, and purpose, and the subtitle of my books is actually based on business research where they found that in order to build a long-term sustainable growing business, it’s about being able to combine profits, passion, and purpose. So there are these weird parallels, actually, between the research that’s come out of the science of happiness and the research that’s come out of what makes for a long-term sustainable growing company.
Dylan: There are many people who would intuit some of what you’re saying, or they would say to themselves, “Yes, I personally believe,” or “I have observed that having a certain amount of money is necessary to be happy,” and that having money beyond whatever that threshold is doesn’t create happiness and everything that you’ve already articulated, and if you were to leave it at that, they’d be fine. But what you’re saying is, no, there’s actually scientific research that validates that theory, and yet we find ourselves in a situation where with a media culture and marketing culture and a government culture and all the rest of it that really still celebrates having a lot of money as a lifestyle, through television, through all, you know, Paris Hilton, Kim Kardashian. The model for being at the top of the American heap is you’ve got so much money that you can use it to throw out the side of your car window.
Tony: Yeah, and part of that is societal, but part of that, I think, is just instinctive. As humans, one of the things that I learned out of reading about the signs of happiness research is that humans enjoy a sense of progress and the amount of money you have in the bank is something that you can see progress if you’re earning money over time. That’s also why with certain video games, you’re progressing up levels. And so you see that in different aspects of society. But what’s interesting is one of the other findings from the signs of happiness research is that people are actually very bad at predicting what will actually make them happy in a long-term sustainable basis. And so the stuff that most people intuit, they believe in their minds that it will make them happy, but when they actually get there, they find it’s not quite as long-lasting or aren’t quite as happy as they had imagined all these years. And probably the most widely cited example is look at lottery winners, their happiness right before winning the lottery compared to a year later, and a year later, it’s actually about the same or it may be even a little bit lower than it was before they won the lottery. So that’s kind of an unexpected – not something that you would predict for yourself. Interestingly enough, research actually has shown the opposite, too, for negative situations. If someone suddenly becomes unexpectedly blind, a year later, their happiness level is actually about the same as what it was right before they became blind, which is a surprising finding.
Dylan: Which is also interesting because what you’re really suggesting is that the brain’s ability to actually accurately perceive environment and events that are likely to satisfy or disrupt it, that they nature of what the brain perceives will please it or displease it when you actually look at the fulfillment of those anticipated pleasures or displeasures has a pretty limited correlation to what actually happens. Why’s that?
Tony: Yeah. That’s just how we were built, I guess. I don’t know why, all I can do is cite the research that…
Dylan: Understood. If you were to – there’s so many people who try to figure out what their relationship with money should be. In other words, is my relationship with money that I just want to get as much of it as I can because then I’ll feel better because I’ll have more security, or should I relate to money in a way that I’m trying to satisfy something that I want or desire, or should I relate to money in way that I’m using it to try to help myself progress down the realization of my own potential—I’m going to start this business with this money, I’m going to get an education with this money—whatever that may be, are there values that you look at and the relationship with money both as it’s liquid capital in an investment that you would want to invest in developing the business, and your own relationship with money in your own life such that your relationship with it skews towards things that will ultimately make you happy as opposed to not.
Tony: Well, here’s a question I actually have asked myself pretty much all my life, both on the business side and personal side, and it’s actually one of the interview questions when I’m interviewing people I ask. And basically, the question is: If you were to win the lottery tomorrow, what would you want to do with your life? And it’s interesting getting responses from people because some people say, “Well, I would travel around the world and go to this country or this country,” or “I would go and teach kids.” And what’s interesting about the responses is in most cases, they can do that today. They don’t actually need to win the lottery to do those things that they’ve been putting off most of their lives.
And so I think as a society, and just by default growing, we just assume we need more money in order to – one of my favorite books was the 4-Hour Workweek by Tim Ferriss where he was busy, I think he might even have been living in New York, trying to make all this money so he could one day travel around the world. And then he finally woke up one day and realized, “I should just travel around the world.” And traveling around the world doesn’t cost very much money in most countries, and he was getting by on like $4 a day or something. There are people that want to spend most of their life surfing or teaching surfing. That doesn’t cost a lot of money either and yet they’re kind of delaying this gratification. And so I think it’s a helpful mental exercise just to take money out of the picture and really focus on what will really make you happy.
On the business side, we actually did this exercise in the early days of Zappos, and we thought, “Okay, if money were no issue, what would we love to do?” And at that time, we were shipping all our packages by ground, and we thought, “Wouldn’t it be great if we could overnight every single package to our customers? That would just be the best service ever.” And we’re like, okay, we don’t have the money to do that but what can we do? And we used that overnight fantasy as, “Okay, maybe we’ll get there in ten years.” And instead, we started out ground shipping and when we got to a certain scale, we started upgrading everyone to three-day shipping. And then, after a couple years later, we went to two-day shipping. And then now, we actually do surprise upgrades for most of our loyal, repeat customers to overnight shipping, which we never would have gone down that path if we hadn’t asked that question of, “What would we do if we had infinite money?” But really thinking that framework helps, I think, both people and organizations really figure out what is really important to them and what they’re trying to do.
Dylan: And ultimately what you’re trying to figure out is what is the best use of resources, not just the money, but the human capital, the time, the fact that you’re in this environment where you’re working together whether it’s in the same room or digitally, and what you’re saying is it’s the release from some of the traditional architecture psychologically and giving yourself that creative space to say with the capital, whatever that capital is, infinite capital, “What would you do?”
Tony: Right. And you may not be able to do all of it, but I would bet for most people, you can probably do 80% of what you’d ideally like to do today without winning the lottery.
Dylan: Have you any theory as to why human beings who are maybe able to do 80% of whatever their dreams may be to win the lottery are refrained from engaging in doing that?
Tony: Because we’re built to really be afraid of risk. And the thing is, you know, today’s society is very different from 20,000 years ago. 20,000 years ago, if – it was actually good to be afraid because if you’re like, “Oh, you know what, I think I’m going to go explore the dark,” you’ll be eaten by a saber-tooth tiger probably, and that’s a very bad scenario. Today, if you go and say, “Oh, I think I’ll explore my passion for surfing,” or whatever – like the worst case scenario is not that bad, you probably are not going to be homeless, you probably have friends who has couches you can crash on. 20,000 year ago, you actually might not have foot or shelter.
Dylan: And so it’s as if some of the instinctual behavior or tribal behavior that served humanity incredibly well for tens of thousands of years…
Tony: Yeah, and they show up in silly things like public speaking, for example. I think most people would say public speaking is as scary as death or I forget what the other thing is. And if you think about it, there’s no real reason to really feel that way, but think about it from 20,000 years ago perspective where – like if you’re in a situation where you’re backed up against the wall and there’s like a thousand pairs of eyes looking at you, that’s a dangerous situation because it usually means you’re about to be eaten. And so I think that’s part of why we feel fearful in this situation.
Dylan: And again, with that perspective, it makes sense. But it also, I think, brings home what an incredible opportunity we find ourselves faced with right with the message that carried in the books like your and really more modeled in the businesses in the way your interact and your own personal values with all people and business and personal. At the same time, a failure to recognize some of these changes is remarkably dangerous.
Tony: It can be. I mean, I guess not dangerous in the sense of you’ll get eaten by a saber-tooth tiger, but dangerous in the sense that a lot of people aren’t going to ever fully realize their potential for their passion or what they actually want to do and so on because they’re just so used to the life they’re living now, and it’s comfortable. And Jim Collins who wrote Good to Great, one of my favorite quotes from him is that “good is the enemy of great,” and there are a lot of people out there that are living good lives which actually prevents them from ever living great lives.
Dylan: I think we’ll leave it on that note, Tony. A real pleasure and an honor to be able to interview you and learn a little bit about how you not only view the world, but how you’re choosing to communicate the values in your learning and experience as a result. A real pleasure.
Tony: Thanks for having me.
Dylan: All right. Tony Hsieh, Zappos is the business that reflects the values, or one of the businesses that reflects the values. But as you heard from Tony, those values go far beyond overnight delivery of any particular item or good and really go to an exploration of your own passion, your own purpose, and your own desire and ability to realize your own potential. As Tony said, in his experience, 80% of what people say they’d like to do if they won the lottery, they could do right now without winning the lottery. I’ll talk to you next time on Radio Free Dylan.