In April 2009, Tony Hsieh, founder of online shoe retailer Zappos, traveled to Seattle for a meeting with Amazon founder and CEO Jeff Bezos to discuss the potential sale of Zappos to Amazon.
Though Hsieh wasn't enamoured of the idea of selling (he had already rejected Amazon's first approach in 2005), he felt it might be the only way to save his life's work.
In the midst of the 2009 financial crisis, Zappos's board of directors, trying to safeguard its cash flow, wanted to cut back on the corporate-culture spending that was consuming valuable resources. For Hsieh, however, that was not an option. His whole business philosophy revolved around investing in and building a strong corporate culture.
"It would have reduced our expenses in the short term, and I don't think our sales would have suffered much at first," Hsieh said. "But I was pretty sure that in the long term, it would have ruined everything we had created."
Hsieh's Dilemma
Despite Hsieh's conviction, the board remained sceptical, and the discussions were deadlocked. That sparked fears the board might fire Hsieh and hire another CEO willing to take a hard line on profitability versus company culture.
"The threat was never made overtly, but I could tell that was the direction things were going," Hsieh said.
Hsieh and Alfred Lin, Zappos's CFO and COO at the time, started searching for a way to resolve the situation. Selling the company and starting another one wasn't an option because; as Hsieh pointed out, "Zappos wasn't just a job; it was a calling." Their only option was to find new investors and buy out their board of directors.
Amazon's Second Attempt
At that point, Amazon approached Zappos for the second time. Initially, Hsieh was reluctant, fearing that Zappos was just another shoe company to Amazon.
"If we sold, we'd probably be folded into their operations, and our brand and culture would be at risk of disappearing," Hsieh said. But Lin was a little more optimistic, and he convinced Hsieh that since Zappos had proven its cultural philosophy via its commercial success, Amazon would likely allow Zappos to run its own show.
And that's how Hsieh—still unsure whether Amazon was the right buyer—ended up in Seattle, standing across the room from Bezos and reluctantly giving his presentation on Zappos.
But as he stood there, doubtful and unsure, something amazing happened that alleviated much of his doubt and changed the mood of the whole situation.
The Defining Moment
"Toward the end of the presentation," recalled Hsieh, "I started talking about the science of happiness—and how we try to use it to serve our customers and employees better."
Bezos, completely out of the blue, remarked, "Did you know that people are very bad at predicting what will make them happy?"