Amazon/Zappos Acquisition: Culture Matters

This morning brought some big news in the online industry, with online mega-retailer Amazon buying online soft goods retailer Zappos. What made the news so important wasn't the fact that Amazon made a major acquisition -- something that it has rarely done -- or the purchase price of $900+ million. What made it big news is that Zappos is renowned for its very unique business culture, where employee empowerment and customer service are pursued with absolute fanaticism. The company has been held up by many in the marketplace as the model of a company that authentically and transparently "lives" its brand -- delivering happiness through obsessive customer service. 

My first reaction, and the first reaction for many of you as well, I suspect, was to question whether the Zappos culture would be smothered or altered by an acquisition and integration into a much larger -- and much more regimented -- business enterprise. At this point, none of us can know the answer; but I was encouraged by the fact that the CEOs of both Zappos and Amazon took steps to reassure everyone that they understand the importance of Zappos' unique culture and will work to preserve it.



Specifically, Tony Hsieh, the CEO of Zappos, posted a letter for all employees, the press and the public to read, with a very direct and honest assessment of what the acquisition will mean and how it came about. Embedded within is a wonderful eight-minute video from Amazon CEO Jeff Bezos explaining his philosophy and commitment to the customer-service culture of Zappos.

Jeff's video is special. Everyone should see it. In it, he explains "Everything I know" about business, with the strong implication that the way he thinks about business and Zappos' culture are very well aligned. The four points that he bullets are worth repeating here:

Obsess over customers. For Amazon, everything starts with the customer. While they pay attention to competitors, they don't let competitors drive what they do.

Invent. Amazon listens to customers, recognizing the need to invent solutions for them, since they can't do it themselves.  Jeff see this as a critical part of what Amazon does -- invent on behalf of customers.

Think long term. Amazon strategists try to look five years out. They don't worry about taking actions that, while they might pay immediate dividends for customers, won't pay off for the company or its investors for five to seven years. They have a willingness to be misunderstood, since so many people only understand short-term needs and short-term thinking.

It's always Day 1. There are always more opportunities to invent more for customers. It's never over or too late.

What I like about this list is that it is simple, and a creed that Amazon not only preaches, but practices as well; of course. Yes, I did raise the issue a couple of months ago that maybe Amazon could be more aggressive in broadening the distribution of Kindle, but that's splitting hairs.

I really like how Zappos and Amazon handled this announcement; so few companies put themselves out on a limb like this. What do you think? Will the Zappos culture be preserved? Did Jeff Bezos nail it with his video?

2 comments about "Amazon/Zappos Acquisition: Culture Matters ".
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  1. John Bruce, July 23, 2009 at 6:03 p.m.

    Through experience, I've noticed that when you go from a small, customer-focused company to a huge online mega store, your customers have a harder time reaching you. How many phone options will the average customer have to go through to reach a live person? Hopefully not too many. Don't frustrate the customer!

  2. David Graham, July 24, 2009 at 4:11 a.m.

    Amazon will smother Zappos, just as it smothered and rendered practically useless the large used book site it bought eight or nine years ago.

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