Growing a business is fraught with risk. Perhaps the greatest
risk is running out of cash. Zappos came close to running out
of cash in 2003. In June of 2003, Wells Fargo, after
performing significant "due diligence", provided Zappos with
a $6 million line of credit. After signing the loan documents
Hsieh wrote an e-mail to "employees, vendors and friends of
Zappos". If you read the letter, it becomes easier to under-
stand how Zappos went from non-existent in 1999 to selling
itself to Amazon for $1.2 billion in 2009.
A few more excerpts, taken from Delivering Happiness: A
Path to Profits, Passion, and Purpose:
"......we now have 200,000 pairs of shoes in our warehouse.
....The plan is to have over 600,000 pairs of shoes in our
warehouse by the end of next year, so that we can offer a
truly amazing selection for all of our customers."
"If we spend our money carefully and continue to constantly
improve the customer experience, we will reach over
$1 billion in shoe sales a year in the not to distant future."
"If we continue to be the leader in our space because of our
relentless focus on improving the customer experience...."
"Already, we've done a lot of revolutionary things that our
customers love. We have the best in-stock shoe selection
anywhere, offline or online. We provide free shipping and
free return shipping...for all of our customers as a standard
part of our service. And although we promise our
customers they will receive their shoes within 4-5 days, we
upgrade the service for almost all of our customers....It's not
something we have to do and it's not something that will
increase our profits in the short term. But because it's
something that creates a great customer experience...."
I've been looking for a great customer experience. I've
been buying my shoes (mostly penny loafers) from a
teeny tiny independent shoe store in downtown Newark
for as long as I have lived in town. Lately however, he
has been having trouble acquiring the shoes I want to buy.
I like being loyal, but I need some new shoes. Ergo,
after I post this, I'm going to zappos.com and buy a pair
of size ten cordovan loafers. I'll let you know how it