Zappos CEO Tony Hsieh is stepping down after 21 years at the helm.
Kedar Deshpande, COO at the company, has assumed the role of CEO, according to an internal email obtained by FN.
“I’m reaching out to share that Tony has decided to retire as CEO of Zappos. We want to thank Tony for his 20 years of work on behalf of Zappos customers and employees and wish him well in his next chapter,” Deshpande wrote in the email. “Effective today, I will be assuming the role of CEO and will be working to make this a seamless transition. As always, we are focused on wowing customers and the 10 core values that drive us every day.”
Hsieh, a tech visionary, built one of the most innovative and successful concepts in modern history, sold it to Amazon in 2009 and continued to grow it far beyond shoes.
“A lot of our growth and innovation moving forward will be based on thinking about what we’re in the business of differently,” Hsieh told FN last year, when Zappos celebrated its 20th anniversary. “We used to say we’re a service company that just happens to sell shoes, and now it’s turned into: We’re a service company that just happens to sell blank.”
It’s been more than two decades since entrepreneur Nick Swinmurn latched onto the idea of selling shoes online, and left a voicemail with Hsieh’s San Francisco venture capital fund, Venture Frogs, hooking him with one factoid: “It was the fact that 5 percent of a $40 billion shoe business was already being done through mail order,” Swinmurn told FN during a 2009 interview.
Then, after another call to the Nordstrom department store in San Francisco Centre, buyer Fred Mossler jumped on board, and the trio got to work. In those early years, Hsieh and team focused on building a unique corporate culture — and were pioneers in free shipping and returns, long before e-commerce took off across the rest of the industry.
In 2009, Zappos was acquired by online behemoth Amazon.com Inc. for 10 million shares of Amazon stock, which, at the time of the closing, Hsieh said was worth roughly $1.2 billion.
While many market watchers celebrated the union, they also speculated that the new parent could impose its own culture on the new division. But true to the initial agreement, Zappos has continued to operate separately from Amazon, maintaining its own leadership team and unique character. (The one area of overlap is fulfillment, as Amazon took over Zappos’ warehouse operations in 2012.)
Several years into the Amazon partnership, Hsieh launched The Downtown Project, an initiative to revitalize downtown Las Vegas.
The goal, Hsieh explained at FN’s 2013 CEO Summit, was to create a neighborhood that is walkable and community-focused. The Downtown Project is even investing in individuals, helping them realize their dreams of starting small businesses. “We are thinking of the city as a startup,” he said. “We want it to be the anti-Strip — with bars and coffee shops.”
In 2015, the company did away with managers in favor of a form of self-organization called holacracy.
In a blog post at the time, Hsieh wrote, “Like all the bold steps we’ve done in the past, it feels a little scary, but it also feels like exactly the type of thing that only a company such as Zappos would dare to attempt at this scale.”
Since its early days, Zappos has functioned as something of an incubator for testing theories about corporate culture and productivity — long before those ideas became the buzzwords they are today. Much of the credit for that lies with Hsieh.
Burned from the experience with his first company, Hsieh used Zappos as a platform to champion connectedness and employee relationships, and looked for ways to bring happiness into the workplace. — With contributions from Jennie Bell
This is a developing story. Check back for more.