Issue link: http://www.e-digitaleditions.com/i/55957
"interpret the visions and dreams of entrepreneurs about how the world should be." As he might tell business stu- dents, the more you venture, the more you stand to gain. Now the company manages a warehouse in Kentucky while running most of the operations out of headquarters in Henderson, Nevada, near Las Vegas. Among the employees in Henderson are those taking calls from customers who find the 800-number prominently displayed on the Zappos Web site. The commitment to customer service means there are no limits on calls, resulting in some phone interactions that last four and five hours; it also means the buying process is as simple and convenient as possible. "We think of ourselves as bringing the store to your home," says Lin. "Look through our store online. Pick out the items that you think you would like, and we'll ship them to you. Try them on in the comfort of your home. Keep the ones that you love, and ship back the rest." Moreover, ship- ping in both directions is free, and loyal customers are often upgraded to free overnight shipping as well. Lin joined Zappos in 2005, but he already knew a lot about the business. He'd been friends with CEO Tony Hsieh since their college days at Harvard University, and the two of them were early investors in Zappos through their invest- ment company Venture Frogs. Together with head merchan- diser Fred Mossler, they have built an online shoe store into an Internet juggernaut. That means, for Lin, it's time to move on. He recently announced that he'll be leaving Zappos for Sequoia Capi- tal by early next year. The venture capital firm—which has already invested in Google, PayPal, and Oracle—specializes in startups related to the Internet, mobile, and tech sectors. In other words, the kinds of companies that are close to Lin's heart. In an e-mail to Zappos.com employees, Lin explains the move by saying he is following his calling of helping 20 BizEd SEPTEMBER/OCTOBER 2010 You first became involved in Zappos when you and Tony Hsieh invested in it while running Venture Frogs. What made you believe the company could be successful, particularly with a commodity item like shoes? There was a certain amount of naiveté involved. We would like to say that we could foresee everything that would hap- pen, but if we had, we probably wouldn't have invested. All kidding aside, we almost missed investing in Zappos. Nick Swinmurn, the company founder, left a voicemail say- ing that he wanted to sell shoes on the Internet. Either Tony or I had a finger on the delete button. Then Nick went on to say that the U.S. market for shoes was about $40 billion. The clincher was when he said 5 percent of the market, or $2 billion, already was being sold on the Internet. It wasn't rocket science to dream that the Internet would be bigger than mail order. The fact that everyone thought it was a crazy idea also made the investment interesting. In the early days, people didn't think we could sell shoes on the Internet. Then, they didn't think an Internet company could provide great customer service. Then, they didn't think that a company could create a brand around great customer service or that an online company could create a personal, emotional con- nection with the customer. We realized that if no one else thought it could be done, then there would be very few companies trying to compete with us. If we could figure it out, it would allow us to build a valuable company. Why do you consider customer service such an integral part of Zappos.com's business model? Customer service is one of the most undervalued methods of creating a substantial company in the long run, whether it is online or offline—but the key is in the long run. Most customer service departments are considered expenses, and it is easy to cut expenses in the short run without damaging things in the short run. Try turning the problem on its head. See if making a greater investment in customer service will pay off over time. In theory, if customers are treated well, they will be more loyal and more likely to promote the company. In theory, that should allow you to spend less on marketing. That is how it played out for Zappos. On any given day, three quar- BOB BARKANY/GETTY IMAGES