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The Zappos Story: How Failure can Fuel Business Success

The Zappos Story: How Failure can Fuel Business Success

By: James Marshall Reilly, author of Shake the World (Penguin, 2011)

Tony Hsieh and the Zappos team act with passion on a daily basis, and have done so from day one.

In fact, it is their passion that jettisoned them to the position they are in today.

They became so passionate about Zappos, the customer-service experience, the building of a self-contained company that followed its own rules, and the formation of a like-minded family of individuals that the company succeeded seemingly against all odds.

For Tony and his partners, Zappos was never simply about shoes. It was about passion and happiness. Not just for them, but for everyone who came into contact with the company.

Which brings us to failure.

When I called on Tony Hsieh to discuss failure, I was quick to explain that it wasn’t because I thought that anyone could somehow possibly construe that he was a failure.

But rather, since failure is such a close cousin to success, I suggested that nobody would be more intimate with it than someone who had achieved as much as he has.

The Zappos Story
In his book and in interviews, Tony has openly discussed the fact that after he took over as CEO of Zappos -- a company he had initially invested in and then stepped in to run-- they were going through growing pains.

After exhausting all other options, being turned down for venture capital and lines of credit, he had to liquidate many of his own assets in order to keep the company going, or else let it go under.

Years into it, in a final move to keep Zappos afloat for an additional six months, Tony sold a large loft affectionately known as “Club Bio” for 40 percent less than what he bought it for -- despite family, friends, and even some of his business partners expressing concern about the rationale behind putting so much of his own money into a struggling company after venture capital firms and banks had turned them down.

How to Process Failure
Since Tony has openly discussed several instances in his life in which he failed, including as a youth, I was curious as to whether or not he considered these experiences to be valuable tools later in life.

“I think a lot of people can view failure as a negative and label themselves as such,” he tells me.

“People with an entrepreneurial spirit view failure as part of a process -- not a permanent label. Don’t view failure as a character flaw,” he advises, which is how many of us internalize failure.

“If you get a cold, for example, you don’t view yourself as being permanently sick. It’s something you have to get through, then move on. I view failure in the same way.”

Capturing this sentiment in an even more focused manner, I referenced a line from Tony’s book that I found to be quite compelling.

“Even if Zappos failed,” he wrote, “we would have known that we had done everything we could to chase a dream we believed in.”

So, I asked him, what would he have done next? Was there a plan in place? I was attempting to identify a post- failure thought process. How do successful people anticipate failure and plan ahead?

“I would have just moved on to the next idea or opportunity,” Tony says.

“I didn’t know what that would be at the time, of course, but something else would have presented itself or I would have thought of something. That’s part of the Silicon Valley culture,” he tells me matter-of-factly.

And it makes complete sense within the mind-set of successful people.

If he had already had an exit strategy, it would mean that he was entertaining the possibility of defeat. An orientation that, in and of itself, would have made failure more likely.

The odd, yet perfect, combination of psychological underpinnings that support business success include the belief that failure is so normal that it is neither feared nor anticipated. Then, when and if it does occur, it is sourced for value and simply stripped of all power by being dismissed.

“Failure is not a badge of shame, it’s a rite of passage,” he tells me casually, and I proceed to write it down three times.

Failure is not a badge of shame. It’s a rite of passage.

Excerpted from Shake the World by James Marshall Reilly by arrangement with Portfolio, a member of Penguin Group (USA), Inc., Copyright (c) James Marshall Reilly, 2011.

Author Bio:
James Marshall Reilly
is an entrepreneur, journalist, and the founder of The Guild Agency Speakers Bureau & Intellectual Talent Management. His expertise lies in the branding and marketing of cutting-edge thinkers and connecting them with audiences worldwide. In November 2011, Reilly was honored at the White House as one of the top 100 entrepreneurs in the United States age 30 or under. For more info on his first book, Shake the World, visit shaketheworld.com.