In This Episode: What makes a business work? I mean in the sense of the triple win: employees being happy, the customers being happy, and the owners making a decent return, or better!, on their investment. I’m going to tell you about a guy who applied Uncommon Sense, and figured it out.
One of the buzzwords of the Internet era is “serial entrepreneur.” You might think of Elon Musk, who I talked about in Episode 72, along with Bill Gates and Warren Buffet. In 1995 Musk co-founded a web software company called Zip2, which was bought out four years later by Compaq Computer for $307 million.
He started the first fully online bank, x.com, a year later, and merged it with Paypal, which helped that company grow like crazy, and two years later Paypal was bought out by eBay for $1.5 billion. And then Tesla, SpaceX, the Boring Company, and more. That’s one heck of a serial entrepreneur.
He’s now the second-richest man in the world, and although he’s obviously very good at what he does, and does wonderful things for the world, he’s often thought of as difficult to work for. Even kind of a jerk. I think that’s also true of the number-one richest, Amazon’s Jeff Bezos. Obviously good at what he does, but definitely not thought of as a fun, easy-going boss.
Tony Hsieh was a good boss, and a serial entrepreneur. Born in Illinois, he graduated Harvard with a degree in computer science in 1995, so he came on the Internet scene shortly after Musk, starting an online advertising network called LinkExchange in 1996. It was obviously a good idea: by 1998, the company was bought out by Microsoft for $265 million.
With that windfall, he and a friend from Harvard started a venture capital firm to incubate new business ideas. And with that firm, in 1999 he bought into a company called ShoeSite.com. Not surprisingly, they sold shoes.
Hsieh almost turned the company down for his incubator. Really: who wants to buy shoes without trying them on first? Then the founder got his attention: he mentioned that in the U.S. alone, footwear is a $40 billion-a-year market, and 5 percent of that was already being sold by mail order catalogs — you know, printed on paper and mailed?! People do buy shoes without trying them on first, if the company does it right. Hsieh was so intrigued by it all he not only provided funding to the start-up, he agreed to come on board as CEO to run the company.
His venture capital company’s co-founder, his friend from Harvard? That was Alfred Lin: he also jumped in to work at the company, as both the chief financial officer, and chief operating officer.
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