business news in context, analysis with attitude

The Wall Street Journal has a story about how Amazon "is slowly dismantling Tony Hsieh’s version of Zappos, more than two years after the famed entrepreneur’s death.

"Zappos laid off more than 300 employees last month, or about 20% of the Las Vegas-based company’s workforce, according to people familiar with the layoffs and a Zappos memo viewed by the Wall Street Journal.

"The Zappos cuts came as part of broader layoffs at Amazon that are expected to eliminate more than 18,000 employees, which the Journal reported will affect roughly 5% of its corporate ranks. They are also the latest in a series of moves by Zappos’s longtime parent company that have largely unraveled Mr. Hsieh’s legacy, people familiar with the companies said."

The Journal writes that the changes at Zappos have included the departure of people who were long-term members of company leadership, as well as layoffs in the customer service division, which was a high priority during Hsieh’s tenure.

Some context from the Journal story:

"Mr. Hsieh agreed to sell Zappos to Amazon on the condition that the company operate independently. He worried over the years about what Zappos employees referred to as 'Amazon creep,' a reference to Amazon executives getting more involved and imposing their more traditional management style, according to former Zappos employees.

"Mr. Hsieh’s core values included 'Create fun and a little weirdness.'  He treated employees like family, throwing lavish parties and happy hours. He embarked on a much-watched management experiment called 'holacracy' that advocated a decentralized management structure: essentially no bosses. The system ended up producing its own kinds of bureaucracy, and some units stopped using it.

"By 2019, Amazon was pressuring Mr. Hsieh and his team to meet certain growth targets, according to the former employees.

"At the same time, Mr. Hsieh was struggling with a worsening drug and alcohol problem, the Journal has reported. His mental health also suffered. By the summer of 2020, he was increasingly abandoning his Zappos duties and, facing pressure from Amazon to improve, he abruptly resigned in the summer of 2020, according to the former employees.

"Family and friends … attempted to get him help before his 2020 death, which came from complications from smoke inhalation following a house fire in Connecticut."

KC's View:

Some of this is inevitable, especially since Hsieh isn't there to resist.  (Though even he might've found that difficult - once you cash the check, the deal is done.)

That said, Amazon bought Zappos because it offered a unique take on the e-commerce experience.  At a time when Amazon's customer experience arguably is less impressive than it once was, dumbing down the Zappos' experience may be the wrong way to go.

Some of this is optics - like replacing the iconic white Zappos boxes with Amazon's brown boxes.  But some of it is tangible and operational, as the Journal writes that "in general, Amazon is much more involved in Zappos and its business decisions than when Mr. Hsieh ran the company."

History books are filled with stories of acquiring companies that have screwed up the cultures and operations of entities for which they spent a lot of money.  It is the result of hubris, and there is plenty of that at Amazon to go around.

There is one line from the Journal story that made me chuckle:

"…a reference to Amazon executives getting more involved and imposing their more traditional management style."

From its inception, Jeff Bezos kept a Today-Is-Day-One ethos at Amazon by not being traditional.  That line, which is kind of a throwaway in the story, kind of adds to the sense that at Amazon now, Today-Is-Day-Two.