Tony Hsieh Talks Downtown Project & Company Culture

November 18, 2015

9:00 am

Zappos CEO Tony Hsieh (who’s currently living in an Airstream trailer as part of a community experiment) started out with a five-year plan when he first made Las Vegas’ Downtown Project a reality. Now three-and-a-half years into the plan, he sits down with Tech.Co’s Frank Gruber at Celebrate 2015 to talk about lessons learned, present status, and future goals of the project.

Hsieh says that one of the goals was to be cashflow-positive across all investments by the end of the five years. It seems like the investments are paying off and that goal is well on its way to being attainable. Here are a few key takeaways from Hsieh’s chat with Frank.

Expectations of What “Community” Means, Varies

One of Hsieh’s goals from the outset of the Downtown Project was to build a community of entrepreneurs and tech enthusiasts who would live, grow, and learn from one another together. One challenge he did not anticipate was having to deal with competing definitions of what “community” means.

“We found that there was a lot of confusion in terms of what were the actual goals of Downtown Project. Because we said we really wanted to help build community, we had a some people start expecting us to do certain things that maybe would be expectations for what the government should be doing. And so over time we really had to clarify exactly what we were trying to do and so that’s when we came up with the 3 C’s of collision, co-learning, and connectedness.”

Holacracy Works for Zappos but Not for Downtown Project

There has been a lot of press about Zappos transformation from a more traditional management hierarchy to holacracy. So far it’s worked well for them. However, when Hsieh tried going the holacracy route with the Downtown Project team, it was not as successful. He compares holacracy to having a new iPhone with the latest iOS, but no apps:

“We [Zappos] are fortunate to be large enough where we have the resources and the people to focus on, for example, some people can focus on compensation, because there’s no out of the box answer to compensation, and other people can focus on other things and with Downtown Project, because we were just talking about the number of different investments and projects going on simultaneously, it was already hard enough to keep up with that number with the people we had, and so adding this other layer, without any apps, was tough.”

The Organizations Most Adaptable to Change Are the Ones That Survive

In response to an audience member’s question about how long it will take pervasive, traditional corporate structure to change, Hsieh paraphrased a Darwin quote about adaptation and applied it to companies. He also said that change is happening faster than it ever has.

“I think that over time, as we are moving faster and faster, as we all become more connected, and networked, and so on, that ultimately the old companies that you’re referring to will eventually die. Some of the bigger ones may take longer to die, but the ones that are gonna do well are the ones that really focus on values and self organization and company culture.”

You can check out the whole chat with Tony Hsieh here:

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Kristin is an aspiring entrepreneur who is enthusiastically navigating her way through the DC startup space. She has an unending passion for learning and is never satisfied with the status quo. During the day she is an ops, biz dev, and marketing maven for Fission Strategy

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