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Delivering Happiness Tony Hsieh CEO – Zappos.com, Inc. www.deliveringhappinessbook.com Pollstar February 16, 2010

Building a brand that matters leads to repeat customers and word of mouth...

Customer Experience What do customers expect? What do customers actually experience? What emotions do customers feel? What stories do they tell their friends? How can culture create more stories and memories?

Ways to build culture Hire and fire based on culture Performance reviews based on culture Pay people to quit Commit to your culture, vision, and brand

Example: Focusing on the 3 C’s C lothing C ustomer Service C ulture

C lothing, C ustomer Service, C ulture C ustomer Service C lothing C ulture

Delivering Happiness (customers and employees) “ People may not remember exactly what you did or what you said, but they will always remember how you made them feel.”

CULTURE “ Committable Core Values”

Example: Core Values Deliver WOW Through Service Embrace and Drive Change Create Fun and a Little Weirdness Be Adventurous, Creative, and Open-Minded Pursue Growth and Learning Build Open and Honest Relationships With Communication Build a Positive Team and Family Spirit Do More with Less Be Passionate and Determined Be Humble

COMMIT TO TRANSPARENCY “ Be real and you have nothing to fear” Your culture is your brand Don’t try to be someone you are not

“ That’s great… But it would never work at my company.”

It doesn’t matter what your core values are…as long as you commit to them. ALIGNMENT

VISION “ Whatever you’re thinking, think bigger.” Does the vision have meaning? Chase the vision, not the money…

VISION “ Don’t chase the paper, chase the dream.” Sean Combs aka “Puff Daddy” to rapper Biggie Smalls aka “Notorious B.I.G.” in Notorious

ENTREPRENEURS: “ What would you be passionate about doing for 10 years even if you never made a dime?”

EMPLOYEES: What’s the larger vision and greater purpose in their work beyond money or profits?

VISION MOTIVATION vs. INSPIRATION

Vision & Culture inspire Passion & Purpose

Example of evolving vision and brand 1999 Selection 2003 Customer Service 2005 Culture and core values as our platform 2007 Personal Emotional Connection 2009 Delivering Happiness

Questions Where does the story begin? Where does the story end? How do you reinforce the good memories? What were the emotions, positive and negative? How can you create more stories and memories?

My U2 experience Showing up 2 hours early with nothing to do VIP tent empty and not exciting Dealing with the crowds Dealing with security Long lines for drinks Long lines for food Long lines for bathroom 30 minutes trying to find people after the show 60 minutes trying to get out of the parking lot

My U2 experience Catching up with friends before the show Fun party bus to the show Amazing lights, stage, music Random guy getting pulled up on stage Hanging out with friends after the show Photos Reading articles about the concert

What’s your business? You’re not in the concert venue business. Cirque du Soleil is not in the circus business. You’re in the experience and emotions business. You’re in the stories and memories business. Think bigger.

TAKE A STEP BACK What is your goal in life?

WHAT IS YOUR GOAL IN LIFE? Grow Company Get a Great Job Boyfriend / Girlfriend Be Healthy Retire Early Make Money Find Soul Mate Run Faster Spend Time w/ Family Buy A Home Get Married Run A Marathon why? why? why? why? why? why? why? why? HAPPINESS why? why? why? why?

RESEARCH HAS SHOWN: HAPPINESS People are very bad at predicting what will bring them sustained happiness. “ When I get ___, I will be happy.” “ When I achieve ___, I will be happy.”

HAPPINESS: There is a SCIENCE behind many aspects of business including: conversion psychology of buying direct marketing customer acquisition metrics repeat customer behavior, etc. What if you spent just 10% of your time studying and learning the SCIENCE of HAPPINESS ? How much HAPPIER could you be?

A Few Different Frameworks of HAPPINESS

Perceived Control Perceived Progress Connectedness Vision / Meaning (Being part of something bigger than yourself) A FEW DIFFERENT FRAMEWORKS ON HAPPINESS:

Rock Star (Pleasure – chasing the next high) Flow (Engagement – time flies) Meaning /Higher Purpose (Being part of something bigger than yourself) 3 TYPES OF HAPPINESS time time time

RECOMMENDED BOOKS: PEAK Chip Conley TRIBAL LEADERSHIP Dave Logan, John King & Halee Fischer-Wright FOUR HOUR WORK WEEK Tim Ferriss HAPPINESS HYPOTHESIS Jonathan Haidt

Profits Passion Purpose GREAT BUSINESS

HAPPINESS time time time GREAT BUSINESS Profits Passion Purpose Pleasure Passion Purpose

What % of your time do you want to spend learning about the SCIENCE of HAPPINESS? How can the SCIENCE of HAPPINESS help your business, your brand, and yourself?

If the research shows that vision / meaning / higher purpose leads to happiness… What is your company’s higher purpose? What is your higher purpose?

My new book is titled “ Delivering Happiness” To be published June 7, 2010 www.deliveringhappinessbook.com

Delivering Happiness Tony Hsieh CEO – Zappos.com, Inc. www.deliveringhappinessbook.com

Legal and Financial Disclaimer P.S. You might be wondering why we need to have a legal and financial disclaimer in this presentation, but you are still reading, so our lawyers, auditors and accountants would really like to make sure we make the following clarifications. Although an audit was underway and almost done, the financial information presented in this slide show was unaudited. We made every effort to present the best information we had at the time. Gross merchandise sales is a non-GAAP metric. We use it to express the total demand across all of our web sites and stores. This number measures the dollar value of the orders placed in the year before accruing for certain items such as returns, and it ignores certain timing cut-offs that are required by GAAP for revenue recognition purposes. If we were a public company, we would have to reconcile gross merchandise sales to the nearest GAAP metric (net sales), but we are currently a private company so the gross merchandise sales number should be viewed just as an interesting number that we want to share with our friends. This presentation contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they ever materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by the forward-looking statements and assumptions. These risks and uncertainties include, but are not limited to, the risk of economic slowdown, the risk of over or underbuying, the risk of consumers not shopping online or at our web site at the rate we expected, the risk of supplier shortages, the risk of new or growing competition, the risk of a natural or some other type of disaster affecting our fulfillment operations or web servers, and the risk of the world generally coming to an end. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including statements of expectation or belief; and any statement of assumptions underlying any of the foregoing. Zappos.com assumes no obligation and does not intend to update these forward-looking statements. Congratulations on making it through all the fine print. If you enjoy fine print, look for openings on our legal and finance team at jobs.zappos.com .

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Zappos - Pollstar - 02-16-10

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Zappos - Pollstar - 02-16-10