How This Company in a City Became a City in a Company


Running a company like a city is the premise upon which our CEO, Tony Hsieh, adopted the self-governing practice of Holacracy for Zappos in 2013. Research showed him that companies tend to become less productive and innovative over time as they increase in size. 

According to the United States Geological Survey, there are 35,000 cities and towns that make up our country. The United States Census Bureau shows the number of towns or municipalities with fewer than 10,000 residents to be about 31,000, which means only the remaining 4,000 qualify as a true “city” as defined by population (being 25,000 or more people). It is determined that half the U.S. population resides in these 4,000 cities. That’s a lot of people concentrated into a relatively small space, and yet cities seem to survive and thrive.

Cities may close their factories, their steel mills, their major tourist attractions, or other entities that once helped them thrive; cities may do a lot of things wrong to cause profitability issues; Mother Nature may even take a devastating toll on an entire community. Even in these negative circumstances, we simply don’t see, in today’s society, an entire city just crumble and go away. 

Running a company like a city is the premise upon which our CEO, Tony Hsieh, adopted the self-governing practice of Holacracy for Zappos in 2013. Research showed him that companies tend to become less productive and innovative over time as they increase in size. He discovered that in contrast the majority of cities increase in productivity and innovation as they increase in size.


The experiment

The knowledge he gained in his research intrigued Tony enough for him to create a cross between a corporation, community and city when relocating Zappos from suburban Henderson, into the throes of urban density: downtown Las Vegas. This downtown campus would be directly connected to its surrounding community, keeping the company focus onsocial, environmental, and entrepreneurial responsibilities. More like a city, less like a bureaucratic corporation.

Emulating a city makes our coworkers our neighbors, right?  Like settlers crafting a new village, it goes without saying the success of the Zappos brand in this experimental corporate-community hybrid must rely on the effectiveness of our strong company culture.


Howdy, neighbor!

Live in any city long enough and you’ll learn the benefits of harmony among a close knit group of neighbors. While it can take a lot of hard work to achieve that harmony, it’s always worth the effort. With that in mind, I decided to take a virtual stroll through our “neighborhood” to see how our culture is helping our little city/community succeed in these early years of this transformation. Is our culture ensuring a positive and dynamic community for our customers, our vendors and each other? The way I see it, the easiest way to be certain that it does is to apply the “unspoken” rules of neighborly love.


Five rules to achieve and maintain neighborly love

1)    Do unto your neighbor as you would have your neighbor do unto you.

You can certainly tell when it’s someone’s birthday or work anniversary here in our community by the heaps of confetti surrounding their work stations. Actually, balloons, cards, gifts and gadgets galore can grace anyone for a plethora of reasons around here. You name it, when it comes to celebrating and honoring our neighbors, we believe it is top of the list of important things to do. In fact, we have a whole team of people whose roles are focused on putting a smile on the face of their fellow neighbors.

Each and every day, whether in the Call Center on in Merchandising, we deliver stellar service to customers and vendors, keeping Zappos at the top of the ratings of esteemed U.S. companies. Therefore, it only makes sense to offer that same great service to one another, allowing our gratitude to replenish our spirit of giving.

We can grant a helpful neighbor a $50 bonus that appears on their paycheck compliments of Zappos. Once a month, a Zappos Hero is selected, an award that comes with an assigned parking space and gift certificate. These are two of the many ways we can do unto our neighbor, as we would have them do unto us.


2)    Don’t look at the splinter in your neighbor’s eye when you have a plank in your own eye.

Using this biblical parallel, it’s easy to imagine the number of challenges that may arise in an environment where everyone is encouraged to bring their own entrepreneurial energy and passions to the table. Leaders and team members alike may not agree on the methods through which tasks are accomplished, or even what tasks are necessary for that matter. What then?

Offering conflict management courses on a regular basis is a way we allow our neighbors to learn how to approach each other in a diplomatic and respectful manner. Because at the end of the day, it’s not about who’s right and who’s wrong. It’s about valuing each other’s contributions to the main vision by developing a conscious awareness of how our actions may affect others.

To take matters a step further, if there’s a Hatfield and McCoy situation brewing, both parties can request a private meeting with a qualified mediator to help coach them to a resolution. There are many other resources at our fingertips to help us stay aligned with our core values of build open and honest relationships with communication, build a positive team and family spirit, and create fun and a little weirdness, just to name a few.  


3)    The grass is not always greener, so don’t hate.  

Have you ever envied your neighbor’s new car in their driveway? Do you find yourself lamenting over your flowerbed full of brown weeds, while your neighbor’s is vibrant and colorful?  Who hasn’t envisioned someone else’s job, or even life, as better than their own?

Not only is this unhealthy to your psyche, but it’s also totally unnecessary here in our neighborhood. Why? Because we encourage “shadowing” with neighbors on any given day so you can see just what it is others do in their roles within the company. This presents an excellent opportunity for many reasons.

Perhaps you thought someone’s role was all glitz and glamour until you sat with them for several hours and really saw firsthand the hard work required of them. Shadowing not only gives you insight into a role you may also like to hold, but you also get to see the bigger picture in how all our roles come together for the greater purpose of fulfilling our company’s vision of wowing customers.  

So, here, when it comes to sharing close space with neighbors who may all be doing such different activities, we don’t have to hate; we investigate.                   


4)    Make it a point to learn who your neighbors are.

“There are companies that focus on work-life separation or work-life balance,” says Tony. “At Zappos, we really focus on work-life integration and at the end of the day it’s just life…..and especially if you spend so much time at work, you better enjoy the time you’re spending there and the people that you’re with….”

Never have those words been truer than when it comes to our Zappos community. Strolling across campus you see neighbors playing games such as miniature golf, ping pong, and foosball. They’re enjoying lunch at the Bistro with their entire team, instead of using their lunch hour as an opportunity to eagerly rush away from those people. Impromptu happy hours or planned team-building activities offsite at bowling alleys, restaurants, hiking trails and other fun places are a regular occurrence many look forward to. 


5)    Keep your pets in your own yard.

A sure-fire way to get on your neighbor’s last nerve is to let your dog stray freely into their yard, digging up their flower garden or leaving “evidence” in their grass. I’m sure we all know proper pet etiquette, so I’m preaching to the choir here.

What we have in our Zappos community is rather unique compared to other companies—especially those of our size. Upon passing extensive testing, dogs are registered to accompany their pet parents to work on a regular basis. They hang out at desk-side, they sit on laps in meetings and they are walked to the grassy area on campus to stretch their legs. They’re definitely ogled over and petted everywhere they go.

There’s 6-year-old Max, a Golden Retriever, who’s in the process of being trained to become a 100% service animal. In the meantime, he’s successfully passed the necessary testing we require to hang out here with us. Shifu is a Chihuahua and is also 6 years old. This tiny service animal has the luxury of being carried around in his pet parent’s large “pet purse.” Duke is huge but as gentle as can be. He is a male Great Dane and is almost 5 years old.

The dogs’ presence is handled very diplomatically by Zappos, with best practices established for the pet parents and “no pet zones” designated to respect those workers with pet allergies. All in all, there are no known neighbor wars due to pet offenses. Could babies on board be next?   


A great city begins with great people

Well, it looks like our culture is helping to pave the way to a successful city-run company experience. Even so, like any community, there’ll always be hurdles in the system to overcome. Great neighbors—like the ones we have here at Zappos—working together is the key to keeping any community going strong. I believe if we all buy into Tony’s city vision, we’ll continue to be the best of neighbors for years to come. Now, for Pete’s sake, whoever borrowed my hedge clippers, please return them! 

Author: Terri Liggins

Tags: Culture

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