Investors Take Note: Happiness & Culture Matter

I was reading an interview with Tony Hsieh (Zappos CEO) yesterday, and it had an interesting hidden gem. Zappos has a very customer and employee-centric culture; it’s one of the things that makes people fanatical about the company.

One of the things Tony talked about early in the interview was that his former company, LinkExchange, was sold because he was *unhappy* there. Apparently as they were hiring, they didn’t pay much attention to the culture, and as a result, they ended up with a mishmosh of staff that didn’t particularly get along, even though everyone could do their jobs just fine. So, the founders sold to Microsoft so that they could stop working there.

It’s not everyone that can sell their company for US$265 million and walk away when they’re unhappy, but it’s an interesting reflection on what makes entrepreneurs tick: happiness *matters*.

Here’s the actual quote from an interview with Tony on BigThink: “From the outside, the first company, LinkExchange, that I co-founded seemed like a success. It was actually a pretty sad thing selling the company. Most people don’t actually know the reason why we ended up selling the company. It’s because the company culture just went completely downhill. I remember when it was just five or 10 of us; it was kind of like your typical dot-com back in the day. This was 1996, and we were working around the clock, sleeping under a desk, had no idea what day of the week it was, but it was a lot of fun. But we didn’t know any better to pay attention to company culture.

“So, by the time we got to 100 people, we hired all the people with the right skill sets and experiences, but not all of them were culture fits. And when we got to 100 people, I remember I myself dreaded getting out of bed in the morning to go to the office. And that was kind of a weird feeling because this was a company that I co-founded and if I felt that way, then I wondered how all the other employees must have felt. So, we ended up selling the company.”

Wow. He’s essentially saying “we sold it because we hated working there.” Now, it may be that it was the perfect time in the marketplace to sell LinkExchange anyway, or it may be that that they sold earlier than they needed to, but having the bad company culture force your hand isn’t something that most entrepreneurs or investors want.

Author: Marcy Swenson

Marcy Swenson is an executive coach who works with tech startup founders and leaders. She writes about about entrepreneurs, leadership, and startup culture on her blog at StartupHappiness.com. She is studying what factors contribute (or detract) to creating a happy startup culture. Prior to becoming a coach, Marcy was a co-founder with two successful exits; at CPTH (Nasdaq), she built the tech team that led to IPO. Forbes names CPTH the fastest-growing high-tech company in the world in 1999. CPTH grew to 3000 employees in 4 years; for comparison, Google grew to 3000 employees in 6 years.