Tony Hsieh, chief executive officer of Zappos
Photograph by Andy Cross — Denver Post via Getty Images
By Jennifer Reingold
April 13, 2016

The past year has been a struggle for Zappos. Following a complex transition to a radically non-hierarchical management system called holacracy, and then the introduction of a second philosophy called “teal,” the Amazon-owned online shoe giant lost nearly one-third of its employees, including many of the longest tenured. It also fell off Fortune’s ranking of the 100 Best Companies to Work For last month after having been on the list for seven consecutive years.

Now CEO Tony Hsieh’s right-hand (or should we say right-foot?) man is jumping ship as well. Fred Mossler, who has no official title but joined the then-fledgling Zappos back in 1999 as the only person who knew anything about retail (he came from the Nordstrom shoe department), has told colleagues that he will be leaving as of June 3.

“I wanted to send out a brief note to let you know I’ve decided it’s time for me to leave Zappos,” Mossler wrote in an email to Zappos’ staff. “I’ve spent almost seventeen years with Zappos and have seen it grow from a two-bedroom apartment to the amazing company it is today. There are not words that can describe what this company has and what the people in it have meant to me and the appreciation I have for the opportunities I’ve had throughout the years.” Mossler wrote that he intends to focus on entrepreneurial efforts, as well as the Downtown Project, Hsieh’s privately-funded revitalization of downtown Las Vegas.

It’s unclear whether the departure of Mossler has anything to do with the changes in management philosophy. But his reference to holacracy is a shorthand example of just how complex the system is. “I’ll be working with my lead links over the next six weeks to transition my roles to a distributed set of people,” he wrote. “Prior to implementing Holacracy I would have been concerned about my absence leaving gaps in the organization, but due to my roles being clearly defined, the transition will be a lot easier than it would have been prior to Holacracy.”

In recent years, Mossler branched out into other outside interests, such as the restaurant chain Nacho Daddy and the Downtown Project. But he didn’t leave when, about a year ago, Hsieh launched “the offer,” in which anyone who didn’t support Zappos’ new management approach would be paid as much as one month for every year worked should they opt out. One wonders why now, if the culture is, as Hsieh asserts, beginning to stabilize, Mossler is leaving.

In an email to Fortune, Mossler explained his departure this way: “I feel the timing is right personally and also feel Zappos is in a good place right now for me to leave. Zappos and everyone in the company have done so much hard work over the past few years moving downtown, implementing holacracy and self organization, working through The Offer and while there is still a lot of hard work ahead, I’m very optimistic about the future of Zappos.

“I’m turning 50 this summer and want to devote more time to family with the two new babies at home and my older children leaving for college in a couple of years. I also want to pursue some other interests, such as Downtown Project, The Life Is Beautiful music festival, Nacho Daddy and a few other companies that I have invested in.

“I never considered taking The Offer. I was strategically involved with Tony and a few others in drafting The Offer, and I was fully committed to seeing Zappos through its execution. Zappos has now come out on the other side of The Offer and is in a very good place. I’m also still committed to holacracy even though I am leaving Zappos. For example, DTP Real Estate is now operating on holacracy, and I am the lead link. I plan on staying close to Zappos and will continue working with Tony on other projects and hopefully will still be a thought partner for Zappos.”

There is no indication that Mossler will be replaced. Still, it’s increasingly clear that, even though Mossler says he and Hsieh will remain “tied at the hip,” as Zappos continues to flatten, there is only one person—Hsieh—at the top.

Update: This article has been updated with comments from Mossler.

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