In 2009 Amazon.com bought a small competitor, online shoe merchant Zappos, for $1.2 billion. It was an unusual deal in that Amazon promised to leave Zappos alone so long as it hit certain financial targets. Tony Hsieh, CEO of Zappos, wrote the following year that the relationship between Zappos and Amazon was “governed by a document that formally recognizes the uniqueness of Zappos’s culture and Amazon’s duty to protect it. We think of Amazon as a giant consulting company that we can hire if we want—for instance, if we need help redesigning our warehouse systems.”
At the time, I doubted Zappos’s independence story, especially given that the overlord in question was the all-powerful Amazon. Six years later and after having read the just-released and extraordinarily vivid account of life at Zappos by my colleague Jennifer Reingold, for the first time I completely believe Hsieh.
In short, the story of how Hsieh is managing Zappos is so wackadoodle that it’s inconceivable Amazon CEO Jeff Bezos would tolerate it if he hadn’t agreed to in the first place.
It is well-known by now that Hsieh is pursuing a no-management philosophy at Zappos called “holacracy” and that a significant percentage of the company’s employees—Reingold, tongue in cheek, calls them apostates—have left as a result. What Reingold, America’s preeminent journalist writing about management, reveals is the depths of the eccentricity Hsieh has promulgated on his Las Vegas brainchild.
A snippet for those who assume Hsieh’s philosophies are all touchy-feely: “In early 2013 the human resources department became the first group at the company to deploy holacracy. Employees were shocked and frustrated by the numerous mandates, the endless meetings, and the confusion about who did what.” Eliminating management, it turns out, bred chaos.
All is not lost. Reingold reports that Zappos continues to satisfy Amazon and that Hsieh remains committed to his plan. He has made it this far, and while his ideas might be extreme it’s not like the rest of the business world has exactly nailed managerial excellence. Curious to know if you can learn anything from Hsieh’s curious mind? Read this story.
Adam Lashinsky @adamlashinsky adam_lashinsky@fortune.com
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BITS AND BYTES
Facebook faces higher U.K. tax liability. Bowing to European political pressure, the social networking company will no longer run payments from big U.K. customers through its Ireland and Cayman Islands subsidiaries starting in April. Instead, that revenue will be attributed to its U.K. affiliate, which means higher taxes. (Wall Street Journal)
Snapchat's new round underscores investor caution. The messaging software company has received $175 million from Fidelity Investments, reports The Wall Street Journal. The round values Snapchat at $16 billion, the same as its valuation last March. Snapchat is one of several highly valued tech upstarts whose valuations have been under pressure in recent months, amid the stock market turmoil. (Wall Street Journal, Fortune)
IBM slashes jobs. The tech giant has been on a hiring bender, adding 70,000 people over the past year. However, that also means eliminating employees who don't have skills related to IBM's new priorities—such as cloud computing, analytics, and security. IBM won't acknowledge how many jobs were cut this quarter, but it's "rebalancing" its workforce again. Meanwhile, it still has 25,000 open positions. (Fortune)
Amazon introduces two more voice-controlled home automation devices. The e-commerce giant has expanded its successful Echo (aka Alexa) product line. The latest additions are Tap, a portable edition that runs off a rechargeable battery, and Dot, which is used in collaboration with a homeowner's existing speaker systems. Amazon doesn't divulge Echo shipment data, but reviews have been "rhapsodic." (Fortune)
Why these employers are subsidizing Apple watches. Employees at biotech firm Amgen, medical group DaVita HealthCare Partners, and insurance broker Lockton can buy Apple Watches for just $25. It's part of a unique corporate wellness program run by Vitality Group, reports The Wall Street Journal. The catch is these workers need to meet monthly fitness goals for the next two years, or they'll have to pay the full price for the smartwatch. (Wall Street Journal)
Hewlett-Packard Enterprise narrowly tops expectations. The company pulled in $12.72 billion in revenue for its latest quarter. That was a decline from one year ago, when the company was still part of the larger Hewlett-Packard, but it was better than anticipated. CEO Meg Whitman is seeking to capitalize on tech buyer uncertainty while Dell and EMC crawl toward their massive merger. (Reuters)
Florida city subsidizes Uber rides. Orlando suburb Altamonte Springs will pick up part of the fare for rides within city limits. This isn't a permanent program, rather a yearlong study of how ride-sharing services affect traffic and road conditions. City officials want more citizens to use public transportation, and Uber is a convenient way to reach bus and train stations. (Reuters)
THE DOWNLOAD
Tech companies, privacy groups rally behind Apple's cause. Yesterday was the final day to file amicus briefs related to the battle over software encryption being waged between Apple and the FBI. Dozens of organizations lined up to support Apple's refusal to help federal investigators unlock the iPhone used by one of the San Bernardino shooting suspects.
The list of those calling on their lawyers included AT&T, eBay, Facebook, Google, Intel, LinkedIn, Microsoft, and Twitter. Several former government officials, speaking at the RSA Conference in San Francisco, also were sympathetic to Apple's cause. Even the United Nations' top human rights official weighed in with this opinion about an Apple loss: “It is potentially a gift to authoritarian regimes, as well as to criminal hackers.”
Noticeably silent were Samsung and Amazon. Indeed, in an ironic twist of timing, the latter company Thursday acknowledged that it has removed business-grade encryption options from its Fire tablets. The reason? Very few people were using it. (Fortune, Re/code, New York Times)
IN CASE YOU MISSED IT
The Internet of things will make data look smallby Tom Krazit
Apple lawyer claims he was fired over Muslim faith by Jeff John Roberts
The DJI Phantom 4 takes drone tech to new heights by Clay Dillow
Why SolarCity's stock jumped Thursday by Katie Fehrenbacher
Underpaid? This startup's software can tell you by Polina Marinova
This ex-Googler wants to turn you into a movie director by Valentina Zarya
Meet Aria Systems, enabler of the subscription economy by Heather Clancy
ONE MORE THING
Star Wars director J.J. Abrams will produce Google documentary. The series, called Moon Shoot, will follow teams vying for a $30 million prize for successfully landing a privately funded rover on (you guessed it) the moon. (Fortune)
MARK YOUR CALENDAR
Enterprise Connect: Communications and collaboration trends. (March 7-10; Orlando, Fla.)
Structure Data: Big data in the real world. Data Sheet readers receive a 35% discount. (March 9-10; San Francisco)
Pure//Accelerate: The future of the modern data center. (March 14-15; San Francisco)
Adobe Summit 2016: Digital strategies. (March 20-14; Las Vegas)
Next 2016: Google's cloud platform strategy. (March 23-24; San Francisco)
Microsoft Build: Microsoft's premier developer conference. (March 30-April 1; San Francisco)
Microsoft Envision: Where business meets possibility. (April 4-7; New Orleans)
DocuSign Momentum’16: Imagine what you can do. (April 5-7; San Francisco)
Zuora Subscribed: Turn customers into subscribers. (April 12-13; San Francisco)
Apttus Accelerate: Innovation in the sales process. (April 12-14; San Francisco)
Qlik Qonnections: Business intelligence trends. (May -4; Orlando, Fla.)
EMC World: What's next for digital business. (May 2-5; Las Vegas)
The Marketing Nation Summit: Marketo's annual conference. (May 9-12; Las Vegas)
Salesforce Connections: Cloud marketing trends. (May 10-12; Atlanta)
Knowledge 16: ServiceNow's annual service management conference. (May 15-20; Las Vegas)
Fortune Brainstorm E: The intersection of technology, energy, and sustainable business. (May 16-17; Carlsbad, Calif.)
SAPPHIRE Now: SAP's annual conference. (May 17-19; Orlando, Fla.)
Gartner Supply Chain Executive: Creating a value chain. (May 17-19; Phoenix)
Google I/O (registration link coming soon): For creative software coders. (May 18-20; Mountain View, Calif.)
MuleSoft Connect: Enable your digital transformation. (May 21-25; San Francisco)
MongoDB World: For giant ideas. (June 28-29; New York)
Inforum: Infor’s annual user conference. (July 10–13; New York)
Fortune Brainstorm Tech: The world's top tech and media thinkers, operators, entrepreneurs, innovators, and influencers. (July 11-13; Aspen, Colo.)
Sage Summit: For fast-growth businesses. (July 25-28; Chicago)
Microsoft Ignite: Product roadmaps and innovation. (Sept. 26-30; Atlanta)
Dreamforce: The Salesforce ecosystem gathers. (Oct. 4-7; San Francisco)
| This edition of Data Sheet was curated by Heather Clancy. | |
| @greentechlady | |
| heather@heatherclancy.com |
