Bulldozer00's Blog

If you”re familiar with the Zappos.com business success story, you might think that it’s the perfect company. Unlimited growth, unlimited profits, enthusiastic employees, all good and no bad. But did you know that the company had to lay off some of their workforce not once, but twice? The first layoff, which came in the early startup years when they were struggling to survive month to month, was much more understandable than the second layoff, which occurred in 2008 while they were profitable.

When 2008 started, Zappos.com exceeded sales and profit expectations for 2007, so CEO Tony Hsieh and his leadership team decided to dole out a surprise, 10%  bonus, to all Zapponians. Incredibly, eight months later he was hatching an e-mail stating that Zappos would be laying off 8% of the workforce. WTF, you ask?

2008 was a whirlwind year. The stock market crashed, the housing market crashed, hundreds of thousands of people were thrown out of work, and businesses everywhere, including Zappos, started reeling from lower sales. Since Zappos was growing like mad up to that point, they discovered that they were overhiring. Even though they weren’t losing money, the Zappos leadership team decided that they had to cut their workforce to better align their costs with decreasing revenues. In Tony’s words from his book “Delivering Happiness“;

Rather than trying to spin the story as a “strategic restructuring” as many other corporations were doing, we stuck by our core values and remained open and honest, not only with our employees, but with the press as well. – Tony Hsieh, CEO, Zappos.com

In November of 2008, Tony sent an e-mail announcing the cuts to all employees and the publicly visible Zappos.com blogs. After the bloodletting was over, he sent a followup e-mail. The full text of both e-mails is in the book, so buy it if you’re curious about what he said to the world.