The Architect of the Greenhouse
Tony Hsieh was no ordinary child. He was bright, playing four musical instruments and scoring straight As while barely cracking open a book. Hsieh (pronounced Shay) was also shy, preferring to spend his time in solitary thought rather than socializing. He liked puzzles; he loved the feeling of discovering creative solutions to difficult problems. His favorite TV show was MacGyver, whose hero was a resourceful secret agent who used everyday materials to escape impossible dilemmas and bring the bad guys to justice. This idea—that tough problems could be elegantly hacked—held enormous appeal. At an early age, he began to MacGyver his way through the world.
For example, when his parents told Hsieh to practice his piano, violin, trumpet, or French horn, he MacGyvered a method where he would record cassette tapes of his practice sessions, then play the recordings from behind the closed door of his bedroom so his unsuspecting parents thought he was dutifully at work. In high school, he MacGyvered the school’s phone system into calling dial-a-porn for free (briefly elevating his popularity among the boys).
The pattern continued at Harvard, where Hsieh MacGyvered studying (he assembled class notes and sold them for twenty dollars a pop) as well as late-night snacking (he bought pizza ovens and sold pizzas for less than the local outlet charged). After graduation, he cofounded a software company called Link Exchange, which he and his partners sold to Microsoft in 1998. At this point, he was twenty-five years old, he had millions of dollars in his pocket, and he would never have to work another day in his life. He began to look for something else to solve.
He found it in an online retailer called ShoeSite.com. On the surface, it did not seem like a particularly smart investment—after all, these were the unpromising early days of e-commerce, the bubble-burst era of failures like Pets.com. But Hsieh saw these failures as an opportunity to rewire a system. He thought about attempting a venture that would reinvent online retailing through a strong and distinctive company culture. He wanted to build an atmosphere of “fun and weirdness.” The site would deliver not just shoes but what Hsieh called “personal emotional connections,” both inside the company and out. A few months after making an initial investment, Hsieh became CEO. He renamed the company Zappos.
Things did not go well for Zappos at first. The business had trouble in the ways young businesses usually have trouble—supply, logistics, execution. At one point several staffers were living in Hsieh’s San Francisco apartment. But in the early 2000s, things started to improve slowly, then with astonishing speed. In 2002, revenues were $32 million; in 2003, $70 million; in 2004, $184 million. The company relocated to Las Vegas and kept growing, reaching $1.1 billion in revenues in 2009. Zappos, which was sold to Amazon, now has fifteen hundred employees and $2 billion in revenue. It is consistently ranked among the country’s top employee-friendly companies and attracts hundreds of applications for each available opening. It is easier to get into Harvard than to get a job at Zappos.
In 2009, Hsieh ventured beyond commerce to purchase the twenty-eight-acre block of downtown Las Vegas that surrounds Zappos headquarters, with the audacious idea of helping to revive it. This was not the glossy Las Vegas of the Strip; this was a desolate jumble of third-class casinos, empty parking lots, and run-down hotels that, as one observer put it, aspired to the category of blight. Here he set out to see if it was possible to MacGyver a city—that is, to use Zappos principles to rebuild a broken downtown.
Before meeting Hsieh, I visit his apartment, located on the twenty-third floor of a nearby building. I’m not alone; I’m accompanied by a dozen people and a guide. Hsieh, epitomizing the Zappos ethos of radical openness, allows groups of visitors to walk through his kitchen, his living room, his lush “jungle room” with walls and ceilings covered in plants, and the well-stocked bars, creating the strange intimacy of seeing a billionaire’s half-eaten granola bar on the kitchen counter, his socks on the floor.
Then on his living room wall, we see the plan: a large satellite map of the Downtown Project, the borders marked in bright yellow, each lot designated with what looked to be an ever-changing set of possibilities. On an adjacent wall flutter several hundred colorful sticky notes scrawled with ideas for those lots: CREATIVE COMMONS…EVERYTHING RUNS ON SOLAR…DOG PARK…TOWN HALL DISTILLERY…COMMUNITY GARDEN. You get the feeling of an impossibly complex game being played—a Sim City unfolding in real time, with Hsieh as both designer and player.
An hour later, at a place called Container Park, we meet. He is a quiet man with a close-shaved head and a steady, attentive gaze. He picks his words with care, and if there’s a pause in the conversation, he will wait with endless patience for you to fill it. Several people close to Hsieh describe him with the same metaphor: He’s like an alien of superior intelligence who came to Earth and figured out what makes human beings tick. I ask him how this all happened.
“I try to help things happen organically,” he says. “If you set things up right, the connection happens.” He sits back and gestures at Container Park, the Downtown Project’s newest crown jewel. A few months ago the place was an empty lot. Now it is a warm, welcoming gathering place built of colorful shipping containers that have been converted into shops and boutiques. Outside stands a giant metal sculpture of a praying mantis that emits fire through its antennae. Around us stroll hundreds of happy people enjoying the late-afternoon sunshine. Later tonight Sheryl Crow will play a concert in the park. While the Downtown Project has had its difficulties, its early phases have had some success: It’s brought in $754 million in public and private projects, assisted ninety-two businesses, and infused the area with a new buzz.
We talk awhile, me asking questions, and Hsieh offering responses. It doesn’t go particularly smoothly, in part because he seems to regard conversation as a hopelessly rudimentary tool for communication. A typical exchange goes something like this:
ME: How did you begin this project?
HSIEH: I like systems, I guess. [ten-second pause]
ME: What models and ideas inspired you?
HSIEH: A lot of different ideas, from different places. [twenty-second pause] That’s a really hard question to answer.
He wasn’t trying to be difficult; it was simply that words could not do the job. Then he suggested we go for a walk, and in an instant everything changed. He seemed to come alive as he moved around the streets, meeting people, talking to them, introducing them to me and to others. He had a connection with everyone, and more impressively, he sought to build connections between others. In the space of forty-five minutes, I saw him connect a movie director, a music-festival producer, an artist, the owner of a barbecue place, and three Zappos workers with someone they should talk to, a company they should check out, someone who shared their hobby, or an event they might be interested in. He was like a human version of a social app, and he made each connection with the same light, low-key, positive vibe. He had a gift of making these conversations seem utterly normal and, through that normalcy, special.
“He’s very smart, but the smartest thing about him is that he thinks sort of like an eight-year-old,” says Jeanne Markel, director of culture for the Downtown Project. “He keeps things really simple and positive when it comes to people.”
“I remember one time I was with him, and for some reason I got it in my head that we should have a Zappos blimp,” says Joe Mahon, marketing manager of the Downtown Project. “Not some little blimp but a huge blimp, like the Goodyear blimp. It was a completely crazy idea, in retrospect. But Tony didn’t bat an eye. I mean, he didn’t hesitate for a second. He said, ‘Good idea,’ and we talked about it.”
Beneath Hsieh’s unconventional approach lies a mathematical structure based on what he calls collisions. Collisions—defined as serendipitous personal encounters—are, he believes, the lifeblood of any organization, the key driver of creativity, community, and cohesion. He has set a goal of having one thousand “collisionable hours” per year for himself and a hundred thousand collisionable hours per acre for the Downtown Project. This metric is why he closed a side entrance to Zappos headquarters, funneling people through a single entrance. And it’s why, during a recent party, he started to get an uneasy feeling—people were standing around in isolated clusters, not mixing. He noticed that the furniture was blocking the flow, and a few seconds later he was heaving a large couch across the floor. Then he started moving lamps and tables, and before long he had completely rearranged the room. “It was the only time I’ve ever seen a billionaire move furniture,” a friend jokes.
“This place is like a greenhouse,” Hsieh says. “In some greenhouses, the leader plays the role of the plant that every other plant aspires to. But that’s not me. I’m not the plant that everyone aspires to be. My job is to architect the greenhouse.”
My job is to architect the greenhouse. This is a useful insight into how Hsieh creates belonging because it implies a process. “I probably say the word collision a thousand times a day,” Hsieh says. “I’m doing this because the point isn’t just about counting them but about making a mindset shift that they’re what matters. When an idea becomes part of a language, it becomes part of the default way of thinking.”
When you talk to people inside Hsieh’s greenhouse, they seem as if they are under the influence of a powerful magnet. “It’s not logical,” says Dr. Zubin Damania, a radiologist who left a teaching position at Stanford to head up Hsieh’s health clinic. “He’s like Morpheus in the Matrix movie, where he gives you the pill where you really see the world for the first time.”
“It’s kind of impossible to explain,” says Lisa Shufro, a Downtown Project staffer. “You connect with all these people, and you don’t feel it in your head, you feel it in your stomach. It’s a feeling of possibility, and he creates it wherever he goes.”
“He knows how people connect so well that it’s unconscious with him,” says Maggie Hsu, who works on the Downtown Project’s executive team. “At this point, he’s been doing it so much that he almost can’t help it. I’ve asked Tony over and over—why do people follow you around? Why do they respond to you? He says, ‘I have no idea.’ ”
Hsu’s story is typical. A few years ago she was a successful consultant at McKinsey when she heard about the Downtown Project. Curious, she sent an email, and Hsieh responded by inviting her out for a few days. Hsu showed up expecting the usual agenda of meetings, visits, and organized tours. What she got instead was a two-line email followed by a list of eight names.
Meet these people, Hsieh’s note read. Then ask them who else you should meet.
Hsu was buffaloed. “I asked him, ‘Is that it? Is there anything else I should do?’ He said, ‘You’ll figure it out.’ And he was right—it all sort of happened. It was like I was getting this signal that got stronger with everyone I talked to, and it was crazy strong, and I couldn’t resist. I ended up moving here. It wasn’t logical at all. It was like I had to do it.”
We don’t normally think about belonging to big groups in this way. Normally, when we think about belonging to big groups, we think about great communicators who create a vivid and compelling vision for others to follow. But that is not what’s happening here. In fact, Hsieh is anticharismatic, he does not communicate particularly well, and his tools are grade school simple—Meet people, you’ll figure it out. So why does it work so well?
During the Cold War, the United States and the Soviet Union conducted a decades-long, anything-goes race to build ever-more-powerful weapons and satellite systems. In both nations, inside hundreds of governmental and private enterprise projects, teams of engineers spent thousands of hours fervently working on complicated problems that nobody had ever attempted to solve before. Partway through that race, the U.S. government decided to look into the efficiency of this process. It solicited research into the question of why certain engineering projects were successful and others were not. One of the first people to formally attempt that research was a young MIT professor named Thomas Allen.
Allen wasn’t a typical ivory tower academic; he was a middle-class kid from New Jersey who’d graduated from tiny Upsala College, then enlisted in the Marines during the Korean War. When he got out, he worked for Boeing, then went to MIT for dual graduate degrees in computer science and management, which left him perfectly positioned to pursue the government’s request for research. (“I didn’t even know they had a management degree when I got [to MIT],” he says. “I took a few classes, liked it, and some people talked me into getting a PhD.”) Allen started his research by locating what he called “twin projects,” where two or more engineering firms tackled the same complex challenge, such as figuring out how to guide an intercontinental ballistic missile or communicate with a satellite. He measured the quality of their solutions, then attempted to find the factors that successful projects had in common.
One pattern was immediately apparent: The most successful projects were those driven by sets of individuals who formed what Allen called “clusters of high communicators.” The chemistry and cohesion within these clusters resembled that between Larry Page and Jeff Dean at Google. They had a knack for navigating complex problems with dazzling speed. Allen dug into the data to find out where the people in these clusters got their knack. Had they written for the same journals? Did they possess the same levels of intelligence? Were they the same age? Had they attended the same undergraduate schools or achieved the same level of degrees? Did they possess the most experience or the best leadership skills? All these factors would seem to make sense, but Allen could find none that played a meaningful role in cohesion. Except for one.
The distance between their desks.
At first he didn’t believe it. Group chemistry is such a complex and mysterious process that he wanted the reason for it to be similarly complex and mysterious. But the more he explored the data, the clearer the answer became. What mattered most in creating a successful team had less to do with intelligence and experience and more to do with where the desks happened to be located.
“Something as simple as visual contact is very, very important, more important than you might think,” Allen says. “If you can see the other person or even the area where they work, you’re reminded of them, and that brings a whole bunch of effects.”
Allen decided to dig deeper, measuring frequency of interactions against distance. “We could look at how often people communicated and see where they were located in relation to each other,” he says. “We could see, just through the frequency, without knowing where they sat, who was on each floor. We were really surprised at how rapidly it decayed” when they moved to a different floor. “It turns out that vertical separation is a very serious thing. If you’re on a different floor in some organizations, you may as well be in a different country.”
When Allen plotted the frequency of interaction against distance, he ended up with a line that resembled a steep hill. It was nearly vertical at the top and flat at the bottom. It became known as the Allen Curve.*1
The key characteristic of the Allen Curve is the sudden steepness that happens at the eight-meter mark. At distances of less than eight meters, communication frequency rises off the charts. If our brains operated logically, we might expect the frequency and distance to change at a constant rate, producing a straight line. But as Allen shows, our brains do not operate logically. Certain proximities trigger huge changes in frequency of communication. Increase the distance to 50 meters, and communication ceases, as if a tap has been shut off. Decrease distance to 6 meters, and communication frequency skyrockets. In other words, proximity functions as a kind of connective drug. Get close, and our tendency to connect lights up.
As scientists have pointed out, the Allen Curve follows evolutionary logic. For the vast majority of human history, sustained proximity has been an indicator of belonging—after all, we don’t get consistently close to someone unless it’s mutually safe. Studies show that digital communications also obey the Allen Curve; we’re far more likely to text, email, and interact virtually with people who are physically close. (One study found that workers who shared a location emailed one another four times as often as workers who did not, and as a result they completed their projects 32 percent faster.)
All of which gives us a lens to understand what Tony Hsieh is up to. He is leveraging the Allen Curve. His projects tend to succeed for the same reason the creative cluster projects succeeded: Closeness helps create efficiencies of connection. The people in his orbit behave as if they were under the influence of some kind of drug because, in fact, they are.
During our conversations, I ask Hsieh how he goes about recruiting new people into the Downtown Project. “If someone is interested, and we’re interested in them, we invite them out here,” he says. “We sort of do it in a sneaky way. We give them a place to stay for free and don’t tell them too much. They get here and they hang out and see what’s happening, and some of them decide to join. Things just sort of happen.”
What percentage end up moving here?
He pauses for a long time. “Probably about one in twenty.” At first, this number doesn’t seem all that impressive—only 5 percent. Then you think about what’s beneath that number. One hundred strangers will visit Hsieh, and after a few conversations and a handful of interactions, five will uproot themselves from their home and join this group they have just met. Hsieh has built a machine that transforms strangers into a tribe.
“It’s funny how it happens,” Hsieh says. “I never say very much; I don’t make any big pitch. I just let them experience this place and wait for the moment to be right. Then I look at them and ask, ‘So when are you moving to Vegas?’ ” He smiles. “And then some of them do.”*2