In April 2009, Tony Hsieh, founder of online shoe retailer Zappos, traveled to Seattle for a meeting with Amazon founder and CEO Jeff Bezos to discuss the potential sale of Zappos to Amazon.

Though Hsieh wasn't enamoured of the idea of selling (he had already rejected Amazon's first approach in 2005), he felt it might be the only way to save his life's work.

In the midst of the 2009 financial crisis, Zappos's board of directors, trying to safeguard its cash flow, wanted to cut back on the corporate-culture spending that was consuming valuable resources. For Hsieh, however, that was not an option. His whole business philosophy revolved around investing in and building a strong corporate culture.

"It would have reduced our expenses in the short term, and I don't think our sales would have suffered much at first," Hsieh said. "But I was pretty sure that in the long term, it would have ruined everything we had created."

Hsieh's Dilemma

Despite Hsieh's conviction, the board remained sceptical, and the discussions were deadlocked. That sparked fears the board might fire Hsieh and hire another CEO willing to take a hard line on profitability versus company culture.

"The threat was never made overtly, but I could tell that was the direction things were going," Hsieh said.

Hsieh and Alfred Lin, Zappos's CFO and COO at the time, started searching for a way to resolve the situation. Selling the company and starting another one wasn't an option because; as Hsieh pointed out, "Zappos wasn't just a job; it was a calling." Their only option was to find new investors and buy out their board of directors.

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ABOUT THE AUTHOR
Aman Basanti writes about the psychology of buying and teaches you how you can use the principles of consumer psychology to boost your sales. Visit Ageofmarketing.com to get his new e-book—Marketing to the Pre-Historic Mind: How the Hot New Science of Behavioural Economics Can Help You Boost Your Sales—for free.