By now, you've probably heard that Amazon.com has scooped up Zappos in an acquisition deal that now combines two of the market's leaders in online retail and online footware sales. The deal has Amazon.com exchanging 40 million shares of Amazon stock (nearly $900 million at current trading values) for all of Zappos's outstanding shares, options, and warrants. The company will also contribute $40 million in cash and restricted stock to Zappos employees.
FYI - $40 Million equals an average grant/award of roughly $27,000 per employee (based on a company employee base of 1,500 team members). Not bad, right?
If you've followed the Zappos culture as a HR/Talent pro, you want things to stay the same at Zappos. Because it's cool as hell. And because you like free two-day shipping.
I agree. But I've also heard all the platitudes that have come from both sides of the acquisition. The Zappos team, led by CEO Tony Hsieh, says nothing about how the well-publicized and unique culture will change. The Amazon team says openly that Zappos will be allowed to operate as an independent company, and the unique culture was a big reason they wanted to buy Zappos. They want to learn from the Zappos team...
That's cool. But make no mistake, when a publicly traded company buys another company, change happens. It's not a matter of if, it's a matter of when. My take is that the changes to the Zappos culture take longer to play out than normal, but if history tells us anything, it's that the culture will change after one of the three following events happen in the interaction between Zappos and Amazon:
1. The Zappos founding and leadership team, having realized a liquid event (that's a cash out, homies), sees the creeping pressures of having to answer to a corporate office and jumps earlier than expected, most likely to go build another company like Zappos, but different enough to not run afoul of their non-competes.
2. The Amazon team, having forced stretch budget numbers on Zappos that include revenue targets that can't be hit, force expense reductions that hurt the culture and are permanent in nature. Culture, after all, is a fragile thing.
3. The Amazon team, having been unable to force the founding Zappos team to do what they want them to do on the expense front, exercise their control and remove the Zappos leadership team and put their own people in.
I hope none of it happens. But unless the founding team is going to stay there for the next decade, change is coming. Not if, but when. I like Zappos, and I'm rooting for them. I've seen this movie before, however, and it usually ends in a similar fashion.
Welcome to the Amazon Jungle - we've got fun and games...
Yep, I was dismayed when I saw this announcement. I agree Kris... change is coming and it won't be for the better.
Posted by: Michael D. Haberman, SPHR | July 27, 2009 at 08:59 AM
There goes my case sample.
I used to quote Zappos, Google and Success Factor (ironical they are all software/Internet based) to sell my proposition that leadership and employees can collaborate to redefine the workplace culture and environment whilst running a succeesful business.
I know there was some ranting on SF, but I like their rules of engagement and how teamwork prevails, in particular when someone has an unsolved problem on hand.
Yes, change is in the air.... as a matter of time .....turns to cheer or despair.
Posted by: Yuvarajah | July 27, 2009 at 11:50 PM
I agree that change is coming for Zappos and hopefully also for Amazon. While in the end, these types of business dealings are all about creating shareholder value I am hopeful that Amazon can learn from Zappos' customer service oriented culture and that Zappos can benefit from Amazon's scale and market penitration.
So, yes, change is coming and as a true capatist, I am hoping it is $ green.
Posted by: Michelle | July 28, 2009 at 09:09 AM
This little comment in Tony Hsieh's email to all employees is the big aha for me:
"We learned that they truly wanted us to continue to build the Zappos brand and continue to build the Zappos culture in our own unique way. I think "unique" was their way of saying "fun and a little weird." :) "
Amazon could never say the words "fun and a little weird" when it comes to whom they prefer to hire.
Externally, these are two of the most customer centric brands around a great match. Internally, they are very different employment brands. That's where the disconnect will happen first.
http://blogs.zappos.com/ceoletter
Posted by: nelking | July 29, 2009 at 11:19 PM