Zappos Archives - Leveling Up

Whenever there’s a new work movement, like the remote work movement, tech people will jump onto it. A couple years ago, when I first got into tech, it was holacracy, or self-management in the workplace. Doing away with hierarchical structure and layered management sounded great on paper, so everyone in tech latched onto this movement.

Flat structures work well for some companies. Look at Valve, the game studio that made games like Half-Life and is now managing Steam. They self manage really well. It’s a developer-focused company that has both a flat structure and a remote work environment.

Then there’s Automattic, the creators of WordPress. Their team is almost completely remote.

This shift towards a flat management structure was happening at Treehouse, too. We were removing layers of management and titles, and a full 60% of our team was remote when I was there. Most of our team was engineering and developers, so the flat management structure and remote work environment worked well for us. Our marketing team of about 7-8 people had video producers in the office, but that was it.

But this caused a lot of confusion. Without titles, who do you report to? Who’s your boss? How do you manage your goals?

Examine the Status Quo Before Reacting to It

The reason I bring this up is because a lot of companies outside of tech have tried to switch to the whole no-manager model. Treehouse tried to do that. Buffer tried to do that. Zappos also did it…though now they’re reverting back.

A lot of these companies are shifting back towards more traditional management and work environment paradigms because, quite frankly, they still work really well. The whole concept of the 40-hour work week, for example, has been optimized fairly well.

That’s not to say that you shouldn’t question the status quo. You definitely want to ask “why” all the time. But I think when you question the way of things, you first have to ask yourself, “Why are these things the way they are?” before making knee jerk reactions based on your assumptions.

How Knee Jerk Reactions Almost Derailed Single Grain

For example, when I first came to Single Grain, almost all of our team was in San Francisco. I was working remotely out of Santa Monica and I said, “Hey, since I just came from Treehouse, why don’t we make the whole thing remote, because remote’s the new thing to do.” It was the new fad.

I didn’t stop and consider what kind of effect that would have on the company. Eliminating the office and having everyone work from home all of a sudden was the same as eliminating our culture. People knew each other in the office. I totally didn’t take that into consideration, and that was bad. My decision basically took away the culture and I made all of these sweeping changes without thinking things through.

But if you’re going to make these big, sweeping changes, you need to stop and think deeply about the status quo.

In retrospect, despite my stint with flat structures, I think managers ultimately do make sense. Quite frankly, most companies literally would not function without management. Some companies can pull it off due to their hiring practices and remote culture, but they started out that way very intentionally and scaled up.

You need to question what’s happening around you. But you don’t want to react too quickly. Just because someone says something’s great or there’s this new trend doesn’t mean you should jump on it immediately.

Knee Jerk Reactions to the Four-Day Workweek

As a marketer, I’m always looking at the new stuff that’s happening and I want to run marketing experiments all day long.

But when you look at a business as a living, breathing entity, you realize that there are real people involved. You affect people’s lives with every big decision you make, and if you can’t be a change agent then there’s going to be a lot of resistance. And wherever there’s resistance, the company suffers as a whole.

At Treehouse, we had the whole concept of four-day workweeks. That might have been a knee jerk reaction on their part. Recently, Treehouse had to do away with the four-day workweek. It just didn’t work anymore.

To be perfectly honest, when I was there, we were struggling and we were about to run out of cash. I was only there for a month or two when the CEO said, “Hey, if we don’t hit numbers this month, we’re going to have to let you go.” I was working seven days a week to make things happen.

Always Think Through Your Decisions

Moral of the story? Sometimes things sound good on paper. But you have to know what kind of repercussions there are.

For example, though the average Treehouse employee loved the four-day workweek, we were still being very ambitious. As the marketing team leader, I actually ended up working longer to hit our goals because everyone else was working less. If my entire team had to start working seven days a week while everyone else was working four days a week, that friction would have boiled up to the surface really quickly.

You don’t want to have to worry about these things. It’s better for you to just focus your team on doing real work that actually makes an impact and moves the needle.

My point is, always think through your decisions. Don’t make the same mistakes that I’ve made, or that Treehouse and all these other companies made because of knee jerk reactions to unproven trends. Always be smart about what you do, because that has an impact on everyone else who works for you.

Not so long ago, I thought paying a couple thousand dollars for a course, or a couple thousand dollars for a mastermind, or a couple thousand dollars for a conference was just insane. Why would anybody pay that amount of money when you can learn this stuff for free online?

But in the past couple years, my investments into groups like Entrepreneurs’ Organization, which probably costs about $8,000 per year, and Young Entrepreneurs Council, which is like $1,000 per year, have paid off so many times.

The Value of Joining Masterminds

Compared to when I first came into Single Grain, I didn’t know a lot of things related to business processes. Basic things around operations, finance, even something like a 10-week cash flow document—I learned all these skills through my EO forum.

I learned all these processes because these guys already had that experience. The guys in my forum are in their 30s, 40s, 50s, etc. They’ve all gone through a lot of these things, and they were able to help me sidestep a lot of mistakes that I would have made on my own. Quite frankly, as a business owner, that’s worth more than a couple thousand dollars, right?

In fact, I’d go so far as to say that without Entrepreneurs’ Organization, my company wouldn’t be around today, because I wouldn’t have been able to sidestep so many mistakes. And it’s not just avoiding mistakes that makes groups like EO worth it—the camaraderie of working with other entrepreneurs who understand what I’m going through is priceless.

Being able to build relationships with people, working closely with people in my forum…it’s been a really rewarding experience to do exciting stuff with really smart entrepreneurs and be a part of this organization where there’s 10,000 people worldwide. And they’re all just trying to create great businesses and add more value to the world.

If Young Entrepreneurs Council can get me into even two publications as a contributor in one year, it’s already more than paid for itself, right? But it gives me much more than that. I’m able to drop into Summit at Sea in Miami and text everyone and all of a sudden we’re all hanging out together. That’s powerful. And when I went to San Diego for Traffic & Conversion Summit, I did the same thing, I looked up who in YEC was there and we all got together.

How Much Are You Willing to Spend on Opportunity?

Summit at Sea is anywhere from $3,000-$10,000. But to be able to meet with so many great people on that boat, where I literally want to have lunch with every single person, makes it more than worth it for me. It was like: “Oh, there’s Tony Hsieh, CEO of Zappos. There’s Scott Belsky, the founder of Behance over there. Gary Vaynerchuk is standing over there. And there’s Eric Schmidt from Google.”

So, even though that event was quite expensive, I’ve started to build lifelong friendships from that. And it’s because of those interactions. Same thing with Traffic & Conversion conference. This time, I took my team, because I knew they were going to learn a lot. And we bonded together more as a team and just had a good time together. Whatever they decide to do with their career, I hope this was a good stepping stone for them to learn a lot.

The moral of the story is that a lot of these expensive investments might not pay off immediately for you. These things take time to manifest. Sometimes, it might take a year or two to close a deal. And that’s okay. I don’t go to these events just to say, “I’m here to get more business.”

Building Goodwill Is Priceless

Ultimately, at the end of the day, I know that the more relationships I can build, the more people I can help. It all comes back to building goodwill, right? Your compensation in the future is based directly on the value that you’re adding to people in the present.

So I’m not really worried about dollar figures at this point. I’m constantly putting out content all the time, and I know that it’s helping at least one person out there. The unsolicited feedback that I’m getting from time to time for the Marketing School podcast and my Growth Everywhere podcast is all the validation I need.

I’m doing these entrepreneur happy hours once a month, where I’ll pay for drinks and food. And I’ll do these monthly entrepreneur dinners, too. In a sense, I’m investing in myself and investing in the future. Because I know that if I’m able to connect these people, great things are going to happen. Not necessarily directly for me, but there’s going to be great value created. And I just want to be able to facilitate that. I want to be able to create that helpful ecosystem.

How Much I’m Investing in Networking this Year

That being said, I obviously did the math for how much it costs. This year alone, these expenses are $20,000-$25,000. A few years ago I would’ve thought that that was an insane cost for something that isn’t delivering immediate ROI. But the way I see things now, it’s worth it. I’m enjoying the community that we’re building in downtown L.A. These things take time, just like any kind of relationship takes time to manifest and grow.

I’ve seen people get massive value from these things. Is it worth it for you to pay $50,000 a year for a coach? Not if you’re only making $100,000 per year. But if you’re in the high six figures and this coach could push you into seven figures? Absolutely.

So take a step back and block out some time for a strategy day to figure out what kinds of conferences make sense. What kinds of events you should be throwing? What else should you be doing to enhance yourself? What else can you do to level up?

I am talking to my book guy in a couple hours and we’re going to review the book I’m writing right now called Level Up.

Every single thing that you do, whether you’re just choosing a business name with a name business generator that provides unique, memorable, and long-lasting ideas, starting a new business from scratch, or coming up with the idea, you have to validate it. You have to do some customer development as well. Maybe you’ll go to LegalZoom and get the right documents in place and get your operating agreement in place.

You have all those things you need to learn, and then after you figure out how to start a business, you need to learn how to actually get customers and build a repeatable process.

The Fatal Error Every New Entrepreneur Makes…

A lot of times, aspiring entrepreneurs will look to established entrepreneurs for inspiration. And they’ll see that everything is perfect on Instagram. Everyone is doing well. Everybody is killing it. They have nice cars. They have such nice lives. Meanwhile, you’re struggling to make ends meet.

Sometimes, you can look at that stuff and get very envious. This happens to all entrepreneurs. The thing they don’t realize is that this type of comparison is pointless, and actually hurtful. You can’t really compare your chapter 1 to somebody else’s chapter 25, right?

So don’t just look at the present day success and the fruits of their labor—think about the labor itself. When I look at the entrepreneurs that have had multiple businesses or multiple bestsellers, they put in the work at the very beginning to get to where they are.

What It Takes to Really Become Successful

To give you an example, the billionaire Chuck Feeney (a great guy, by the way), pretty much the father of duty-free shopping, amassed an $8 billion fortune. He was once one of the top 10 richest guys in the world. And he’s well known for giving all that money away, before Bill Gates or Warren Buffet or any of those other philanthropists started doing it.

Here’s what’s interesting. In the book about his life, The Billionaire Who Wasn’t, the first half doesn’t mention his philanthropy at all. Instead, it talks about how cutthroat things could be in the duty-free world, how he had to fight tooth and nail to get to where he got.

What Chuck Feeney is known for today, his incredible philanthropy, came after all that leveling up he had to do to get to where he was as a business owner.

The moral of the story? No one becomes an overnight success, much less a self-made billionaire. You can’t just look at Instagram pics and think to yourself, “Oh man, I can’t wait to get to that point. I wish I was there right now.” You have to put in the time.

Stop Looking for Shortcuts

You also have to realize that you can’t try to take shortcuts all the time because shortcuts don’t work. Most people who come to me are the people who are looking for shortcuts. They’ll email me or send me a random message. And I’m like, “Dude, you just have to put in the time.” It’s not like anybody else around you is that much smarter than you. They just put in more hours than you have.

Tony Hsieh of Zappos tells his team, “We’re honestly just trying to get 1% better every single day.” So take it one day at a time. You don’t have to try to do too much in one day. Just think about the 3 to 4-year journey, then the 10-year journey.

Whatever it is that you’re looking for, just be patient and focus on the concept of leveling up. That’s all you need to do. You just need to put in time for each level, learn a lot, take the experience, and then go to the next thing. It’s basic stuff that we’re all taught, but I think we all forget from time to time because we all go into auto-pilot around our daily tasks.

What are the mistakes I made in the last few years? Sometimes, I’m trying to do too many things at once. This year, I’m trying to say no to more things so I can focus on growing and leveling up the things that I already have. Because I want to play the ultimate game of philanthropy.

Whether you think of business as a game or you think of it as just gaining more experience, you need to level up.

Let’s talk about micro-retargeting. You already know about retargeting: when you visit a website, you’re going to get ads that follow you around the ‘net.

What Is Retargeting?

Let’s say you visit Zappos briefly and then everywhere you go on the web, you’re faced with random ads. They don’t really know what your intention is because you’ve only visited a homepage, right? They send you generic ads. Which you’re probably not as likely to convert on.

But let’s say you visit Zappos, go to the men’s shoe section, pick out the Nike Metcon 3 and then you add it to your cart. Guess what? You’ve shown a lot more intention, you’ve spent a lot more time on it, and you’re a lot more deliberate. You’re going to be served ads that are very different from the generic ones.

Let’s say these big companies have a million people that visit their site per day. Only a very small number are going to take a specific action and therefore have that kind of message tailored towards them. But the more personalized that experience is, the higher the conversion rates will be.

What Is Micro-Retargeting?

Micro-retargeting is retargeting people based on the section of your site that they visited, how long they stayed, and things like that. It’s behavioral, but it’s also temporal. You can do it with Facebook. You can target people based on the number of pages they visited or how long they stayed (e.g., top 5% of your traffic).

For Single Grain, anytime someone visits our services pages three times or more, I’m going to re-target them and I’m going to try to get them to come over to our site, go to our case studies page and then fill out a free consultation form.

Yesterday we spent five dollars and got two free consultations. Each free consultation was at about $2.50. Now for us when it comes to free consultations, we’re willing to pay $317 for a free consultation. So far, our CPA is $319.50. But if landing a client gives us $10,000–$100,000 in return, that’s well worth the cost.

Now what I’m missing is the ability to re-target people who have watched, let’s say, 10 seconds of these live videos. I’m doing these live videos, but I’m going to make audiences off of them as well, and it’s really cheap to make these audiences. For Facebook Lives on Sundays, we’re paying about one cent per view for three-second views. For 10-second views we’re paying three cents per views. These views are on autoplay and will stop some people in their tracks. I haven’t even added captions to them (I probably should!).

So I re-target these people and see what happens with them. These are people who have engaged with me, with my brand. A lot of this stuff is hard to measure (ROI-wise), but when I look at my YouTube comments and see, “Thank you so much for your help. I’m really grateful for everything,” I know that these videos are actually working.

Be Patient—Don’t Monetize Immediately

One of my other podcasts, Marketing School, is going to reach 589,000 downloads this month, but we’re not even thinking about how to monetize right now. We just want to build up the brand. We want to get it to a million or 1.5 million downloads, because we know that as long as we continue to create and spread goodwill, good things are going to happen for us.

Same thing with Growth Everywhere. I’ve been doing this for 3-5 years. It’s just goodwill. I didn’t really start to do anything with it monetization-wise until two years in. Being patient, and learning to delay your gratification, is key to building up these big brands. It never happens overnight.

Hello everybody, today we have Yahya Mokhtarzada, co-founder of Truebill, a software service that helps us find, track, and cancel our paid subscriptions.

In today’s interview, we’ll be talking about how Truebill got 10,000 signups without paying customer acquisition costs, why subscription commerce is replacing traditional commerce, and how Yahya saw a pain point in managing the-ever increasing amount of subscription services that people have and developed a product to fix that pain point.