In my previous post I wrote about the first section of Tony Hsieh’s book where Tony discusses discovering his true happiness and passions. I began the second section today, and while I haven’t finished it yet, I had to write about the period during which Zappos was struggling to make any profit. They had sales, they had employees, offices, a warehouse, and a real growing business model, but they still weren’t making any profit.

Tony was only working for $25/year full time at Zappos. He had invested millions from the investment fund, Venture Frogs, that he’d started, to the point that there was no money left. He then began to invest money from his own personal funds but that began to run out. They had to layoff some employees and significantly cut the salaries of the others, but in order to make that work and still keep the employees, Tony put them up in his own loft without charging rent. He also began selling off the property he had purchased as an investment in order to put that money into Zappos and keep it going. He even listed his favorite loft at less than market value, and then dropped it by 40% in order to quickly turn it around, get the cash and keep Zappos going.

VC’s said it was a bad investment; naysayers said people won’t buy shoes online. The business plan, should someone have ever bothered to put one together, would not have indicated any of this was a good decision. But Tony believed in the idea, he believed in the team, and he believed in himself and he was willing to risk everything for his passion of building something. In the end, he decided to liquidate everything he had and have a “fire sale” in order to raise the final round of money to keep hope alive.

We all know how it worked out in the end, though I can’t wait to read more and learn how. This book will teach you lessons in commitment and following your dreams, as well as motivate you, so I highly recommend it…again. And don’t forget, leave a comment on this post or the last one, or the next one, for an opportunity to win your own copy.

Due to my schedule in May, I didn’t get a chance to starting reading the Zappos CEO, Tony Hsieh’s new book, Delivering Happiness until just yesterday. The book is broken up into three sections, which Tony has labeled:

1. Profits
2. Profits and Passion
3. Profits, Passion and Purpose

I completed the first section this morning and rather than wait until I finish the book later this week, I thought I’d begin today with my first impressions of this beginning section. The book is so full of things to talk about, that discussing them all in one blog post would be impossible anyway. So, I’m going to write a few posts throughout week to discuss more of the book and hopefully hear from you with your opinions on the subjects discussed here.

I’ve been a fan of Zappos since September of 2009, when I made my first order and had to exchange it. I wonder if I had become such a fan if I’d chosen the proper shoe size the first time through, because, though I was impressed with the mind-boggling shipping turn around it was really the customer service I received when exchanging the shoes that converted me to a life long member of the Zappos movement. I know it was only shoes I was buying, and yet the way I was taken care of, caused me to see the company as more than just a business. I won’t review that experience again, since I wrote about it here, but I will say that it was that experience and being contacted by Tony himself on Twitter due to my review, that my interest in Zappos and Tony himself began. I started paying attention to what Tony was saying on blogs, and at his speaking engagements. All that led to my interest in reading his book, and looking back, I’m so very happy that I ordered that first wrong size.

As I said above, Tony split the book into three sections. Having only read the first at this point, I can’t comment on the direction he takes in the other two sections, but for me, after reading the first, I have the impression that the title of the first section really should be, ‘Discovering Happiness’, because that is the focus of the first segment of his life’s experiences and it really builds toward his ability to ‘deliver happiness’ through his work at Zappos. Tony begins with his childhood entrepreneurial endeavors, which sounded so much like my life that I made an immediate connection with him. As he experiments with various jobs, including programming, and various opportunities, he discovers that his passion really lies in building things. Again, I could relate to this so well, as I’m sure many of you will, and often reading about a successful entrepreneur who goes through the same challenges and discoveries that you have, can really help you see your own life from a different perspective, and also helps you connect with his wisdom and experience better and apply that to your own situation.

Here are a few ideas and quotes that stood out to me from this first section. I’ll be giving away a free copy of the book at the end of the week to someone who has commented on one of my book related posts. So if any of these ideas and quotes stir your thinking, leave a thought in the comments below and you’ll be entered to win a free copy of the book.

• As I said, Tony spends the first part of the book chronicling his entrepreneur adventures as a child, from worm farms, to selling greeting cards, to button making. It shows his entrepreneur leanings as a kid. I doubt there are too many real entrepreneurs that don’t have a similar story. Those that don’t may be more of a small business owner, and less of a serial entrepreneur. There is a difference, and it’s an important difference to understand and be able to identify in yourself.
• In high school he tried to find creative ways around actually doing any hard work. He did the same while attending Harvard. (if that’s not an attribute of a true entrepreneur, I don’t know what is!)
• He said, “School-related activities aside, my biggest focus during high school was trying to figure out how I could make more money.”
• Discovered the power of crowdsourcing while attending Harvard and collecting and reselling study notes for college classes.
• Held various programming jobs, including working for Microsoft before graduating and going to work for Oracle.
• Tried doing freelance work for clients building web sites, but found out how unsatisfying that can be.
• Created LinkExchange and sold it for $265 million to Microsoft
• Burned out at LinkExchange because he still hadn’t identified what it was that truly made him happy
• Finally realized it was, “building stuff and being creative and inventive” that made him happy, along with, “Connecting with a friend and talking through the entire night until the sun rose”. (This is so true in my own life, but love the way he states it and enjoyed watching him come to this realization, which is worth price of the book alone).
• Started an investment firm
• Discovered poker and realized the similarities between poker and business strategy. This part you can read online at the Delivering Happiness web site. Very interesting correlations, and once again, I could relate to it because I enjoy poker for the same reasons.
• From what he learned from poker he said, “one of the most important decisions for an entrepreneur or a CEO to make is what business to be in.” He goes on to say that it doesn’t matter how great your product is (in other words how great a poker player you are), if you choose the wrong market (ie. the wrong poker table), you’ll lose anyway.
• “Without conscious and deliberate effort, inertia always wins.”
• Discusses how Zappos got started, what his involvement was initially and how it changed to what it is now.

In all, though this first part is technically not yet about how Zappos became successful, it’s easy to see how Tony’s view points developed and what led him to lead Zappos in the way that he has, which led to the environment that formed the basis for all the success we see coming from the company.

I’m looking forward to reading the rest and sharing my observations and reading yours.

Earlier this week AT & T announced a controversial change to their data plan rates and usage limits. The net has been buzzing with complaints from users who feel they need higher caps on their data usage, not lower ones. But according to AT & T, “Currently, 98 percent of AT&T smartphone customers use less than 2 GB of data a month on average.“

I have to wonder how many complaining customers are being impacted in any other way than saving $5 a month? I use my iPad a lot, probably way too much. While on a week’s vacation recently, I watched several TV shows (while working), over 3g. I was really impressed with how well it worked considering I was on 3g. I also surfed the web a bunch, kept up with my email and social networks. I downloaded apps, watched other video, and took a bunch of notes. The week before I did the same on a 3 day trip to Atlanta, and the week before that another 3 day trip to Sarasota, FL.

I keep my wifi turned OFF on the iPad, and use 3g even when wifi is available, because often the wifi my iPad picks up is actually worse (probably due to distance) than the 3g. In all, since I received my iPad over a month ago, I’ve used under 2 gigs of data. I also have no doubt that as time goes on, that monthly number will drop. I used it a ton when I first got it because it was new. I’ll never purchase as many apps in a month as I did this month. Usage will level off, and I certainly won’t always travel for half an entire month either. And if I did get close on data usage, I would start using wifi when available.

I think this is a perfect example of what I often tell clients and startups, that you must both listen to and ignore your customers all at the same time. The trick is knowing when to do each. And as always, observing your customers actual usage of your product provides far more info than asking them their opinion. There’s nothing wrong with asking of course. PeepNote is doing that right now with a survey (we are giving away a few Pro Plan year memberships in the process too), but you can’t assume that your customers are always right. I used to spend hours watching people use web sites in UI focus groups. Their behavior rarely ever matched up with what they thought their behavior was. We as humans simply aren’t always aware how inaccurate our perceptions can be when compared with reality, particularly when not in our area of expertise.

Customers can’t know where you are coming from, where you are going as a company/product/service, what your expenses are, what your limitations are, nor what you are actually seeing vs hearing. With AT & T, they saw the the majority of users didn’t need more than 2g a month, but that a tiny percentage where ruining it for everyone by using far more than the rest. So, instead of listening to your demands, they ignored you, and in the process, lowered your monthly bill, reduced strain on their network, and stopped forcing YOU to pay for someone else’s usage.

Consumers have to remember, that while a company needs to make its customers happy, it also has to make money. You can’t do one without the other. AT & T seems to have done the right thing here, and ignored the talk while observing the behavior. Hopefully for them, customers will see over the first few months, that there is no impact on them at all. Remember too, with this change came tethering, something consumers have been asking for, for years.

What do you think and how much data have you used on your iPad or iPhone over the last month?

In today’s world, with the innovations we’ve had in technology and the large amounts of free and low cost Internet software, almost anyone can create an Internet-based business, and, sometimes it seems, almost everyone is. There is an endless stream of new web sites on a daily, if not hourly basis, revealed to us through our many social networking feeds, emails, friend recommendations, roadside billboards, even TV and magazine ads.

But with all those sites being created, we may not realize how few are ever successful, nor how much work goes into making a web venture successful. I plan to define this success in a future article, but for now I’ll leave that to personal interpretation. But any way you define it, it is the unusual venture that actually sees real success, real growth, real usage, and thus persists, beyond the initial launch and buzz phase.

Many people with a web site idea, but no past experience creating one, fail to realize going into it, just how much work is involved. While the startup costs are lower for a web based business than for a brick and mortar one, I would say the time and effort, the “sweat equity”, needed for success is the same, and this is something most web venture founders aren’t aware of. Often they aren’t willing or even able to invest the proper effort, and as time goes on they lose their passion, come up with a better idea, or move on to other things.

“It’s not that I’m so smart, it’s just that I stay with problems longer.”
~ Albert Einstein

This is why it’s important, when you are preparing to step into such a large undertaking, to ensure that the idea you are pursuing, that is, the web venture you hope to build, is one that you can stick with, even as the chasm between you and success lengthens and deepens.

For that reason, I have below 10 questions to ask yourself before starting a new web venture. Answer these honestly to yourself; give them significant thought, and ensure before setting out on the quest, that you are truly ready emotionally and physically for what lies ahead.

• If a competitor comes along and beats me to my idea, or does it better than I have done at that time, will I feel overwhelmed by the pressure and competition, or will my secondary drive kick in propelling me to work even harder, investing even more time, improving the quality of the product and my customer service, even entertaining the possibility that I may have to rethink the entire site, in order to give consumers something that makes them come to me instead of my competition?
• While on vacation, and my mind is far away from work, but I receive a call or an email about a web site related problem from a teammate or customer, will I gladly take care of it, even canceling the days plans, or will I see it as only a nuisance and interruption?
• When I get another great idea for a web venture, but have no time to work on it as well, will I regret having to work on my existing web site, or will I be able to shelve the new idea, even if I know its better, because I also recognize that its not the idea that leads to success, but perseverance and hard work?
• When, after having invested months of my time, energy and passion on this venture, and not one single person visits on opening day, no one blogs about it, no one Twitters about it, and the site gets no traction at all in the beginning, will I feel committed to press on or begin to question the original concept of the site, even question myself and in the end give up?
• After months of nightly sacrificing personal and/or family time to maintain the site, will the pressure to balance family and personal time with business time become too overwhelming to continue?
• When the partner that originally promised to help with the venture loses interest or takes on other commitments and I’m left alone, will I want to continue investing myself in this site even when there is little support or even little belief by anyone that it will succeed?
• If this is the only site I ever get to do, because of the time it takes to commit to it, would I still want to do it?
• When money is needed to quickly improve the servers or hire a specialist with a particular skill that is needed quickly, would I be willing to go into debt to get the job done? Sell my car and take the bus? Mortgage the house? Never eat out? Take no vacations?
• Is this idea the most important one I could dedicate all my time to? Is it the one I believe will help me reach my goals or is this simply a neat idea, that seems simpler for now? If so, what if this one takes so much time I can never make it on to the more important project?
• If I found out, that right now someone else had this exact same idea, would I lose my passion for it? Is it the idea of the site that gets me excited, or, is it the prospect of the journey to bring it about, and make it the best possible implementation of that idea that gets me excited?

If you can truly answer yes to all these questions, and if just reading them fills you with passion and determination, its time to take the next step in bringing your idea to life. Watch my site for further articles to help you on your path to successful web venture.

Surprisingly, the if you build it, they will come mentality still seems to be the practice of too many web site startups. Even those that say they know better, still practice the myth anyway, perhaps for lack of anything else to do. I suppose I shouldn’t be surprised, since I also see this practiced regularly in brick and mortar businesses. Family restaurants open, life savings are spent, homes are double mortgaged, and in three months, the restaurant closes. I often wonder why anyone would start a restaurant if they couldn’t afford to run if for at least 6 months without any expectations of income during that time. Yet so many close before there should even have been expectations to grow.

The list of overnight successes must statistically be near zero in comparison to those businesses that built what they have over a period of time, in a dedicated and determined fashion. So let me for a minute, properly reword the if you build it they will come mantra, as this:

If you build it, and
get people to try it, and
listen to their impressions of the site, and
make adjustments accordingly, and
get them to try again, and
listen again, and
adjust again…

Continue that process, while inviting more people to try it, slowly extending your reach, building a firm foundation of dedicated users who have clearly experienced your commitment to listening to them, and responding accordingly. Your product will be what they want, they will feel like part of it, and in turn, being the humans they are, they will tell others. Ask them to tell others; reward them for telling others. After that? Start at the top again…and repeat.

One more tip, don’t waste your time judging your success by your Google Analytics report. Web stats show views and nothing more. You’ll need to talk to users to really get a feel for the impression you are making on them. Stats can certainly help you see what recent marketing campaign worked, and some other helpful info, but at first, watching your site stats simply reinforces the false myth that you should expect overnight growth. If you are engaging your customers, and really paying attention, you’ll know if you are headed in the right direction, even if your site stats don’t see it yet.