Hsieh says he hires and fires people based on whether they fit with his company’s core values—independent of their potential value or job performance.

Question: How do you create culture? 

Tony Hsieh:rn Creating culture isn’t something that can really be dictated top down. rnIt’s really more about having it come from the employees. And that’s rnliterally what we did to figure out our core values. I emailed all of rnour employees—this was about five years or so into it—and asked them rn"What should our core values be?" And got back a whole bunch of rndifferent responses. And it actually is a pretty hard thing to do. It’s rnbeen about a year going back and forth, and we eventually came up with rnour final list of 10 core values at Zappos. 

And you know, a lot rnof companies have things, they may call them "core values" or "guiding rnprinciples," but the thing we wanted to come up with was a list of rncommittable core values. And by committable, meaning that we were rnwilling to hire, or fire people based on whether they were living up to rnthose core values independent of their actual specific job performance. 

Andrn so we’ve actually passed on a lot of really smart, talented people thatrn we know could make an immediate impact on the top or bottom line, but rnif they’re not a culture fit, if they don’t live up to our core values, rnthen we won’t hire them. And ultimately what we try to do is actually rntake care of it on the front end. When we hire people, we do two sets ofrn interviews. The hiring manager and his or her team will interview for rnthe standard fit within the team: relevant experience, technical rnability, and so on. But then our HR Department does a separate set of rninterviews purely for culture fit. And they have to pass both in order rnto be hired. 

So for example, one of our core values is, "be rnhumble." And there are a lot of really smart, talented people out there rnthat are also really egotistical. And it’s not even a question, we just rnwon’t hire them. Whereas, probably the conversation at most companies rnwould be, "Well this person might be kind of annoying and rub you the rnwrong way a lot of times, but he can add a lot of value to the company, rntherefore we should hire him." And I think, that one hire won’t rnnecessarily bring the company culture downhill, but if you keep making rncompromises like that over and over and over again, I think that’s why rnmost large companies don’t have great cultures. 

Question:rn How can you tell that potential employee won’t fit the company's rnculture? 

Tony Hsieh: So, our recruiting team over rntime has gotten actually pretty go at figuring out whether somebody is rngoing to be a culture fit or not. And we actually have interview rnquestions for each and every one of the core values. And it's not rnnecessarily what they say, but how they say it a lot of times. And, overrn time, our recruiting team has really developed their gut in terms of rnwhether what the right call is for a candidate. 

We actually lastrn year had over 25,000 people apply to work at Zappos and we only hired rn250 of them, so about 1%. I think I heard the stat that it's actually rnharder to get into Zappos than into Harvard. So I'd say our recruiting rnteam does a good job of screening on the front end. And, yes, it is rntrue, they are not perfect and there are times when people do make it rnthrough the process, but then everyone that’s hired goes through a rnfour-week training program. The same training program that our Call rnCenter Reps and it’s pretty hard to fake something for four weeks. And rnso we also use the training program as part of... it’s almost like an rnextended interview. 

Question: Do you end up training rnmany people who are not eventually hired?

Tony Hsieh: rnIt really varies. It used to be really bad, it used to be that within rnthe first month or so half the people that were accepted in were no rnlonger employed by the end of the first month. But now the vast majorityrn do make it through. But we still get cases where, for example, we had rnsomeone that was actually a pretty senior technical hire, and because wern are based in Las Vegas, a lot of the technology people we actually havern to relocate from other places. And this was a candidate that rnrelocated... we paid to relocate from L.A. to Vegas and he started the rnfirst four weeks of training and by the end of the first week, it was rnpretty clear that his attitude was that customer service was beneath himrn and that really he was just waiting to make it through the program so rnhe could start the actual job he was hired for. But we actually ended uprn letting him go during the training program—even though what he was rndoing in the training program didn’t have anything to do with the actualrn job function—because, for us, that’s how strongly we believe in the rnimportance of culture and in making sure that we are hiring people whosern personal values match the corporate values.