It Happened Again

Did You Hear About Former Zappos CEO Tony Hsieh?—Part 1

You may not have known the name Tony Hsieh, but you probably knew the name Zappos, which is the business that propelled Tony Hsieh into fame. I met Tony Hsieh in 2010 at a conference in Dallas, Texas. He was already well known at that time for creating the unique Zappos culture; best known for “delivering happiness” and creating a “WOW” experience for customers. Shortly after hearing Tony Hsieh that summer, I booked a trip to Las Vegas to experience Zappos for myself.

So I was shocked when I heard that Hsieh died recently. Hsieh died nine days after being pulled from a house fire in a beachfront home in New London, Connecticut. Official cause of death: complications of smoke inhalation. Hsieh, age 46, was single and had no children. At the time of his death, Hsieh was worth an estimated $840 million, but in spite of his immense wealth, he died without a will or any other estate planning in place. WHAT? That’s right; no planning at all. While it’s not uncommon for the rich and famous to die without a will, as we have seen in the recent past with many iconic figures—Prince, Aretha Franklin, and most recently, Chadwick Boseman, Hsieh’s case is particularly puzzling given all that he accomplished during his lifetime as well as his commitment to altruism. Yes, Hsieh was renowned for his kindness, generosity, and always putting others first. This was obvious when I toured Zappos as our very first stop on the tour was Zappos library. A library stacked with volumes of business, motivational and best-selling books for the taking. Yes, we were invited to take as many books that we wanted. WOW! I love a good book!! I was like a kid in a candy store.

What is so perplexing is that by dying without a will, Hsieh left his loved ones a colossal mess to clean up. Indeed, it will likely take his family months upon months just to account for all of his assets. And it’s likely that his family, like many others, will overlook and never find all of Hsieh’s assets. Once his family does their due diligence and locates what they can of Hsieh’s assets, his estate will go through the court process of probate, which is likely to last years and rack up hefty lawyer fees and other expenses and costs. Additionally, Hsieh’s family will face an enormous federal tax bill that could run into the hundreds of millions.

By all accounts, Hsieh’s death at such a young age is horribly tragic. But it’s equally tragic for such a brilliant and compassionate individual to have wasted the opportunity to do something amazing with the assets he created and to needlessly put his loved ones through such an ordeal.

Although it may seem harsh to lay such a judgment on Hsieh, who was reportedly suffering from mental health and substance abuse issues in the last year of his life, we do so from a place of true compassion. Indeed, we talk about Hsieh’s untimely and tragic death, with the hope that it will inspire you to remember that death comes for us all, often when we’re least expecting it. And without any planning in place, you are forcing your loved ones to endure a costly legal process and the unnecessary loss of wealth and assets you worked so hard to build.

The loss to Hsieh’s family, and the charitable causes he would have likely supported had he known he would die soon and put his estate planning in order, will be immense. Granted Hsieh’s family can well afford to pay lawyers, court costs, and taxes with what Hsieh left. It will take years to resolve Hsieh’s estate and the time, cost, hassle and conflict of going through the court process could have easily been avoided. The point is that even though your estate is much smaller than Hsieh’s estate, the actual cost of loss to your family by not planning, is just as significant.

But here is the good news: All of the time, investment, loss and suffering can easily be avoided with proper planning. And even though you aren’t a multi-millionaire, you can create a plan that is guaranteed to protect and provide for your loved ones no matter what happens to you.

Hsieh was a True Pioneer

Hsieh graduated from Harvard with a degree in computer science, and started his first company, LinkExchange, in 1996. Two years later, at age 24, Hsieh sold it to Microsoft for $265 million. Soon afterward, Hsieh and a partner launched the venture capital firm, Venture Frogs, which is how he met another young entrepreneur named Nick Swinmurn, who pitched Hsieh the idea of starting an online shoe company. That company would become Zappos, which ultimately defined Hsieh’s career and set in motion his vision for life and business. As CEO of Zappos, Hsieh focused heavily on customer service, and famously offered customers free shipping and complete refund on all shoes for a full year after purchase, with no questions asked.

Hsieh’s leadership proved highly successful, and Zappos saw its sales go from $1.6 million in 2000 to $252 million in 2005. In 2009, Hsieh sold Zappos to Amazon for $1.2 million in stock, while staying on as the company’s CEO. Jeff Bezos was reportedly so impressed with the way Hsieh ran the company, he allowed the young entrepreneur to continue running the brand with very limited oversight.

In 2005, Hsieh moved Zappos headquarters from San Francisco to Las Vegas, where he invested $350 million of his own money to transform a once seedy part of town into a hub for arts, culture, and tech. As part of the project, Hsieh created a community of 30 Airstream trailers, where he himself lived for years with his pet alpaca named Marley.

Hsieh’s interest in fostering community and connection with the Las Vegas project, Airstream park, and other ventures reflect the young business guru’s overarching vision—which was about more than just retail. “He was never interested in shoes,” former Zappos executive Fred Mossler told Forbes. “Hsieh’s journey was to improve the human condition.”

Growing Pains

Hsieh’s was known in more recent years to struggle with depression and substance abuse, which reportedly intensified in early 2020, as the quarantines from the COVID-19 pandemic set in. In January, right before the pandemic exploded, Hsieh attended the Sundance Film Festival in Park City, Utah, and fell in love with the upscale ski resort town. Vowing to recreate his Vegas utopian community in Park City, Hsieh decided to relocate to the town, purchasing some $70 million worth of property around the area, while establishing a $30 million angel fund to help local businesses and startups.

Hsieh’s new home and the centerpiece of his Park City properties was a $16 million, 17,350-square-foot mansion with a private lake he called “The Ranch.” During his transition from Vegas, Hsieh reportedly promised to double the salary of friends who would agree to relocate to Park City and help him in his quest to revamp the community.

According to Forbes, at least several dozen friends took Hsieh up on his offer and moved to Utah with him, where they lived for free in some nine properties he purchased in the high-end Aspen Springs neighborhood. In Park City, Hsieh helped many local entrepreneurs and propped up local businesses struggling to stay afloat during the pandemic with lavish spending on restaurants, bars, limos, and concierge services.

The Park City Crew

While Hsieh initially relocated to Park City to focus on “health, wellness and rehabilitation,” by the late summer, friends and family reportedly became concerned with his increased drinking and drug use. Longtime friends found it hard to reach Hsieh, who grew increasingly isolated. Hsieh surrounded himself with a new group of younger friends-The Park City Crew, most of whom were on his payroll and encouraging him to indulge in more frequent drug use.

In August, it was announced that Hsieh was retiring from Zappos after more than two decades at the helm. Although the timing of his retirement was suspect, Amazon denied pushing Hsieh out, and insisted that stepping down was his own decision, according to Forbes. Whatever the case may be, his friends and loved ones became so worried about his condition, they staged several interventions in order to convince him to seek help.

Apparently, the interventions worked. Hsieh was reportedly planning to check himself into a rehab facility shortly after a planned visit to see friends and family in Connecticut for the Thanksgiving holiday. But as we now know, Hsieh’s plans to turn his life around were tragically interrupted.

Stay tuned in part two of this series, and hear about the last days of Hsieh’s life and how his lack of estate planning created a nightmare burden for his family that is only just getting started.