A nine-point checklist on leadership and control suggests Zappos functions like a cult

Zappos meets most requirements on a cult-indicator checklist.
Zappos meets most requirements on a cult-indicator checklist.
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In spring 2016, Zappos CEO Tony Hsieh had returned from the Nevada desert festival Further Future, an invite-only micro-Burning Man event for the elite.

I wanted to talk to Tony one more time before I turned in my manuscript for this book, so that I could finally ask some of the elephant-in-the-room questions that had been looming. He agreed. In advance of our call, he sent me his Myers-Briggs personality type, INTP (an acronym that stands for “introverted, intuitive, thinking, perceiving”), and asked me to take the test as well. One thing that caught my eye from the INTP description is that the personality type really doesn’t like failure. The Myers-Briggs Type Indicator classifies people into one of 16 psychological types. The first indictor, “introverted” or “extroverted,” is one of the most culturally defining elements, especially in the United States, where we tend to place high value on extroversion.

Tony told me that he created his own personal “Why?” (defined as “the very reason you exist”) during an exercise with motivational speaker and leadership guru Simon Sinek, by recalling a childhood memory. He shared something about catching fireflies and wanting to create canvases so that people could find the light. The story seemed too perfect, too contrived, so I didn’t really believe it. Why would someone as calculated and confident as Tony feel any need to create a personal “Why?” after all this time? After our call, I even checked his public Evernote to contrast the date on the Evernote he shared with the date of his meeting with Simon Sinek. Even though they aligned, I still wasn’t totally convinced of the story.

We also went through the cult-indicator checklist that my friend from Brooklyn had sent me after I told him about Tony’s world and what he was doing with Holacracy, a management tool designed to ostensibly make the company self-organizing. There were a lot of parallels. I forwarded the email to Tony, and we started going through the list together, but he conceded only the first point:

Constantly Changing Requirements
Members are kept off balance by continuous changes in the way day-to-day business is conducted. Done under the guise of improving efficiency or maintaining flexibility, it generally results in intensely painful crisis management.

“Black-and-White” Thinking
Complex situations and concepts are often reduced to “catch phrase” simplicity in order to limit free thought.

Multiple Levels of Membership
Most groups have an inner, devoted core with secretive doctrines and/or practices, and an outer congregation that provides a good image to present to the rest of the world.

Deceptive Recruiting or “Staged” Commitment
When joining a group, new converts are not told the “whole story” concerning what will be expected of them as a member.

Excessive Workload/Activities
Members are kept as busy as possible, or at least prevented from spending much time alone.

Most groups expend lots of energy in making sure they know where members are and what they’re up to. Often includes requiring constant communication or sending “more experienced” members to “check on” others.

Exclusive Doctrine or Special Insight
The group has special knowledge of the scriptures, or a direct line to God (via the leader). As such, they are “special” and often act accordingly.

Front Groups
Cults will often start businesses or community service organizations that perform one or more of the following functions: (1) generate income, (2) recruit new followers, (3) improve the group’s image in the community, (4) provide employment for members so they can be more closely controlled.

Double Standards
The leadership is free to do things that are verboten for “regular” members. They receive special privileges and benefits for no reason other than the fact that they are “in charge.”

He pointed out that companies like Apple could probably also make the list. That’s true; Apple is a cult brand and would probably fit some of the requirements. But Tony’s ecosystem seemed to be a unique fit. I never considered it a real cult, but it trended more toward yes than no. Even those who had a front row seat to his world in Airstream Park do not believe that it’s a true cult. On a scale of 1 to 10, I’d rank Zappos/DTP/Delivering Happiness and all the rest around a 7. Without a doubt, though, it is a cult of personality.

With its unclear intentions and high lack of ambiguity, “Front Groups” seemed to fit Downtown Project perfectly. No one understood what its real purpose was. Group members are encouraged not to spend time alone; the ideal is to have everyone working and playing together 24/7. Airstream Park is a manifestation of this. Beyond that, there are rituals (fernet, tattoos), doctrine (Holacracy is the letter of the law; teal is the spirit of the law). And finally, the idea that “no one is in charge but everyone’s in charge.” There also appeared to be different levels of membership.

I didn’t think that Tony intentionally sought to create a cult, at least not in the beginning. I certainly don’t think it was anything that Zappos founder Nick Swinmurn or former Zappos chairman, CFO and COO Alfred Lin would ever support. Alfred left the company when it was starting to turn that corner, by which time Nick had been long gone. The cult of personality emerged with Tony’s book tour. During a 2011 appearance on The Colbert Report to promote Delivering Happiness, comedian Stephen Colbert asked Tony if he was a cult leader.

“How much control do you have over these people?” he pressed, and then proceeded to ask Tony if there was a way to “deliver suffering.”

In her footnotes to her report on Downtown Project, urbanist Leah Meisterlin notes that, “At the time of writing, a Google search for the terms ‘Tony Hsieh’ and ‘cult’ yielded a little more than 80,000 results. Under the present circumstances, I am far more troubled knowing that the combination of ‘Tony Hsieh’ and ‘kool-aid’ is just as frequent.” (As this book went to press, a Google search for “Tony Hsieh” and “cult” provided 300,000 results, though “Tony Hsieh” and “kool-aid” yielded only about 30,000. However, it’s also notable that if you do a search for other visionary tech leaders and the word “cult,” a high number of results also appear.)

If you ask people why Tony employs people who have no experience, many will say that he wants to give them a chance. But the closer you go into his inner circle, the answer to that question changes. These people talk about how he hires neophytes he can influence. Most of them use the word control. I think it’s some combination of both.

Even Downtown Cocktail Room owner Michael Cornthwaite—indeed, the reason that Tony decided to invest his Amazon windfall into downtown Las Vegaswho has been up close, doesn’t understand how things work. “Do you really know that Tony is making the decision?” he reflected. “Or that Fred is making the decision? No, you really don’t know because no one will disclose who’s making any decision, so the only logical conclusion you can come to is that they are all collectively making the decisions, and one person gives the answer. I’ve been around Tony so much that I hear interactions that take place, and I’ve only been surprised by the amount of detail he knows about things. And you’d think, no way he knows that. But he totally does.”

Tony has always said that if you become your true self, your tribe will find you. Using that reasoning and the conventional wisdom that we are generally the composite of the five people we spent the most time with, you can figure out Tony by looking at those around him. Within him are his longtime right-hand Fred Mossler and all of the yes-men and yes-women–those with a fierce desire to please and who avoid conflict at all costs. Real estate mogul Andrew Donner reflects his ego, the unforgivingly rational and purely profit-seeking side to him. Serial entrepreneur Scott Cohen, though more of an acquaintance, uniquely reflects Tony: a counterpart in the dot-com boom, he was also lucky twice, and his Life Cube represents Tony’s vision in its purest form. In Tony too are Heidy and Chad Stamper, who represent the raver part of him that is both escapist and idealist; an element of the purity of his vision also lies within them. Then there is Michael Cornthwaite, who has leveraged and been scarred by the Vegas underbelly and yet made a decision to devote himself to his wife and daughter; even though that may be more aspirational, that part exists in Tony. His childhood friend and confidant Janice Lopez, who happened to join Downtown Project immediately after Ovik Banerjee’s suicide, represents his past and his heart. I don’t think it’s a coincidence that she showed up when she did. And finally, surely there is a part of him that identifies with all of the broken toys and lost souls–the most significant common thread among everyone.

And maybe Tony doesn’t want to see himself as a traditional leader, but he is one. Although he won’t even claim the title, those who work most closely with him see it that way.

“Tony is the CEO,” affirmed Michael Downs, who is executive vice president of operations for Downtown Project and holds a good amount of decision-making power. I asked Michael what was going to happen at the end of the five-year mark, which was January 2017. He told me that the plans to reach sustainability had been pushed back a year to January 2018. The core Downtown Project team is now down to about 30 people, which means that after the Dirty Thirty shake-up in 2014, 30 more employees have since departed–some voluntarily, some not. “We’ve been really aggressive about not refilling positions,” he explained.

Downtown Project—originally pitched as a lifestyle and gateway to living out one’s dreams, with the support of a strong purpose-driven community—had the opposite effect. Many walked away with shattered dreams and broken hearts.

DTPer Lisa Shufro reflected on the irony of the aftermath in a Medium post “Delivering Resilience,” which she published after the Dirty Thirty layoffs, seeking to find a silver lining:

On the day that Malala Yousafzai won the Nobel Peace Prize, Rehan asked me what Shiza Shahid, Malala’s mentor and women’s rights advocate, would speak about. Resilience, of course. Rehan paused, and said, “What if, in a weird way, what happened to Malala is the best thing that’s ever happened to her?”

“That could never be the case,” I said. “The best thing that’s ever happened to Malala is what she did next with that experience. She chooses to live through it, to journey through the reservoir each day to experience joy.”

There’s something strange about how coming from a place of loss and failure clarifies things.

In his 2011 interview with Barbara Walters, Tony said that it would be an interesting challenge to build everything back up again from zero. It’s one of the most notable things he’s said– everyone talks about it when he’s not around. I think I now understand more of what he meant: there is nothing like starting with a blank canvas from a place of failure or loss. It’s the ultimate opportunity.

An excerpt (edited for clarity) from “The Kingdom of Happiness: Inside Tony Hsieh’s Zapponian Utopia” by Aimee Groth, published Feb. 21, 2017 by Touchstone Books, an imprint of Simon & Schuster, Inc.