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<\/p>\nIt was never going to be easy to succeed Tony Hsieh, the celebrated chief executive of Zappos, who turned a tiny online shoe seller into a $1 billion behemoth through an obsessive focus on corporate culture and happy employees. But Kedar Deshpande took over at a particularly fraught time.<\/p>\n
Zappos, which is owned by Amazon, was already navigating remote work and grappling with pandemic-driven changes in how people shop when Mr. Hsieh abruptly retired in August after two decades, which led Mr. Deshpande to be named C.E.O. Then in November, tragedy struck: Mr. Hsieh, 46, died from injuries suffered in a house fire in New London, Conn., sending shock waves throughout the roughly 1,500-person company, as well as tech and entrepreneurial circles.<\/p>\n
Since then, it has been reported that Mr. Hsieh had been behaving erratically for months and that friends had considered staging an intervention last summer. The revelations brought new scrutiny to the circumstances of his exit from Zappos.<\/p>\n
Mr. Deshpande, who was previously Zappos\u2019s chief operating officer, said that when Mr. Hsieh told him last summer that he wanted to pursue other projects, he did not push back.<\/p>\n
\u201cFrom my experience working with Tony, Tony always believed in the things that he wanted to change,\u201d Mr. Deshpande said in an interview, his first as chief executive. \u201cI asked him, \u2018Hey, Tony, are you sure?\u2019 And he said, \u2018Yes, I want to retire\u2019 \u2014 so that was the end of the conversation.\u201d<\/p>\n
Now, Mr. Deshpande, 42, is tasked with shepherding Zappos through the late stages of the pandemic and into the company\u2019s next phase as an online retailer, without Mr. Hsieh\u2019s guidance. He must also show whether the company\u2019s culture of \u201cfun and a little weirdness\u201d in Las Vegas can survive without its chief architect.<\/p>\n
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\u201cThe Covid situation and everything else going on makes it very tough, particularly with a culture that is built on physical proximity and happiness associated with that,\u201d Mr. Deshpande said in the Zoom interview, from his home in Henderson, Nev. But he said he was optimistic about the future, especially given the decade he had spent at Zappos in different roles.<\/p>\n
\u201cThe culture is not just one person or two people,\u201d he said.<\/p>\n
There was apparently no long-term succession plan when Mr. Hsieh stepped down. Zappos\u2019s board, which consists of Amazon and Zappos employees, elevated Mr. Deshpande to the role. The company, founded in 1999, has long functioned as an independent unit within Amazon, which acquired it for $1.2 billion in July 2009 and does not disclose its financials.<\/p>\n
It\u2019s tough for a person to replace a C.E.O. with an outsize personality like Mr. Hsieh, said Erik Gordon, a professor at the University of Michigan Ross School of Business, who anticipated that Zappos\u2019s culture will face some changes under new leadership.<\/p>\n
\u201cThe person who takes over from the founder who created the culture doesn\u2019t have the authenticity or moral authority that the founder had,\u201d Mr. Gordon said. \u201cCan he maintain the same spirit of fun and a little weirdness and positive team spirit?\u201d<\/p>\n
(Mr. Hsieh did not found the company, but has been referred to as a founder based on his involvement as an investor and chief executive from its earliest days.)<\/p>\n
Mr. Deshpande, who is from Aurangabad, India, came to the United States for a master\u2019s degree in computer engineering, and joined Zappos after stints at General Electric and PepsiCo. He joins a growing list of South Asian chief executives in the United States, at companies like Microsoft; Google\u2019s parent company, Alphabet; and Gap.<\/p>\n
Zappos, which derives its name from \u201czapatos,\u201d the Spanish word for shoes, was an early e-commerce success story under Mr. Hsieh, who wrote a best-selling book in 2010, \u201cDelivering Happiness: A Path to Profits, Passion, and Purpose.\u201d It argued that a company\u2019s top priority should be its culture and that keeping employees happy translated into success with customers.<\/p>\n
The company, which moved from the Bay Area to southern Nevada in 2004 and now has a campus in downtown Las Vegas, developed a reputation for being a fun, almost cultlike place to work, where employees regularly socialized at work and outside the office. The company has claimed that it is harder to get a job at Zappos than it is to get into Harvard.<\/p>\n
Mr. Deshpande said Zappos employees had become closer in some ways in the past year as they brought family or pets into the remote-work fold.<\/p>\n
\u201cWhen we have Halloween contests, it\u2019s the entire family that is participating,\u201d said Mr. Deshpande, who has two young daughters. He described packages Zappos sent to employees and their families for activities like planting herb gardens or performing science experiments.<\/p>\n
He guessed that employees would start returning to the office after July 1 and were likely to develop hybrid schedules with some remote and some in-person work.<\/p>\n
While Zappos did not have to struggle with the drop-off at physical stores that so many other retailers did, it did take a hit early on in the pandemic as shoes and clothing became an afterthought; few people were buying high heels last March. Sales have recovered since, fueled by demand in the so-called performance and home categories \u2014\u00a0think running and hiking shoes, pajamas, athleisure and slippers.<\/p>\n
Mr. Deshpande said he was unsure when demand for high heels would return, but anticipated that people would continue to want comfort as the economy reopened.<\/p>\n
Zappos has introduced and expanded ways to smooth out the kinks of online shopping during the pandemic, like allowing some customers to make returns through UPS home pickups, and making it easier to exchange items. It also observed that the average length of calls with customer service representatives had increased as people had more time in a closed-off world. They also left more detailed reviews on products.<\/p>\n
One of the company\u2019s biggest goals, and a top priority for Mr. Deshpande in coming years, is figuring out how to make online shopping less transactional and more like the browsing experiences that people seek out in malls and department stores. That includes developing new digital magazinelike \u201cverticals\u201d \u2014\u00a0much like what media companies create \u2014 such as \u201cThe Ones,\u201d which is tailored for female sneakerheads and advertised as \u201cpowered by Zappos.\u201d<\/p>\n
Zappos is also behind VRSNL, a luxury site that has its own web address and no visible link to the shoe site. It features wares from designers like Dolce & Gabbana and Proenza Schouler. The company has been pouring new effort into product detail pages and informational videos catered to audiences like new runners, and even co-developing merchandise and campaigns with the brands it carries.<\/p>\n
\u201cWhat online fails to deliver, which physical delivers today, is around these different experiences,\u201d Mr. Deshpande said. \u201cUntil you actually go and deliver on these experiences, people will go back to the physical, in my opinion, and they will stay online for only transactional experiences.\u201d<\/p>\n
The company refers to these efforts as \u201cexperience commerce,\u201d and said the category was driving 25 percent of its investments. Outside of prompting consumers to explore more, Zappos is also trying to make online shopping more cohesive \u2014\u00a0all with the aim of getting consumers to spend more money over time.<\/p>\n
\u201cOne of the challenges has been that when somebody walks into \u2018online,\u2019 somebody looking for a jacket, for example, we show them inventory next to each other \u2014 like a $30 jacket, $50, $100, $300,\u201d Mr. Deshpande said. \u201cThis is a very disorienting experience.\u201d<\/p>\n
In his view, all of the efforts are in line with Zappos\u2019s obsessive focus on service for the past 20 years, which he anticipates remaining its focus for the next 20 years.<\/p>\n
While the company is still grieving Mr. Hsieh, Mr. Deshpande said, employees will continue to embody the values that he championed. He pointed to an instance during the holidays when one employee mentioned children missing out on meeting Santa Claus during the pandemic, leading to a multidepartment effort to set up Santa Zoom meetings for children around the country.<\/p>\n
\u201cTo me, Tony\u2019s legacy is around delivering this happiness to everybody,\u201d Mr. Deshpande said. \u201cThis culture he has created or pioneered, it\u2019s going to be alive.\u201d<\/p>\n