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Zappos

Utopia or Lord of the Flies?

Tony Hsieh, who devised “holacracy”. Film Magic/Getty Images

The tragic tech billionaire Tony Hsieh had a dream that large groups of people could work together without “big bosses calling the shots” – a tempting utopia, says Matthew Syed in this episode of his Sideways podcast for Radio 4. Hsieh built Zappos, an online shoe retailer based in Las Vegas, to be “the happiest company in the world”. It was harder to get into than Harvard, and applicants had to be generous, committed oddballs. “If you weren’t friendly to your taxi driver to and from the interview, Tony would hear about it,” Syed says. The company thrived and was soon worth $1.2bn.

Then Hsieh decided to do away with hierarchy altogether, letting employees choose what they would work on and who they would work with – a system called a holacracy. Hsieh saw hierarchy as a hindrance to happiness and was willing to think boldly. Many agreed, but the staff who didn’t understand the new system were baffled. There was too much confusion and powerful bully boys formed cliques. It was “essentially Lord of the Flies”, says tech journalist Paul Bradley Carr. In 2015, Hsieh offered a bonus to anyone who wanted to leave: 18% of his employees took it and a further 11% left without a payoff. “The happiest company in the world had lost a third of its workforce in a single year,” Syed says. In seeking perfect equality, Hsieh had “inadvertently created its opposite”.

The real victim, however, was Hsieh, whose drug use spiralled. “In healthy hierarchies, people lower down the chain of command are encouraged to speak up when the leader is doing something wrong or dangerous,” says Syed. But Hsieh only had yes men now. He died last November following a fire in a garden shed; it’s unclear whether he had locked himself inside. “He was the emperor whose subjects couldn’t tell him that he was unclothed.”

Listen to the full episode here.