In this interview, Will Young, Director of Zappos Labs, explains the purpose and evolution of the small R&D team within Zappos, describing its early work on e‑commerce buzzwords and its current focus on exploring new business lines beyond retail. He then details Zappos’s experiment with holacracy—a self‑organizing, manager‑less operating model—covering the company’s timeline (a year and a half of trial, a public announcement in April, and the removal of all managers on May 1). Young outlines the severance offer for employees who choose to leave, noting that 14% of the 1,500‑person workforce resigned after the announcement. He discusses how the shift affects compensation (no pay cuts in 2015) and career trajectories, emphasizing that former managers must now add value in non‑managerial ways, which some view as an opportunity to return to product work while others feel uncertain. The conversation highlights the cultural shock, the strategic intent behind holacracy, and the personal impact on Zappos staff.
To sort of switch gears a little bit, I mean, can you talk about your role at Zappos Labs? Sort of explain what you do there, and then talk about this whole leadership thing that's going on.
It's kind of crazy. So Zappos Labs, it's existed for about 4 years. We're an R&D team for Zappos. Pretty small. It's not like Amazon, who were a subsidiary of ours, has huge R&D teams. We're 10 people. 5 open recs, we're hiring, in case your startup doesn't work out. So, you know, we've evolved over the years, just like you as your startup should kind of change your focus, pivot, whatever. Early days, we were like, we pretty much worked on e-commerce buzzwords. Like, what does social shopping mean? Like, how do we make people who use Pinterest a better shopping experience on Zappos? So we did a lot of stuff there. Now we're kind of focused on 3 buckets of what are new lines of business that Zappos should explore outside of e-commerce. You know, we have this great ethos of company culture and good customer service. Like, what else should we launch? Like, should we be like a Virgin brand that launches Cruises, airlines, because they have this great brand that people love. So we're spending some time there. We're doing something and going to the manager thing. Some of you might have read some headlines like Zappos has been trying to— has anyone ever heard of holacracy? It's in some articles, like Medium Corp is doing it. It's a new model of running enterprise with like no managers, and it doesn't mean flat, and I won't go into all the gory details, but it means how do you create an environment that is really self-organized, where it's not just top-down direction all the time. And so Zappos has been trying to do it for about a year and a half, kind of half-assed, like not a great job. So Tony, our CEO, sends out an email to the company at the beginning of April, and it got into the press, which we're comfortable with, but that said, okay, we've been doing it for a year and a half, not super great. End of April, we're pulling off the band-aid. Managers will no longer exist on May 1st. And we're a 1,500-person company, so it's kind of crazy, right?
Yeah.
And it says, if you're not— if you don't wanna be part of this journey, totally understand, this isn't the company you signed up for, you can quit and get 3 months of severance or 1 month of severance for every year you've been at Zappos. So last, last Friday, we found out how many people quit, which is kinda crazy. And Zappos has this great culture that people talk about. It's like, Zappos, you're so great, you're so great. 14% of the company quit last Friday, last, last Friday. Kinda nuts, right?
Yeah.
Across every department, leaders of departments. And again, I don't know what we were expecting. To me—
Were some of those people going to get pay cuts because of the change? Were their jobs going to be worse?
Yeah. I think what we told people is, your pay will not decrease in 2015. But if your job today is all you do is manage people, you need to start finding other ways to add value to this company. And I was super excited about that, because I think, like a lot of you, as you grow in your careers, if you go back into corporate America, like one of the paths is if you're a programmer, like eventually people push you to manage engineers, right? Whether you want to or not, like that's a career path. So when I'm like, you're not managing people anymore, I'm like, awesome, I get to like build product again, which I'm super rusty at, but I was really excited about. But some people a little nervous, like, you know, managing people's all I know and maybe it's not for me. So, and some people were just, you know, like been at Zappos for 10 years. And I love Zappos, I love the culture, I love where we're going, but I'm gonna take this opportunity and change my career.
Right.
Like, thanks, Zappos. And there's some tech people, it's like, there's my seed funding for my startup, and they're doing startups, so good for them, right? Like, I think Zappos— I think it's kind of exciting that Zappos gave them that opportunity. You can take principles out of self-organization and not need to be Holacracy. There's a lot of good articles about it, like First Round Capital has a lot of blog posts about Medium success and their learnings on it. And they do kind of a variation of it. But I think the thing to remember is getting rid of managers doesn't mean it's flat and anarchy. So like, if you think about a typical corporate structure, it's a hierarchy of titles, right? CEO, VPs, directors, managers, blah blah blah blah blah, all the way down. And like, where you are in that hierarchy kind of dictates your power. But Holoxee has a hierarchy too, but it's a hierarchy of work. So like, for example, like before in the traditional hierarchy of people, I kind of sit maybe in the middle there. In the hierarchy of work, I play all these roles within the company. So for my labs team, I'm the lead link of that lab circle, but I'm in circles where I'm at service to a 22-year-old call center rep because I work on her project with her. But I don't need to be the lead of that, but I just support that. So I play 10 different roles in the company. Some of them I'm a leader on, some of them I'm just a doer on. And I think that's a good thing, right? Sometimes you'll hear about the servant leaders, leaders who just wanna do whatever their employees need, and this is to the nth degree, and I think that's a good thing, 'cause I think one of the things you guys as early CEOs or founders, you're going to put everything on your shoulders. I'm sure you're already feeling that right now. Even if you have a couple people, you shield them from all the stuff that's hard. Haloxi's good is you kinda say, These are the problems in the company. Who wants to help fix these things? And it takes a little off you as leaders, and I think that's a good thing. Does that create a lack of focus, though? A little bit, but there's purpose alignment. I think, what are we trying to do as a company? And I think everyone's still measured on, are you adding value to the company? So if someone says, you know what, we're a self-organized company, and I want to launch a lemonade stand because it's really hot in Vegas, they can actually— Do that at Zappos now, but they're going to be asked, like, what value did that add to the company?
