Delivering Happiness

Top 10 Questions to Ask When Looking for Investors and
Board Members
1. Do you really need investors? Can you avoid funding by
growing more slowly?

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2. How actively involved will your investors be? How actively
involved do you want your investors to be?
3. What value beyond money can your investors add (connections,
advice, experience)?
4. What is the time horizon for a financial exit that your investors
are expecting?
5. What, if anything, are your investors hoping to get out of their
involvement beyond just financial return? How would they
prioritize those things?
6. Do your investors and board of directors buy into the vision and
mission of the company?
7. Would they accept less profits if it meant that the vision could
be fulfilled faster?
8. How flexible are your investors and board members in their
thinking?
9. Who controls the investors? Who controls the board?
10. Do the core values of your investors and board members match
the core values of the company?
Alfred, Fred, and I brainstormed ways we could address the alignment
issues we were having with our board of directors. We certainly didn’t want
to sell the company and move on to something else. To us, Zappos wasn’t
just a job or something to build our careers. It was a calling. We had too
much of an emotional investment in the company to just give up. We had
gotten through much tougher things at Zappos before. This was just another
challenge we needed to figure out. So we came up with a plan.
We would buy out our board of directors.
Amazon
We figured it would cost about $200 million to buy out our board of
directors, so we started looking for other potential investors. In early 2009,

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we started talking to various private equity firms, venture investors, wealthy
family businesses, and wealthy individuals. The idea was to raise money
from them for a stake in the company so that we could then buy out Sequoia
and some of our other shareholders and board members.
As we were going through the process of talking with these different
potential investors, Amazon contacted us. We had been in touch with them
for the past several years.
Jeff Bezos, founder and CEO of Amazon, first contacted me back in
2005 and paid us a visit in Las Vegas. Even before he flew down, we let
him know that we weren’t looking to sell the company.
Date: August 16, 2005
From: Tony Hsieh
To: Jeff Bezos
Subject: Thursday’s Amazon/Zappos meeting
Hi Jeff—
I’m looking forward to meeting you in person on Thursday.
I just wanted to set proper expectations before the meeting and
reiterate that we are looking to grow Zappos as an independent
company at this point in time, but are always open to exploring