Zappos was founded by Nick Swinmurn in 1999. The initial inspiration came when he couldn’t find a pair of brownAirwalks at his local mall. That same year, Swinmurn approached Tony Hsieh and Alfred Lin with the idea of selling shoes online. Hsieh was initially skeptical, and almost deleted Swinmurn’s voice mail. After Swinmurn mentioned that "footwear in the US is a 40 billion dollar market and 5% of that is already being sold by paper mail order catalogs," Hsieh and Lin decided to invest $2 million through their investment firm Venture Frogs. The company was officially launched in June 1999, under the original domain name "ShoeSite.com." A few months after their launch, the company's name was changed from ShoeSite to Zappos (a variation of "zapatos," the Spanish word for "shoes") so as not to limit itself to selling only footwear. In January 2000, Venture Frogs invested additional capital, and allowed Zappos to move into their office space. During this time, Hsieh found that he "had the most fun with Zappos" and came on board as co-CEO with Nick Swinmurn. After minimal gross sales in 1999, Zappos brought in $1.6 million in revenue in 2000.
In 2001, Zappos more than quadrupled their yearly sales, bringing in $8.6 million. In 2002, they opened their ownfulfillment center in Shepherdsville, Kentucky. Advertising costs were minimal, and the company grew mostly by word of mouth. It was around this time that Hsieh and Zappos executives set long-term goals for 2010: achieve $1 billion in sales and receive inclusion on Fortune’s list of The Best Companies to Work For. In 2003, Zappos reached $70 million in gross sales and abandoned drop shipping, which accounted for 25% of their revenue base. The decision was based on supplying superior customer service, as Hsieh says "I wanted us to have a whole company built around [customer service] and we couldn’t control the customer experience when a quarter of the...
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