Amazon and Zappos – let’s see how high we can pile the crap

I first heard about the Amazon acquisition of Zappos, the web’s favorite online shoe store, through Twitter and the exclamations that went along with it. One’s like “Wow!”, or “Didn’t see that one coming” that have gone on to be retweeting fodder.

So I started flagging posts about the acquisition as they appeared in my feed reader – which didn’t take very long, natch. Among all the posts was the letter from Tony Hsieh, CEO of Zappos, on the company blog to company employees letting them all in on what had been a completely secret backroom deal. It was at this point that my bullshit meter started going off.

As Michael Mesnick noted in his post much of Hsieh had to say was an almost painful effort to make sure everyone got the right story about the deal – it wasn’t an acquisition. No folks it was the joining of two divergent corporate cultures in such a way that Amazon would remain as Amazon and Zappos would remain as Zappos. Just ignore that Amazon would be the only shareholder.

Over the next few days, you will probably read headlines that say “Amazon acquires Zappos” or “Zappos sells to Amazon”. While those headlines are technically correct, they don’t really properly convey the spirit of the transaction. (I personally would prefer the headline “Zappos and Amazon sitting in a tree…”)

We plan to continue to run Zappos the way we have always run Zappos — continuing to do what we believe is best for our brand, our culture, and our business. From a practical point of view, it will be as if we are switching out our current shareholders and board of directors for a new one, even though the technical legal structure may be different.

Uhm … who is Hsieh trying to kid here?

Look when one company buys up all the shares and other sundry goodies of another company that folks is an acquisition. I don’t care how high up in the tree Hsieh wants Amazon and Zappos to be sitting it doesn’t change the fact that Amazon is Zappos’ new overlord. you know … much like this line in the letter

As mentioned above, we plan to continue to run Zappos as an independent entity. In legal terminology, Zappos will be a “wholly-owned subsidiary” of Amazon.

The other line that got me in the letter was this one

We realized that we are both very customer-focused companies — we just focus on different ways of making our customers happy.

Amazon, a customer focused company?

You mean the company that believes in proprietary hardware and have no compunction about deleting books you bought just because a publisher changed their minds. You mean the company with some of the worst customer service on the web.

Are we talking about the same company here?

But, the big thing for me was the whole WTF! about the acquisition (or is that playing house in the trees like Tarzan and Jane?) was that these are two companies with totally divergent cultures. You know – sort of like the whole Microsoft and Yahoo thing.

Ya, Hsieh is pushing the fact that even though Amazon is now the boss everyone can rest assured that Zappos will be maintaining it’s own culture and core values (I lost count on how many times he repeated those two things in his letter). However I just don’t see this as being a lasting thing because like Doc Searls, who is the only other person I have read so far that is questioning this deal, the two companies might be able to form some kind of synergy as Zappos gets sucked into the Bezos universe but will it last?

So I’m sure there is synergy there. But synergy alone does not a great acquisition make.

I wonder, now that (as the press release says) “Amazon will provide Zappos employees with $40 million in cash and restricted stock units” — in addition to whatever stockholding Zappos employees get in the form of Amazon stock — if Zappos’ soul and mission will survive the acquisition.

I also wonder what kind of hit the whole subject of relationship, which is so highly potentiated (read: absent, though it shouldn’t be), will take.

– Doc Searls :: From Z to A

Just to make sure that I wasn’t just being cranky about the deal for the sake of being cranky I had a quick chat with good friend Mark “Rizzn” Hopkins to see if he saw this as a working deal. I will say that while I don’t agree with him – for the reasons stated – he did at least come up with an interesting take on the whole thing (he has a post up now on SiliconAngle about the deal).

5:39 PM are you getting this Amazon/Zappos deal at all? like it makes as much sense as MS and Y!

5:41 PM Mark: yeah

actually

Zappos is going to be the customer service / social media arm of the company

5:42 PM Amazon is clueless when it comes to monitoring the web for PR purposes.

they still act like a local company.

they’re active in the Seattle media scene, but little else

5:44 PM me: well that may be the case but if it is a lot of people are piling on the separate company and separate core values bullshit thick and heavy .. nothing I have read so far even points that way .. if anything it points elsewhere ..

but I do agree that Amazon is useless that way

While the majority of posts about the deal are either just reprinting the Zappos letter or they are going on about the dollar figures of the deal very few are questioning the ‘synergy’ of the deal. I still don’t see how Zappos is going to be able in the long term to maintain the same culture and ethos that has made them famous in the social media circles. Like Michael Mesnick said

If I had a dollar for every time an acquired company insisted that the acquirer was going to keep them running exactly the same as before, I’d be a lot wealthier. And if I had to give back that dollar for every time that wasn’t true, I’d be giving all that money back. This is an acquisition, no matter how Zappos is trying to paint it.

I’d be willing to bet that within a year of the deal being finalized Zappos will either be as Mark suggests, the social media arm of Amazon, or it will be just a shell of its former self.