I am sorry to see Amazon buy Zappos. Not because I have bought a lot of shoes at Zappos (still liked this as a title for the post though), but here are three reasons:
First, I felt that Zappos could be a real competitor to Amazon for online retail. And I love competition. It is great not just for customers but also for suppliers.
Second, Zappos was an IPO-able company based on size and apparently profitability. It takes IPOs to build confidence in the financial markets. IPOs beget IPOs. Now we have to scratch one candidate off that list.
Third, I am an Amazon shareholder and don’t think this was a smart move (as so often, the market disagrees with me as AMZN is up 5%). This reminds me of eBay buying half.com and then never really figuring out what to do about the two brands.
There is a rumor going around that Tony Hsieh did not want to sell Zappos and that this was a Sequoia Capital move. Bijan points out, it’s not so easy for an investor to sell a company unless management wants to go along. On the other hand, it may also not be easy to IPO a company if the VC doesn’t want to go along. Be that as it may, I sure would have love to see Zappos stay independent and go public.