A Holacracy of Dunces

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“Where’s the man with the megaphone?”

The fair boy shook his head.

“This is an island. At least I think it’s an island. That’s a reef out in the sea. Perhaps there aren’t any grownups anywhere.” – Lord of the Flies

“I can’t get fired. I can just wait her out.”

May 2015 and in a downtown Vegas restaurant called Eat, a man wearing a Zappos badge is loudly explaining his plan to force a co-worker to quit. I’m at the adjacent table, but the man is being so vocal I could have heard him from across the room.

“She’s made the work environment miserable. Why doesn’t she stay at home?”

His companion doesn’t respond, which the man takes as encouragement to continue: “Before I get fired she’ll be long gone.”

The man may be an asshole but, unfortunately for his intended victim, he isn’t wrong. Up until recently Zappos was considered one of the best places to work in the world: A company offering benefits so in-demand that, to guard against carpetbaggers, it famously offers new hires up to one month’s salary to quit. According to Zappos’ own numbers, less than two percent of recruits take the offer.

When I first visited Zappos in 2011, for the Huffington Post, I joked to CEO Tony Hsieh that, frustratingly for a reporter, I couldn’t persuade any of his employees to say anything bad about their boss, or his company.

Four years later, Hsieh has solved that particular problem. In the weeks leading up to my visit to Vegas, 210 Zappos employees had resigned. Many of those who remained were — people close to the company would tell me — a combination of scared, confused, and angry. The sources themselves asked me not to use their names in any subsequent reporting, citing an already strained work environment.

[Disclosure: Both Hsieh and his Vegas Tech Fund are investors in Pando]

Zappos is in the midst of the biggest shake up in its fifteen year history, bigger even than when it was sold to Amazon in 2009. At risk is not just the soul of the company, but the careers of the 1200 or so employees who still rely on Zappos for their livelihood and who still, in many cases, trust that Tony Hsieh will continue to — in the words of his famous book — Deliver Happiness. Never have those careers seemed so uncertain, and never has that trust been so stretched.

The culprit? A new and unproven management theory called “Holacracy…”

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