Tony Hsieh, Zappos Founder, talks about coping with the recession from Zappos headquarters in Henderson, Nevada.  Zappos, a online shoe retailer, was started in 1999 by Nick Swinmurn and Tony Hsieh and now has over $1 billion dollars revenue.

How has Zappos been affected by the economic downturn?

The good news is that we are still growing year over year, although we are definitely growing at a slower pace.

Has Zappos’ business strategy, marketing or product / service offering changed as a result of the recession?

We’ve been more cautious with our growth projections and therefore our hiring. However, we have not cut back on our focus on customer service or company culture.

I think the true test of a company’s character (or even a person’s character) is how they behave when times are tough. For Zappos, we’ve continued to focus on providing the very best customer service and developing our company culture.

What considerations led to your decision to base Zappos in Las Vegas? Did you consider California as well? Do you see more businesses moving to Las Vegas as a result of these factors?

We actually started in San Francisco in the building where Craigslist is now located. When we first moved from San Francisco to Las Vegas, we had about 90 employees in San Francisco and about 70 ended up moving with the company. Today, we have about 700 employees in Las Vegas, so the vast majority of our current employees joined Zappos after they had already lived in Las Vegas.

For the employees that moved from San Francisco, some of them decided that living in Las Vegas wasn’t quite right for them, so we offered to pay for their relocation back to San Francisco. Overall, I think most employees are pretty happy with the move.

Over time, I do see the potential of more businesses moving to Las Vegas.

Have any new opportunities emerge as a result of the recession?

As counter-intuitive as it sounds, the recession actually brings with it a lot of opportunities. For example, suppliers are more flexible to work with and it’s easier to recruit quality employees.