Sunday, April 23, 2023

Tony Hsieh’s Friends/Family Milked Millions in His Drug-Fueled Final Months

When Zappos’ charismatic founder died at 46 in 2020 after a mysterious fire, it was revealed by Forbes to be drug-related. But his self-destructive spiral was evident months earlier in the utopian community he tried to build in Park City, Utah. In this exclusive excerpt from Wonder Boy, Hsieh began paying millions of dollars to a sycophantic circle of acolytes in a desperate attempt to deliver him happiness during the last weeks of his life.


Tony Hsieh’s family had already come and gone by the time the 46-year-old Zappos CEO had bought a ranch in Park City, Utah. After a manic episode and a subsequent hospital stay in June 2020, his parents had arrived in town with his two brothers, Dave and Andy. Despite their arrival, Tony spent little time with them, and asked friends to ensure that he would never be left alone with them.

In the moments Hsieh did spend with his family, he left them struggling to connect with him. During one moment with his mother, Judy, he said he would be open with her if she would act like his friend. If she acted like a family member, then he would hide information from her. After Judy told him that he needed to see a therapist, he said he would, but only if for every minute he was in therapy she would sit in an ice bath. When she pressed the therapy point once more, mentioning his issues with attention, Tony left the house in a rage.

When it came time for the family to depart, Andy thought twice about leaving. Despite their distance over the years, seeing a swirl of new people he had never met before made him want to stay in Park City and keep an eye on his older brother. Ten days later, he returned and quickly realized that he had entered an ecosystem where people were competing for Tony’s money, pitching projects that didn’t make sense and living in houses they would never be able to afford otherwise. And there was a rule that ominously dicta­ted many behaviors in the Park City enclave: Never tell Tony you were concerned about his behavior. To do so meant risking excommunication.

One solution Andy came up with was to bring in people he could trust to watch after Tony. As it happened, Andy knew that his brother had wanted to work with their longtime friend Tony Lee for a while. Lee had spearheaded Wells Fargo’s loans to Zappos in 2003 when the company was close to bankruptcy. Since then, Lee had worked at a number of smaller banks before settling in Texas to manage the finan­ces of the Bass family, the oil dynasty worth more than $5 billion. Lee and Andy had remained close friends over the years; Andy had asked him to be the best man at his wedding before it was canceled. Now, at a time when his brother’s spending was spinning out of control, Andy figured they could benefit from a professional financial mana­ger to conduct some due diligence.

Lee was reluctant to entertain the idea of uprooting his life in Texas and to leave a comfortable job to join the mania of Tony Hsieh’s world, but he agreed to a meeting. During a dinner in late July at a restaurant on Main Street, Hsieh told him that he was turning Park City into a community similar to the one he had built in downtown Las Vegas a few years ear­lier, but better. Lee’s role would involve overseeing all finances in the Park City ventures. As he had done with others, Hsieh offered to pay double Lee’s current salary, which meant he would be earning $1.5 million a year. Sensing Lee’s hesitancy, Hsieh turned to one of the people at the dinner and suggested that if he could convince Lee to stay, he would receive a 10 percent commission, or $150,000.

After dinner, Andy pulled Lee aside. Coming to Park City made sense for multiple reasons, he explained. With Lee overseeing the finances, he could also help weed out people who were taking advantage of his brother.

Andy’s request came with a sense of urgency, as funds had been hemorrhag­ing from Tony’s accounts for many months. If people had concerns about taking money from a man drifting further from reality due to excessive drug use and other erratic behavior, few had seemed to consider the Faustian bargain they were entering—an oversight that took vivid form when Hsieh found another destructive fascination.

In the weeks following his release from the hospital, Hsieh had become focused on the study of biohacking to increase his personal output. He became convinced that inhaling nitrous oxide was a way to heighten his blood oxygen levels and eliminate the need for sleep. Better known as laughing gas for its use at dental offices, nitrous oxide is commercially available as an everyday kitchen item: the cartridges used in whipped cream machines, known as Whip-Its. While it’s illegal to inhale the gas, the practice has been popular for decades among teenagers who can’t legally buy alcohol and festival revelers seeking a cheap, quick high.

But the brain can only handle so much. Excessive nitrous oxide use can lead to brain damage, and some teenagers have died from chemical asphyxiation. In between cigarettes, Hsieh was inhaling from Whip-It canisters like he was drinking water from a bottle. By one estimate, he was using more than 50 a day.

His near-constant stream of nitrous oxide prompted strange behavior. One time, he stepped on glass, cut his foot, and walked around the Park City ranch leaving streaks of blood on the floor—a trail, he said, that would make it easy to find him. On another occasion, he tried depriving himself of food and water to eliminate the need to use the bathroom. Over time, his physical appearance changed, and his weight fell below 100 pounds, leaving his frame looking skeletal.

Chef Executive: When Hsieh moved to Park City, he dreamed of creating a utopian community similar to the one he built in Las Vegas with family, friends and loyal Zapponians—at any cost.

At one point paranoia also took hold, and Hsieh was convinced one morning that a Zappos executive named Tyler Williams was in town, trying to stage an intervention. The scare prompted him to hire a legion of black-clothed security guards to form a human perimeter around the ranch. Visitors who came to see Hsieh encountered guards in different wings of the property, as if they were entering a fortified estate.

While Hsieh was initially seen at mealtimes and held meetings in vari­ous rooms at the ranch to discuss the stream of projects being pitched to him, he gradually started spending more time in his bedroom, and would hold court while sitting in bed, surrounded by nitrous oxide canisters. “His room looked like a homeless shelter,” his brother Andy said later.

“There was feces on the ground. Plants in his toilets. Broken glass, broken plates all over the ground. Rotten food under the bed. Rotten food on the walls . . . it was disgusting.”

His spiral with nitrous oxide came at a time when people were finding new ways to spend his money and Hsieh seemed all too willing to spend himself broke, thanks to a nonsensical incentive scheme he had devised called 10X.

The first iteration of 10X launched with a noble goal: to help Park City reopen amid the pandemic. The plan was to walk around downtown and sell $10 memberships to people, granting them an all-you-can-eat-and-drink pass to local restaurants; participants were given T-shirts and merchandise with a 10X logo. It might have sounded chari­table, given that the venture made no financial sense, but the state of Utah took issue with running an open bar tab on an entire town and shut down the program after its second week.

But the philosophy of 10X remained and morphed into something else over the summer when Hsieh began demanding that everything be achieved in multiples of ten: ten times faster, ten times bigger, ten times more. In addition to offering new arrivals double-your-best-salary deals, he vowed that anyone who spent his money would be entitled to a 10 percent commission on the amount they spent. If someone booked out a restaurant and spent $1,000 on the tab, for example, they would earn $100. If they recruited someone to live in Park City, they would be entitled to a 10 percent commission on that person’s annual salary. And if someone could source a real estate deal and spent $1 million on the property, that person would earn $100,000.


At one point, Andy Hsieh urged another friend to convince Tony to invest $10 million in a tequila company, eventually suggesting she ask for $50 million for the venture. 


By now, Tony Lee had assumed the role of financial overseer and had a front-row seat as money left his old friend’s bank accounts. Unlike the mundane stock performance charts Lee had been overseeing for the Bass family, he was now staring at receipts for investments in gold and real estate properties, hot air balloons and proposals for helicopter tour companies.

Lee could also see those vying for Hsieh’s money beginning to fight for it—often motivated by the 10X program. Hsieh’s longtime personal assistant Mimi Pham, for example, had in recent years been paid a flat $9,000-a-month salary from Hsieh, in addition to travel expenses. But after the Park City chapter began, she negotiated a pay raise and was now earning $30,000 a month—an amount that was soon dwarfed by the money she was scooping up in 10X commissions.

In total, through an LLC she controlled, Pham sent invoices for what amounted to more than $20 million. In one case, she “managed” a contractor who was being paid $83,333.33 a month for “assistance and management of various projects”—earning her $8,333 every time he was paid. When Hsieh bought a fleet of buses and asked that Pham arrange for them to be retrofitted at a cost of $3.7 million, she took 10 percent of the fee. Then there was the $7 million acquisition of the Big Moose Yacht Club, an event space on prime real estate at the foot of Park City’s ski lifts, which entitled her to a $700,000 commission.

Burning Questions: The New London, Connecticut, shed where Hsieh barricaded himself during the 2020 fire contained laughing gas, marijuana, a propane heater and candles.

NEW LONDON FIRE DEPARTMENT (BOTTOM)

In a twisted way, Hsieh’s incentive structure was working the way he envisioned it; people were vying to execute his every whim. When he had an idea to launch a film studio that produced documentaries, Pham took up the proposition. On a sticky note, she and Hsieh wrote up the terms of a contract to set up an LLC with $10 million to fund documentary film projects produced by an existing studio called XTR. The LLC would be controlled by Hsieh, Pham and her boyfriend, Roberto Grande, a former lawyer and aspiring film producer. As part of the agreement, Pham and Grande were entitled to 55 percent of the profit from the venture, despite not putting up their own money. And in line with 10X, Grande would be entitled to a $1 million commission for setting up the LLC. Pham then charged Hsieh another 10 percent fee on the cost of hiring the lawyers to arrange the $1 million commission payment to Grande.

Two months later, Grande told XTR that Hsieh had approved another $7.5 million for the venture. It’s unclear if the money was wired, but soon afterward, the attorneys who had written up the terms for the $1 million commission payment to him amended the contract to state that he was now owed $1.75 million.

Wonder Boy by Angel Au-Yeung and David Jeans

Henry Holt & Co.

Pham’s efforts often came into conflict with those of Suzie Baleson, a friend of Hsieh’s who had previously attended events with him as a plus-one and was now overseeing multiple operations in his Park City world. At one point Pham introduced a “Suzie penalty,” which Hsieh agreed to—for every day Baleson was on one of his properties, Pham would fine him $30,000. While it seemed outrageous, Hsieh racked up $1.83 million in fees under the scheme and received an invoice from Grande. He ended up paying $420,000.

Another person Pham seemed to be feuding with was Andy Hsieh. Since Tony had met Paula Abdul earlier in the year, he had wanted her to come to Park City to do some shows—and because tours had been canceled as a result of the pandemic, she had spare time. So Hsieh proposed that Abdul perform 180 shows at a local event venue known as Yellowstone for a $9 million contract. Whoever could close the deal would get the $900,000 commission. Andy claimed that he had arranged it, while Pham argued that in fact she was entitled to the commission, but nothing ever came of the proposal. In another dispute, Andy and Pham lobbied Tony about who they thought was entitled to the 10 percent commission on the $15 million ranch he was now living in.

In the final frantic months before Hsieh’s death from a fire in a storage shed, where he had barricaded himself surrounded by nitrous oxide canisters, candles and a propane tank, Andy also tried to rally support among others to pursue deals with his brother’s money. At one point, he urged another friend, Janice Lopez, to convince Hsieh to invest $10 million in an entity that would own a tequila company, eventually suggesting she ask for $50 million for the venture. But Lopez refused, and the deal went nowhere.

Favorite Son: Hsieh moved Zappos’ headquarters to Downtown Las Vegas in 2012 and invested some $350 million in the community. Upon his death, the city paid tribute to its unofficial mayor.

Bryan Steffy/Getty Images

Tony Lee, for his part, initially seemed to encourage Andy’s pursuit of the 10X commission payments. “You are welcomed [sic] to go broker a deal for me,” Lee wrote in a text to Andy, referring to his salary contract. “Go talk to him.”

“Yeah I’ll talk to him,” Andy replied. “Tell him I’m your broker.”

Lee seemed enthused. “You have to earn your commission now and make it happen. :)) hope tony pays you.”

“I’ll make it happen with Tony! And you make it happen with him that I’m your broker :),” Andy replied.

“The higher my number whether 1.4 or 1.5 [million dollars] you will get a bigger commission. Go fight for me now. :))”

“Win win!” Andy wrote back. “Mainly excited for you to be here and we can hang out together.”

Lee later claimed he wasn’t aware how ill Hsieh was until after he deci­ded to take on the role. After he star­ted working, he soon soured on Andy and came to believe that he was seeking to exploit his brother rather than protect him. At one point, Lee claimed that Andy asked him to divert as much as $100 million to an account he controlled, to put aside for Tony’s “retirement,” which he refused to do, a claim Andy later denied.

As for Andy’s efforts to secure a 10 percent commission on Lee’s salary, worth more than one hundred thousand dollars, those fell by the wayside when Tony himself refused the proposal. It didn’t seem to matter, though, as Andy had already negotiated his own salary contract with his brother—at $1 million a year.


Adapted from Wonder Boy: Tony Hsieh, Zappos, and the Myth of Happiness in Silicon Valley by Angel Au-Yeung and David Jeans. Published by Henry Holt and Company. Copyright

© 2023 by Angel Au-Yeung and David Jeans. All rights reserved.


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