1. They were turned down by every venture capitalist. It took almost five years from founding to Sequoia leading their A round. No one thought consumers would buy shoes online.

2. Tony Hsieh, who ended up backing Zappos those first five years, was selling off apartments to keep the company in business. (He was not the founder; Nick Swinmurn was.) Hsieh made a lot of money selling his first company to Microsoft. He spent a lot of it on apartments. He ended up selling those apartments to keep Zappos running.

We did $1.8 million in 2000, our costs were high, we had a pretty good staff of people trying to sign up shoe brands, and developers, and we were losing money and counting on the fact that one day these brands are going to work with us.  When we moved into incubator, Tony had a penthouse and 10 other apartments and by the time we raised the Sequoia round, he had 1 apartment, so he was kind of like, "okay we need more money, let me go sell another apartment, I'll put some more money in".

3. Zappos lost a $250,000 convertible note. It had a $250,000 convertible note from Draper Richards, but when the note was set to convert they changed their mind and pulled the note. Hsieh had to pay them back out of his pocket

4. Zappos decided to sell when it started to realize that an IPO wasn't going to be viable. The company had big sales, but relatively small profits. It had a goofy culture. The VCs worried that the stock would be clobbered, thus making an IPO worse than selling to Amazon.

Read more: http://www.businessinsider.com/nick-swinmurn-zappos-rnkd-2011-11?op=1

3. Zappos lost a $250,000 convertible note. It had a $250,000 convertible note from Draper Richards, but when the note was set to convert they changed their mind and pulled the note. Hsieh had to pay them back out of his pocket

How can that be? Can the note be converted to debt? Of it's just the financing deal did not go through?

A note is debt. When it hits its due date, the note maker (Draper Richards in this case) can demand its money back.

So Tony had to sell assets to repay the debt.

That team was made of some gritty entrepreneurs...