
Former Groupon CEO Andrew Mason on what the roller-coaster ride felt like - prostoalex
http://nymag.com/intelligencer/2018/10/andrew-mason-on-groupon.html
======
privateSFacct
One key point in this - long term vs short term thinking.

I was a groupon user / and higher value to restaurants I'd like to think (ie,
strong income, would go out to eat at a nice place, if I liked a new place I'd
go to it more) but also someone who doesn't want a lot of hassle, time is
money etc.

Groupon went from actually good deals, hassle free, to endless marketing
emails / wall to wall shlock deals (50% off supposed $300/hr personal
trainers? 20% off the latest MLM scam) and lots of scammy / scummy merchants
who did everything they could to rip you off.

These dying places pulled every bogus trick. I'm sure there are cheap
customers willing to fight through it all, but the money is probably in the
folks able and willing to pay bigger $ just looking for an excuse to try some
place new.

Then you read all the crap the groupon sales managers pulled to get folks on
board (ignoring do not call, threatening bad yelp reviews).

Yuck.

~~~
wpietri
Doesn't that dying-place-pulling-every-trick thing describe Groupon's arc
itself?

I think of Groupon itself as one big pump-and-dump. I don't see that there was
ever a long term for it, not outside of a niche business. Promotional coupons
are not exactly a new idea. If Groupon had stayed small and figured out a way
to bring businesses new customers that stuck around, it might have had a
future.

But they used the power of the internet in exactly the wrong way. The internet
can get you instant volume by getting many people to act in concert. But
limited-capacity local businesses don't want a flash mob; it's a bad
experience for all concerned. And the internet can collect niche audiences and
really serve them. But Groupon's best niche audience is cheapskates who are
super focused on going from great deal to great deal. Carefully managed this
might have been a decent small business, but I don't think it could ever have
been a large one.

And I think they must have known they were fucked from the start. When they
IPOed, 86% of the money raised, over $800m, went into the pockets of insiders.

~~~
smacktoward
_> Promotional coupons are not exactly a new idea._

The new idea was using the Internet to build a gigantic new audience for those
coupons. Once you have that audience, you then become more attractive to
businesses that want to advertise to it. In other words, Groupon was just a
21st century version of the age old "pennysaver"
([https://en.wikipedia.org/wiki/Pennysaver](https://en.wikipedia.org/wiki/Pennysaver))
publications you can pick up in places like coffee shops, or that you get
periodically in the mail (ugh).

An electronic pennysaver could possibly have worked, if they'd grown
organically and kept the operation lean. But instead they went the other way,
figuring if they got big enough fast enough they could then use the size of
their audience to muscle the advertisers who wanted to reach that audience
into swallowing hugely disadvantageous terms in exchange for access. (See
[http://www.slate.com/articles/technology/technology/2012/08/...](http://www.slate.com/articles/technology/technology/2012/08/groupon_earnings_report_the_daily_deals_site_s_crummy_business_model_is_finally_dead_hooray_.html))
for details on that.)

It worked for a while, when their rapid growth made them look like an
unstoppable juggernaut that any small business was going to have to learn to
live with. But then the growth stopped and smart advertisers fled as they
realized that the terms made dealing with Groupon more trouble than it was
worth, which meant the one choice Groupon had left to justify its valuation
was to get into bed with scuzzy advertisers looking to rip off that big
audience. But then the audience eventually realized it was getting ripped off,
and boom, death spiral.

------
shoo
[https://www.ribbonfarm.com/2013/04/03/the-locust-
economy/](https://www.ribbonfarm.com/2013/04/03/the-locust-economy/)

> He added one little factoid I did not know: offering a Groupon deal is by
> now so strongly associated with a desperate, dying restaurant that
> professional food critics tend to write off any restaurant that offers one
> without even trying it.

~~~
xianb
[https://twitter.com/kenjennings/status/339170784406810624](https://twitter.com/kenjennings/status/339170784406810624)

~~~
atroz
Sounds like something someone who can afford to spend $300 on a meal would
say.

~~~
rad_gruchalski
If you’re making food for people who spend $300 for a meal, why would you
suddenly offer discounts.

------
rsp1984
Andrew Mason is still worth hundreds of millions of dollars. Sure, he was
fired from his job, but I wouldn't exactly call that a "fall". It's not like
they took away his equity in the company.

~~~
joezydeco
In fact, he was able to cash out before he was fired. How often does _that_
happen?

[https://www.forbes.com/sites/joanlappin/2013/03/05/dont-
cry-...](https://www.forbes.com/sites/joanlappin/2013/03/05/dont-cry-for-
groupons-andrew-mason/)

The entire Groupon story is a black stain on Chicago startup history.

~~~
ForHackernews
> How often does that happen?

For execs? I'd assume frequently.

~~~
joezydeco
Well, sure. I guess I meant it in more of a "able to cash out pre-IPO while
still raising money" context.

------
rjtavares
I really recommend the "Without Fail" podcast [1], where this is taken from.
Alex Blumberg is an interesting guy with a rare perspective (a journalist and
radio host turned venture funded entrepreneur), and these are part interviews
part conversations. Really liked the first few episodes.

[1] [https://www.gimletmedia.com/without-
fail](https://www.gimletmedia.com/without-fail)

~~~
m_ke
If you like without fail I'd also recommend internet history podcast
[http://www.internethistorypodcast.com/](http://www.internethistorypodcast.com/)

------
ryanmccullagh
Every groupon I've bought I haven't used as a result of me missing some small
detail in the "fine print". For example, one groupon was only able to be used
on Thursday's. I tried to go with my wife on a Saturday only to be told it
would cost $50.

I know I should have read the fine print, but it's so easy to miss.

------
pchristensen
Ex-Groupon, before and after IPO. Groupon would make a great case study. The
fundamental problem was that everyone knew "deal" websites would be a good
business, that it would be very winner-take-all because of customer attention
and supply, but no one knew how big that industry would be. So lots of
companies got into it, but no one knew ahead of time how much it was worth
spending to win the fight.

------
Radle
Q:"Just remaining a gigantic private company seemed impossible?" A:"You have
to go public at some point. The way we were structured and the way we had
raised money, we were just engineered so that, if we weren’t going to get
acquired, that was the only exit option for us."

Why? Is this because investors want to make a quick buck on this?

~~~
3pt14159
The way funds are structured mean that money out is expected within a ten to
twenty year window. Staying private and paying dividends is more of a hundred
year window outcome.

The reason funds are structured this way is that it gets complicated to pay
out things like bonuses or to do estate planning when so much capital is
uncertainly tied up in a single, illiquid entity. Divorce happens, tax rates
change, people reasonably want their money.

------
Major_Grooves
I'm surprised there is no mention of the Rocket Internet investment. From what
I heard it was the non-US part of Groupon (which was what Groupon acquired
from Rocket) that partly dragged the company down.

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cm2012
Groupon, today, is a two billion dollar public company. That is no small
achievement.

------
hi41
Why did he get fired? At that time the company was attracting lot of customers
and doing fairly well. I like this guy. He is so funny. The lay off letter was
hilarious.

~~~
ganoushoreilly
The article explains it, he had a few issues with board members and after bad
performance on Q3 numbers, he was told make it happen Q4. They had some sort
of tax liability in France that hit them $10 million and because of it didn't
hit Q4 numbers. That was that.

------
Jsharm
Is there functionally anything bad about getting fired vs resigning? In this
situation or any?

~~~
barking
I know that in some jobs if you resign they don't have to pay out to the end
of your contract. If they fire you they do (unless you're in breach on
contract I suppose).

Also if you resign it can be more difficult to get social welfare benefits.

