According to the payout statements Jason was also one of the folks who took money out in the last funding round to the tune of 500k (which seems like a pittance all things considered).
I wonder how much of a ding this will make in his credibility among bootstrapped entrepreneurs in general. It's hard to talk down something and have your thumb in the pie at the same time.
Some facts here before things get a bit out of control:
The S-1 speaks for itself.
Back in mid-late 2009 Andrew Mason asked me to be on the Groupon board of directors. He wanted my opinions and advice on product development, design, copywriting, software development, and user experience. Andrew (and Brad and Eric) know where I stand on building bootstrapped, profitable businesses. I still stand there. I wasn't asked to be on the board to give them financial advice.
I agreed to be on the board. I like Andrew a lot and I was very happy to help him. I had never been on a board before so I saw it as a great learning experience for me as well.
Groupon compensated me for my involvement with options.
A few months ago when Groupon took a big round, I was asked if I would like to sell some of my shares. I said yes. That sale is listed in the S-1. I still have more shares. I don't see any problem morally or ethically with selling shares that I was granted as part of my involvement with the board. I owned something, someone offered to buy it, and I sold it.
I was asked to leave the board of directors in January of 2011. I serve as an advisor now. Whenever Andrew asks me for product, design, or writing advice, I'm happy to help.
I've never invested my own money in Groupon or any other private company. It's not that I wouldn't invest in a private company, it's that I haven't.
Those are the simple facts.
As for my credibility, I don't see how any of this is relevant. You can make up your own mind about that. I believe today what I've always believed - net profits rule, bootstrapping is the way to start a business, and spending less than you earn is the only way to have a healthy relationship with money.
As for DHH's opinions, they are his own. I may or may not share them, but we're both grown ups and we respect each other no matter what.
Hi; I don't know you or Mr. Mason, and wasn't intending to imply that you were doing anything immoral or unethical. Hell, if I had the opportunities and circumstances that Mr. Mason has (for example), I might chart the same path.
I was just speculating that these developments may have a nonzero impact on your brand, PR, image, etc. You've talked a lot about the 'bootstrap vs. VC' topic; insofar as people perceive that topic to be dichotomous and you as being "all-in" on one side of it, any involvement with the other side may create some cognitive dissonance.
Maybe I shouldn't speculate about people's personal brands and such (something I can't say I do often anyway), just so I don't rouse any sleeping bears, as it were. :-)
Did you ever feel compelled to voice your opinion after you saw the data that indicated Groupon was spending more than they earned? Why did they ask you to leave the board?
Thanks for sharing what you have. It's been said before, but I'll say it again: HN is a remarkable place when intelligent people are having open conversations about the news that directly involves their own business.
I was never shy about my opinion. A good board is made up of people with differing opinions. The worst boards are made up of rubber stamps.
And of course a board is made up of people with different strengths and experiences. My experience is not in massive growth, rapid growth, acquisitions, companies with thousands of people, etc. There were and are people on the board that are very experienced in those matters.
My experience is in product design and development. My advice on those matters was my main contribution to the board and the company. I continue to advise, when asked, on product design.
That's Jason's business and not yours. I can't even believe such a thing needs to be verbalized. You're coming across like a tabloid journalist. Essentially you're trying to manufacture a controversy here out of an OpEd that: (1) Jason's business partner wrote on his own private time and (2) hasn't been endorsed by Jason's company.
As if business partners can't have differing opinions about the business practices of other companies. If Jason's and DHH's opinions are indeed different, which I'm not convinced they are. Sheesh.
Why would that matter? He was asked, and he said yes. These were options paid to him for his involvement on the board, not money invested by him.
If you did some work for someone, and they paid you with stock instead of cash, wouldn't you feel like converting that to cash the first chance you get?
NO. if i would have a successful company like 37signals and enough money - i would keep the additional startups as long as possible, since there is not much to loose
especially would keep the shares of the "hottest" and "fastest growing" startup groupon
I cannot wonder thinking..if you were a board member, you had a duty of care to know all affairs of the company (within reason), especially under good corporate governance. If as DHH is implying that Groupon is misleading potential investors with CSOI (ok, they may have used this metric after you left - but I am just trying to make a point here), and if you believed this is incorrect, then you would still have a duty to point out as a board member, even if your responsibility is purely on product design. I thought this is how it works on large boards. Is this not the case in the USA?
I have made the assumption here that if DHH saw it, so would you! Of course, I could be completely wrong with this assumption.
I have only been on the board of small companies, so do not have any experience of how large companies split responsibilities.
Would be interesting to know your thoughts on this subject - this is not meant as a complain of any sort, just trying to understand how large corporates behaves with corporate governance.
I believe today what I've always believed - net profits rule, bootstrapping is the way to start a business, and spending less than you earn is the only way to have a healthy relationship with money.
Don't you also have a rule about not growing beyond a certain number of employees?
No we don't have a rule about not growing beyond a certain number of employees. We believe in keeping things as small as possible. Currently for us that's a bit under 30, but if as small as possible means 40, then we'll be at 40. We are opposed to hiring more people than we need.
Need to run the business, design and develop our existing and future products, maintain and improve our infrastructure, and serve our customers at the highest standards we're capable of.
Plus balance all that with maintaining the type of culture and environment we all want to work in, for, and towards.
For us it's about balance. Rapid growth is not balance. Not having enough people to serve our customers is not balance. Not improving our products frequently enough is not balance.
Balance is a moving target. Sometimes we're in better balance than other times. But the goal there is to try to strike the right balance as often as possible.
I hope that helps shed a bit more light on what we need to do. Have a nice weekend.
What does this have to do with Groupon's valuation? It seems like Jason got baited into setting the record straight on his involvement with Groupon and is now being chased around the thread about 37signals. 37signals and Groupon are, obviously, very different businesses.
Jason is a pop icon in the tech world and was obviously asked to be on the Groupon board because of his work w/ 37sig and Rework, etc. I think asking questions on whether his corporate philosophy is consistent with his recent actions is totally on point, although certainly there is no obligation on his part to answer them.
Also, from the back of Jason's book, "Pick a fight." That's actually what this whole thread is about. DHH has been on a campaign to pick a fight with what he considers overvalued companies.
If you're interested in how Fried contributed to Groupon's operational management strategy, you should ask questions about Groupon. Unfortunately, the answers to those questions will probably be boring, because he just said that was never his role.
If you're interested in how 37signals is operated, you should start a separate thread about 37signals.
Groupon and 37signals are very interesting contrasting Chicago tech companies and would make an excellent comparative study, but Fried's involvement with both companies doesn't really set up the "consistency" narrative you're (maybe inadvertently) creating.
I'm not asking him questions about how he manages, I'm asking him what his philosophy is. Very different. 37signals has often been seen as being on the anti-large company bandwagon, and obviously Jason and DHH co-wrote a book together called Rework in which they share all of their wisdom, including things like "You don’t need to staff up."
Jason responded that his philosophy is "balance." That's all well and good, but is that consistent with his involvement in Groupon? That's how this originally came up.
Certainly he has been very gracious to respond at all, and I think he's convinced me (and hopefully others) that there is no necessary inconsistency in preferring balance for one's own company and rapid growth for another -- or simply acknowledging that even if one doesn't gel with another philosophy on rapid growth that one can still provide valuable advice on design, etc.
Is that consistent with his philosophy as stated in Rework? I'm still not sure...
I agree that it was gracious for him to respond, which is why I'm skeeved out by the "consistency" questions. The line between benign question and passive-aggressive accusation is 1 px solid #fefefe.
And I have a thing about us accidentally chasing primary actors in the tech community off of HN by acting like... you know... us.
Totally understand. It's hard not to pick a fight with people (DHH and Fried both) who stand by a "pick a fight" mantra -- but I'm trying my hardest to be nice regardless! I swear!
Maybe I'm just not understanding something here, but aren't people on the boards of directors of companies supposed to be committed to the success of that company, not simply providing advice? Sounds like you were never very committed.
Of course I want them to succeed - that's why I offered to help them with product design. I wouldn't spend my time helping someone if I didn't want them to succeed.
I didn't say you didn't want them to succeed, I said it doesn't seem like you were very committed to seeing them succeed. Those are two very different things. I want all sorts of things to succeed that I am not committed to at all.
Please stop trolling. I want HN to remain a place where influential people come and talk about the story behind the story. Having an inquisition about inconsequential aspects of Jason's board membership doesn't help that.
It sounds like Jason helped the company with the things he was best at (product design) and didn't have much involvement with every other aspect. His not wanting to be involved in every aspect may be part of the reason he became an advisor eventually.
The bigger concern is why you'd choose to get involved with the Lightbank guys knowing their record in Chicago. They led past companies to bankruptcy. They pumped up InnerWorkings and watched its value tank after enriching themselves. It's just disappointing that you'd let them use your good name to build value in another underperforming company.
As long as DHH was not part of the GroupOn advisory panel, he is free to air his opinion. Also based on his tweets, he was expecting them to show a profit but was shocked to find that they were losing money. It's fine to change your opinion based on the hard numbers.
But then these opinions are by DHH and not Fried. And based on what I know about DHH from his online persona, I don't think he will not air his opinions just because Jason was part of advisory panel of a company.
I didn't say DHH should or should not do anything. I was (perhaps too obliquely) thinking aloud about how the image of Mr. Fried (esp. re: VC vs. bootstrapping) meshes with his work with Groupon and their strategies, totally unrelated to whatever opinions or remarks either he or DHH make about Groupon.
My opinions remain the same. I'm for bootstrapping, slow and steady growth, keeping your company as small as possible. Every day that goes by reinforces my belief in those basic ideas.
None of that means I can't help someone who runs a company with a different model. I don't see how the two are related. I run my company one way, other people run their companies their way. If someone I respect asks for my help, and I want to help them, and I'm able to help them, I'll help them.
I get hundreds of emails a year from people who ask for my help. I help as many as I reasonably can. Sometimes it's an email. Sometimes it's a phone call. Sometimes it's office hours. Sometimes it's giving a talk or giving my feedback on their products, companies, or designs.
The Groupon experience was a very unique experience. I've never been presented with an experience like that before, so I got involved. It was a fantastic learning experience for me. I continue to help when asked. I wish everyone there nothing but the best.
My approach, in general, is to learn about what I don't understand before rejecting what I don't understand. I don't always live up to that ideal, but I try.
All that seems great. I'll pick one nit before walking away from this steaming heap I've apparently provoked:
> I don't see how the two are related.
The simplest of affiliations can be taken by many as endorsement. That's only a problem (or, a "problem") if one's public persona is an asset and there's a perception of conflict or contradiction.
Anyway, I unfortunately speculated in abstract terms publicly, instead of saving it for the coffee shop. I apologize for any resulting grief.
its not a shock though.. as I understand it Groupon wants to eliminate competition by making it so costly to get customers that others give up ti than can address rest of the inefficiencies and make profits at a slower revenue growth rate.
Jason mentioned that he didn't agree with everything Groupon was doing. Besides, I see 37signals as just favoring bootstrapping and not some hardcore anti venture capital crusaders.
