7 ms·

Former Groupon CEO Andrew Mason on what the roller-coaster ride felt like

183 points by prostoalex 8y ago

shoo 8y ago
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.
- DonHopkins 8y ago
  Sounds like Sauce's Trip Hosley made the right call hanging up the phone when Groupon's Andrew "Andy" Johnston called: http://sfist.com/2013/08/19/groupon_salesman_threatens_restaura.php http://sfist.com/2013/08/19/groupon_salesman_threatens_resta... >Groupon Salesman Threatens Restaurateur Because He Hung Up On Him, Gets Canned >Groupon Area Sales Manager Andrew Johnston got on the horn to Sauce restaurant last Friday, and spoke with partner Trip Hosley, a co-owner of Sauce's two locations. As the Inside Scoop reports, Hosley was busy at the time of the call and had had enough negative experiences with Groupon to not want to waste another minute on the phone with a salesperson. >Johnston, though, took things in a pretty unprofessional direction, however, when he shot off an email to Hosley right after the call threatening to bring down the wrath of bad Yelp reviews on him in response to his rude hangup. To wit: >Hi Trip! >I sincerely appreciate you hanging up on me. As a resident of San Francisco for over 25 years, I have a huge network of friends (ages 25-40) that all are extremely active on Yelp as well as other social media. I will gladly let them know how you treated me as well as my feelings about the people who run Sauce. >Go Giants! >Andy https://www.facebook.com/SauceSF/posts/unbelievable-customer-service-email-from-groupon-threatening-me-with-bad-yelps-f/10151880503224575/ https://www.facebook.com/SauceSF/posts/unbelievable-customer... >Andy, >You must be new to cold calling, you might want to develop a thicker skin, or work for a less despised company. >Despite what you might think, you have NO right to my time. I told you that I was not interested and asked you twice to remove me from you call list, as I have EVERY time I have been called by a representative from Groupon since our last, horrific, experience with your company. I do not have to give you any more chances, you do not have the right to interrupt me, take time away from my already busy day or to force me to listen to how new and wonderful Groupon is, I am not interested. You would be saving yourself time and energy by removing me from your call list, and focusing on business with whom your company has not already burned bridges. >We had a relationship with Groupon, Groupon messed it up, we no longer want to have a relationship with Groupon, end of story. After two or three years it would seem like you could respect my wishes as a business owner not to deal with your company and leave me alone. >All the best, >Trip I wonder if Andrew "Andy" Johnston and his huge network of friends (ages 25-40) were an inspiration for that 2015 "You're Not Yelping " South Park episode, and if they have a good time eating boogers and cum: https://www.youtube.com/watch?v=pDlR_ccnZww https://www.youtube.com/watch?v=pDlR_ccnZww Historic discussion with archive links, showing how "Andy" actually carried through with his threats, and had a history of writing many fake reviews a day for quite some time (which apparently got him promoted to "area sales manager"): https://news.ycombinator.com/item?id=6229410 https://news.ycombinator.com/item?id=6229410
- xianb 8y ago
  https://twitter.com/kenjennings/status/339170784406810624 https://twitter.com/kenjennings/status/339170784406810624
  - atroz 8y ago
    Sounds like something someone who can afford to spend $300 on a meal would say.
    - rad_gruchalski 8y ago
      If you’re making food for people who spend $300 for a meal, why would you suddenly offer discounts.
  - tekstar 8y ago
    someone replied with an actual study, "The Groupon Effect on Yelp Ratings: A Root Cause Analysis" https://arxiv.org/abs/1202.2369 https://arxiv.org/abs/1202.2369
deleted 8y ago
[deleted]
rjtavares 8y ago
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 8y ago
  If you like without fail I'd also recommend internet history podcast http://www.internethistorypodcast.com/ http://www.internethistorypodcast.com/
- blang 8y ago
  This article is written by Alex Blumberg and has embedded links to that podcast. I actual wonder how that works, did gimlet pay for this placement in nymag?
rsp1984 8y ago
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.
- ryanwaggoner 8y ago
  You’re so right! I think we tend to equate failure with not living up to our expectations, no matter how unrealistic they were. Andrew is probably comparing his actual outcome with the potential outcome that was envisioned when Groupon was flying high. He’s not in the three comma club like he expected, or like his (former) peers are. Hence, “failure”. You could argue that anyone reading this right now on a computer is probably anthropologically successful enough that “failure” is never a fair term to apply to them.
- Cthulhu_ 8y ago
  Narp, I mean sure he didn't get to keep his tenure as CEO, but he was barely in his 30's when Groupon changed hands to stock brokers, who'd rather have a more experienced - read: stock price level manager - CEO at the helm. I wouldn't trust myself running a big company!
- curiousDog 8y ago
  Very true. He's apparently worth $200million. That's generational wealth 99% of us can only dream of.
  - hindsightRegret 8y ago
    99.99% more like
  - kyleblarson 8y ago
    I'd add more 9's to that number.
    - dharma1 8y ago
      999999%
Jsharm 8y ago
Is there functionally anything bad about getting fired vs resigning? In this situation or any?
- barking 8y ago
  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.
  - deleted 8y ago
    [deleted]
- mdrzn 8y ago
  I'd say PR, having to manage how the story goes around.
- StavrosK 8y ago
  Basically your reputation, if you get fired it looks bad for you.
  - pchristensen 8y ago
    Ironically, Andrew Mason insisted on being fired rather than resigning for reasons he did not agree with. So he chose being fired in order to preserve his reputation. (part 2 of the Gimlet "Without Fail" podcast - very excellent coverage)
    - StavrosK 8y ago
      It was also explained well in the article.
- DonHopkins 8y ago
  Getting fired by Trump is quite an honor, and it helps with tell-all book sales.
deleted 8y ago
[deleted]
hi41 8y ago
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 8y ago
  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.
Radle 8y ago
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 8y ago
  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.
privateSFacct 8y ago
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.
- rhombocombus 8y ago
  I managed a bikeshop/tavern prior to my transition into tech and we did a lot of groupon promotions. Their sales folks were super greasy and it was almost impossible to opt out once you were in, whether or not it made business sense to continue. It was an effective loss leader at first, but sometimes we would get punished with a throng of grouponers at peak times and we LOST money in a bar. It was a greasy business and I never gave them a dime after I left that job.
- wpietri 8y ago
  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.
Major_Grooves 8y ago
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.
ryanmccullagh 8y ago
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.
cm2012 8y ago
Groupon, today, is a two billion dollar public company. That is no small achievement.
pchristensen 8y ago
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.

183 points by prostoalex 8y ago

shoo 8y ago

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.

DonHopkins 8y ago
Sounds like Sauce's Trip Hosley made the right call hanging up the phone when Groupon's Andrew "Andy" Johnston called: http://sfist.com/2013/08/19/groupon_salesman_threatens_restaura.php http://sfist.com/2013/08/19/groupon_salesman_threatens_resta... >Groupon Salesman Threatens Restaurateur Because He Hung Up On Him, Gets Canned >Groupon Area Sales Manager Andrew Johnston got on the horn to Sauce restaurant last Friday, and spoke with partner Trip Hosley, a co-owner of Sauce's two locations. As the Inside Scoop reports, Hosley was busy at the time of the call and had had enough negative experiences with Groupon to not want to waste another minute on the phone with a salesperson. >Johnston, though, took things in a pretty unprofessional direction, however, when he shot off an email to Hosley right after the call threatening to bring down the wrath of bad Yelp reviews on him in response to his rude hangup. To wit: >Hi Trip! >I sincerely appreciate you hanging up on me. As a resident of San Francisco for over 25 years, I have a huge network of friends (ages 25-40) that all are extremely active on Yelp as well as other social media. I will gladly let them know how you treated me as well as my feelings about the people who run Sauce. >Go Giants! >Andy https://www.facebook.com/SauceSF/posts/unbelievable-customer-service-email-from-groupon-threatening-me-with-bad-yelps-f/10151880503224575/ https://www.facebook.com/SauceSF/posts/unbelievable-customer... >Andy, >You must be new to cold calling, you might want to develop a thicker skin, or work for a less despised company. >Despite what you might think, you have NO right to my time. I told you that I was not interested and asked you twice to remove me from you call list, as I have EVERY time I have been called by a representative from Groupon since our last, horrific, experience with your company. I do not have to give you any more chances, you do not have the right to interrupt me, take time away from my already busy day or to force me to listen to how new and wonderful Groupon is, I am not interested. You would be saving yourself time and energy by removing me from your call list, and focusing on business with whom your company has not already burned bridges. >We had a relationship with Groupon, Groupon messed it up, we no longer want to have a relationship with Groupon, end of story. After two or three years it would seem like you could respect my wishes as a business owner not to deal with your company and leave me alone. >All the best, >Trip I wonder if Andrew "Andy" Johnston and his huge network of friends (ages 25-40) were an inspiration for that 2015 "You're Not Yelping " South Park episode, and if they have a good time eating boogers and cum: https://www.youtube.com/watch?v=pDlR_ccnZww https://www.youtube.com/watch?v=pDlR_ccnZww Historic discussion with archive links, showing how "Andy" actually carried through with his threats, and had a history of writing many fake reviews a day for quite some time (which apparently got him promoted to "area sales manager"): https://news.ycombinator.com/item?id=6229410 https://news.ycombinator.com/item?id=6229410
xianb 8y ago
https://twitter.com/kenjennings/status/339170784406810624 https://twitter.com/kenjennings/status/339170784406810624
- atroz 8y ago
  Sounds like something someone who can afford to spend $300 on a meal would say.
  - rad_gruchalski 8y ago
    If you’re making food for people who spend $300 for a meal, why would you suddenly offer discounts.
- tekstar 8y ago
  someone replied with an actual study, "The Groupon Effect on Yelp Ratings: A Root Cause Analysis" https://arxiv.org/abs/1202.2369 https://arxiv.org/abs/1202.2369

deleted 8y ago

[deleted]

rjtavares 8y ago

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 8y ago
If you like without fail I'd also recommend internet history podcast http://www.internethistorypodcast.com/ http://www.internethistorypodcast.com/
blang 8y ago
This article is written by Alex Blumberg and has embedded links to that podcast. I actual wonder how that works, did gimlet pay for this placement in nymag?

rsp1984 8y ago

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.

ryanwaggoner 8y ago
You’re so right! I think we tend to equate failure with not living up to our expectations, no matter how unrealistic they were. Andrew is probably comparing his actual outcome with the potential outcome that was envisioned when Groupon was flying high. He’s not in the three comma club like he expected, or like his (former) peers are. Hence, “failure”. You could argue that anyone reading this right now on a computer is probably anthropologically successful enough that “failure” is never a fair term to apply to them.
Cthulhu_ 8y ago
Narp, I mean sure he didn't get to keep his tenure as CEO, but he was barely in his 30's when Groupon changed hands to stock brokers, who'd rather have a more experienced - read: stock price level manager - CEO at the helm. I wouldn't trust myself running a big company!
curiousDog 8y ago
Very true. He's apparently worth $200million. That's generational wealth 99% of us can only dream of.
- hindsightRegret 8y ago
  99.99% more like
- kyleblarson 8y ago
  I'd add more 9's to that number.
  - dharma1 8y ago
    999999%

Jsharm 8y ago

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

barking 8y ago
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.
- deleted 8y ago
  [deleted]
mdrzn 8y ago
I'd say PR, having to manage how the story goes around.
StavrosK 8y ago
Basically your reputation, if you get fired it looks bad for you.
- pchristensen 8y ago
  Ironically, Andrew Mason insisted on being fired rather than resigning for reasons he did not agree with. So he chose being fired in order to preserve his reputation. (part 2 of the Gimlet "Without Fail" podcast - very excellent coverage)
  - StavrosK 8y ago
    It was also explained well in the article.
DonHopkins 8y ago
Getting fired by Trump is quite an honor, and it helps with tell-all book sales.

deleted 8y ago

[deleted]

hi41 8y ago

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 8y ago
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.

Radle 8y ago

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 8y ago
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.

privateSFacct 8y ago

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.

rhombocombus 8y ago
I managed a bikeshop/tavern prior to my transition into tech and we did a lot of groupon promotions. Their sales folks were super greasy and it was almost impossible to opt out once you were in, whether or not it made business sense to continue. It was an effective loss leader at first, but sometimes we would get punished with a throng of grouponers at peak times and we LOST money in a bar. It was a greasy business and I never gave them a dime after I left that job.
wpietri 8y ago
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.

Major_Grooves 8y ago

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.

ryanmccullagh 8y ago

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.

cm2012 8y ago

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

pchristensen 8y ago

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.