Interesting Article about Groupon's CEO

16 replies
From MSNBC: Quirky CEO 'genius' behind Groupon's success - Business - U.S. business - msnbc.com

It's probably a good idea for us to understand how someone gets Google to open their wallet for a few billion and why that someone would turn them down. (I know I'd sell out for a cool $6 billion! But, hey, I'm not young and hip.)

Do you think you have to be a "quirky genius" to really win big at the Internet marketing game or to even earn a decent living from it?

I think you have to be a little quirky to do it but you have to be very driven as well. Overall, I think the quirky part tends to drown out the part about dedication and passion toward achieving a goal when the media talks about people like Andrew Mason.
#article #ceo #groupon #interesting
  • Profile picture of the author Bane
    I don't think you have to be a quirky genius at all......

    Says the quirky genius....

    I see a flaw in my unbiasedness.
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  • Profile picture of the author scortillion
    Turning down $6 billion is a tough decision, unless you are really confident that it can become a hell of a lot more.

    Personally I would have taken the 6 Billion and started another project!
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  • Profile picture of the author Dave Rodman
    Banned
    I don't really get why Groupon is valued at so much. Google already has an enourmous database of small business customers through all it's services. It would seem relatively simple for them to basically setup the same type of "Deal of the day" operation.

    But as far as the quirkiness. There are all different types of personalities in business so it's not just one that works. Besides, once a "story" gets out about a particular person in business, it just gets repeated. Things like Warren Buffet still living in his original house or Abbie Joseph Cohen of Goldman Sachs taking the subway to work.
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    • Profile picture of the author bgmacaw
      Originally Posted by Dave Rodman View Post

      I don't really get why Groupon is valued at so much.
      Neither do I but I still have to wonder what it takes to get Google or any other big bag 'o money knocking at your door and offering you an amount that would make a mega-lottery winner jealous.

      Originally Posted by Dave Rodman View Post

      But as far as the quirkiness. There are all different types of personalities in business so it's not just one that works.
      I agree. The problem comes when people try to copy somebody else's quirkiness, or, even worse, try to codify it into a generalized business plan (example, almost anything by Jack Welch).

      But, most successful entrepreneurs I've worked with did have a certain quirkiness about them. And, I've also seen this quirkiness and the energy it provided die due to hubris and/or addictions and that was a sad moment to witness.
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    • Profile picture of the author sbucciarel
      Banned
      Originally Posted by Dave Rodman View Post

      I don't really get why Groupon is valued at so much. Google already has an enourmous database of small business customers through all it's services. It would seem relatively simple for them to basically setup the same type of "Deal of the day" operation.

      But as far as the quirkiness. There are all different types of personalities in business so it's not just one that works. Besides, once a "story" gets out about a particular person in business, it just gets repeated. Things like Warren Buffet still living in his original house or Abbie Joseph Cohen of Goldman Sachs taking the subway to work.
      Unlike many of the companies that Google has bought, Groupon is already profitable. It's the latest "big site" fashion statement to own a coupon company. Facebook tried to buy Foursquare and those talks failed, so they launched Facebook Deals. Then Google tries to buy Groupon. Let's see what they try to launch next. All part of the Facebook/Google wars.

      With about 3,000 employees worldwide, up from just 150 a year ago, the company has annual revenues that have been pegged, quite fuzzily, at anywhere from $100 million to $2 billion.
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      • Profile picture of the author willyboy104
        Originally Posted by Dave Rodman View Post

        Well I didn't mention this because I thought it was obvious, but Google has both pieces already.....a massive list of "retail' customers...as well as a massive list of small business customers that are willing to advertise. Gmail alone has 193 million Gmail users on a monthly basis.

        I guess the other piece is I wonder how great of a deal this is for the advertiser. So they have to have a compelling offer...say 50% off their services. And then of what they sell, they give Groupon 50% of the revenue. So you're essentially getting 25% of what you normally would.

        Now you might get a lot of people that don't use them or buy more of your services. But I think the jury is still out on that one. I just question of most businesses that signed up for Groupon ONCE, will do it again. I just don't think many small businesses are saavy enough to make it work for them.
        Yes, so if so then why are they trying to purchase Groupon. They could quite easily launch their own Group buying websites, however they don't. Why?

        Well, there isn't any value in their subscribers when comparing this to Google's own database we know this already. However, branding is the main reason I feel and the fact that if they didn't purchase Groupon they would have to compete or halt from going any further in to this market.

        Competing against a brand that is already established in over 30 countries is a ridiculous idea, whether your Google or not. It is much easier to just purchase the main market share holder instead.

        Not only this, but with Facebook battling it out with Google over the email service provider market why couldn't Google battle it out in the social networking market.

        Sounds stupid, but wait...wouldn't you like to share that impressive deal you just bought with others, your friends and family...there isn't an easier way but to add it to your Groupon profile...this would also help the business create more viral purchases.

        There is so much potential in Group buying and the type of user which is selected through their demographics, especially when you have an infinite amount of revenue being made, such is life with Google.

        The advertiser or business which is advertising on Groupon get's massive amount of exposure for FREE. How is this something you would want to pass up?

        Yes, your product/service has to be highly discounted (generally 60-90%) but with that amount of market coverage, and with an irresistible offer you are guaranteed to benefit in the long term.

        This would be from initial sales, recurring customers, brand exposure and the actual growth in your market from the actual exposure to such a massive audience.

        In the USA Groupon is said to take 50% share, in the UK and I think Europe as well it is unknown but said to be around 30%. However after you have taken in to consideration the employee costs, asset costs and any other internet/external costs you probably don't see a massive amount of profit.

        Anyways, it is known that Groupon makes most of it's revenue from another source.

        Originally Posted by bgmacaw View Post

        You would think so but I've worked for three companies where the owner and investors got offers that were just too good to pass up. In these cases, they had recently obtained new rounds of venture investment and had been actively expanding. When another company offered them well over $100 million, they cashed out even though they had businesses that were quite profitable.
        Why would you want to sell a company for $6 billion when it makes over $500 million annually and is still in a low level of growth.

        If you take a look at the European market for Group buying some of these countries (uk included) have a much more suited target audience therefore making it more profitable than other countries, with it still in the low levels of growth why not reap the market for all it's got before you go off and sell it.

        $6 Billion although it sounds a lot of money, well it is a lot of money but compared to the rate of growth for Groupon and it's current annual revenue why would you?

        Plus it's unknown whether other companies shared their own opinions on Google wanting to purchase Groupon, perhaps some pier pressure or market influence.

        Originally Posted by sbucciarel View Post

        Unlike many of the companies that Google has bought, Groupon is already profitable. It's the latest "big site" fashion statement to own a coupon company. Facebook tried to buy Foursquare and those talks failed, so they launched Facebook Deals. Then Google tries to buy Groupon. Let's see what they try to launch next. All part of the Facebook/Google wars.
        Exactly, Groupon is actually top 60 high traffic site according to the Alexa ranking system.

        It is a massive growing trend with many national newspapers, social networks and other copy-cat deal aggregators following the same path.
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        • Profile picture of the author bgmacaw
          Originally Posted by willyboy104 View Post

          Why would you want to sell a company for $6 billion when it makes over $500 million annually and is still in a low level of growth.
          Because you'll burn out, especially a highly creative person like Andrew Mason. The option for most people is to either cash out or to delegate. For example, at Microsoft Paul Allen cashed out while Bill Gates delegated. Sergey Brin and Larry Page delegated a lot to Eric Schmidt and others. Sadly, many people who get into this position won't delegate easily or fail to cash out when they have a good chance.

          Early in my programming career I worked at two companies where the highly innovative and creative owners of those companies burned out. It was quite ugly watching them personally self-destruct along with their companies.

          I've also seen some other company owners choose to cash out. They seemed much happier when they no longer had the tiger by tail. Most of them went on to found new companies that also did well.
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          • Profile picture of the author willyboy104
            Originally Posted by bgmacaw View Post

            Because you'll burn out, especially a highly creative person like Andrew Mason. The option for most people is to either cash out or to delegate. For example, at Microsoft Paul Allen cashed out while Bill Gates delegated. Sergey Brin and Larry Page delegated a lot to Eric Schmidt and others. Sadly, many people who get into this position won't delegate easily or fail to cash out when they have a good chance.

            Early in my programming career I worked at two companies where the highly innovative and creative owners of those companies burned out. It was quite ugly watching them personally self-destruct along with their companies.

            I've also seen some other company owners choose to cash out. They seemed much happier when they no longer had the tiger by tail. Most of them went on to found new companies that also did well.
            I wouldn't think this is an issue for Andrew Mason, he is a creative person and Groupon has hardly been a life long career, it was only established a couple of years ago.

            Considering their new plans for development I would think this could continuously grow for at least 5 years, although that's just my personal idea and I think by adding, implementing and just being innovative Groupon can stay on top.

            Andrew could easily delegate, the fact is that he only looks after Groupon US. Germany controls the whole of Europe and obviously different managerial staff are implemented here. Andrew could easily step back and focus on other projects but Groupon is an exciting project, even for me it is exciting!
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      • Profile picture of the author Dave Rodman
        Banned
        Originally Posted by sbucciarel View Post

        Unlike many of the companies that Google has bought, Groupon is already profitable. It's the latest "big site" fashion statement to own a coupon company. Facebook tried to buy Foursquare and those talks failed, so they launched Facebook Deals. Then Google tries to buy Groupon. Let's see what they try to launch next. All part of the Facebook/Google wars.
        Yeah, I know they are profitable...I just question the valuation. Because another "Deal of the day" website, WOOT.com, just sold for $110M to Amazon. I guess I am wondering what is so special about Groupon that it warrants a $5B price tag. I get the whole "It's worth what someone will pay", but to pay that for Groupon seems outrageous.

        Especially when you consider that WOOT is product focused. Apple might offer 250 IPODs at $150, knowing that it will capture quite a bit of customers at Itunes.

        Most of Groupon's offers are service based. So you're talking about something that seems (to me anyways) much more difficult to track. You get a coupon, you print it out, it's tons of manual work for the owner, and they are taking a decent hit on their profits....basically they are crowding out existing customers to offer the "deal customers" their service.

        I don't know. But I'm sure GOogle sees something I don't. I'm just not impressed with Groupon. Especially after talking with business owners that have participated in it. I'm in Chicago so it's been around awhile.
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        • Profile picture of the author willyboy104
          Originally Posted by Dave Rodman View Post

          Yeah, I know they are profitable...I just question the valuation. Because another "Deal of the day" website, WOOT.com, just sold for $110M to Amazon. I guess I am wondering what is so special about Groupon that it warrants a $5B price tag. I get the whole "It's worth what someone will pay", but to pay that for Groupon seems outrageous.

          Especially when you consider that WOOT is product focused. Apple might offer 250 IPODs at $150, knowing that it will capture quite a bit of customers at Itunes.

          Most of Groupon's offers are service based. So you're talking about something that seems (to me anyways) much more difficult to track. You get a coupon, you print it out, it's tons of manual work for the owner, and they are taking a decent hit on their profits....basically they are crowding out existing customers to offer the "deal customers" their service.

          I don't know. But I'm sure GOogle sees something I don't. I'm just not impressed with Groupon. Especially after talking with business owners that have participated in it. I'm in Chicago so it's been around awhile.
          Woot, never heard of it...and that's probably the strongest reason why Groupon is worth that much, if not more.

          Groupon is everywhere! Biggest in the USA, but it's huge in Europe too and taking in to account they do NO offline advertising, yet it is so huge goes to show the power of Groupon as a business.

          The complete UK business has been built through online advertising, CPA networks and other performance related networks such as Affiliate windows.

          Sure, it's a simple model, you could pay a design $500 and I am positive he could whip up something pretty similar in no time but you would have no deals, no traffic and no awareness.

          To copy such a simple model, and to actually compete you would need millions of pounds worth of investment/backing who would automatically question why and how you plan on competing with Groupon.

          Living social is Groupons main rival, they own a minority of the market share and received $144 million worth of backing from Amazon last week, why? Because they have market share...but still this is nothing in comparison to Groupon.

          Most of Groupon's offers are NOT service based, depending which country you receive Groupon I would have to assume overall that it is still not mainly service based.

          The actual amount of labour for the owner is pretty minimal except for ensuring they can handle the demand/growth of their business.

          The customer prints the coupon off, they show the owner, the owner takes the coupon and finally redeems the coupon at Groupon or through an after sales employee.

          Ah you're in Chicago, that's excellent I am glad I am discussing Groupon with someone based primarily where Groupon was first established.

          I understood what you mean by some business owners not being satisfied, I do know of the negatives that Groupon brings it's advertisers but I just feel the overall long term benefits significantly out-weight the negatives.

          Not only this but the opportunity for small/medium sized businesses which may of just established and have a small marketing budget can really exploit the media coverage through Groupon.
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  • Profile picture of the author Anthony_Hall
    A quirky genius?

    I don't know if I buy that. Everyone is quirky in their own little way and an article can pick up on that one thing and run with it.

    Of course the CEO could just be trying to hold out for a higher price from Google and saying no for now just to see what else he can get from them.
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    • Profile picture of the author willyboy104
      Originally Posted by bgmacaw View Post

      From MSNBC: Quirky CEO 'genius' behind Groupon's success - Business - U.S. business - msnbc.com

      It's probably a good idea for us to understand how someone gets Google to open their wallet for a few billion and why that someone would turn them down. (I know I'd sell out for a cool $6 billion! But, hey, I'm not young and hip.)

      Do you think you have to be a "quirky genius" to really win big at the Internet marketing game or to even earn a decent living from it?

      I think you have to be a little quirky to do it but you have to be very driven as well. Overall, I think the quirky part tends to drown out the part about dedication and passion toward achieving a goal when the media talks about people like Andrew Mason.
      I was very suprised when I found out this happened, since I really wanted to have working for Google on my CV as well as Groupon.

      Andrew or the investors had uncertainties as to whether Groupon would be a sustainable business model in the long term. Therefore I feel Andrew or the whole team needed to prove that Groupon and the business model behind it's success was a viable long term business. When Google bid for Groupon it made it obvious this was the case and with the recent investment from private investors of $144 million and the expansion in to south-east asia as well as the introduction of Groupon 2.0 these don't seem like the functions of a company which is about to sell.

      Originally Posted by Dave Rodman View Post

      I don't really get why Groupon is valued at so much. Google already has an enourmous database of small business customers through all it's services. It would seem relatively simple for them to basically setup the same type of "Deal of the day" operation.

      But as far as the quirkiness. There are all different types of personalities in business so it's not just one that works. Besides, once a "story" gets out about a particular person in business, it just gets repeated. Things like Warren Buffet still living in his original house or Abbie Joseph Cohen of Goldman Sachs taking the subway to work.
      Groupon is valued that highly due it's large capacity email list (30 million plus) and it's high conversion rates within these email lists as well as the percentage of recurring customers.

      Not only this but the overall platform has been rapidly increasing since launch internationally.

      As for Google, they have a huge database of small businesses...these are not Groupon's target market. I believe the reason Google wanted to purchase Groupon was for it's relevants to Google's current market sectors.

      Since Groupon is a web based company and with their online advertising spendings and focus through online advertising Google can easily take advantage of this.

      Not only this but it allows Google to expand to the more social side of the E-commerce market.

      Overall Groupon is an intuitive, smart business and the model has got an expirey date but the potential that the current platform serves is undeniable, whether that be to a more social or more business related model.
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      • Profile picture of the author Dave Rodman
        Banned
        Originally Posted by willyboy104 View Post

        Groupon is valued that highly due it's large capacity email list (30 million plus) and it's high conversion rates within these email lists as well as the percentage of recurring customers.

        Not only this but the overall platform has been rapidly increasing since launch internationally.

        As for Google, they have a huge database of small businesses...these are not Groupon's target market. I believe the reason Google wanted to purchase Groupon was for it's relevants to Google's current market sectors.

        Since Groupon is a web based company and with their online advertising spendings and focus through online advertising Google can easily take advantage of this.

        Not only this but it allows Google to expand to the more social side of the E-commerce market.

        Overall Groupon is an intuitive, smart business and the model has got an expirey date but the potential that the current platform serves is undeniable, whether that be to a more social or more business related model.
        Well I didn't mention this because I thought it was obvious, but Google has both pieces already.....a massive list of "retail' customers...as well as a massive list of small business customers that are willing to advertise. Gmail alone has 193 million Gmail users on a monthly basis.

        I guess the other piece is I wonder how great of a deal this is for the advertiser. So they have to have a compelling offer...say 50% off their services. And then of what they sell, they give Groupon 50% of the revenue. So you're essentially getting 25% of what you normally would.

        Now you might get a lot of people that don't use them or buy more of your services. But I think the jury is still out on that one. I just question of most businesses that signed up for Groupon ONCE, will do it again. I just don't think many small businesses are saavy enough to make it work for them.
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      • Profile picture of the author bgmacaw
        Originally Posted by willyboy104 View Post

        When Google bid for Groupon it made it obvious this was the case and with the recent investment from private investors of $144 million and the expansion in to south-east asia as well as the introduction of Groupon 2.0 these don't seem like the functions of a company which is about to sell.
        You would think so but I've worked for three companies where the owner and investors got offers that were just too good to pass up. In these cases, they had recently obtained new rounds of venture investment and had been actively expanding. When another company offered them well over $100 million, they cashed out even though they had businesses that were quite profitable.
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  • Profile picture of the author Mark Brian
    This reminds me of how FB turned down $1B from Yahoo.

    I admire people who turns down buyouts, they would rather see their ideas through.
    Although personally I'd probably have a hard time turning down $1B more so $6B.
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  • Profile picture of the author kimkay
    Also, don't forget Andrew Mason may run Groupon but he certainly isn't alone there are millions in VC money in Groupon and check out their Board of Directors...some heavy weights in tech so he's got pretty good people to bounce ideas off of...

    www(dot)groupon(dot)com/pages/bod
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