- The speaker had a music intro and talked about his album "Hardly Workin'"
- The song "Look No Further" from the album was mentioned
- The speaker was asked about his previous company called The Point
- The speaker received a million dollars in funding for The Point
- The Point did not work out and the speaker started Groupon as a side project
- The speaker faced challenges and low points during the early stages of Groupon
- The speaker mentioned a failed campaign involving Juggalos
- People who quit during the difficult phase of a startup had rational reasons to do so
- The speaker started Groupon as a local version of Woot, a deal a day website
- The first version of Groupon was a coupon side project embedded in The Point's e-commerce system

- Groupon started with a deal for a 2 for 1 pizza at Motel Bar
- The company quickly realized they were onto something big
- Groupon faced many internal challenges and had to scale rapidly
- Groupon was easy to copy, leading to many clones popping up
- Groupon expanded internationally but struggled to maintain their company culture
- The founder met with the clones and tried to see things from their perspective

- The speaker discusses a potential acquisition deal with a person who collects coins but decides not to proceed with it.
- Instead, they end up doing a deal with the Samwer brothers, who have a reputation for copying others but are considered smart and savvy.
- The speaker emphasizes the importance of finding people who are aligned with one's values in business acquisitions.
- The speaker shares the story of Groupon almost getting acquired by Yahoo but ultimately deciding against it due to the company's growth and potential value.
- The speaker reflects on their reluctance to sell and their belief in building businesses to make a difference in the world.
- The speaker advises against going public, stating that it diverts time and incentivizes short-term thinking.
- The speaker briefly discusses their new company, Detour, which offers location-aware audio walks and shares lessons learned from starting a new venture.

- Maintaining strong convictions and principles, even in the face of data or challenges, is crucial for long-term success.
- Startups often make exceptions to their principles, but this can be detrimental.
- It is important to consistently prioritize the customer and work backwards.
- Having the courage to stick to convictions leads to great outcomes.

- The speaker discussed their album "Hardly Workin'" and mentioned the song "Look No Further"
- They talked about their previous company, The Point, which received a million dollars in funding but did not work out
- The speaker started Groupon as a side project and faced challenges during its early stages
- They mentioned a failed campaign involving Juggalos and acknowledged that people who quit during difficult phases of a startup had valid reasons
- Groupon began as a local version of Woot and started with a deal for 2 for 1 pizza at Motel Bar
- The company quickly realized its potential and faced internal challenges while expanding internationally
- Groupon encountered many clones but ultimately did a deal with the Samwer brothers
- The speaker emphasized the importance of finding aligned values in business acquisitions
- Groupon almost got acquired by Yahoo but decided against it due to its growth and potential
- The speaker advised against going public and discussed their new company, Detour, and the importance of maintaining strong convictions and prioritizing the customer.

Andrew Mason at Startup School Silicon Valley 2014

View the annotated transcript, and add annotations of your own, on Genius: http://tech.genius.com/Andrew-mason-andrew-mason-at-startup-school-sv-2014-annotated

That was a really good intro for making it up just then.

Well, you're dodging the question of that wonderful music we were just listening to from your album Hardly Workin'.

Please check it out, it's awesome, it's on iTunes, you can buy it.

And it's about how you can find, you don't need to be reading business books or anything like that in order to learn how to be great at business.

You can find beauty in witnessing the birth of an octopus, for example, or other such natural wonders.

I had specifically requested Risen, apostrophe, above the pack, because that's my favorite.

I'd love to spend a few minutes before we get into Groupon, because I know the audience is probably excited to hear about Groupon, but to hear about before Groupon, you started a company called The Point.

I'd love to hear a little bit about that.

Just how you came up with the idea and what went wrong with it, why it didn't work.

You know, how you got started, that kind of thing.

Is this an awkward looking way to sit in this chair?

Well, you can't lean back, that's for sure.

So maybe just, you do look a little uncomfortable.

Okay, so I had the idea for this website called the point when I was a grad student at University of Chicago in public policy.

And the idea was it was going to be this social platform that would allow people to come together and organize to either take some kind of collective action or give money towards something, but only once they hit a tipping point of participation that got everybody to, that everybody knew that their effort would be worthwhile.

So it's kind of like a precursor to things like Kickstarter and others.

So, I had been a developer before I went back to grad school, and somebody that I had worked with heard about the idea through a mutual acquaintance and called me up 1 day and said, I wanna give you a million dollars for you to drop out of school and work on this idea.

And at the time, this was 2006 I guess, I didn't know anything about starting a tech company.

We were in Chicago, I didn't know anything about, I wasn't really a student of the game, so

Like a bunch of things happened in between the million dollars and the phone call, but the phone call was, can you come to my office and pitch this thing to me?

And then a week later, it was a million dollars.

And so you really didn't know what you were doing at this point in terms of starting a startup.

No, and at later points as well, it turns out.

So we started, I guess, in the beginning of 2006, launched the point in September 2006, floundered for about a year before pivoting into Groupon.

So that's like the high level arc and I can dive in on any of those parts that

Did you just get this million dollars in funding before you did Groupon?

No, we then, after launching the point, we raised money from NEA.

So another like 4 or 5000000 dollars or something.

At what point did you realize, like, God, this isn't working and it's time to do something else?

Because I think, you know, we heard a lot of advice today, like, you have to believe in your idea, even if all your friends say it stinks.

Like, at what point did you say, time to…

Yeah, I mean, I can tell you some low points in that period, in kind of the summer of 2007.

But honestly, like there was never a point when I was like, this isn't going to work.

We started Groupon as a side project and we're running it, we launched Groupon in about 30 days and we were running it at the same time that we were running The Point.

And I was able to kind of shift my attention to Groupon without ever admitting to myself that the point, or like coming to that conclusion.

I think I'm a little bit more nimble about those sort of decisions now and balancing the kind of resolve and stubbornness that you need while still accepting when something's just not working, but at the time it wasn't, so we just did them both at the same time.

There was some, in that period after we launched, every day we'd have maybe 1,000 visitors to the website, And sometimes we would get some press or something, and it would peak, but it would always come right back down.

I remember at 1 time we started trying search engine marketing.

And we had a number of campaigns on the point.

And each 1 of these campaigns were around a social issue, typically, that we were trying to drive traffic to.

And we thought, well, if we can get people to join these campaigns, then they'll become users.

And then they'll spread and join other campaigns and this is how we can kind of get things going.

And so there was 1 campaign that we found that we could get really cheap subscribers to and it was the Legalize weed campaign.

And there was a community of people that really rallied around this particular issue.

And I mean, you should check them out on YouTube or something.

They're this group of people that takes pride in being stupid.

Like, they did what we wanted them to do, which was kind of infect the site.

Only instead of infecting it with joy and like, you know, high value customers that we could, you know, sell to advertisers or something like that, they infected it with just trolliness.

So they would go to all these other, like, great campaigns and just troll everybody that was joining them.

I think back on that time and I think if I ever wanted to make a movie or a documentary about how hard it was, how intense and irrational it is to build a startup, I think I would go and find the people who quit companies like The Point in that phase, or any other startup, because most startups have this phase when things just aren't working.

And I can tell you, at least for the point, what you would find is they were completely like rational, awesome people, and they were quitting for the most awesome reasons.

Like if you went back and interviewed them, they would say Andrew was insane, like he had no idea what he was doing, like there was no real strategy, it was shifting every other day.

It would have made perfect sense to anyone that they told the story that those people quit.

And it's the people who, for whatever reason, didn't have that perfect sense that stuck around and turned this thing into something that turned out to be huge.

So I don't know what the lesson there is.

Well, you got to be a little bit crazy and a believer, you know, to be in a startup.

You said you sort of started it simultaneously with the point, why, and how did you get the idea, sort of what happened?

So the why is because it was clear to us that the point wasn't working.

Our investors were starting to hint that they wanted to take their money back.

And so we were just trying everything we could think of.

And the story of how I had the idea for Groupon was just, well, we know that group buying is 1 potential business model for this.

We know that people have been trying to do, we know that people have been trying to do group purchasing campaigns using the points where you get a group of people together that try to negotiate with a local business in order to get a discount.

Why don't we just go out and do that, and why don't we do a local version of Woot?

Like Woot was a website that we all liked and this deal a day thing really seemed Really seemed compelling so so that's what we did and I Had a hard time getting the rest of the team excited about doing this little coupon side project.

And I knew how to code well enough that I could build a template for WordPress.

So we built a custom template for WordPress.

And every day we would have a new post, and embedded in that post would be a little widget that included all the e-commerce guts of The Point.

But the first version of The Point, or of Groupon, excuse me, when you bought a deal, you would get an email that said, thanks for joining this campaign on the point for 10 for 20 at Motel Bar, or something like that.

Like it was totally hacked together, but it was enough to show that it was something that people really wanted.

And so we were just running to try to keep up with demand pretty much from that first deal.

Do you remember what the first Groupon actually was?

Yeah, it was a business that was in the ground floor of our building called Motel Bar.

It was a bar, but they sold pizza, so we did a 2 for 1 pizza deal that we negotiated with them.

Up until the last minute, it was going to be a local e-commerce company that sold sports-themed garter belts.

We had way too much of the fear of death in us to think about being funny at that time.

It was, they were the only people that we could convince to take us seriously.

So you launch this and you say, wait, we might be onto something.

So at what point did you realize, whoa, whoa, this is taking off?

It was after a couple of weeks, it was clear that we were on to something.

And after a couple of months, we would start doing kind of extrapolations or projections of well, if this continues, this is how big this thing is going to be.

And we'd look at those numbers and all kind of shake our heads and say, there's no way, like, this would make us the fastest growing company in history.

Yeah, so tell me, like, you're the fastest growing company in history.

First of all, usually fast growing companies are like sort of disastrous internally or having some disasters go on internally.

Can you talk about some of the stuff that broke within Groupon as you're trying to keep up with that growth?

We were, I'm trying to think of a good specific example of something that broke.

I mean, for the first 6 months, we were, the way that we were generating the actual Groupon vouchers was a FileMaker app.

Like, we would export all the data from the production database to a file maker database and then email them through, by creating a script that opened individual emails in mail.app and would pause every 30 emails to make sure that we didn't crash the computer.

It was really just held together with tape.

And then as we expanded internationally, I mean, I don't know how many, the maximum number of different platforms, like completely independent technology platforms we were on, but it was maybe like 7 or 10 or something like that.

So it was a very competitive environment, and because of that, and we thought that first mover advantage made a big difference.

So we moved very, very fast and tended to push off anything that could be pushed off.

So first mover advantage, so many people copied you.

You were like the most copied website ever.

Why do you think that and what made you guys win?

It was basically like a newsletter, right?

And then you have to get people to go out and negotiate 1 deal a day in order to be in a city.

Providing a consistently good customer experience proved to be difficult.

But a lot of people, it's not hard to get started at least.

So back to the scaling thing again, sorry I'm jumping but I keep thinking of all these questions Can you give any advice out there that would be for the people out there about scaling any other thoughts on like what you need?

To be thinking about or like what mistakes don't make if you're if you're trying to scale a company quickly?

Well, I certainly wouldn't do what we did unless you're in, and I can't imagine your business is gonna be in a similar competitive environment to ours.

But The reason that we were adding, for example, when we launched in Europe, I think we went from 50 people in the first month to a couple hundred people in the third month to a thousand people by the sixth month or the ninth month or something like that.

Like we were adding people so fast that the tendons that usually form to hold a culture together didn't really have time.

So that's just 1 of the costs that you incur.

And it ended up making it very difficult to have a kind of a global value system that people just intrinsically understood how we think about customers.

So, I guess I'm saying what I wouldn't do that we did.

What we did that worked really well was we identified a unit, a group on unit, which was each city, and then we came up with a playbook that we could just rinse and repeat over and over and over again.

So when we decided we wanted to be in 30 markets, after we already had 3 markets where we were working, we kind of said, okay, we know what we need for each market.

What does our org chart look like when we're in 30 cities?

And to some degree, we're thinking about it the same way at Detour, which is also a local model.

Like once we feel like we have product market fit, it's gonna be a similar kind of rinse and repeat model.

So how do you expand internationally while keeping the culture in mind?

Like how do you make sure that you don't lose your company culture?

I mean, I'm probably the wrong person to ask, because I don't think we really succeeded at it.

I can tell you what I would do differently is make sure that the problem, let me tell you about how we expanded.

So when we announced our funding, I think in 2009, maybe 2010, from Excel, we knew that we'd been intentionally keeping a low radar because we knew the business was easily copyable.

So that was like the first time we were ever in TechCrunch, and we knew at that point that everybody was gonna start copying us, and that's what happened.

And so there was a lot of urgency to figure out our international strategy at that point.

And we started off by just interviewing people, like, you know, executives that we would base in, like, Amsterdam or London or whatever, who would build our international operation from scratch.

And as we were doing these interviews, we were seeing even faster than we anticipated clones popping up.

And so we said, God, we really need to talk to these people.

And this was, for me, personally, 1 of the most difficult growth moments because I hated the clones.

And I mean, I didn't hate them from a business perspective.

Like, I just found, and I still, like, to be honest, like, find it so foul.

Like, the reasons that I got into building startups and then comparing that to the reasons, like to think that somebody, I mean, let me

It's an important lesson though, because it's incredibly demoralizing when someone just blatantly rips you off.

Yeah, so I kind of sucked it up and we started bringing people to Chicago to meet with them and meet with these different clones.

I remember the first 1 kind of sitting in my office.

I was going to meet him downstairs at Motel Bar where we did that deal.

I remember sitting in my office and kind of trying to get myself in a zen-like state and try to think about even the worst human beings, they have their, if you can see the world through their eyes, it makes a lot of sense.

People aren't usually evil, crazy, or stupid.

So I was there and I went downstairs to meet him and instead of getting right into business, I was just like, so let's just talk to each other as humans, man.

And I thought to myself, that's the stupidest hobby that I can imagine.

And then I said, well, like, why do you collect coins?

And he was, or like, do you like to like hold them and think about all the hands that they've passed through?

Or like, you know, think about the history or something?

right, well, that, be as may, like I'm sure there are good reasons to collect coins, but this guy didn't have 1.

So what he said was, I like to sit on my couch on the weekend and I open my safe and I take it out and I think about how valuable it is.

And I was like, exactly, that's exactly who I thought you would be.

But then we met the Samwer brothers who we ended up doing the deal with, and they were just like super, super smart, like clearly savvy, and it was clear that these guys were going to, like if we wanted to play in Europe, then we were gonna play with them, or we could just put it off and do something later.

But they sort of have bad reputation for copying people.

Well, I think the copying thing is just emotional.

They have a bad reputation for building unsustainable businesses, and that would be a better reason to question my judgment.

Yeah, I did, I think I read they had huge turnover in employees and didn't really care about the user experience, which seemed opposite to Groupon.

So what I'd say, if I was doing it again, I think I would be very thoughtful about making sure that if I am going to do an acquisition, that the people that are running the show across the pond would be 100% values aligned with me because as the company gets bigger, like part of the reason we did an acquisition is because we were still in a knife fight in the US.

Like we, to think that we would be able to pay any attention overseas, like, so we really needed to have somebody that we would be able to trust.

And you can align with them on things from time to time, but it's the million little decisions that you never, that are never even brought up to your attention that really make the difference between success and failure.

So that's why it's so important that you find people who you're really aligned with on a values level.

So speaking of acquisitions, Groupon almost got acquired.

Can you talk a little bit about that story?

Sure, so I think it started with Yahoo approaching us unsolicited if I remember correctly And They offered they made kind of a over-the-transom offer like kind of hinted that they would buy us for something in the like 2000000000 dollar range.

And I really did not want to sell to Yahoo.

And, But the board was interested, as is the board's responsibility to be interested in stuff like that.

So I managed to get a meeting with Google, with The thought being that if we can get them interested, that's a better place to end up than Yahoo.

The same time that was happening, it was getting into the holiday season, and the business was just taking off on a level that we had never seen before.

So kind of fortuitously, just as that conversation was happening, you know, we were looking at our numbers and the board sat down and said it would be foolish to sell at this point.

We think this company can be much more valuable independently and so we kept going.

So you didn't wanna sell, that you were happy to keep working.

Meaning I really don't know if I have a just deep kind of sense of ownership around these things and I don't want anybody else to own the company or if I didn't think it was the right thing for the business.

My point of view on it now, like I've come to think, or how I think about it with like detour and what I'm trying to do by building a business is I think of a business as an opportunity to inject an idea into the world that hopefully makes a difference somehow and whether that actual business persists or like is kind of secondary to whether or not the idea has had an impact, whether it's through your own company or somebody else's company.

So that's how I think about building businesses now.

I'm gonna take a few extra minutes because I have a couple more questions and I wanna get to detour, but just very quickly, any advice for founders in this audience thinking of going public someday?

It's really the worst thing that I think we ever did, and I think Groupon would be different if it hadn't gone public.

Let me tell you a couple, I don't know why you're clapping.

Because 1 person who clapped told me why you clapped.

Is it because it's like nice to hear me admit that or is it because like honesty, okay.

Like I think at the very least 10% of your time and for a company like Groupon 50% of your time it will now be sucked up by doing something that has nothing to do with building a great company.

The reason you're doing what you're doing now and you're slaving away, now you're going to be doing something entirely different that just feels like complete bullshit.

Every second that you're doing it, unless you're a sociopath, you're going to be like, I hate this, why do I have to do this?

The other thing is the incentives to think short term are so unbelievably strong.

The incentives to think quarterly are too strong for any company to resist.

I don't care what any public company CEO tells you, they are making short-term trade-offs all the time.

I think it's bad for business and entrepreneurship.

I don't know why anybody would wanna do that.

So I guess my advice for you is, don't get consumed by this, because you've gotta be successful first, but to the degree that you can be thinking about what you can do to set yourself up to never go public, or put it off as long as possible, you'll thank yourself down the road.

We were engineered from very early on because of the way that we were financed to go public relatively quickly, and it's probably the worst thing.

it's no surprise, and I also feel like we were a particular brand of shit show, like let me be clear.

You know, like there's all kinds of other shit that I did that I could have avoided because we grew so fast.

But I'm kind of self-aware enough to, I think I'm objective enough about this to be able to make this judgment universally and say that we're just like the worst example.

Okay, finally, I know I'm going over, we gotta talk about Detour quickly, and any sort of-

So like, I don't want you to think like the only way I agreed to do this is to be able to plug my new company.

I've been wanting to talk to you about Detour forever.

Okay, well then just- And I haven't seen you.

If you're going to ask a question about it, make sure it's 1 that doesn't feel like it's in my

I heard about this really cool company called Detour.

No, seriously, what I want to know is what is Detour and what lessons are you now applying now that you have this blank slate again, you're doing a new startup, what are you doing differently?

So, Detour is, they're location-aware audio walks.

You put your phone in your pocket and we have these awesome stories that walk you through San Francisco.

It's awesome, like I'm super proud of it.

It's the most fun thing I've ever done and I think everybody's really gonna love it when they have a chance to use it.

1 thing that someone said to me, we did an offsite last week, and 1 thing that somebody said to me that I hadn't even thought of is there's a certain amount of big company structure that I'm bringing to Detour.

We have 90 day company goals, we do post mortems on things, nothing that's just stuff that makes startups unnecessarily chaotic.

I think the other thing is, the biggest, There are certain values that you really have to, like I think the definition of values is they're the behaviors or principles that you religiously adhere to within your company.

When I say religious, I mean that no amount of data will sway you from those principles.

And the degree to which that you have the courage to maintain your conviction around those ideas is the degree to which you're gonna be successful over the long term.

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Andrew Mason at Startup School SV 2014