I imagine many of us will want to bash on Andrew Mason but I've decided to take a contrary position.
I had a negative flinch reaction towards seeing Andrew Mason's name, given the performance of Groupon over the last few years, but then I remembered that he was the one who got that low barrier to entry, commodity business to its previously enviable position in the first place. That kind of experience of ultra-rapid ramp up and sales will surely be valuable to more than a few YC companies.
I don't agree with some of the things he did (ex: preferential exits for himself and other execs) but I wish him the best in his new role.
I came to bash him, he should not be flung as an example for young people. His behavior was toxic. That he would get a second chance in a lowly job under tight supervision, and showing good behavior for a few years, yes. But here it's putting someone who cheated accounting to mis-represent the value of his company to investors directly advising decision-makers. He also let his sales people lie to customer businesses.
It's not even about what he does or says anymore (for a while, time will pass), it's about flinging a guy who struck it rich by cheating in front of aspiring entrepreneurs. He could repeat "don't cheat" as much as he wants, his position is the single proof that cheating works, it's more powerful that words.
Marc Andreessen explained the use of those metrics on Rap Genius:
“As someone who was in the room as an observer at the Groupon board when the decision to use these metrics was made, I think Groupon was honestly trying to provide additional information that investors would find useful, which mirrored the way management thought about running the business.
However, no good deed goes unpunished, and widespread media paranoia about business metrics still lingering from the 2000 dot com crash combined with other missteps on Groupon’s part combined to make the use of those non-standard metrics highly controversial and ultimately negative for the company.”
They could have added them on the side. But they where trying to tap public markets and avoid revealing the operating costs at the same time. Going to Wall Street is optional, but going there is a huge commitment and those bankers act in a very predictable manner.
Andreessen is full of crap here. Plain and simple. These metrics were more about deception than perception. Mind you these comments came from the same guy who called for an end to "Bullshit Metrics." MA has no credibility.
It's not plain and simple. The thought, at the time, was that the marketing expenses _can_ be amortized. GAAP doesn't let you do that (there's only certain kinds of marketing expenses you can amortize). Groupon's view was that the marketing expenses were a dial they could dial down at any time to reduce total amount of customer acquisition and they would still have residual customer capture. Groupon was, perhaps stupidly, trying to give potential investors more information. Aaron swartz had a post about it as well: http://www.aaronsw.com/weblog/acsoi
I have to agree. It's not that he 'failed' in many respects he was wildly successful.
You can do a whole lot of things right but if their is something rotten at the core that undermines everything.
Groupon was rotten. The accounting was shady [1], in my view inexcusable so. I profited handsomely from shorting it, they sold the market what can only be described as a lie. The smoking guns were lying all over the place. Maybe if you tell yourself something loud enough often enough you can come to believe it, that doesn't make it true / right.
Nobody wants to build the next Groupon, where you are disgraced and forced out of your company after watching a huge portion of your net worth evaporate. They want to build the next Facebook or Google. He had a chance to do that, and fucked it up. Having him explain to you how and why would be extremely valuable. I'd argue even more valuable then getting advice from people who've only known success on how they were so successful.
That's not an argument. That's what his father would say, or his grandmother.
PS1: What does "good guy" even mean? Most people are "good guys" in that they don't spend their weekends torturing small animals in their attic. Most bad things are done by "good guys" because there isn't enough bad guys to do all the evil that's being done.
PS2: Like many others, I did enjoy / admire his exit letter; but I still have a problem not just with accounting practices at Groupon, but the essence of what Groupon was trying to do.
We form an opinion on people in the first 10 seconds we meet them; this opinion rarely ever changes.
There was a study where students were asked to rate their professor right while the professor was entering the classroom for the first time, and then at the end of the semester. Opinions from students hardly changed at all after a semester of class.
It's very difficult for you to know if you're biased. It's impossible for me to know you're not.
It's also been shown that we like to be consistent with what we've already said, so perhaps unstated opinions are more subject to change than stated ones.
I think it was Dale Carnegie that pointed out if you asked everyone if they themselves were dishonest, you would discover the surprising result that in fact there never has been a dishonest homo sapien in the history of this planet.
I thought his very sincere Groupon exit memo[1] is what made me think he is a good guy. I've never met him, so my opinion is based solely on what I read here. However, the backlash against Andrew is akin to Jason Calacanis's battle with DHH [2] and Jason Cohen's "King vs Rich"[3]. No one here is "right" but I suspect many more people in this community are far more motivated to want to become kings than be rich, hence the backlash.
Andrew Mason founded an enormously popular company that went public and generated hundreds of millions in revenue.
Regardless of any other issues anyone might have with him or Groupon, you don't get to that point (especially after the dot-com bubble) unless you know what you're doing.
I look to tech leaders to demonstrate personal responsibility and accountability; it's part of the engineering culture, and we shouldn't hold our leaders to lesser standards.
You know, I've been turning it over in my head for while. I'm of a similar mind.
Mason may know a whole lot – but he commands none of the respect I feel for the other names associated with YC. He's an antibrand. Maybe someone can someday make a compelling case for why Groupon isn't a completely scummy greater fool play. But all the sane, non-frothy things I've read about it make that a tough mountain to scale.
Most all of life is acting in the presence of imperfect or incomplete data. I welcome any contributions to my imperfect knowledge you may offer, however.
Groupon is no longer the same company it was 4 years ago; you might be biased by being anchored to a $20 IPO price, which you should actually blame on the investment "banksters"; thousands of merchants are grateful for the relationships they have with the company and continue to maintain those relationships; at least one YCombinator company has been purchased by Groupon. Calling it a "scummy greater fool play" is not appropriate in light of these facts.
I worked with Andrew for a while, and I can confidently say that he's a good and smart product guy. He had a good vision for the future of Groupon. Things obviously didn't work out, but it will be ignorant to put all the blame on him.
This one time, a business school professor interviewing him in front of a lot of MBAs asked, "So, what suggestions do you have for a student who has a tech startup idea, and they need help finding developers to build the first version?" I'm sure she was expecting him to talk about finding contractors, interns or free CS students . His response: "Learn to code." Since then, I've always felt he was one of us.
Many of us would have done exactly what he did (or maybe worse) if we were in his shoes (inexperienced entrepreneur running the fastest growing company ever, where everyone around him had a lot more weight).
ex-Groupon here. Andrew was one of the best things about Groupon, by far, no question, no argument from any other devs that worked there. Take that for what it's worth.
I think that a lot of what's wrong with Groupon is thanks to the current CEO (co-CEO?) and former (while Mason was there) chairman Eric Lefkofsky[0], rather than Andrew Mason. Of course, that doesn't absolve Mason of any responsibility, but it was sort of like the situation with Bush and Cheney.
Very good article. I've read similar ones to this in the past as well. Sounds like Mason got played by a Machivellian operator (taking the brunt of the blame for the accounting scandal and poor performance, while the real culprits escape most of the blame).
Their blog had been on Posterous. Posterous shut down. One of their partners made Posthaven to replace Posterous and to never shut down. Not a shocking choice.
Kevin is an investor in Zapier and we've got to say he has been outstandingly awesome. Before committing he came over to our place and hung out with us (and didn't bat an eye when my dog Tuna tried to pull off his socks multiple times, how embarrassing!).
It's wonderful that he shares some of what made Wufoo great (still one of the many startups we look up to). He has a really sharp eye for product and a unique counter-view to the "raise a load of money, it's the only way" sort of thinking the valley sometimes promotes. A great addition for sure.
Congrats to YC, Kevin, Michael, Steve, Dalton, and Andrew.
It doesn't change anything from my perspective, that is the idea behind part-time vs. full-time. The other part-time partners all have fulltime jobs as well.
Good. I'd say it should help. Not that you need it, but all counts. (: Good luck with YC. I've always seen you as a stand up guy, after that episode with FB wanting to buy you out and you declining. Takes character to do that. Something rarely seen in SV.
Awesome. Andrew Mason built an impressive 5,000+ person sales force from 0-60 in a matter of years – something very few people have ever done. I'm hoping he brings this experience to YC so sales-heavy YC companies with similar growing pains can benefit from his experience.
Absolutely. YC needs someone with deeper experience in cheating investors and walking away with a pile of cash. Anyone who can sell something as obviously close to a Ponzi scheme as Groupon was and cash out before the music stops will add a new set of skills to the YC team that was previously lacking.
Harj was very active on Quora, Twitter, and other sites answering YC-related (as well as general startup) questions, so I hope some other YC partners step up and fill that role with him leaving.
On that note, thank you Harj and good luck! And congratulations to the new full and part-time YC partners!
Many in this thread have failed to consider these facts: Groupon is no longer the same company it was 4 years ago; you might be biased by being anchored to a $20 IPO price, which you should actually blame on the investment "banksters"; thousands of merchants are grateful for the relationship they have with the company; at least one YCombinator company has been purchased by Groupon. I bought Groupon in after hours on this announcement and I am proud to post my trade publicly.
Qasar Younis is not getting the recognition he deserves, really sharp guy who will add a lot to future YC companies. Overall, congrats to all involved.
Dalton (and a few other really awesome people) made of my favorite app! In fact its what initiated my transition from "just a phone" to a "smartphone", that app was PicPlz. I look forward to Dalton's vision for YC.
One of these days YC will launch their late stage fund financed through one or two successful exits and IPO's. That will re-define the VC market as much as YC has changed the world for start-ups and seed capital.
Harj leaving is at least as important as the five new entrants, I'm very curious what he's going to do next. Andrew Mason is a pretty brave pick given the amount of backlash that could create, ethical choices aside he's a smart fellow, there are probably far more people in the start-up scene that would be happy to work with him than there are that would rather stay clear. His farewell note was a class act and sketched the man in a different light for me, but still does not detract from fundamental issues in the groupon model.
YC is making bigger and bigger strides, wished I had a better crystal ball :)
66 comments
[ 4.2 ms ] story [ 133 ms ] threadI had a negative flinch reaction towards seeing Andrew Mason's name, given the performance of Groupon over the last few years, but then I remembered that he was the one who got that low barrier to entry, commodity business to its previously enviable position in the first place. That kind of experience of ultra-rapid ramp up and sales will surely be valuable to more than a few YC companies.
I don't agree with some of the things he did (ex: preferential exits for himself and other execs) but I wish him the best in his new role.
It's not even about what he does or says anymore (for a while, time will pass), it's about flinging a guy who struck it rich by cheating in front of aspiring entrepreneurs. He could repeat "don't cheat" as much as he wants, his position is the single proof that cheating works, it's more powerful that words.
here is an explanation of the accounting thing: http://www.forbes.com/sites/petercohan/2012/08/14/memo-to-se...
“As someone who was in the room as an observer at the Groupon board when the decision to use these metrics was made, I think Groupon was honestly trying to provide additional information that investors would find useful, which mirrored the way management thought about running the business.
However, no good deed goes unpunished, and widespread media paranoia about business metrics still lingering from the 2000 dot com crash combined with other missteps on Groupon’s part combined to make the use of those non-standard metrics highly controversial and ultimately negative for the company.”
http://allthingsd.com/20121217/andreessen-and-mixpanel-call-...
You can do a whole lot of things right but if their is something rotten at the core that undermines everything.
Groupon was rotten. The accounting was shady [1], in my view inexcusable so. I profited handsomely from shorting it, they sold the market what can only be described as a lie. The smoking guns were lying all over the place. Maybe if you tell yourself something loud enough often enough you can come to believe it, that doesn't make it true / right.
[1] http://blogs.smeal.psu.edu/grumpyoldaccountants/archives/742
That's not an argument. That's what his father would say, or his grandmother.
PS1: What does "good guy" even mean? Most people are "good guys" in that they don't spend their weekends torturing small animals in their attic. Most bad things are done by "good guys" because there isn't enough bad guys to do all the evil that's being done.
PS2: Like many others, I did enjoy / admire his exit letter; but I still have a problem not just with accounting practices at Groupon, but the essence of what Groupon was trying to do.
There was a study where students were asked to rate their professor right while the professor was entering the classroom for the first time, and then at the end of the semester. Opinions from students hardly changed at all after a semester of class.
It's very difficult for you to know if you're biased. It's impossible for me to know you're not.
[1] - http://finance.yahoo.com/blogs/breakout/one-thing-could-save...
[2] - http://37signals.com/svn/posts/2219-jason-calacanis-vs-david...
[3] - http://blog.asmartbear.com/rich-vs-king-sold-company.html
People should be judged by their actions not by how nice they feel when you meet them in a friendly context.
Mason may know a whole lot – but he commands none of the respect I feel for the other names associated with YC. He's an antibrand. Maybe someone can someday make a compelling case for why Groupon isn't a completely scummy greater fool play. But all the sane, non-frothy things I've read about it make that a tough mountain to scale.
Are the thousands of merchants happy with Groupon outnumbered by the thousands of merchants not happy with Groupon?
> Calling it a "scummy greater fool play" is not appropriate in light of these facts.
Your "facts" more resemble opinions phrased as assertions. Which is your right, but if persuasion was your aim, the feedback might be useful.
This one time, a business school professor interviewing him in front of a lot of MBAs asked, "So, what suggestions do you have for a student who has a tech startup idea, and they need help finding developers to build the first version?" I'm sure she was expecting him to talk about finding contractors, interns or free CS students . His response: "Learn to code." Since then, I've always felt he was one of us.
Many of us would have done exactly what he did (or maybe worse) if we were in his shoes (inexperienced entrepreneur running the fastest growing company ever, where everyone around him had a lot more weight).
(I have no idea about his background.)
0: http://www.theverge.com/2013/3/1/4043566/andrew-masons-deal-...
I'm sure he'd also have things he would do differently this time around, and that is part of his value too.
"Simple, easy blogs for $5 a month, forever."
Interesting.
It's wonderful that he shares some of what made Wufoo great (still one of the many startups we look up to). He has a really sharp eye for product and a unique counter-view to the "raise a load of money, it's the only way" sort of thinking the valley sometimes promotes. A great addition for sure.
Congrats to YC, Kevin, Michael, Steve, Dalton, and Andrew.
"and 'til recently" or "and until recently"
http://www.merriam-webster.com/dictionary/till
On that note, thank you Harj and good luck! And congratulations to the new full and part-time YC partners!
Harj leaving is at least as important as the five new entrants, I'm very curious what he's going to do next. Andrew Mason is a pretty brave pick given the amount of backlash that could create, ethical choices aside he's a smart fellow, there are probably far more people in the start-up scene that would be happy to work with him than there are that would rather stay clear. His farewell note was a class act and sketched the man in a different light for me, but still does not detract from fundamental issues in the groupon model.
YC is making bigger and bigger strides, wished I had a better crystal ball :)