0:02
That was a a really good intro for making it up just then.
Search this video
0:04
I mean, it definitely sounded like that.
0:06
Like it was bad in the way jazz is bad.
0:10
Well, you're you're dodging the question of that wonderful music we were just listening to from your album hardly working. Um please check it out. It's awesome. It's on iTunes. You can buy it.
0:21
I'm not sure what song was that.
0:25
Uh that was um look no further. Yeah.
0:29
And it's about how you can find um uh you you don't need to be reading like business books or anything like that in order to learn how to be great at business.
0:37
You can find um beauty in witnessing the birth of an octopus, for example, or other such natural wonders.
0:45
Um I had specifically requested risen {apostrophe} above the pack cuz that's my favorite, but anyway, that's one of my favorites, so. Right. Um thank you for coming.
0:56
Uh I'd love to spend a few minutes before we get into Groupon cuz I know the audience is probably excited to hear about Groupon, but to hear about before Groupon, you started a company called The Point.
1:08
I'd love to hear a little bit about that. Okay.
1:13
Specifically like just Just how you came up with the idea and what went wrong with it, why it didn't work.
1:21
Um you know, how you got started, that kind of thing cuz it led to Groupon. It led to Groupon.
1:26
So, I think Do I Is this an awkward looking way to sit in this chair cuz I feel extremely awkward?
1:32
Well, you can't lean back. That's for sure.
1:34
So, maybe just You do look a little uncomfortable. Um okay.
1:39
So, uh so, I uh had the idea for this website called The Point when I was a um a grad student at University of Chicago in public policy.
1:49
And the idea was it was going to be this social platform that would 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.
2:09
Um so it's kind of like a precursor to things like Kickstarter and um and others. Indiegogo. Yeah.
2:18
And um and why did you guys fund them? No, she spoke today. Oh, okay. Earlier this morning. Oh, that fabulous talk.
2:26
So um so so I'd been a developer before I went back to grad school and um and somebody that I had worked with heard about the idea through a mutual um acquaintance and called me up one day and said, "I want to give you a million dollars to for you to drop out of school and work on this idea."
2:46
And at the time, this was 2006, I guess.
2:50
I didn't know anything about starting a tech company. We were in Chicago.
2:52
Like I didn't even I didn't know anything about I wasn't really like a student of the game, so to speak.
2:59
So wait, it was like an inbound inbound. Yeah, it was unusual. dollars.
3:04
I mean it wasn't on the phone.
3:04
Like a bunch of things 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?" Okay.
3:13
And then a week later it was a million dollars.
3:15
And so you really didn't know what you were doing at this point in terms of starting a startup.
3:20
No, and at later points as well, it turns out.
3:22
Um Um so so that's how it got started and so we started I guess in the beginning of 2006, um launched the point in September 2006, floundered for about a year before pivoting into Groupon.
3:41
So that's like the high-level arc and I can dive in on any of those parts that you want.
3:48
get this million dollars in funding um before you did Groupon?
3:53
No, we then uh we then after launching The Point we raised money from NEA. Okay.
3:59
So another like four or five million dollars or something.
4:01
Okay, so you were floundering.
4:01
At what point did you realize like God, this just this isn't working and it's time to do something else cuz I think you know, we heard a lot of advice today like you have to believe in your idea and even if all your friends say it stinks.
4:14
Like at what point did you say time to Yeah.
4:19
I mean I I can tell you some low points in in that period and kind of the summer of 2007.
4:27
But honestly like there was never a point when I was like this isn't going to work.
4:30
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.
4:39
And it was 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.
4:50
I think I'm a little bit more nimble about that those sort of decisions now and balancing the kind of resolve and stubborn stubbornness that you need while still accepting when something's just not working.
5:03
But at the time it wasn't.
5:03
So so we just did them both at the same time.
5:07
Um There was some in that period after we launched every day we'd have maybe a thousand visitors to the website and like sometimes we would get some press or something and it and it would peak but it would always come right back down.
5:24
And we were trying everything.
5:24
I remember at one time we started trying um uh we started trying um search engine marketing.
5:33
And we had a number of campaigns on The Point and each one of these campaigns were around like a social issue typically um 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 they'll spread and join other campaigns, and this is how we can kind of get things going.
5:53
And so, one There was one campaign that we found that we could get really cheap subscribers to, and it was the legalize weed campaign.
6:01
And um there was a community of people that really rallied around this particular issue, which Imagine there was.
6:08
and um they're they're called Juggalos.
6:10
Do you know what Juggalos are?
6:14
You know what Juggalos are?
6:14
So, Juggalos are are are Insa- Insane Clown Posse fans.
6:20
And I mean you should you should check them out on YouTube or something.
6:23
Like they're this group of people that takes uh pride in being stupid.
6:28
Um and and they're just enormous trolls.
6:31
So, they ended up trolling not just that Like they did what we wanted them to do, which was which was kind of in infect the site.
6:38
Um only instead of infecting it with joy and um like, you know, high-value customers that we could, you know, sell to advertisers or something like that, it they infected it with just trolliness.
6:52
So, they would go to all these other like great campaigns and just troll everybody that was joining them. And so Ah. It was awful. Um Wow.
7:01
Did not know that Juggalo story.
7:04
If if I I I I 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 how intense and irrational it is to build a startup, I think I would go and find the people who um who quit companies like the point in that phase um or any any other startup, because most startups have this phase when things just aren't working.
7:29
And I 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.
7:41
Like if you went back and and interviewed them, they would say, "Andrew was insane.
7:44
Like he had no idea what he was doing.
7:47
Like we were There was There was no real like strategy.
7:48
It was shifting every other day."
7:53
Like it would it would have made perfect sense to anyone that they told the story that those people quit.
7:58
And it's the people who for whatever reason like didn't have that perfect sense that stuck around and turned this thing into something that turned out to be huge. Yeah.
8:09
So I don't know what the lesson there is.
8:11
got to be a a little bit crazy and a believer, you know, to to be in a startup.
8:16
So let's talk about Groupon.
8:19
You said you sort of started it simultaneously with The Point.
8:20
Why and how did you get the idea? Sort of what happened?
8:26
So the why is because it was clear to us that The Point wasn't working.
8:29
Our investors were um starting to hint that they wanted to take their money back.
8:35
Um and uh and so we were just trying everything we could think of.
8:42
And the um you know the the the story of like how I had the idea for Groupon was just well, we know that group buying is one potential business model for this.
8:57
We know that people have been trying to do um We know that people have been trying to do group purchasing campaigns using the points where that you get a group of people together that try to negotiate with their with a local business in order to get a discount.
9:09
Why don't we just go out and do that?
9:11
And why don't we do like a local version of Woot?
9:14
Like Woot was a website that we all liked and this deal of the day thing really seemed um really seemed uh compelling.
9:21
So so that's what we did.
9:26
And I had a hard time getting the rest of the team excited about doing this little like coupon side project.
9:32
Um and I knew how to code well enough that I could build a template for WordPress.
9:37
So we built a custom template for WordPress.
9:41
We bought get your Groupon.
9:41
com 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 of the point.
9:50
But like the first version of the point or of Groupon, excuse me, when you when you bought a deal, um you would get an email that said, "Thanks for joining this campaign on the point for 20 for 10 for 20 at Motel Bar or something like that."
10:06
Like it was totally hacked together, um but it was enough to show that it was something that people really wanted.
10:12
Um and uh and so we were just running to to try to keep up with demand pretty much from that first from that first deal.
10:22
Do you remember what the first Groupon actually was?
10:25
Yeah, it was a a business um that was in the ground floor of our building called Motel Bar.
10:30
Um that that had uh it was a bar but they sold pizza.
10:33
So we did a two for one pizza deal that we negotiated with them.
10:37
Um up until the last minute it was going to be um an a local e-commerce company that sold sports-themed uh garter belts.
10:48
Um and that wasn't a joke.
10:48
It was It wasn't us trying to be like funny.
10:51
Um we had way too much of the fear of death in us to think about being funny at that time.
10:58
Um it was It was They were the only people that we could convince to um to take us seriously.
11:07
So So you launched this and say, "Wait, we might be on to something."
11:10
So what point did you realize, "Whoa, whoa, this is taking off."
11:15
Like when did it really start to go up? Um pretty soon.
11:20
It was after a couple of weeks uh it was clear that um it was clear that we were on to something.
11:29
And after a couple of months would start doing kind of extrapolations where or projections of well, if this continues, this is how big this thing is going to be.
11:41
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. And then it was. Yeah.
11:52
So, tell me like you're the fastest growing company in history.
11:57
Um couple of things I want to ask about that.
11:59
First of all, usually fast growing companies are like sort of disastrous internally or having some disasters go on internally.
12:06
Can you talk about some of the stuff that broke within Groupon as you're trying to keep up with that growth?
12:13
Um in the in the early days Yeah. Okay. the early days. Okay.
12:17
Um Ever I mean everything.
12:20
Uh the We were I'm trying to think of a good specific example of something that broke.
12:31
I mean for the first 6 months, we were the way that we were generating the actual Groupon vouchers was a FileMaker app.
12:40
Like we would export all the data from from the production database to a FileMaker database and and then email them through like by creating a script that opened individual emails in mail. app.
12:54
Um and would pause every every uh 30 emails to make sure that we didn't crash the computer.
13:04
Um it was really just held together with um with tape.
13:07
And then as we expanded internationally, I mean I don't I don't know how many the the maximum number of different platforms like completely independent technology platforms we were on, but it was it was maybe like seven or 10 or something like that.
13:20
So, um it was a very competitive environment and because of that um and we thought that first-mover advantage made a big difference.
13:30
So, um, we moved very, very fast and tended to push off anything that could be pushed off.
13:39
So, first-mover advantage, so many people copied you.
13:42
You were like the most copied website ever.
13:43
Like, why do you think that and what made you guys win?
13:50
Um, because it was easy to copy.
13:50
I mean, we built Groupon in a month.
13:52
It was basically like a newsletter, right?
13:54
And then you have to get people to go out and negotiate one deal a day in order to be in a city.
14:00
So, getting started is not hard at all.
14:03
Now, scaling it ended up being difficult.
14:05
Providing a consistently good customer experience proved to be difficult.
14:09
Um, but a lot of people uh it's not hard to to get started at least.
14:15
So, back to the scaling thing again.
14:17
Sorry, I'm jumping, but I keep I have all these questions.
14:18
Um, can you give any advice out there that would be for the people out there about scaling?
14:25
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?
14:34
Um, well, I would certainly wouldn't do what we did unless you're in like uh and and I I can't imagine your business is going to be in a similar competitive environment to to ours.
14:45
Uh, but um, the reason that we we we we were adding Yeah, you For example, when we launched in 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 or the the the ninth month or something like that.
15:11
Like, we were adding people so fast that the tendons that usually form to hold a culture together didn't really have time.
15:19
So, that's just one of the costs that you incur.
15:23
And it ended up making it very difficult to to have a kind of a global value system that people just intrinsically understood how we think about customers.
15:35
Um so I'm guess I'm saying what I wouldn't do that that we did.
15:40
Um what we did that worked really well was we identified like 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.
15:53
So, when we decided we wanted to be in in 30 markets um after we already had three markets where we were working, we kind of said, "Okay, we know what we need for each market.
16:03
What does our org chart look like when we when we're in 30 cities?
16:08
Let's work backwards and start hiring."
16:10
And like to some degree we're thinking about it the same way at at Detour which is also a local model.
16:18
Like once we feel like we have product market fit, it's going to be a similar kind of rinse and repeat um model.
16:24
So, how do you expand internationally um while keeping the culture in mind?
16:30
Like how are you how do you make sure that you don't lose your company company culture? That's a good question.
16:36
I mean, I'm probably the wrong person to ask um cuz I don't think like we really succeeded at it.
16:42
Um I I can tell you what I would do differently is um is make sure that the the the the problem Let me let me tell you about like how we expanded.
16:56
Um and take a step back if that's okay.
17:00
We uh So, so when when we announced our funding I think in 2009 9 maybe 2010 from from Excel, um it we knew that we'd been intentionally keeping a low radar because we knew the business was easy easily copyable.
17:17
So, that was like the first time we were ever in TechCrunch and we knew at that point that everybody was going to start copying us and that's what happened.
17:24
And so, there was a lot of urgency to figure out our international strategy at that point.
17:29
And we started off by just interviewing people like, you know, executives that we would base in like Amsterdam or or London or whatever who who would build our international operation from scratch.
17:40
And as we were doing these interviews, we were seeing even faster than we anticipated clones popping up.
17:48
And so, we said, "God, I we really need to talk to these people."
17:50
And this was for me like personally one of the most difficult um growth moments because I hated the clones.
17:58
And I mean like I didn't hate them from a business perspective.
18:02
I hated them as human beings.
18:03
Like I just found and I still like, to be honest, like find it so foul.
18:09
Like the the reasons that I got into building startups and then comparing that to the reasons like to think that somebody I mean, uh let me move on from that.
18:22
It's It's an important lesson though cuz it's incredibly demoralizing when someone just blatantly rips you off. Yeah.
18:29
So, uh so I kind of sucked it up and we started bringing people to Chicago to meet with them and meet with these different clones.
18:35
And I remember I remember the first one um kind of sitting in my office.
18:40
I was going to meet him downstairs at Motel Bar where we did that deal.
18:43
I remember sitting in my office and kind of trying to get myself in a zen-like state and and and try to think about like even the worst human beings, you know, they have their If you try to see if you can see the world through their eyes, like it makes a lot of sense.
18:56
People aren't usually evil, crazy, or stupid.
18:58
So, I So, I was there and I went downstairs to meet him.
19:02
And instead of like getting right into business, I was just like, "So, let's just talk to each other as as humans, man. Like, what are you into? What are your hobbies?"
19:12
And he was like, well, I collect coins.
19:15
And I thought to myself, that's stupidest hobby that I can imagine.
19:22
But but I but I but I said, come on Andrew. Open mind.
19:25
And then I said, well, like why do you collect Why do you collect coins?
19:29
And And he was Or like what Do you Do you like to like hold them and think about all the hands that they've passed through?
19:35
Or like you know, think about the history or something? collects coins. I could ask him. All right. Well, that be as may.
19:46
Like I'm sure there are good reasons to collect coins.
19:49
But but this guy didn't have one.
19:51
So, what he said was, I like to I like to 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.
20:02
That's exactly who I thought you would be.
20:04
Um So, we didn't do that deal.
20:09
Um But then But then we met the Samwer brothers, who we ended up doing the deal with.
20:14
And they were just like super super smart, like clearly savvy.
20:16
And we It was clear that these guys were going to like if we wanted to play in Europe, then we were going to play with them.
20:25
Or we could just put it off and do something later.
20:29
Well, but they sort of have bad reputation for copying people.
20:32
Like why did you buy them?
20:39
Well, the I think the the copying thing is just emotional.
20:41
Um They also They have a bad reputation for for like building unsustainable businesses, and that would be a better reason to question my judgment. Okay.
20:52
Um Yeah, I did I think I read they had like huge turnover in employees and like didn't really care about the user experience, which seemed opposite to Groupon.
21:03
So So, what I'd say I if I was doing it again, I think I would be I would be very um thoughtful about making sure that if I am going to do an acquisition, that the people that are running the show across the pond um 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.
21:29
Like we to think that we would be able to pay any attention overseas.
21:34
Like so we really needed to have somebody that we would be able to trust.
21:38
And you can align with them on things from time to time, but it's the million little decisions that you never um that that that are never even brought up to your attention that really uh make the difference between success and failure.
21:51
So um so so that's why it's so important that you find people who you're really aligned with on a on a values level.
22:00
So speaking of acquisitions, Groupon almost got acquired. Mhm.
22:05
Can you talk a little bit about that story? Um sure.
22:08
So um I think it started with Yahoo approaching us um unsolicited, if I remember correctly.
22:18
Uh and um they offered they made kind of a over the transom offer, like kind of hinted that they would they would buy us for something in the in the like $2 billion range. And range, okay.
22:33
Yeah, I uh it was so somewhere around there and um and I really did not want to sell to Yahoo.
22:40
Um I didn't want to sell at all.
22:42
I really didn't want to sell to Yahoo.
22:45
Um and um but the board the board was interested um as is the board's responsibility to be interested in stuff like that.
22:54
So um I managed to get a meeting with uh with Google um with the the thought being that if we can get them interested, that's a better place to end up than than Yahoo.
23:03
And and and that went really well.
23:07
Um the same time that was happening, it was um it was uh getting into the holiday season and the business was just taking off um on on a level that we had never seen before.
23:23
Um so kind of fortuitously just uh as that conversation was happening, you know, we were looking at our numbers and the board sat down and said it would be it would be foolish to sell at this point.
23:35
We think this company can be much more much more valuable independently. And so we kept going.
23:41
So you didn't want to sell.
23:41
But you were happy to keep working.
23:44
Yeah, I didn't want to sell.
23:44
I you know, I don't know why.
23:46
Um meaning I'm I'm I I I meaning I don't know I really don't know if I have a um just deep like 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.
24:08
Um My my point of view on it now, like I've I've come to think or how I think about it with like with like Detour and what I'm trying to do by building a business is I I think of um a business as an opportunity to um inject an idea into the world that
24:28
hopefully makes a difference somehow and whether that actual business persists um or like is is kind of secondary to whether or not the idea um has had an impact, whether it's through your own company or somebody else's company. Um
24:43
Um So that's how I that's how I think about building businesses now.
24:51
Okay, and I'm we're running out of time.
24:53
I'm going to take a few extra minutes cuz I have a couple more questions and I want to get to detour, but just very quickly, any advice for uh founders in this audience thinking of going public someday?
25:05
Um going public is awful.
25:08
Uh it's really the the worst thing that that I think um we ever did and uh I think Groupon would be different if it hadn't gone public.
25:22
Let me tell you Let me tell you a couple I don't know why you're clapping.
25:28
Like why are why are you clapping?
25:30
Cuz one person who clapped tell me why you clapped.
25:33
Is it because it's like nice to hear me admit that or is it because like honesty, okay.
25:40
Um so here's here's what it is.
25:42
Like I think at the 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. It is so tragic.
25:55
It's like all the reason you're doing what you're what you're doing now and you're slaving away, now like you're going to be doing something in entirely different that just feels like complete every second that you're doing it unless you're a sociopath, you're going to be like, I hate this.
26:15
Why do I have to do this?
26:18
Um the other thing is the incentives to think short-term are so unbelievably strong.
26:24
The the incentives to think quarterly um are too strong for any company to resist.
26:30
I don't care what any public company CEO tells you, they are making short-term trade-offs all the time.
26:37
And um I just think it's bad.
26:40
I think it's bad for for for for business and entrepreneurship.
26:44
I don't know why anybody would want to do that.
26:47
So I guess my advice for you is don't get consumed by this cuz you've got to be successful first, but to the degree that you can be thinking about what you can do to set yourself up to to um never go public or or put it off as long as possible, you'll be doing you'll you'll you'll thank yourself down the road.
27:08
I mean, we were engineered from very very early on because of the way that we were financed to go public relatively quickly, and it's probably the the worst thing. So, avoid going public. That I know.
27:21
I mean, it's no and and I and I also feel like we were a particular brand of show, like let me let me be clear.
27:27
You know, like there's all kinds of other that I did that I could have avoided because we grew so fast, but I'm I'm kind of self-aware enough to I I think I'm objective enough about this to be able to to be able to like make this judgment universally and say that it's we're just like the worst example.
27:45
Okay, finally, and I know I'm going over, we got to talk about Detour quickly, and any sort of We actually don't.
27:51
Like I don't want you to think that the only way I agreed to do this is to be able to plug my new company. I want to hear about it.
27:55
I've been wanting to talk to you about Detour forever.
27:59
Okay, well, then then just then just if you're going to ask a question about it, make sure it's one that doesn't feel like it's in my self-interest to about this really cool company called Detour.
28:07
Can you tell me about it?
28:11
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?
28:17
You're doing a new startup.
28:19
What are you doing differently?
28:21
Jeez, um So so Detour is um they're they're location-aware audio walks.
28:28
You put your phone in your pocket, and we have these awesome stories that walk you through San Francisco.
28:34
They take about 45 minutes.
28:36
They they tell you where to turn.
28:36
You can take them in groups. It's awesome.
28:40
Like I'm I'm super proud of it.
28:40
It's the most fun thing I've ever done, um and I think everybody's really going to love it when they have a chance to use it. Um lessons so many.
28:51
Um There's actually a lot of value value.
28:58
Um One thing that someone said to me, we did an offsite last week and one thing that somebody said to me that I hadn't even thought of is there's a certain amount of like big company structure that I'm bringing to Detour.
29:07
Like we have 90-day company goals.
29:13
Um we do postmortems on things.
29:13
Like nothing that's um Just just stuff to make that makes startups unnecessarily chaotic.
29:20
Um we're not doing that stuff.
29:24
I I think the other thing is the biggest the the There there's certain values um that you really have to um Like I think what you're the definition of values is they're the behaviors or principles that you religiously adhere to within your company.
29:45
When I say religious, I mean that no amount of data will sway you in from um from those principles.
29:51
And the degree to which that you have the courage to um maintain your conviction around those ideas is the degree to which you're going to be successful over the long term.
30:02
And I think there are things like around the type of people that you work with, around starting with the customer and working backwards that I see startups um that that at Groupon we rationalize making exceptions.
30:17
Um I see YC startups rationalizing exceptions all the time.
30:20
Um because it's it's really really hard.
30:24
And everybody everybody thinks they're doing it.
30:26
We thought we were doing it.
30:28
Like I thought I was doing it.
30:29
I thought I was consistently starting with the customer and working backwards.
30:33
And when I wasn't, I always had a really good excuse that I could explain to someone. Um but it didn't matter.
30:37
And I feel like those are the biggest mistakes.
30:39
And so like the biggest difference is just having the the courage to stick to those convictions and it feels so good when you see them pay off. Aw, that's awesome. Great way to end.
30:53
I'm sorry we went over but it was too awesome talking to you.