Earlier this year at All Things D, Groupon CEO Andrew Mason said one of his regrets was not opening an office in Silicon Valley earlier. The implication was that he was talking about not taking advantage of the superior coding talent, but I took it another way.
Being in Silicon Valley is like playing for the Yankees. You get knocked around more than anywhere else, the glare of the media spotlight is more brutal and the expectations are higher than they’d be in any other city. You also get the coaching and, say, run support or bullpen arms that the most outrageously rich franchise in baseball history can afford. If you’ve got the chops, all of that undoubtably makes you a better player.
Don’t get me wrong: I hate the Yankees. But I can understand on a professional level, why so many players leave teams I love to go play there.
Similarly, a young wunderkind with a great idea coming to Silicon Valley will find no better place with more freedom to build his dream. This is perhaps the only place where millions are thrown at someone with no management experience, and board members will fight for a 20-something kid to stay CEO, even as mistakes are continually made. The cult of the founder can verge on reckless at times.
But there’s a flipside to that: Every founder who makes it– no matter how much of a maverick they are– surrounds themselves with mentors and staff who help them avoid pitfalls. Mark Zuckerberg, for instance, has always been headstrong and no one would say Facebook is run by committee. And yet, he’s constantly sought out mentors and others with more experience who could guide him in certain areas. He’ll be the first to say without Sean Parker, he wouldn’t have known the importance of keeping so much control of Facebook’s board– a move that saved the company from being sold prematurely.
Similarly, Marc Andreessen– another person who isn’t exactly shy and retiring– has frequently cited the impact of mentors like Jim Barksdale on his career, not to mention the sometimes moderating force of his partner Ben Horowitz. Most iconoclast founders I’ve covered in more than a decade in the Valley, bend far more from good advice than their personas would project. (Yes, even the headstrong Michael Arrington.)
Behind all of the founders we like to think of as playing by their own rules are a team of people they’ve chosen who are have experience they lack. People who have been there before. They don’t always listen to them, but they recognize the value of surrounding themselves with them nonetheless. It’s that old adage of understanding the rules before you can break them.
Mason simply hasn’t benefitted from the raft of mentoring, gut-checks, constant scrutiny, in part because Groupon is based in Chicago. But also because the company was such a phenomenon, growing so quickly, that many of its investors have come in on the company’s terms at much later stages. Like a spoiled only child, it has the dually corrosive reality of being a big fish in a small pond as the startup who put Chicago on the high-tech map, and a big fish in a big pond getting global attention, and all the kiss-ass press and money it could ever want. I don’t say this to knock Groupon or its CEO Andrew Mason. The company and the team have shown extraordinary natural ability. But like a child prodigy it’s been a victim of that easy success too.
Because as every entrepreneur knows and Groupon is learning now, that phase of being the darling doesn’t last forever. An entrepreneur who’s grown up in the somewhat schizophrenic Valley ecosystem– a place where they are constantly built up with valuations and cash but also constantly torn down by haters and the endless scrutiny of the blogosphere and competitors– rarely has quite the same honeymoon Groupon has had. Or if they do, they are well aware from looking around them that there’s a shelf life to it.
Witness the first backlash Groupon ever faced: Those Superbowl ads. They had to know, people would be offended. The ads were intentionally cheeky, like most things Groupon does. You don’t start an ad talking about saving the whales and then switch to a sushi ad and not expect to ruffle feathers. In terms of backlash, it wasn’t that severe, and yet the company pulled a dramatic about face pulling the ads and apologizing. People close to the company told me the executives were shocked at the modest hate mail being written about them, because frankly, they’d never experienced it before.
Oh, but the backlash from the S1 would be so much worse, and Groupon has had little it can do about it thanks to the quiet period. Or should we call it the “quiet” period because the company’s frustration with the press and potential investors’ concerns about its financials and the future viability of its business have been clearly telegraphed, through cheeky “leaked” emails and memos and tantrums by PR firms.
Whatever Mason’s desired effect was, it’s not working. Even if it doesn’t piss off the Securities & Exchange Commission and derail the IPO, as Dan Primack of Fortune aptly Tweeted this morning, “It’s beginning to act like ex-child star who can’t believe the world is no longer enthralled by his cute-ness.”
Perhaps the biggest misstep Groupon has made: Filing to go public so early in the first place. Every other break out company of this era has had one thing in common: Learning from the past that there’s nothing magic about going public and no reason to rush. Zynga, Twitter, Facebook, and LinkedIn all have had the benefit of all their ugly secrets and skeletons coming out well before they were in a quiet period and couldn’t respond. It’s the lesson that was made so clear by Google’s IPO: Wait until you are dominant enough that you can do it on your own terms. It’s hard to believe that would have been lost on a Valley-based Groupon.
I’m not saying the stodgy old men of the Valley (read: People in their 30s and 40s) are the experts on how things should be done. Quite the opposite. The best entrepreneurs know when to ignore sage advice. After all, the advantage of the 20-something founder who has never had a job is that he isn’t personally invested in all the rules he’s breaking. But there’s nothing wrong with being told what those rules are and having a founder who will listen.