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The Early Wild Days of Groupon

groupon, startup, growth

Groupon started in 2008 as a service that connected subscribers to local deals on almost everything. It grew to an IPO valuation in 2011 of $12.7 billion—what was then the biggest IPO of any internet company since Google in 2004. Ben Allen looks back on his days at Groupon’s London office and recounts the swings, the cuts and the mayhem as it all happened.

 

Linkdln co-founder Reid Hoffman once said that being part of a startup, especially in its early days, is to jump off a cliff and build the aeroplane on the way down. This is never a smooth ride for a company. But what about for one of the world’s fastest growing businesses in history?

Groupon was a company that didn’t just grow fast in terms of revenue and speed, but also in terms of physical presence, employing over 12,000 people worldwide within five years of its inception. What was not apparent during the growth times has now become clear: that kind of growth may never be seen again. Groupon has become the company which tested the aeroplane metaphor to its limit; the company which taught the world what growing too big, too quickly looks like.

Cast of Characters

“When I first started, contracts would come in, they would have just been signed that day and within two minutes I’d be ringing the person to say they’d be going [live] the next day.”

Sarah Gulliford worked as a PM between 2010 and 2013.The scene she’s describing was the environment which most of us stumbled into–a frantic buzz of people walking too fast and talking too quickly. There was always much to do and much less time to do it in.

Each deal that went live had to be researched, the contract signed, checked by QA, given a date and newsletter position by scheduling, ‘locked in’ by the PM (i.e. a phone call confirming the contract details and prepping the client to Go Live), written and published by editorial, and then come back to PM for the preview of the deal to be sent to the client for approval. And the newsletters sent each day – one for each city – would need to contain a range of deals for subscribers to choose from. It would often be the case that each morning, as we came in, the next day’s newsletters would be sparsely populated with the deals, and the whole Groupon operation would whir into motion to fill it up.

For the PM team, once the next day’s newsletter was dealt with there were still finance queries, preview amendments, redemption requests, questions on customer service or perhaps the aftermath of a previously run deal which had gone wrong. “That’s where the treadmill analogy comes in,” said Mike Bernstein who worked at Groupon, mostly in PM, between 2011 and 2014, “because you’re constantly moving, there’s a constant output… [the work] keeps coming until you turn it off at the end of the day.”

Simon Willmore worked on the content management team in editorial between 2010 and 2013. The content management team were the ones who received requests to edit deals which were live or about to go live. Every team which dealt with a deal had a stake in it, and would need to be consulted at some point “It was really just a different range of people screaming at you,” he observed sardonically.

Groupon expanded to 500 cities worldwide through a series of acquisitions, and each country operated pretty much autonomously because, initially, all the numbers kept going up. It’s now clear that the reason so many people were involved was because Groupon had grown too fast and too far to implement a management or internal tool structure sophisticated enough to deal with the type and volume of work required to keep everything in motion.

As 2011 rolled on, the scale of the growth became apparent “We were this noisy new gang on the block,” Bernstein said, “We start realising, we can sell a load of anything – we can put any deal on this page and it will sell.” So the deals flowed in and the focus was on increasing revenue and hiring people to cope with the escalating business, there was no time to build out new systems.

As a result, and through no fault of anyone in particular, errors were easy to come by and the job of the PM team was as the safety net on the stream of deals making their way live. “We were the link to all the other departments,” said Ben Russell, a PM between 2011 and 2014, “it seems bonkers to think about it like that… It was like ‘the client needs you, spot all the mistakes in this deal before it goes live.’”

In retrospect, there were a number of aspects about the place which played into the Peter-Pan ether behind Groupon’s front doors. There was a scary security guard from South Africa on the front desk who, if we had forgotten our pass, would reprobate us without us realising we were too old to have to put up with such censure. And every day the class clown would enter each floor in the form of The Soup Guy. He was an out-of-work actor sent up by the cafe on the first floor to sell the soups of the day, and he would announce his presence in the form of whichever limerick or skit he’d decided to try out on us that day.

“My first month was odd. We were put on this really weird desk. I was facing a pillar. There was a picture of Cliff Richard on the pillar.”

Spontaneous hires

Russell nostalgically parodied his first call with the HR department in his leaving email:

HR: So the interview’s on Thursday, do you know much about Groupon?

Ben: I’d never heard of it until yesterday.

HR: Ah, well best do a bit of reading.

Russell chose to elaborate. “The interview was with [the head of PM] for about half an hour, they sent me into this really weird room in the old office in Liverpool St and there was a moped in the corner, like a black Vespa, very bizarre, I still don’t know who’s that was. I didn’t really talk about anything I’d done previously, [he] was asking me about my dissertation on American Psycho… I came out of it not really knowing what had happened, not really knowing at all about the job I was going to be doing.”

The training at Groupon was as non-existent as the interview process. Most people were sat at a computer near someone else who was more experienced and involved in “taking orders from someone who was probably six months older than you but in your mind felt like ten years older.” Russell summarised.

“My training was a mixture of sitting on one of those exercise balls watching [colleague] Becs call clients for a few days.” he continued, “And then Mike said to me ‘can you work Microsoft Excel?’… and he would just send me lists of voucher codes to verify or de-dupe or something. My first month was odd… we were put on this really weird desk… I was facing a pillar… there was a picture of Cliff Richard on the pillar.”

Gulliford recounted the extent of training she received from her manager “The first time I answered the phone he stood over me and when I put down the phone he just said “you say ‘basically’ too much”.

At the time, this all seemed part of the company’s charm. “I was sat at the desk”  Willmore recalled of his initiation, “and I asked the head of the team ‘how do we do this?’ and he said ‘oh, we’ve never done that before’. I weirdly thrive on that. That was a key skill to have at Groupon; that you make up your job on the fly. There were some bloody smart people there.”

“What was I doing? Me, little cog in the machine, saying ‘I’ll give you my credit card.’”

Fighting fire

Offered a legal contract from an unhappy client who had doubtless been victim to one of the systems’ many quirks, Gulliford found herself thinking “What the hell is this job? I have no idea what I’m doing. I’m being sued, I’m being threatened on the phone, and some people are sending me legal contracts and I’m having to pretend that I know what they mean. I’d say for my first 9 months, most of my job was fire-fighting and being shouted at in the process.”

As 2011 turned into 2012 the company started reaching its all-six-cylinders peak, reaping sales previously not thought possible, and the UK office grew to its fullest. The PM team, having been around 15-20 people was on its way up past 60. The maelstrom of hiring and semi-training and the intense pressure to perform impossible feats was paying off.

Bernstein coughed up an example of trying to deal with a failed payment by himself, which was a PM’s worst nightmare. “This must have been at nine or ten at night,” he begins, the humour drained from his face as the memory took shape. Payments could go wrong repeatedly and were always, and understandably, a fast track to an angry phone call from the client. “I was sitting on the phone – but on the floor, under my desk, because I needed to be in a safe space – having a conversation with a hotel owner,” he continued, “I’d reached the point where any person still in possession of their mental faculties would have just [said] ‘I can’t do anything. I will speak to so-and-so in the morning and they will get you your money.’ The only solution I could find that was left was [to say] ‘take my credit card details as a guarantee and I will deal with this for you in the morning. What was I doing? Me, little cog in the machine, saying ‘I’ll give you my credit card.’”

Downtime

The crazy daily events became anecdotes, which were retold back to colleagues as fast-paced rants. Somehow amidst it all we also managed to learn from one another, the different stories would give us all an understanding of our different perspectives. Letting off steam at the pub allowed for the dark humour to seep in and formed a coping mechanism. “Sometimes it gave you a bit of perspective on being able to see the humour in stuff that had driven you crazy that day,” Gulliford said, “So for that reason it was cathartic because something that you thought was horrendous and had plagued your day was actually now a really good story.”

2012 was part of the reason we didn’t realise the oddity of this manic rush just to make it to the next day with plenty of drinks and laughs in between. 2012 has become a hallowed year for the UK, and Londoners in particular; the year of The Queen’s Diamond Jubilee and, most importantly, The Olympics. It was a year which we now realise was sandwiched between – and in painful contrast to – the global financial collapse in 2007 and the Brexit referendum in 2016.

“[T]hey were literally standing in front of their mates and saying ‘you’ve done nothing wrong, but you’re gone. And I’m fine’.”

It must have been the first All Hands meeting of 2013 when the CEO, Andrew Mason, used the phrase “one playbook”. I hadn’t heard it before but it didn’t need explaining. Groupon had to operate as one company, it had to find the best way of doing things and everyone should operate like that. The company had been founded in Chicago and it seemed as if the American’s were now wresting back control.

American accents were heard around the office asking us what, how and why. We all seemed to understand what was going on, but decided to bury that understanding away in some corner of our mind and pretend it wasn’t happening. We would instead try to resist whatever was on its way or, at least, give it a hard time.

Shortly after the first visits, the Americans made a second round to London, but this time they had brought shiny new systems with them. And any questions we asked were met with uncomfortably sensible answers. Bernstein again—“The goal was to do things through the properly designed way, and we then have the tools to do things in the properly designed way.” But between the hiring freeze and the new systems we didn’t admit to ourselves the end of the sentence Bernstein then delivered, “so we then need less manpower. The point of the hiring freeze was ‘we need to stop spending this money’.” The problem was that the way things were changing was not what we had in mind. We knew things were a mess but it was our mess, and no one had previously been around to challenge us on that or offer the resources for us to deal with it ourselves. But we now realised that the introduction of systems and processes and efficiency and accuracy was not actually an introduction of anything, it was a removal of the human relationships on which the UK office was built.

During 2014, certain job roles started being moved to Eastern Europe or India. The new systems started being built out so they could do much more. And the next dose of medicine was far less palatable: redundancies.

There was an initial round in editorial, then the goods PM team went, then another round in editorial. During this time the rest of the PM team were leaving so fast that natural attrition was enough. I was doing a different role by this point in the Goods team, but would occasionally walk through the old PM floor, now reduced to just a few tables.

The bonds which had held the company together and given us so much opportunity had started to become an anxiety. Bernstein remembered that “I got to do so much and experience so much that was above my pay grade and experience level, but I’m so glad I never had to [make people redundant]… fuck doing that, especially to people that you’re properly tight with.The editorial ones – they were literally standing in front of their mates and saying ‘you’ve done nothing wrong, but you’re gone. And I’m fine’.”

In the end Groupon had to cut over 1,000 jobs worldwide and close down a series of countries it was operating in. But no one I spoke to held any resentment towards the company. We all knew we were on a fast moving and poorly built ship which would only remain afloat if it didn’t slow down too much. When Groupon was growing most people just thought that’s how fast tech companies could grow, no one knew the upper limit. “At what point does a startup become a business? I’m pretty sure it’s some point before it employs 12,000 people,” Bernstein quipped. None of my old colleagues that I spoke to thought they suffered as a result. Quite the opposite.

Bernstein and I sat talking for a while about how it’s now pretty much impossible to fluster us. Groupon calibrated you at such a high bar for words like “urgent” and “mess” that we all feel it difficult to use them anymore. When I asked Russell to sum up Groupon in three words he shot back “Solve. This. Problem.”

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