Groupon's CEO Gets Schooled in Small Business
Groupon CEO Andrew Mason has been a controversial figure since the company came on the scene. The company spurned a multibillion-dollar takeover offer from Google, saw insiders pull out enormous amounts of cash from venture investment, created a stir with a Super Bowl ad, repeatedly raised eyebrows with its pre-IPO SEC filings, went public, and then saw its stock slide from around $20 to well under $10 a share.
But there is evidence that Mason is learning an important lesson--and one that every entrepreneur should learn. Bloomberg Businessweek published a profile of Mason that starts with a fascinating image of him working as the host at a Japanese restaurant in Chicago:
"In addition to actually greeting customers as they come in," says Mason, "I'm running between the front of the house, where we have one system, and the back of the house, where we have another system, entering redundant data from one into the other. I'm just managing the mess that is this technology infrastructure for the business."
What is the head of a high-profile company doing working as a maitre d'? Learning to understand his customers. In theory, the experience will let him better tune Groupon's activities so that both his company and his clients' businesses do well--because success for Groupon's clients means they are more likely to run more Groupon promotions, reducing the expense of acquiring new customers.
But by closely studying his customers, Mason also has a chance to uncover another potential business for Groupon. He wants to offer local business owners a software infrastructure. Bloomberg Businessweek again:
Mason envisions consumers using Groupon as a kind of Yellow Pages to search for new ideas on where to dine or where to find the lowest prices offered by thousands of local businesses. Merchants would use the system not only as a form of advertising but also as a touch point for every sale they ring up and a hook for bringing customers back.
Maybe it will help Groupon diversify its revenue at a time when consumers may be cooling to its current model. Maybe not. But the principle of living, in one sense or another, with the customer is an important one. Your company's possibilities completely depend on what customers want, need, and do. The better you understand them, the better you can run your business.
That might mean going to work for a client-type business. It might mean spending time in the areas your customers live and work, or even taking up activities that customers enjoy. The closer you understand how those people think and feel, the more intelligently you can approach them, and financial success.
ERIK SHERMAN | Columnist
Erik Sherman's work has appeared in such publications as The Wall Street Journal, The New York Times Magazine, and Fortune. He also blogs for CBS MoneyWatch.