reDesign

June 8, 2012

Would Rocky Agrawal ever work for Groupon?

Filed under: daily deals, groupon — Rakesh Agrawal @ 1:00 pm

This post is an excerpt from a forthcoming book on Groupon.

It’s a question I’m asked quite often by friends, family, journalists and once by a Groupon employee.

Apparently, it’s plausible that I would. When I posted on April Fool’s Day that I was joining Groupon (a day after a scathing analysis of Groupon’s earnings restatement), quite a few people believed it. I had several reporters contact me to ask me for interviews on my new job.

What made it believable is that most of the post was actually true. Aside from the part about, um, actually joining Groupon:

  • I’ve spent my entire career in product management and business development. It’s my true passion.
  • I’ve also spent much of my career on local products.

My initial and ongoing motivation for writing about Groupon and LivingSocial (and increasingly, Yelp), is to help small businesses make better decisions. By analyzing these business models, I hoped that SMBs who do even the most basic due diligence could find resources that would help them make a better informed decision on how to spend their hard-earned dollars.

I was chatting with a VC the other day about how wave after wave of local sites have raped small businesses, promising internet magic but delivering dubious value.

As I’ve said repeatedly, Groupon is not always a terrible thing for merchants. There are some cases when it makes sense. (Yelp, on the other hand, is always a bad buy.) Some of Groupon’s newer products actually make sense for small businesses.

One thing that I’ve heard from several sources is that Andrew Mason actually cares about small businesses. When he hears that a deal has gone bad or that a business lost a lot of money on a Groupon, he pulls out the checkbook and tries to make it right. Not in the “please don’t sue us and run to the press” way, but because he genuinely wants to make it right. Even Jessie Burke of Posie’s Cafe told me this. (To date, the company has not allowed me to speak with Andrew Mason, so I can’t offer a personal assessment.)

Over the last year, I’ve been approached by a number of companies that are looking to tackle the local space, from startups to the giant internet companies, about joining their teams to help small businesses. If I thought a company had a credible plan for helping small businesses really use the power and efficiency of the Internet, I would consider joining them.

Even if that company were Groupon. I look toward the future, not the past.

But I would have to believe that Groupon genuinely wanted my input and I would have a role where I could drive products in a way that would work for small businesses. If it was just about silencing a vocal critic, that wouldn’t be interesting.

Joining Groupon would obviously carry a lot of brand risk for me. Based on my April Fool’s Day joke, I know how a lot of people would feel about it. Many were puzzled, some called me a traitor and many offered their congratulations.

My friend Dave wrote on my Facebook wall:

Congratulations but I have to say I’m a bit disappointed. Here’s why, businesses that build their empires based on questionable/unethical business practices that ruin other businesses (especially small and local) should not be rewarded later for changing their practices after they’ve been exposed. I’d rather they go belly up but short of that, I hope you can help them stop ruining SMBs.

My friend Walt wrote:

Wow! Rocky life is full of surprises – this is a big one! The are very fortunate to have you!

And J.T. wrote:

I recall a lot of us thinking that their best move would be to hire you when last we met.

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2 Comments »

  1. did groupon just lose their international head?

    Comment by tom — September 28, 2012 @ 4:47 am

  2. Hi Rakesh, great to read your analysis on Groupon, I stumbled upon these while doing research on small business marketing. I understood your analysis of Groupon (and I might have misunderstood) as being an intermediary that does not create as much value as much as it takes from the merchants. What happens is merely a transfer of value from the merchant to the customer and Groupon – value shifting instead of value creation. Marketing 101 says that in order for any effort to be successful, you have to create value and then capture as much of it as you can. Clearly, that does not seem to be the case with Groupon. I wonder if the newfound love of marketing type initiatives (e.g. daily deals) and talks of analytics and data-driven actions should really be as important to small businesses as big businesses. Afterall, if you are a small business in a small community, how much marketing do you really need and how much more analytics do you really need to understand a few hundred customers that may visit your store daily? At present, it seems that media frenzy and peer pressure is causing small merchants to adopt excessive marketing where it may be totally unnecessary.

    Lastly, it was great to discover your blog and I hope you’d share your thoughts on bellycard and other such digital loyalty management programs that are on the rise, given your interest and expertise in small businesses.

    Comment by Tahsin Ali — January 9, 2013 @ 1:00 am


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