According to the payout statements Jason was also one of the folks who took money out in the last funding round to the tune of 500k (which seems like a pittance all things considered).
I wonder how much of a ding this will make in his credibility among bootstrapped entrepreneurs in general. It's hard to talk down something and have your thumb in the pie at the same time.
Some facts here before things get a bit out of control:
The S-1 speaks for itself.
Back in mid-late 2009 Andrew Mason asked me to be on the Groupon board of directors. He wanted my opinions and advice on product development, design, copywriting, software development, and user experience. Andrew (and Brad and Eric) know where I stand on building bootstrapped, profitable businesses. I still stand there. I wasn't asked to be on the board to give them financial advice.
I agreed to be on the board. I like Andrew a lot and I was very happy to help him. I had never been on a board before so I saw it as a great learning experience for me as well.
Groupon compensated me for my involvement with options.
A few months ago when Groupon took a big round, I was asked if I would like to sell some of my shares. I said yes. That sale is listed in the S-1. I still have more shares. I don't see any problem morally or ethically with selling shares that I was granted as part of my involvement with the board. I owned something, someone offered to buy it, and I sold it.
I was asked to leave the board of directors in January of 2011. I serve as an advisor now. Whenever Andrew asks me for product, design, or writing advice, I'm happy to help.
I've never invested my own money in Groupon or any other private company. It's not that I wouldn't invest in a private company, it's that I haven't.
Those are the simple facts.
As for my credibility, I don't see how any of this is relevant. You can make up your own mind about that. I believe today what I've always believed - net profits rule, bootstrapping is the way to start a business, and spending less than you earn is the only way to have a healthy relationship with money.
As for DHH's opinions, they are his own. I may or may not share them, but we're both grown ups and we respect each other no matter what.
Hi; I don't know you or Mr. Mason, and wasn't intending to imply that you were doing anything immoral or unethical. Hell, if I had the opportunities and circumstances that Mr. Mason has (for example), I might chart the same path.
I was just speculating that these developments may have a nonzero impact on your brand, PR, image, etc. You've talked a lot about the 'bootstrap vs. VC' topic; insofar as people perceive that topic to be dichotomous and you as being "all-in" on one side of it, any involvement with the other side may create some cognitive dissonance.
Maybe I shouldn't speculate about people's personal brands and such (something I can't say I do often anyway), just so I don't rouse any sleeping bears, as it were. :-)
Did you ever feel compelled to voice your opinion after you saw the data that indicated Groupon was spending more than they earned? Why did they ask you to leave the board?
Thanks for sharing what you have. It's been said before, but I'll say it again: HN is a remarkable place when intelligent people are having open conversations about the news that directly involves their own business.
I was never shy about my opinion. A good board is made up of people with differing opinions. The worst boards are made up of rubber stamps.
And of course a board is made up of people with different strengths and experiences. My experience is not in massive growth, rapid growth, acquisitions, companies with thousands of people, etc. There were and are people on the board that are very experienced in those matters.
My experience is in product design and development. My advice on those matters was my main contribution to the board and the company. I continue to advise, when asked, on product design.
I cannot wonder thinking..if you were a board member, you had a duty of care to know all affairs of the company (within reason), especially under good corporate governance. If as DHH is implying that Groupon is misleading potential investors with CSOI (ok, they may have used this metric after you left - but I am just trying to make a point here), and if you believed this is incorrect, then you would still have a duty to point out as a board member, even if your responsibility is purely on product design. I thought this is how it works on large boards. Is this not the case in the USA?
I have made the assumption here that if DHH saw it, so would you! Of course, I could be completely wrong with this assumption.
I have only been on the board of small companies, so do not have any experience of how large companies split responsibilities.
Would be interesting to know your thoughts on this subject - this is not meant as a complain of any sort, just trying to understand how large corporates behaves with corporate governance.
I believe today what I've always believed - net profits rule, bootstrapping is the way to start a business, and spending less than you earn is the only way to have a healthy relationship with money.
Don't you also have a rule about not growing beyond a certain number of employees?
No we don't have a rule about not growing beyond a certain number of employees. We believe in keeping things as small as possible. Currently for us that's a bit under 30, but if as small as possible means 40, then we'll be at 40. We are opposed to hiring more people than we need.
Maybe I'm just not understanding something here, but aren't people on the boards of directors of companies supposed to be committed to the success of that company, not simply providing advice? Sounds like you were never very committed.
Of course I want them to succeed - that's why I offered to help them with product design. I wouldn't spend my time helping someone if I didn't want them to succeed.
I didn't say you didn't want them to succeed, I said it doesn't seem like you were very committed to seeing them succeed. Those are two very different things. I want all sorts of things to succeed that I am not committed to at all.
The bigger concern is why you'd choose to get involved with the Lightbank guys knowing their record in Chicago. They led past companies to bankruptcy. They pumped up InnerWorkings and watched its value tank after enriching themselves. It's just disappointing that you'd let them use your good name to build value in another underperforming company.
As long as DHH was not part of the GroupOn advisory panel, he is free to air his opinion. Also based on his tweets, he was expecting them to show a profit but was shocked to find that they were losing money. It's fine to change your opinion based on the hard numbers.
But then these opinions are by DHH and not Fried. And based on what I know about DHH from his online persona, I don't think he will not air his opinions just because Jason was part of advisory panel of a company.
I didn't say DHH should or should not do anything. I was (perhaps too obliquely) thinking aloud about how the image of Mr. Fried (esp. re: VC vs. bootstrapping) meshes with his work with Groupon and their strategies, totally unrelated to whatever opinions or remarks either he or DHH make about Groupon.
its not a shock though.. as I understand it Groupon wants to eliminate competition by making it so costly to get customers that others give up ti than can address rest of the inefficiencies and make profits at a slower revenue growth rate.
Jason mentioned that he didn't agree with everything Groupon was doing. Besides, I see 37signals as just favoring bootstrapping and not some hardcore anti venture capital crusaders.