Groupon Founder's Next Big Plan: Audio Walking Tours

Fired by his board, Groupon’s co-founder has a new pitch

Andrew Mason
Photograph by Aaron Wojack for Bloomberg Businessweek
Andrew Mason is walking with a reporter amid the seagulls on San Francisco’s Fisherman’s Wharf, using his iPhone to play an audio walking tour. As he approaches the giant hoists with which local anglers move their daily catch to shore, the voice of a local fisherman named Candy pipes up on the recording to describe the scene ahead: “If you see any boats unloading, look for sea lions hanging nearby, waiting for the fish receivers to throw them scraps.” The recording is one of the offerings from Mason’s latest startup, Detour, which he is trying to build into a central repository for a new kind of GPS-based neighborhood walking tour. The guided-tour industry brings in tens of billions a year, so it may actually be a big deal—if it works. “People have an enormous hunger to have really compelling experiences in their cities,” Mason says. Then a seagull poops on his head.

For anyone looking to describe Mason’s last few years, the moment offers an irresistible opportunity for metaphor. The 34-year-old founded and served as chief executive officer of Groupon, the daily-deals site that came out of nowhere in late 2008 and quickly made a name for itself during some of the grimmest days of the recession. Things at Groupon turned sour soon after the company’s blockbuster initial public offering in 2011, and the board fired Mason in February 2013 amid a string of quarterly losses and a cratering share price. Detour isn’t necessarily a bid for redemption; Mason left Groupon worth more than $400 million and doesn’t need to care what anyone thinks of him. Yet it’s likely to be one of the most-watched comeback attempts in recent Silicon Valley history.

Groupon set up shop in Chicago, where Mason majored in music at Northwestern University. He graduated in 2003, and by 2006 was developing software for Groupon’s seed investor, Eric Lefkofsky. Groupon initially appealed to consumers by persuading restaurants and other small businesses to sell unused, off-hours capacity at a steep discount. Punchy daily e-mails helped build an audience of millions of deal seekers, and Groupon was soon among the fastest-growing companies ever. In 2010, Mason famously rejected a $6 billion buyout offer from Google.

July 30 (Bloomberg) -- Bloomberg Businessweek’s Brad Stone reports on former Groupon CEO Andrew Mason’s GPS-based audio walking tour project. Stone speaks on “Bloomberg West.” (Source: Bloomberg)

The coupon site—and Mason—soon became better known for missteps. In 2011, Groupon ran a Super Bowl ad viewed as insulting to various charities, and pre-initial public offering accounting irregularities attracted the attention of the Securities and Exchange Commission. Perhaps most important, the company has never been able to turn a quarterly profit. Its share price, more than $26 at the close of its IPO, hovers below $7, leaving its market capitalization at about $4 billion. “The things Andrew and Groupon did really well was get small businesses engaged, which was not insignificant,” says Rocky Agrawal, an analyst, short seller, and frequent critic of the company during its early years. “The downside was that they got those businesses engaged in a business model that didn’t really work. We saw how quickly it collapsed.”

In conversation, Mason is modest about his accomplishments and quick to point out his shortcomings. “I blame everything on myself,” he says of the company’s troubles during his tenure, adding that the biggest mistake was going public, which he describes as “a hazing process for introducing you to the club of corporate douchery.” Groupon, he says, staged an IPO too early: “We had a lot of messiness that I don’t think is that uncommon at companies that go from $450 million in revenue one year to $5 billion the next.” Trying to keep up with that growth in a public setting “was my dumb decision.”

He’s more judicious with details of his firing and his thoughts about the company since his departure. Asked what he thinks of Lefkofsky, who chaired the board while Mason was CEO and has now taken his place, he turns facetious (“We are best friends. Our kids hang out every weekend. We fly there, they fly here. …”) and then says: “I don’t want to talk s-‍-‍- about people.” Asked whether he’s proud of Groupon now, he pauses for a while, then says he is although he regrets not doing more to counter the notion that the company ends up hurting small business. “By and large, businesses continue to work with them,” he notes. Groupon spokesman Nicholas Halliwell wouldn’t comment on Mason’s exit, saying, “We wish Andrew all the best with his new endeavor.”

Mason calls his personal wealth absurd and says of the outsize payouts to many startup founders, “None of us deserve any of this.” After leaving Groupon, he took some time to reset. He checked into a weight-loss camp, shedding the first few of an eventual 30 pounds. He and his wife spent a month traveling in Southeast Asia without their phones or computers, then moved to San Francisco. There, Mason cut a rock album, Hardly Workin’, that may or may not have been intended as a joke. With a smile, he earnestly calls it “the best thing I’ve ever done” and says he listens to it once a month while exercising.

Mason and Lerner, co-founders of Detour
Photograph by Aaron Wojack for Bloomberg Businessweek

In November, Mason started Detour with Yishai Lerner, Groupon’s former vice president of mobile engineering. He says the inspiration was a trip to Rome, where he and his wife wandered old ruins listening to a walking tour on their iPod, forced to share a pair of earbuds. Detour’s technology allows people walking together to listen on their respective phones while keeping the tour synchronized. Beyond the history of landmarks, Mason imagines a marketplace of tours that are variously informational, historical, or akin to scavenger hunts. He’s invested $3 million of his own money in the company, which began a limited testing period on Wednesday morning with several well-produced walking and driving tours through the Bay Area. In a trip through San Francisco’s Tenderloin district, former Grateful Dead lyricist John Perry Barlow talks about his favorite haunts and offers random thoughts about the changing character of the city. Connecting Detour to the phone’s GPS creates some extraordinary moments. “That’s Chester behind the counter,” Barlow’s voice announces when the tour enters a coffee shop. (Indeed it is.) “Say hi to him for me.”

Next year, Mason says, he hopes to open up Detour to outsiders who want to create their own tours. The company will charge users $5 to $10 to download a walking tour to their phones, splitting the fee with contributors. (For now, the tours are free.) “Andrew sees a potential to let people be in someone else’s shoes for an hour,” says Stephan Crasneanscki, founder of SoundWalk, a New York company that makes audio guides and is working with Detour. Still, he acknowledges, “Many audio-tour companies have tried to redo classic tour guide as apps and no one has succeeded.”

If it seems a bit of a leap, Mason says Detour’s mission is similar to Groupon’s at its most basic level. “Groupon was a way to get people out of the house,” he says after wiping bird droppings out of his hair with his sweatshirt. “This is also a company where success is not measured by the time we get people to stare at a screen.”

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