Groupon gang: Learn more about the 4 behind the firm
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(Crain's) — How did Groupon's founder, president and two early investors set the startup on the road toward explosive growth? Check out our profiles of Andrew Mason, Rob Solomon, Brad Keywell and Eric Lefkofsky.
Founder Mason's roots in political, collective-action sites
Many Chicagoans know that the 30-year-old Groupon Inc. founder dropped out of graduate studies at the University of Chicago to pursue his idea. But his full back story is more complicated—and more interesting.
Mr. Mason, born in the Pittsburgh suburb of Mount Lebanon, Pa., showed an early inclination toward entrepreneurship (and nonconformist thought). In high school he started a Saturday morning bagel delivery service and soon branched out to selling candy he purchased in bulk at a Costco warehouse store.
A pianist and erstwhile garage band member, he arrived in Evanston in 1999 to attend Northwestern University as a music major. A line in his professional biography says the degree's uselessness served as “a chief inspiration to not be useless” in life. Music also may have had a more direct impact on Groupon's success: “I think being in a band makes you learn how to disagree with people and hold onto a kind of uncompromising belief,” Mr. Mason told VentureBeat.com in May.
Post-graduation, Mr. Mason pursued his musical passion by working weekends at Electrical Audio, a local recording studio owned by Steve Albini, while holding a computer programming day job at Chicago-based InnerWorkings Inc., a printing and promotional company founded by prominent local entrepreneur Eric Lefkofsky.
While there, he developed PolicyTree.org, a site that sought to simplify political debate about the Iraq war by presenting various policy perspectives in flow-chart form. This earned him a scholarship to the University of Chicago's Harris School of Public Policy in 2006. A mere three months later, though, he dropped out when Mr. Lefkofsky offered him $1 million in angel capital to keep working on the site.
After struggling to cancel a cell phone contract later that year, Mr. Mason became interested in collective action. In an early interview with a tech blog, he attributes the basic Groupon concept to “an overactive sense of vengeance,” wondering, “What if we just got everyone on the web who had this problem to refuse to abide by (cell phone companies') terms and just basically stop paying their bill?”
Thus began ThePoint.com, a group-powered site whose goal was “solving all the world's unsolvable ideas.” In an oft-invoked story that demonstrates Mr. Mason's quirky personality, he initiated a campaign on the Point to raise $10 billion to enclose Chicago in a dome that would shield the city from cold weather. (The plan raised $250,000 in pledges, but because it fell short of it goal—or didn't “tip,” in Groupon parlance—no one actually ponied up.)
But Mr. Lefkofsky eventually began pressuring the Point to make money, and Mr. Mason noted that people were using the site to organize discounted group purchases. Groupon launched in November 2008, became the fastest-growing web company in history, according to Forbes magazine, rising from seven employees to 1,000 in Chicago and more than 3,000 worldwide.
Mr. Mason lives in Ukrainian Village with his fiancée, singer/songwriter Jenny Gillespie—but not with the 20 cats his bio claims. He told CNBC he added the line because “most CEOs will make up stuff about themselves to sound way smarter and cooler . . . (so) I decided to set the bar very low and make up lies about myself that make me sound lame.”
— Brigid Sweeney
President Solomon combines e-commerce, social-media savvy
When Groupon Inc. snared Rob Solomon last March as president and chief operating officer, it was the kind of hookup only the social shopping site could pull off.
After all, it had to convince the Silicon Valley insider “to do a crazy thing,” in Groupon CEO Andrew Mason's words, like move from the Left Coast to the Third Coast.
Much of the Chicago-based mass coupon publisher's growth rests on its ability to scale up its platform of highly personalized deals quickly without flaming out the way so many dot-coms have. In Mr. Solomon, a former Yahoo Inc. executive who came aboard as the business grew beyond the day-to-day control of Mr. Mason, Groupon got the killer combination of big-time e-commerce experience and social and venture capital sensibilities.
Since hiring on, Mr. Solomon, who is in his 40s, has launched Groupon's first national deal with San Francisco-based Gap Inc., which sold 445,000 coupons valued at $11 million, and struck a global distribution deal across 300 markets with Yahoo. Mr. Solomon told Crain's sister publication Advertising Age to expect global promotions with “major multinational brands.”
He's also overseen hiring that's lifted the company's headcount to 1,000 in Chicago and more than 3,000 worldwide. The site started with seven two years ago.
Before coming to Chicago, Mr. Solomon was a venture partner at Technology Crossover Ventures, a Palo Alto, Calif., fund with $8 billion in investments. Among those are 45 public offerings and 30 sales or mergers, such as the $200 million all-cash combination of travel websites Kayak and SideStep, where Mr. Solomon had been CEO.
He has had plenty of experience with startups. Most of his earlier positions were for stints of a year or two, including product management and marketing jobs at Electronic Arts Inc., Cendant Corp. and Zaplet Inc.
Later, he spent six years with Sunnyvale, Calif.-based Yahoo, where his last positions were senior vice-president of commerce and vice-president and general manager of Yahoo Shopping Group. He left in early 2006.
He also sits on the boards of several VC-funded startups, including vacation rental site HomeAway.com of Austin, Texas, and online automotive publisher High Gear Media of Palo Alto. He also sits on the advisory board of social travel network Where I've Been, which recently received funding from Lightbank, the Chicago investment fund owned by Groupon's other co-founders, Eric Lefkofsky and Brad Keywell.
At the University of California-Berkeley, he earned a bachelor's degree in history in 1988 and was an All-American water polo player.
— Kate MacArthur
Initial investor Keywell set startup on growth path
Brad Keywell has followed an almost identical path as his Groupon Inc. investment partner, Eric Lefkofsky. They're both 41 years old, grew up in Michigan, attended the University of Michigan as undergraduates and earned law degrees from its law school at the same time (1993) before going on to found a slew of technology-based consumer companies together.
While Mr. Keywell, who resides in Glencoe, now leads his own investment and advisory firm, Meadow Lake Management LLC, he still collaborates with Mr. Lefkofsky on most business moves, including the decision this year to create a new fund called Lightbank, which the partners said would funnel $10 million annually to Midwest technology entrepreneurs, especially in Chicago.
“Our formula for high-growth, high-return firms in business services has translated very well to the consumer market, and we believe there are many opportunities to further build on our skills and resources,” Mr. Keywell said in a statement announcing Lightbank.
Chicago companies they have founded together include Mediabank LLC, Echo Global Logistics Inc., InnerWorkings Inc. and Groupon. Mr. Keywell had a more prominent role as CEO in one of their only companies that flopped, software company Starbelly, which was sold to Ha-Lo Industries Inc. in 2000. Within a year, Ha-Lo wrote off the purchase and filed for bankruptcy. Like Mr. Lefkofsky, he still serves on the boards of many of the companies they founded.
Mr. Keywell did step out on his own for a while. In the early 2000s, he worked at Equity Group Investments LLC, the investment firm led by real estate mogul Sam Zell, who also received his undergraduate and law degrees from Michigan. At Equity Group, Mr. Keywell picked out investment opportunities across various industries and acted as a liaison to companies in which the Chicago firm invested.
Like Mr. Lefkofsky, he is an adjunct professor at the University of Chicago Booth School of Business, teaching two subjects he knows well, entrepreneurship and technology-based businesses. His own schooling also included a year of study at the London School of Economics.
While Mr. Lefkofsky has gravitated to writing, producing a business book on entrepreneurial innovation and regularly posting to a blog, Mr. Keywell seems to be more of a reader. On his personal website, he lists a “bookshelf” full of favorites ranging from Victor Frankl's “Man's Search for Meaning” to “Fast Food Nation” by Eric Schlosser. He also says he routinely tries to read a host of business publications. Meanwhile, his blog isn't functioning.
Bald, with a big smile and the hint of a goatee in a photo on his website, Mr. Keywell has focused his charitable contributions on health care and education causes. He's a trustee for the Foundation of Northshore University HealthSystem and the Imerman Angels, a network that connects cancer survivors with patients.
He also founded the Connect to the Future program in the Chicago Public Schools. The program invites professionals into sixth- through ninth-grade classrooms, where they can share their experiences with students and take questions about their education and careers.
— Lynne Marek
Founding backer Lefkofsky an entrepreneurial multitasker
Eric Lefkofsky hasn't taken life lightly in his first 41 years. While he's now spinning into the spotlight as an early backer of Groupon Inc., he's also a long-time Chicago entrepreneur and venture capitalist who's founded several companies, an author, a part-time business school instructor, a blogger and a major arts benefactor.
Mr. Lefkofsky, like his business partner Brad Keywell, grew up in Michigan and earned an undergrad degree from the University of Michigan and a law degree from the University of Michigan Law School. After graduating, the duo headed to Chicago, where they founded Mediabank LLC, Echo Global Logistics Inc., InnerWorkings Inc. and Groupon, among others.
In addition to guiding Groupon through two years of explosive growth, Mr. Lefkofsky serves as a director at the other Chicago companies he started, including two publicly traded ones: InnerWorkings and Echo Global.
One startup Mr. Lefkofsky doesn't spotlight on his website is Starbelly.com Inc. He and Mr. Keywell founded the software company and sold it to Ha-Lo Industries Inc. in 2000. Within a year, Ha-Lo wrote off the purchase and filed for bankruptcy, a business demise that spawned lawsuits over the acquisition.
In March, Mr. Lefkofsky and Mr. Keywell created a new fund called Lightbank that they said in a statement would channel $10 million annually to “Midwest technology entrepreneurs who are short on capital but flush with innovative ideas.”
“Chicago is full of untapped entrepreneurial talent that just needs a little support,” Mr. Lefkofsky said at the time.
He also is president of Blue Media LLC, a Chicago-based private-equity and consulting firm focused on applied technology.
As of March, the pair had raised more than $150 million and generated more than $1.5 billion in investor returns through their ventures.
He shares his business experience with students as an adjunct professor at the University of Chicago's Booth School of Business and has been a guest professor at Northwestern University's Kellogg School of Management.
For others, there's his blog at Lefkofsky.com. In a recent posting, he tutored entrepreneurs on how to raise money for their ventures, suggesting that they seek more modest sums at first.
“When you're looking for investors early on,” Mr. Lefkofksy wrote, “don't just seek the highest valuation from people who have thrown tons of money at tons of ideas (a few of which have been homeruns). Look for partners that understand the inner workings of your business and can help you iterate your way to the right model.”
Mr. Lefkofsky laid out his view of the 21st-century entrepreneurial environment in “Accelerated Disruption: Understanding the Speed of Innovation,” published in 2007. In the book, he explained how the speed of technological advances are increasingly allowing new businesses to disrupt staid industries by offering innovation on price, service or some other function.
Aside from business, Mr. Lefkofsky has taken a serious interest in Chicago's arts and civic scene. He serves on the board of trustees for the Steppenwolf Theater Company, the Art Institute of Chicago and the Museum of Contemporary Art and was a member of the committee that devised Chicago's bid for the 2016 Olympics. In addition, he is a director at Children's Memorial Hospital.
Mr. Lefkofsky and his wife, Liz, who reside in Glencoe, also started their own Lefkofsky Foundation to focus on pediatric medical research. The organization is in memory of Ms. Lefkofsky's sister who died at age 7 of a brain tumor.
— Lynne Marek
Josh Bernoff is Senior Vice President, Idea Development at 
