I love Silicon Valley. Love almost everything about the technology ecosystem. I grew up in New Jersey watching with extreme envy and wonderment as the ‘95-01 boom-bust played out. Like most, I also share a certain reverence for Steve Jobs. Unfortunately, the Valley tends to indulge in one of the less enviable Jobsian traits: the shithead/hero rollercoaster. People and companies are always one or the other. We glorify when it’s smooth sailing and bash mercilessly during turbulence.

Groupon has taken the entire ride. From wonder boy CEO and “fastest growing company ever” to becoming the evil company out to defraud merchants/investors. Now that I’m no longer directly affiliated with the company (other than being a locked-up shareholder), I thought it would be nice to provide a little balance. There’s plenty that’s been said on the negative side of the ledger — no doubt inspired by a righteous desire to protect the little-guy merchant and investor and not at all fueled by a desire for twitter followers or endless TV appearances.

Outside of karmic balance, I also care about the company itself and for my friends there. A recent occurrence is that I’m also tired of conveying much of this content in response to questions. Last week alone, I got 5 inbounds from people who could potentially have a relationship to Groupon and who want to know “just how bad it is inside the company.” These conversations don’t scale, and as I dug deeper, I saw just how loud and effective the shrill cries of the critic have become. For the record, I’m not trying to lay out a pro-Groupon case here. That’s because I really don’t care/want you to buy shares, love the company, go work there, or whatever. I just want there to be another signal amongst the litany of noise on the company for intelligent people who want to form their own judgements.

Groupon is a strange company. It just is. Start with Andrew, a very charismatic, quirky CEO. Then take the unusual nature of their first investors (vs just investing, they become co-founders and partner with you) and their past business history. Corporate employee count and revenue base basically multiplied like rabbits. The international growth under the leadership of the infamous Samwer brothers was unprecedented. The massive fundraising rounds with large insider sales by early investors. Turning down a $4-6B acquisition after only 2 years in business. The very model had a simplistic appearance that appeared to lack a defensible element. The newly created accounting terms invented to share key business metrics with the outside world. The incredibly confounding Super Bowl ads that absolutely no one seemed to like. A COO, who in less than six months, made a Google-Groupon sandwich. Any one of these plotlines are interesting enough alone. Together? A strange, fascinating company.

It’s a Rorschach test, really. You could pretty much see anything you want if you look hard enough. Currently the ink-blot looks sinister (much self-inflicted) to pundits, a picture worthy of scorn and suspicion. While not actively seeking to change opinions, I do hope to provide additional context. Since context changes perception, that inkblot might look a little different by the end.

So here are some things that are no less true than the negatives, but get much less attention:

1) Groupon has put together a fantastically well-credentialed, experienced management team. The negative press constructs a narrative of a shortsighted enterprise hell-bent on ripping-off merchants and investors alike. The biggest problem with this contention, though, is the people. They’ve not only knowingly signed up to join the company, but they play also play a direct role in steering it. Groupon isn’t some faceless Borg ship; it’s full of Picard’s and Riker’s. It is gospel in the Valley that people and culture are the most critical component to a company because they mostly determine outcomes. If one accepts this premise, what follows should matter heavily.

Jason Child, CFO: Jason is a veteran of Amazon and basically ran international finance there. His resume (but, really, resumes are dead, I mean LinkedIn profile) speaks for itself, but first-hand he’s one of the smartest, most thoughtful executives I’ve ever worked with. With the recent accounting restatement, there is a lot of, understandable, apprehension over financial controls/situation. Jason is clearly in the spotlight as head of finance*, but for what its worth, I trust the guy completely. He’s got his work cut out for him, but if the job is doable, he’ll get it done.

Rich Williams, SVP Marketing: Rich also worked at Amazon running worldwide customer acquisition, etc. Other than my close friend Gedioen, Rich is the other person I take in a marketing draft to save my life. He got in the weeds of user acquisition/conversion numbers and also was a clear voice on the brand challenges.

David Schellhase, General Counsel: David was Counsel for Benioff at Salesforce for 9 years. Yeah, that pretty much says it all. David’s a badass. A man of few words, but incredible presence he immediately got to work on all things litigation and compliance.

Skipp Schipper, SVP HR: Skipp (or “Brian” as, randomly, I just discovered is his first name according to his LI profile) was the global head of HR at Cisco. Yes, that Cisco Systems. Trying to be an agile Internet company while you have 10K+ employees spread out all over the globe is intense. It kind of helps that Cisco has 70K+ employees all over the globe, and Skipp has been there, done that.

Jeff Holden, SVP Products: Sometimes things are so interesting, that you only need one sentence: Jeff worked with Jeff BEZOS at DE Shaw, then joined Amazon in 1997 (!), and ran all of consumer for Amazon before founding his company, which was eventually acqui-hired by Groupon.

There is, of course, much other great talent. There’s Hoyoung Pak, who is, not just an operations ninja, but literally, an actual ninja. He joined as I was leaving, but I was struck by his thoughtful, calm discipline in turning Groupon’s far-flung (and often undisciplined) operations into something approaching world-class. The list goes on… Aaron, former-roommate Jason, Brian, Mihir… Look at their backgrounds and think about whether they’d join or be party to a willful scam. Or if you were a company that was basically imploding would you hire such smart, powerful, influential people or instead more middling talents who you could hide the truth from?

2) Groupon has been building a ton of lower-margin, high-value tools for merchants. Groupon Scheduler, so merchants can more efficiently schedule their appointments not only from deals, but everyday business. Groupon Rewards, a loyalty program to help drive repeat business from deals and otherwise. Groupon Now! to drive demand during off-peak times. The pattern here is that whether you use Daily Deals or not, these are tools to help your business. Daily Deals is the golden egg with huge margins for Groupon unlikely to be found in future offerings. That clearly doesn’t scare Groupon off from trying to meet merchant needs because being the ecosystem for local business requires massive scale and providing massive value. These are small steps in trying to deliver that. Success here unlocks massive value for Groupon (and its merchant partners), which they are clearly demonstrating they understand. Then there are the massive amounts of talent acquisitions (by Groupon’s incredible Corp Dev staff led by Jason and close friend Tom) that are no doubt building the next generation of great products.

3) Groupon has massive ongoing merchant relationships. If Groupon was such an evil company and so bad for local merchants – why are tens of thousands of these local businesses still actively working with them? As a national populace, we lionize small business owners. Do we only believe that they don’t know what’s in their best interest when it comes to the “evil Groupon”? That’s a bit insane. In every major city in America, a large number of very prominent local fixtures have repeatedly chosen to feature their businesses on Groupon. Are we really supposed to believe that these businesses are actively working against their self-interest? If you do, then I actively encourage you to embrace President Barack Obama’s radical socialist agenda for America** to help save them from themselves. Or if you believe that these businesses have no choice but to run a Groupon or face insolvency (wait, what?) then by that logic isn’t Groupon doing everyone a favor by helping these businesses bridge this cataclysmic chasm? It’s hard to divine any kind of logic here. The numbers and facts of repeat, free-market choices by local merchants defy all cohesive argument.

Now two myths/misconceptions:

1) Groupon is an awful, easily replicable business that is toast once “the real” competition arrives. This is the meme that refuses to die, but should, if only to give this amazing Hillary Tumblr the room it needs to thrive. But the clear consensus was that Groupon would die shortly from the clones because there was no moat.*** To be honest, when I joined Groupon this was the point that I was most ill at ease about. But when you take a breath, and look at reality, what’s happened? Yelp, probably the strongest brand in local merchant discovery, abandoned the deals business. Facebook, the stickiest web property in history, shut down shop quite quickly. Google has, it seems, gained zero traction. LivingSocial after surging has faded a bit (but still a great company). Amazon is still sorting things out, but clearly hasn’t cracked the nut. The hundreds of local clones have mostly gone quietly into the cold night. Those are facts, not theory. Finally, as critics love to say that the very “daily deal” model with its discounting and revenue splits is disgusting and evil (!). It’s apparently predatory. That must be why two public companies with valuations in the twelve digits, Amazon and Google, seem to be stumbling all over themselves doing their darndest right now to try and exactly replicate it. Yes, clearly it is intrinsically evil (bad for local merchants!) and has no barriers to entry (will crumble as soon as anyone of substance enters!). Right.

2) Groupon is doomed! – The critics were right, just look at its stock price and all the negative press. GRPN is admittedly trading at a disappointing $13ish. That earnings restatement hurt****, no doubt. Of course those who have made a PR career off Groupon are using all of this to declare victory, repeatedly pat themselves on the back, and let everyone know that they’ve “been right all along.” Unfortunately just looking at the stock price ignores history. I’ve been lucky enough to have worked at two pre-IPO companies. LinkedIn and, obviously, Groupon. LinkedIn traded to a high of 120+ and dropped to the mid-50’s. This meant absolutely nothing about LNKD’s core business. Nothing. My point is just that stock performance doesn’t make any kind of demonstrable point. Signal? Sure. Point? No.

Second, just because the torrent of current herd opinion is against GRPN doesn’t turn it into truth. Why? How about this bit from the WSJ:

“What would you do with a 3-year-old company that has never turned an annual profit, is on track to lose a quarter billion dollars and whose recent SEC filings warn that its services might be used for money laundering and financial fraud? If you were the managers and venture capitalists…, you’d take it public. And that is what they hope to do in an $80 million offering that will test the limits of investor tolerance and financial market gullibility. …(Market N)eeds…as much as it does an anthrax epidemic.”

Written about Groupon? Nope. PayPal. 10 years ago. What else? Well, PayPal paid its users $10 to join, $10 to existing members for a referral. This led Reid to once remark that they would actually decrease their burn rate, if they switched to throwing $100 bills from the roof. Yet, as uncomfortable as it was, it was a high-risk, high-reward strategy to winning a massive market. I’m not saying Groupon is PayPal. I’m not saying Groupon is LinkedIn. Those are two phenomenal businesses with the most precious of all advantages: network effects. While being the plumbing for local merchants seems network-y, ultimately we’ll have to wait and see. Regardless, we need to stop, breathe, and look around. There are clearly parallels.

At this point, you’ve been with me for 4 hours reading this. We’ve exited the part where I’ve tried to help you understand a bit about the company (and now I’ll try to stop typing because my fingers are cramping). If you’ve come this far, you might be wondering about my time with Groupon. I led the merchant group. That was basically everything non-sales that involved a merchant. This meant I worked on merchant marketing programs, new merchant tools and delivered sanctimonious speeches to the entire salesforce about how important our merchants were to us. It was an incredible, great role, surrounded by amazing people at a very important time in the company’s history. I love the people and my time there. Why did I leave? Part of it was that coming off my 18-month congressional sojourn, I wasn’t sure I wanted to commit myself to Chicago/a large company and from the first introduction from Reid to Andrew we structured as temporary/interim leadership. When I joined, neither Rich, Jeff, or Hoyoung (all mentioned above) were a part of Groupon. All of them quickly grew into invaluable partners and functional mentors once they did join though. They innately grasped the importance of merchants to our long-term success. Late summer, I brought to Andrew the idea of elevating the Merchant role or splintering the group functionally to these various heads, and he chose the latter. It’s hard for me to argue with his choice given how talented the team is. So folks who worked on my team in product, marketing, and operations spun out into these various heads. Always nursing a certain international wanderlust, I debated a role that was offered to move to Dublin to play (probably not so nicely) with the Samwers. Ultimately, I decided that I had already learned a ridiculous amount and was sliding down the curve of diminishing returns in learning and skills, and wanted to move on to what was next. Today when friends see all the negative news about the company, they expect that I’d be happy I left. On the contrary I often look back wistfully, part of me misses Groupon and wishes I were still there side-by-side with my friends.

Last, this post is sort of intentionally obnoxiously long. Why? Because I’d really rather not write another. I don’t aspire to be the “Groupon guy”. And so, to recap, I’m not trying to sell you on Groupon.***** I just want folks to take a breath and form their own opinion. The innate herd mentality combined with the echo chamber that is Silicon Valley can be a doozy. But after reading this, maybe a few of might think that Groupon has actually, maybe, done one or two things right in their lifetime. You might even think that they, in fact, have some chance at pulling off a veritable moon landing of becoming the plumbing of local commerce. There are lots of worthy companies out there: Square, Google, Amazon, PayPal, LivingSocial, Facebook. They all have some kind of shot at local commerce. But, it’s just not rational — just not fair, not an impartial reading of the facts, to say that Groupon isn’t also in that conversation.

We can spend our time hating on Instagram for selling at a $1B w/14 employees & no revenue, and Groupon for its variety of sins, or we can choose to live up to our individual human potential, and dare to try and be great. It’s much easier (and more fun) to judge people, but I think Roosevelt was on to something:

It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.

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* The two people most under fire are Jason and Andrew. I understand. I don’t really bring up Andrew in this post. It’s a shame that very few people in the Valley have gotten to know Andrew. He’s one of the most talented people I’ve ever come across. Most impressive? He’s been on a massive up/down ride and he’s always been almost inhumanly even-keeled about it. Equally impressive is how fast he learns. I heard from someone who was there in “The Point” days about how much Andrew still had to learn about business/management then. His instincts, and how fast he learned, was absolutely amazing. He’s not perfect (when he gets a pet project in his teeth, he can’t let it go), but NO ONE is. What he is: ridiculously talented. When I found a company (now or years in the future), I’ll gladly take Andrew’s money and bizarrely creative brain. For all the shit he takes, you should especially worry if Andrew isn’t running Groupon.

**For those of you about to freak out: relax. I ran as a Democrat for Congress in 2010. So: I kid, I kid.

*** Bill Gurley talks about moats in one of the best ever posts by a VC when he calls out that not all revenue is created equal. Though I agree w/his post completely, though we have a general disagreement on Groupon.

****But what does it say about the company? Probably that they went public too soon. This is a totally new category that has no precedent, no history for modeling. As customer cohorts age, and as they experiment with new deal categories and types, refund rates could have pretty large changes. This doesn’t do well for predictability, forecasting, or investor comfort, but that’s part of the deal for new businesses. I don’t believe that has anything to do with accounting shenanigans or other kind of scary stuff. No doubt internal controls need work. It takes time, and for the longest time, Groupon was a rocket ship where the company was just trying to hang on internally and with t he international sprawl, even harder. Internal controls are critical, the company knows that (see management profiles) and now must play catch up.

*****In fact, I told my mom not to buy Groupon. She’s retired, and Groupon is just too high-risk, high-reward. They could win local commerce and have a market cap that’s easily 2-3 times what it is today or end up with one that’s well below where it is. And no doubt, just being public creates more noise and scrutiny (why I’m writing this) and the pressure for short-term profits. Groupon’s success, in my opinion, will be entirely determined by its ability to prioritize building long-term relationships and value for merchants. I’m not the smartest, but I’m guessing that some amount of this comes directly at the expense of short-term revenue. In fact I’m more concerned about the company over-optimizing for short-term at the expense of long-term — in the forms of focusing on quarterly earnings.The stock market is an awful insane, childish short-term optimizing machine, so just the fact that the company is public is something I dislike.

Special thanks to Ben Casnocha, Avichal Garg, and Andrew Chen for reading and giving feedback.