Groupon's Management Secret in Two Words

Andrew Mason, founder and CEO of social-shopping site Groupon, was part of a panel discussion at Google's Chicago office last night on innovation and startups. One of the questions he was asked was to sum up his management credo in just two words. "Cultivate ownership," Mason answered. Then he told a quick story.

When Groupon was launched in Chicago in November 2008, the seven employees were "just a bunch of rascals." They included one twentysomething guy who, though "supersmart," had so little gumption that Mason thought he'd end up working at Shoney's when he was 45. But given responsibility for a specific area, the guy flourished and now manages a staff of 65.

Mason also gave a shoutout to Eric Lefkofksy as the outsider most responsible for Groupon's success. Lefkofsky is a Chicago-based serial entrepreneur who, though his Lightbank venture capital firm, was Mason's original backer and adviser.

Groupon is en fuego. It is up to 11 million subscribers, offering group coupons for restaurants and retailers in 160 cities in 22 countries. In its 20 months, Mason said, the site has saved customers $300 million with its daily deals.

It also has its own pilot fish, according to this post on WiseBread. Say you can't use your Groupon discount or you think it's worth more than you paid, you can sell it on sites such as CoupRecoup and DealsGoRound.

The discussion was organized by the Chicago Innovation Awards--Groupon was a 2009 winner--and hosted by Google, which is one of the contest's silver sponsors this year.

Michelin Restaurant Guide Comes to Chicago; Who's Next?

Michelin is becoming more American with its restaurant guides. The tire company just announced it will publish a guide in November for Chicago, its third U.S. city. (New York came first in 2005, with San Francisco the next year.) The dining directories, begun 110 years ago, are based on secret visits by a staff of 90 trained critics, a method that seems increasingly old-fashioned—and costly—as other ratings outfits from the Zagat Survey to Yelp rely on volunteers.

While Michelin executives were in Chicago to promote its latest edition, I caught up with Parmeet Grover, chief operating officer of Michelin’s Travel & Lifestyle unit in North America.

Grover does not have a gourmand’s background. He hired on with Michelin’s U.S. subsidiary in Greenville, S.C., in 1996, after receiving a PhD in engineering from Georgia Tech. He moved into his current role last year. Grover says he’s been a “foodie” from way back, however. “If you go back to Renaissance times,” he told me, “being technical doesn’t prevent one from having other interests that range quite widely,”

Here’s an edited version of our conversation:

Q: With Chicago, the guide will be in three cities in the U.S. What’s the plan for expanding further?

A: Globally, this will be our 26th city. And in the U.S. there are some large cities we’re looking at. You could imagine they’d be in the vein of the ones we’ve already done.

Q: Do you see adding another city in 2012?

A: I can’t comment on that right now.

Q: How has American cuisine changed in the last several years?

A: I think changes in American cuisine represent the changes in our society. If you look at the diversity of the country, it has increased over the last two decades. As a result, there is a lot of fusion cuisine.

But I think we may be onto another important trend, which is using a lot more natural ingredients, locally sourced ingredients. I see this even in Greenville, S.C., where my family is based.

Q: Michelin is doing things the way it’s done for more than a century, sending in trained reviewers anonymously. Aren’t you behind the times now that everybody is doing crowdsourcing?

A: In terms of the wisdom of the crowds, we respect it. But I think what we bring is another perspective that nobody else has. We are using professionals who know cuisine very, very well. What we have developed over the last 100 years is a process that’s worked very well. When we say it’s one star or two stars, whether it’s in London or Tokyo or New York or one day somewhere in Africa, it means the same thing.

Q: So that’s your advantage—you can get consistency because you know who your raters are?

A: Exactly. We are a company of engineers, so we have a process that is followed rigorously. And we never compromise.

Q: Is there any built-in bias in that training, however, that would favor a traditional French restaurant over another?

A: Not at all. I go back to something in the DNA of our company. We have five values, and I haven’t seen too many companies with this fifth value, which is respect for facts. When we go in to rate a restaurant or award the stars, it’s purely objective, based on what is in that plate, what has been cooked that day.

Q: How many times is each restaurant visited?

Ten times sometimes. And it’s not the same person. We have many different people that go, and all of the information is put into a data base and analysis is done.

Q: Your employees have been out eating in Chicago restaurants how long to get prepared for the new guide?

A: It’s been two years now. We take this very seriously.

Q: So I take it you’ve got employees in other cities that we don’t know about doing the same sort of covert operations.

A: That is correct. And what’s funny is that some of the families don’t know either what they’re doing. They need to maintain their anonymity. We are very serious about the confidentiality of it, which is the key to staying objective.

Even at Michelin, everybody has never met these people. My first impression was that they would all be rather heavy-set men. But that’s not true. We have men, and we have women, and they seem to be normal. You wouldn’t be able to guess what they really do.

Meet Google's $700 Million MIT Math Whiz

As my Bloomberg colleague Brian Womack reported yesterday, Google paid $700 million for ITA Software, a 16-year-old company that has provided the flight-booking software for Orbitz since it opened for business in 2001. The acquisition brought back memories for me. I profiled ITA’s founder and CEO, Jeremy Wertheimer, in 2000 for BusinessWeek.com. The MIT PhD was brilliant back then, if still cash-strapped—he came up with the $100,000 to start his Cambridge, Mass., company by maxxing out his credit cards and borrowing from his parents. Today, he’s undoubtedly still brilliant and rich, too.

Click here for the full profile.

Steelcase Takes a Desk in the Classroom

I’m sitting next to a desk that could have been mine in elementary school. Yours was probably like this, too: a hard-backed wooden chair on steel legs with a small writing tray bolted to a steel pipe. The one I’m sitting in could hardly be more different, starting with its bright green plastic seat that swivels, and has elbow perches that double as backpack hooks and gives a little when I lean back.

“There just hasn’t been any significant innovation in classroom furniture in I can’t remember when,” says Sean Corcorran, director of product development and marketing for the education solutions group at Steelcase, which designed and made the desk I’m test-sitting. “We see 50-year-old chairs in classrooms today. I think there’s pentup demand.”

Still, I wonder whether the desk will enable Steelcase to break out of the office market and into classrooms. With a laptop-friendly work surface, the node, as it’s called, lists for $599. By comparison, basic desks by market-leader KI start as low as $169. What’s more, I haven’t heard of a school anywhere that’s got extra cash these days. Many, in fact, can’t even pay all their teachers or afford new books.

At a Neocon event in Chicago, Corcorran tells me that in four months of pre-sales, the company has received orders for 50% of the first year’s production. Yet in better times—say, seven years ago when Steelcase decided to branch out into the education market—the order rate probably would have been higher, concedes his boss, Steelcase Group President James Keane.

Schools are mostly submitting try-out orders, buying desks for a classroom or two rather outfitting the entire building. “There’s probably less across-the-board opportunities in this sort of economy,” he tells me. “But we’ve been very happy with the success so far.”

The node is so unusual because, as a newcomer to the market, Steelcase looked not at how classrooms are generally equipped, but at how teaching has evolved. Used to be that teachers stood in the front and drilled rows of students much like a sergeant would address the troops. Today students are just as likely to be learning from one another in groups. Students also need a place for their backpacks and, at the college level for sure, a work surface with room for a laptop and a book.

Steelcase began developing its desk with help from design shop IDEO about a year and a half ago, Corcorran says. The early prototypes, on display at the event at the Tribeca Flashpoint Media Arts Academy, were assembled from crudely cut plywood and old plastic chair seats. Nonethless, they look basically like the final product.

The node comes on wheels, making it easier for students or teachers to roll them into new arrangements. The concave base, made of aluminum, provides an out-of-the-aisle space for backpacks or other gear. Not only does the plastic-molded seat swivel; the work tray does, too. And the 22x12-inch plastic surface can easily accommodate a laptop with space to spare.

One of the bigger changes was to make the seat bigger. Corcorran says Steelcase added an an inch and a half to the width so that today’s heftier students can squeeze in. The desk, which weighs 32 pounds, can support up to 300 pounds. The American classroom has changed.