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.

Gen Y Unplugs Cable TV

Generation Y has already upset plenty of media businesses with its unconventional consuming habits. Another sector may be about to get smacked—cable and satellite television. Jeffrey Cole, director of the Center for the Digital Future at USC, made that call in his dinner speech for a group of chief marketing officers last night. The dinner was part of a conference in Chicago sponsored by Bloomberg Businessweek.

People in their 20s and younger no longer buy print newspapers, music CDs, land-line phones or watches, Cole noted. (I don’t think they listen to over-the-air radio, either.) Now, Cole said his research has detected that they’re not signing up for cable or satellite TV like prior generations. Instead, they’re watching video on laptops or even their cell phones.

Cole also predicted that most newspapers have just five more years before they’re killed by the Internet. (Cue up Ziggy Stardust.) A handful will survive: New York Times, Wall Street Journal, USA Today, and Washington Post. Women’s magazines will live on, too, since readers buy them as much for the ads as the editorial content. He didn’t give odds for us.

The Designer Behind Top Chef Izard's New Room

Over her 10 years as vice president of design at 555 International, Karen Herold has produced interiors for nightclubs in Las Vegas for Playboy and N9NE as well as retail space for Chanel, Valentino, Armani, and the Dallas Cowboys. She’s proud of every one of them, of course, but she notes that they’re really the taste of her clients, especially the flashy casino venues. Now Herold says she finally has a room of her own.

Actually, the new place, a Chicago restaurant called Girl and the Goat, will be identified with Stephanie Izard, the 2008 winner of television’s Top Chef, who’ll be managing the kitchen when it opens shortly after the Fourth of July weekend. And financially and legally, Girl and the Goat belongs to Kevin Boehm and Rob Katz, a duo who already own three other restaurants in Chicago. But the interior design is Herold’s throughout.

“This is exactly how I wanted it,” Herold says. “I wish I could buy a house right now. I would make it the Goat house. Everything I would have in my house.”

Herold, a 38-year-old Dutch native, showed me around the 150-seat dining room the other evening, as workers were still installing light fixtures. It is purposely anti-Las Vegas—Izard, whose previous restaurant, Scylla, was often described as cozy, and her backers had made “no glitz” a hiring condition. But the space does have some dazzle, which I’ll get to in a moment. (Sorry, no photos yet.)

Girl and the Goat is made to feel comfortably worn, lived in. It is Old World heavy and dark, from the 10-seat communal tables made of thick, weathered oak planks and lit by clear incandescent bulbs in antique glass fixtures to the back bar, which is made of 14 iron fireplace grills from the early 1900s that were sandblasted and fitted in a two-row span. Colors are muted. The seat cushions on the steel-brushed oak chairs are so deep green they look black.

The fireplace grills, which will be backlit when everything is up and running, are one of Herold’s three big statements in her design. Another is a brightlly colored, boozy painting of a girl and a goat that measures 7x7 feet and commands an exterior wall. Izard (the wild-haired girl in the painting) personally commissioned Quang Hong to do the work, based on a smaller one he had done for Scylla.

The other is a pitch-black screen in the center of the room. It’s what’s left of the supporting wall that had bisected the 116-year-old structure. Rather than leave the exposed bricks, Herold decided to encase them with cedar boards—after setting them on fire in a big parking lot to char them and then coating them with resin. Herold says Japanese builders have used this technique for ages, though she had never done it anywhere before.

“It is very bold without being loud,” she says. “I wanted to make strong statements without being in your face about it.”

Until now, neither Herold nor 555 International has had much of a profile in Chicago, though the design and custom-furniture firm has been based in the city since 1988, when it was founded by industrial designer James Geier. Herold, an interior-design graduate from the Institute of Fashion and Design in Amsterdam, hired on in 2000.

In all, Boehm and Katz have spent $1.6 million to create Girl and the Goat. Boehm says it was well worth it. “I always expected it to be really cool and really authentic, but I didn’t expect it to be sexy.”

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.

Gehry's Take Two on LEED Architecture

Frank Gehry asked me to call him. I thought it was to answer questions about how the Great Recession was affecting the next generation of architects. But before we could get to that, the founder of Gehry Partners and an instructor this term at the Yale School of Architecture said he wanted to clarify his comments about LEED building standards. (I posted this blog after Gehry spoke on that topic during a public appearance on April 6.)

Yes, he did say that efforts to win a Leadership in Energy and Environmental Design certification can be a waste of time and money. But he told me on the phone that what he really meant to attack was the posturing around the LEED seal of approval. He’s all for energy-efficient buildings, he said, and has been since before there was an Earth Day, in the late 1960s.

Though he reiterated that he had never designed a building just to gain a LEED tag, he noted, in fact, that his Stata Center at MIT has been awarded a LEED silver from the U.S. Green Building Council.

“I’m not against LEEDs at all,” he said. “I think it’s wonderful. I think we’ve got to do this.” But then Gehry, who acknowledged that he is something of a cranky old man, got back on a soapbox to decry today’s automatic embrace of LEED certification. “It’s become ‘fetishized’ in my profession. It’s like if you wear the American flag on your lapel, you’re an American. That’s what I was trying to say. You get people who are holier than thou. I think architects can do a lot, but some of what gets done is marketing and doesn’t really serve to the extent that the PR says it does.”

With that off his chest, our conversation turned to other subjects including the job market for architects today, which is simply rotten. Gehry said he has 10 “superb” students in his graduate-school class. In previous years, he would have hired a few of them. But this year, with to little to do at his Los Angeles-based firm, he said he can’t. “Some of them will have trouble. And I don’t think they can all afford to have trouble.”

He said the students probably would work for less money, and some would be happy to be unpaid interns. But he said he insists on paying the prevailing salary for entry-level architects, and his partnership doesn’t have the work for more paid employees. For now, he said, the profession is in serious trouble, too. “You just hope it’s going to come back.”