An open letter to Groupon’s CEO: How to get ahead of your next PR crisis

Dear Andrew:

It was great sitting down with you on stage at the DEMO conference this week. We talked a bit about the challenges of your runaway growth and the difficulties of applying your innovative collective-buying model to small, local businesses. It was a friendly chat, I admit — you even joked about offering me a PR job. (Seriously, would you tech mogul dudes please stop poaching VentureBeat talent?)

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As flattering as the offer was, I don’t think I’m the man for the job. Like you, I love great writing, but I want to tell the story of technology and innovation, and there’s no better place to do that than at VentureBeat. You do need a great communicator in your camp, however.

I like how you’ve handled your PR crises to date. Responding to a particularly comedic class-action lawsuit by suing yourself was a funny move. And your recent blog post reacting to questions raised about an offer by an Atlanta-area photo studio, Dana Dawes Photography was deftly written. You also have a great, scrappy, and likely understaffed PR operation under Julie Mossler right now. But as the volume of critical stories and problem deals rise, you’re going to need someone more experienced to handle them.

You need more than just a PR veteran, though. You need someone who can rethink your operations with protecting Groupon’s public image in mind. You recently told me that you stand by the way you vet companies. Seven people at Groupon touch each offer before it goes live. And yet you also have plans to rapidly ramp up the deals you have on offer. Roughly 35,000 companies are waiting in queue to offer a Groupon.

As you grow the business and work through that backlog, problem deals will become more and more visible. And as you’ve noted, when a business can’t handle the volume Groupon directs to it or customers have other complaints, Groupon loses, too. As the company introducing customers to a business, you’re going to get bad PR on all sides.

Yelp and PayPal dealt with similar issues in the early stages of their business — not successfully, I might add. PayPal was besieged by lawsuits from angry merchants and customers whose accounts were frozen for fraud investigations. And Yelp got serious bad buzz for the less-than-transparent way it displayed — or didn’t display — business reviews. Both companies have recovered, but it’s hard to know how much more successful they might have been if they’d dealt with their image problems more expeditiously.

Now’s the time to get ahead of the curve. It feels obnoxious to point out a problem without offering a solution. And it’s clear that you think the secret to Groupon’s success has more to do with people than technology.

So I have the fix: Hire Julie Anderson Ankenbrandt. Who’s that, you say? Ankenbrandt was an executive at PayPal. She started out running public relations. But as PayPal’s operational snafus mounted, causing more and more PR crises, she realized that the best way to address them was to fix the underlying business problem. So she moved out to Omaha, Nebraska temporarily to set up PayPal’s first customer-service center, a move that arguably saved the business from imploding under the weight of fraud investigations and customer complaints. She went on to help lead PayPal through its IPO — a move that many have speculated is next up for your company — and its acquisition by eBay, a company we’ve cited as a model for your international growth.

I haven’t talked to Ankenbrandt in years. She moved from Silicon Valley to Denver several years ago and got a degree in public administration at the University of Colorado at Denver — a nice fit with your own degree in public policy. And, as it happens, her LinkedIn profile describes her as “emerging from hiatus.”

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The fit seems perfect. You could hire any number of PR executives, but someone with Ankenbrandt’s operational experience, strategic perspective, and experience with a business that caters to small merchants seems perfect for Groupon. I don’t know if you’ll be able to get Ankenbrandt to pick up and move to Chicago. At the very least, you should talk about your common experiences — and think about how to get someone with her kind of resume in your camp.

So I hope that helps, Andrew. You seem sincere in your commitment to avoid bad experiences by customers and merchants who use Groupon. And you’ve done pretty well setting up shop outside Silicon Valley. But I think there’s a lot you can learn from tech’s battle-scarred veterans. Drop Ankenbrandt a line. And let me know how it goes.

[photo by Stephen Brasher for DEMO]