Fish in the sea

The joke used to be that Grouper was a Y Combinator funded startup, because the founders took the $400 travel reimbursement check they got after being rejected from the prestigious acclerator and used it as the seed funding for Grouper.

Now Betabeat has learned that Grouper was accepted into the new class at Y Combinator, and co-founder Michael Waxman will be heading out to California shortly.

The company used Facebook to match users up on a three on three group outing (it's not a date!). The company billed itself as a sort of online social club. They claimed to be profitable after just 60 days, but that fact, along with many others, came from co-founder Jerry Guo, who turned out to be fairly casual about the truth.

After Betabeat's report detailing his notorious tenure at Newsweek and how he leveraged his past as a journalist to get inside access to other dating startup in New York, Mr. Guo resigned from Grouper.

We're told Mr. Waxman, is determined to bounce back and hopes to find a new partner at YC who can lead Grouper with him.

Jerry Guo and the Dalai Lama

Jerry Guo, international rules-bending journalist turned startup CEO, just issued a public apology on his Tumblr. The apology is addressed to the startup world and to the CEO of TechStars company Ignighter, Adam Sachs. Mr. Guo told Mr. Sachs he was a journalist, visited Ignighter and asked lots of questions about the business. Mr. Guo wanted intel on the competition because he was starting his own company, Grouper. "I didn’t tell Adam this, and met him under false pretenses," Mr. Guo writes.

In the wake of the sudden attention after Betabeat's article earlier this week, and Gawker's subsequent interest, Mr. Guo has left Grouper in what he says was a mutual decision with his co-founder and CTO Michael Waxman.

Startups are not a zero-sum game. We can all win, and by that, I mean create value that ultimately helps those around us—by creating jobs, connecting people, making markets more efficient, etc—and some go on to change the world.

The media world can be a zero-sum game. Getting a scoop means beating someone else to the punch. Coming up with a false narrative garners more page views for gossip rags. I don’t want to stoop to their level and give a point-by-point refutation, but will just let my reporting speak for itself and the love our Grouper members have shown us.

Mr. Guo also publicly apologized to his co-founder:

He’s poured his heart into Grouper and does not deserve the scandals I’ve created, for which only I am responsible for. We came to a mutual decision for Grouper to survive, I will need to part ways. I’m really thankful to Michael for always being there for me and believing in my potential from the start. He’s my best case for why the tech world is so awesome.

Mr. Waxman has not returned requests for comment.

Betabeat tried to get Mr. Guo to write a post, but he declined, preferring to break the news himself.

UPDATE: Here's our take on Jerry's post: Jerry Guo: What I Did Was ‘F-ed Up’ and I Must Leave for Grouper to Survive

Grouper co-founder Jerry Guo has confirmed to Betabeat that he has left the company, which will now be run by CEO Michael Waxman. 

Guo's exploits at Newsweek and AOL, followed by his subterfuge in Silicon Alley, became something of an international sensation.

"We're on good terms," said Mr. Guo of his relationship with co-founder Michael Waxman. Mr. Guo has initially agreed to pen a guest post for Betabeat, giving us his side of how things shook out at Grouper, which he recently told us is growing fast and already profitable.

UPDATE: Mr. Guo is now considering publishing the post on his Tumblr. [You can find it here]

UPDATE TO THE UPDATE: Mr. Guo has decided to post the tell-all on his Tumblr and declined our offer to republish.

Talking any more about this video would just spoil it.

Image via Gadling

Betabeat received an email this morning from Grant Martin, Editor-in-Chief at the travel site Gadling, alerting us that Jerry Guo, the notorious Newsweek writer and startup scammer, had a troubled history with AOL as well. From Mr. Martin's email:

Jerry was a blogger for Gadling for a couple of years and then was removed in November of 2008. Curiously, his bio photo on Gadling was of him holding a panda.

Jerry was terminated because he
was taking old, past published posts and tucking them into the recent (but out of sight) queue so that our payment system would automatically sweep through and double pay him.

That same week we found out that he was trying to farm out blog posts for our site for $5 each on elance. Still have the screenshot on that one.

Jerry's tenure at Gadling was full of him trying to work our system, squeeze us for more money and earn free travel. I'm glad that he's gone, but I wish that I had been more proactive in reaching out to his other/future editors.

In talking with editors at Newsweek and The Atlantic for this story, Betabeat often heard the same refrain. Typically editors regretted not doing more to out Mr. Guo as a bad seed, but felt it was wiser to sweep things under the rug and protect their own publication. This allowed Mr. Guo to hop from one big name to the next. Since 2008 he has written for the NY Times, Washington Post, Newsweek and Foreign Affairs.

Check Out Our Slideshow of Jerry Guo's Adventures Around the World>>

Mr. Guo

UPDATE: AOL Editor who fired Mr. Guo in 2008 writes to say he regrets not doing more to warn others. Story here.

-- --

Jerry Guo considers himself a modern nomad. The 24-year-old Chinese-American stays in a different apartment each month, couch surfing or subletting, whatever works best. “Moving around makes it easier to find cool new venues,” Mr. Guo explained. His recently launched startup company, Grouper, sends six users on platonic group outings to lux hotspots around New York, so maintaining a fresh supply of trendy locales is key to Mr. Guo’s success.

"I like to keep moving," Mr. Guo told Betabeat, hunching down into a leather chair at our Midtown offices. He wore a purple sweatshirt, jeans and yellow-trimmed topsiders with no socks. Over the last two years the rakish Mr. Guo has touched down in exotic locales on practically every continent on earth. There was a rare trip inside North Korea, which Mr. Guo wrote about for the Washington Post. And the time he spent running with the rebel forces in Iran during the summer of 2009, which he chronicled in The New York Times. It was his Chinese passport that allowed him access to nations typically hostile to America*.

“Jerry is...I think the best word is irreverent,” said his co-founder at Grouper, Michael Waxman, who met Mr. Guo when the two were freshman at Yale in 2005. “After all the crazy shit he has done, he’s lucky just to be alive, so he kind of brings that to the table as an entrepreneur.” Mr. Waxman is the CTO/CEO of sorts, while Mr. Guo handles partnerships, operations and marketing. “He has the kind of charisma you can’t learn.”

Check Out Our Slideshow Adventure Around the World With Jerry Guo >>

Mr. Guo’s charisma—and his irreverence—were on stark display in the spring of 2011, when he reached out to Adam Sachs, CEO of the very successful group dating site, Ignighter. He told Mr. Sachs that he was a freelance journalist who had been commissioned to write a piece on Ignighter for The Atlantic Monthly, and sent along some of his clips from his time at Newsweek by way of credentials.

“It was really strange,” Mr. Sachs said. “He showed up to the interview with this other guy, who I later learned was his co-founder. They asked a ton of questions and we talked for maybe an hour.” A few weeks went by and Mr. Sachs heard nothing, so he emailed Mr. Guo to ask about the story. “He told me it was still being edited and that it would come out soon.” Another month or so passed. “Then all of a sudden I see Grouper.” Both companies relied on users’ social graphs to choose clusters of people they would send on group outings.

Mr. Sachs emailed editors at The Atlantic, who informed him that Mr. Guo had indeed pitched the story but that it had never been assigned. He emailed Newsweek, who told him that his complaint was just one of many they were sorting through involving Mr. Guo. Mr. Sachs was upset, but he didn’t feel threatened by Grouper, and he decided to let things go. We thought the incident warranted a closer look.

The adventure began the summer Mr. Guo graduated from Yale. “Before college, I had never been outside the country, well, except before I moved here,” Mr. Guo explained. His family moved to America when Mr. Guo was six, and he spent his youth mostly in Greer, South Carolina. He showed a aptitude for computers early on, winning an award in 2003 from the Association for the Advancement of Artificial Intelligence, for creating a novel spam-filtering algorithm. At Yale, he studied economics. But after college, the diligent student transformed into a globe trotting adventurer.

As Mr. Guo explained in an interview with the local blog We Are NY Tech, the day after graduation, he flew to Amsterdam, then on to Tehran, where he’d agreed to teach a class on entrepreneurship at the University of Tehran. Due to the growing unrest, the class was cancelled.

“I ended up couchsurfing for the summer, working at a local hedge fund by day while running with the Iranian youth opposition by night,” he wrote. “I started writing about my time with them, and in the process accidentally became the last Western journalist in Iran.”

Check Out Our Slideshow Adventure Around the World With Jerry Guo >>

The clips Mr. Guo landed during his summer in Tehran earned him a spot at Newsweek International, where, according to Newsweek staffers, he was personally recruited by the newly appointed Fareed Zakaria.

Mr. Guo was, depending on whom you ask, an intern, a fellow, a correspondent, a staff reporter or a compulsive liar. "He was a strange egg, that’s for sure," said a former staffer who worked with him. "He would disappear for weeks at a time, then call up saying he had an interview with Hugo Chavez or pirates in Africa. Then he would be back at the office, I would see him sleeping under his desk. People joked he was a spy."

Mr. Guo arrived at Newsweek during a troubled time. The venerable magazine was losing large sums of money and shedding staff. Talks of a takeover rattled bull-pen morale. “It was kind of crazy, for sure,” Mr. Guo told The Observer. “They needed a young guy like me who would go anywhere, produce a lot of copy and not worry too much about whether my job would still be waiting for me when I got back.”

More than 30 pieces from this time now appear on the Newsweek/Daily Beast website. They are an odd mix of reportage: international conflicts and human rights on one hand, luxury lifestyle coverage on the other. A piece on the Russian occupation of Georgia sits next to a story on a $10,000 ski trip at an five-star Helsinki hotel. A interview with Chinua Achebe on Nigeria’s future is paired with a feature on luxury hunting resorts in South Africa.

“I worked for a section at Newsweek called The Good Life,” explained Mr. Guo. “It was basically, you know, advertorial content that they would pair with some really expensive ads.” Newsweek International, short on reporters, was hungry for content and revenue. Mr. Guo would buy a plane ticket and head off. “Basically I would just do things and worry later about expensing them.”

In addition, Mr. Guo would often claim a story had been assigned in exchange for free flights, hotel stays and merchandise. “I didn’t have an apartment, so it was always nicer to be on a plane or in a hotel,” said Mr. Guo, who confirmed that he would crash under his desk during his rare visits to New York.

“Sometimes if I wanted to make a trip work, I would just figure out a way to get The Good Life involved,” he said. “So I wanted to go to Tibet and report on the conflict there with China. You couldn’t get into Tibet from the Chinese side, so I just called up this ridiculous yoga retreat on the Indian side, told them it was a piece for The Good Life, they let me stay for free and next thing you know, I’m talking with the Dali Lama about human rights.”

Both the interview with his Holiness on conditions in Tibet and “UpMarket Facing Dog,” a zippy roundup of high-end yoga spots around the globe, ran in Newsweek International.

Like many news organizations, Newsweek had a longstanding ethics policy that expressly forbid reporters from accepting flights, hotel accommodations and merchandise in exchange for coverage. But current and former Newsweek staffers who worked alongside Mr. Guo said that during his tenure at Newsweek International, Fareed Zakaria changed that policy, specifically for reporters working on The Good Life section.

“It just begs the question, why did Fareed implement these new rules?” said a current Newsweek employee who worked alongside Mr. Guo. “Nobody objected, because Jerry filed good copy. It seems crazy now, but he basically just played within the absurd rules of the time.”

Mr. Zakaria emailed Betabeat to explain the change. The Good Life, he said, was “an effort to provide a service for our readers and attract new advertisers. It is quite common in that world for reporters to, say, go to a special tasting at a new restaurant or attend a weekend retreat at a new hotel. I relaxed our rules on this stuff for those two pages. In retrospect, it was a mistake—my mistake—and I regret it. We should not have been in the business of covering luxury goods—that world is so different from the traditional world of news reporting. I was always uncomfortable with it but was trying to help to help the magazine survive through tough economic times."

The fun came to an end in December of 2010, when Newsweek merged with The Daily Beast. Mr. Zakaria had left by then for a position at Time. Mr. Guo’s internship had already gone well past its allotted time, and the incoming management decided not to renew him.

A few weeks later, the complaints started to arrive. One came from the Tourism Board of Thailand, which wanted to know why they had paid for Mr. Guo and a photograher to fly to Thailand and stay at deluxe hotels. Others involved an expensive watch and a some Gore-tex gloves Mr. Guo had requested. About ten or twelve letters arrived at Newsweek’s legal department.

"After his internship ended, Newsweek International received a number of complaints about Jerry Guo, all of which were dealt with accordingly," said  Andrew Kirk, director of Public Relations at Newsweek & The Daily Beast.

Check Out Our Slideshow Adventure Around the World With Jerry Guo >>

Mr. Guo, meanwhile, had moved on to the world of tech startups. As he navigated the new scene, he continued to employ many of the tactics that had worked so well for him in the world of print media.

When Jerry Guo is nervous, he flushes red and hides his eyes behind his bangs. In a small office at Betabeat's building on West 44th Street, when we asked him about what happened with Ignighter, he looked at the floor and scratched his scarlet neck.

“I think the story here is, like, what happened to journalism,” said Mr. Guo, who had grown accustomed to exchanging coverage for access and gifts. “Coming from that world, I thought essentially, Adam wouldn't have time to talk to us and that this was a great way to get a meeting: ‘Hey I'm a writer so in return for this meeting I’ll write about your startup.’”

Mr Guo has since apologized to Mr. Sachs, who said he doesn’t see the two companies as competitors. Mr. Guo is now eager to put the lessons he learned as a news hack behind him, and focus on growing his company. “Some stats: 93% want to go on another Grouper, we've arranged 1,000+ drinks this summer, and we're already profitable,” he wrote to The Observer in a chipper email a few days after our meeting. He recently went to a secret rave in New York with a friend he met through a Grouper. And at the first New York Meetup for the prestigious startup program Y-Combinator, Mr. Guo, as he always does, made an impression.

“I really like companies doing things with online to offline,” said Justin Kan, founder of Justin.tv and a new partner at Y-Combinator, speaking on stage before 800 hopeful young startup founders. “I met this startup tonight that arranges people into group dates. It’s called like, Grouper or something. That seemed very cool.” In the audience, Mr. Guo beamed from ear to ear.

Co-founders Jerry Guo and Michael Waxman like to joke that Grouper is a Y Combinator-funded startup. That's because they didn't come up with the idea for Grouper--a social service that sets you and two friends up with three strangers based on your Facebook profile--until they got rejected from YC. "We took our $400 travel reimbursement check from YC and used that as seed capital for Grouper," Mr. Guo told Betabeat via gChat.

Does that mean Grouper is a pivot?? "Lol," he wrote, "It's a completely new concept. We applied to YC with paperbuff.com. In the 36 hours before our interview, we ditched paperbuff and built qomments.com, were rejected, then decided to build a product people would actually want (*measured by charging for it)."

Indeed, Grouper, which just launched out of beta in New York today, was profitable after just 60 days.

Here's how it works: Rather than having to fill in a questionnaire about your interests, you sign up for Grouper via your Facebook account. The Grouper algorithm mines your friend graph, "taking into account age / education / personalities / interests / attractiveness," said Mr. Guo, and then sets you up with someone of the opposite sex whom you're not Facebook friends with based on the results. There are no profiles on the site, and the Grouper algorithm does the matchmaking. You invite two friends of the same sex, they invite two friends of the same sex, and you all meet up at a place of Grouper's choosing. "The concept is two groups of friends who don't know each other, but that we think should," explained Mr. Guo.

Although this sounds like a giant Crazy Blind Date to Betabeat, Mr. Guo disagrees. "No not at all. It's not a date.  (For instance, you don't have to be single.) We think the most organic social context is one that's not confined to a bucket/label, whether it's dating / making friends / networking." He did, however, concede one inadvertent matchmaking success. "Anecdotally I know of at least one long-term relationship, but we don't track that since we're not in the dating space. We do ask if people see each other again, and that's been about 1/3 of the groups."

Grouper makes money by charging $20 for the service, which covers the cost, including tax and tip, of the first drink at the venue. To find cool spots in the city, Mr. Guo and Mr. Waxman switch up their homebase to a different neighborhood every thirty days. "For instance last month on the Upper East Side, we found a speakeasy on 89th and 1st that no one knows about called Auction House," he told Betabeat. Previous locations included Apotheke in Chinatown and Bathtub Gin in Chelsea. (Speakeasies appear to be something of a theme.)

Mr. Guo is a former travel writer for Newsweek who uses his experience covering food and nightlife to find venues for Grouper. Mr. Waxman is a serial entrepreneur whose former employee at Batiq, Nathan Blecharczyk, went on to found Airbnb. The two met as freshmen at Yale. Mr. Waxman dropped out a year later to move to San Francisco and found his startup. (Peter Thiel would be so proud!)

Grouper has already put together hundreds of events, with 93 percent of participants reporting with that want to go on another one. Currently, the service is about twice as popular with women. One of the first events they put together included a rather bold-faced name as a seventh wheel: Gilt Groupe's Kevin Ryan. As Courtney Boyd Meyers at The Next Web notes, Mr. Ryan didn't want respond to an initial request, "But when they told him six other recent Yale entrepreneurs wanted to meet him, he said yes within 20 minutes. They ended up having a 3-hour dinner."

"Gilt started off as a high-end members-only club, so we wanted to learn how they did it," explained Mr. Guo, who ended up picking up a trick of the trade. "[Mr. Ryan] had an anecdote about when they launched Gilt. They didn't have the refund feature built, but that was okay because they figured it would take a couple days before people would start asking for refunds. So we've taken on that same sort of 'move quickly and break things attitude.'"

Did Grouper end up hitting up Mr. Ryan for funding? "Ah, no, we didn't put in any seed capital aside from the $400 YC check and we're actually not seeking outside funding," said Mr. Guo. Huh, one more startup and that makes a no-VC trend!

This is a guest post from Gary Sharma (a.k.a. "The Guy with the Red Tie"), founder of GarysGuide and mentor at ER Accelerator.

Quote of the Week: "We'll see if we can do hackathons every day so long as I don't have to write code!" --Mayor Mike Bloomberg, at the Reinventing NYC hackathon winners' breakfast at General Assembly last week.

Mayor Mike's geek cred would have gone through the roof if he had decided to get down and dirty to crank out some code ;) but big props on committing support to hackathons. Speaking of hackathons, we've got a bunch of hacking-related events this week.

Hack and Tell
The place to be if you have cool hardware, software, scripts or widgets to demo. Just here to watch? No problemo, as long as you remember that there are only three appropriate responses to a demo: constructive criticism, asking clarifying questions or remaining shocked. :O
Monday, 6:30 p.m. @ Meetup HQ, 632 Broadway

Hacking Print Media: Pitching Journalists and Getting Profiled
Jerry Guo, former Newsweek staff correspondent, gives start-ups the inside scoop on how to talk to and charm journalists. It's about time there was a class for this.
Tuesday, 8:30 a.m. @ General Assembly, 902 Broadway 4th Floor

Acting for Entrepreneurs
Let's face it. More business plans would be getting funded if entrepreneurs could just channel their inner Al Pacino during VC partner pitch meetings. Hoo-ah!
Tuesday, 6 p.m. @ General Assembly, 902 Broadway 4th Floor

iPhone Software Developers Meetup - Start-up Night
As per the event organizers, "the lead developers from a couple of innovative NYC start-ups will sneak out of their Objective-C bat caves for the evening and share some hard-earned technical solutions from the trenches." Sounds interesting. Wait a min, did they say Objective-C bat caves?
Tuesday, 7 p.m. @ Microsoft, 1290 6th Avenue 6th Floor

DreamIt 2011 NYC Demo Day
Incubators, accelerators and their associated demo days are all the rage these days, and DreamIt is right up there with the best of them with alumni including SCVNGR, Easel and SeatGeek. Graduating this week will be their freshman NYC class including 1DocWay, AfterSteps, ClothesHorse, Cognection, CustomCoup, KeepRecipes, LetsGiftIt, ListenVoice, SocialAdMX, TakeTheInterview, Class.io, Hoot.me, LearnBop, NewQuill and Prepfly. Note: Event is by invitation only.
Wednesday, 9 a.m. @ DreamIt Ventures, 1221 6th Avenue

Websdays with Internet Week NY
I'm a big fan of David-Michel Davies (a.k.a. dmd), chair of Internet Week (New York's answer to SXSW) and Richard Blakeley, creator of the wildly popular Webutante Ball (it's prom night for geeks, yo!). And now they've joined forces to give us Websdays, a monthly schmooze-fest capturing the spirit of Internet Week. Wednesdays will never be the same again!
Wednesday, 7 p.m. @ 200 Orchard Street

Feedback Forum And Pitch Showdown
Graham Lawlor is turning Ultra Light Startups into ... American Idol!  Ten start-ups pitch, an investor panel provides feedback and the audience votes via Twitter. In the judging hot seat will be Owen Davis (managing director, NYC Seed), William Reinisch (venture advisor, Paladin Capital), David Teten (partner, ff Venture Capital and founder, HBS Angels NY) and Mark Wachen (founder & CEO, Upstage Ventures and Managing Partner, DreamIt Ventures).
Thursday, 6:30 p.m. @ NYU Stern Kaufman Management Center, 44 West 4th Street

Digital Learning Series: Demos and Discussion
Demos from cool education start-ups including Learnbop, Hoot.Me, Socrative, Pictour.us and New Quill. Yes, there will be food + drinks.
Thursday, 7 p.m. @ General Assembly, 902 Broadway 4th Floor

Startup Weekend NYC
Shelve your weekend plans and start flexing your lean start-up muscles. Startup Weekend is back in town for another round of late night hacking fueled by pizza and Red Bull at Manhattan's urban campus, General Assembly. Speakers and judges including Alexis Ohanian (founder, Reddit + Hipmunk + BreadPig), Anthony Casalena (founder & CEO, SquareSpace), Jason Baptiste (founder and CEO, OnSwipe), Mike Horn (founder, CraftCoffee) and more.
Friday, 5 p.m. @ General Assembly, 902 Broadway 4th Floor

DUMBO Tech Breakfast
For folks who like tech, live around Dumbo and can wake up early.
Friday, 8:30 a.m. @ Choice Market/The Gallery, 108 Jay Street, Brooklyn

Hacks & Hackers: Health Innovation & Open Data With Todd Park, CTO Dept of Health and Human Services
Stay up all night salivating about getting access to oodles of government healthcare data sets? Then you don't want to miss this event.
Friday, 3:00 p.m. @ Pfizer Inc, 235 East 42nd Street

More on the horizon ...
Entrepreneurs Roundtable 38 with Albert Wegener from Union Square Ventures @ Microsoft on Aug 17
NYC Startup Crawl @ 10gen on Aug 19
Photo Hack Day with Aviary @ General Assembly on Aug 20

Until next week. Stay social, my friends!