By Sonali Basak and Caitlin Klask — Medill News Service
February 28, 2013
Groupon Inc.’s board of director fired CEO Andrew Mason late Thursday, a day after the daily-deal company’s shares went into a tailspin after it released disappointing fourth-quarter earnings.
In a terse press release, Groupon said it named Executive Chairman Eric Lefkofsky and Vice Chairman Ted Leonsis to the newly created Office of the Chief Executive on an interim basis, while the company searches for a new CEO.
Mason, widely known for a quirky sense of humor, wrote in an email to employees that “After four and a half intense and wonderful years as CEO of Groupon, I’ve decided that I’d like to spend more time with my family. Just kidding – I was fired today.”
Mason, who co-founded the company, had no experience managing a major publicly company, and his exit did not come as a big surprise. “When you have a situation with shareholders, sadly, the easiest form of doing something is getting rid of the person at the top,” said Tom Kuczmarski, president of Kuczmarski and Associates, a Chicago consulting firm that specializes in innovation.
That said, Kuczmarski criticized Groupon’s move. “I’m a huge fan of Andrew Mason’s. I mean, he’s the guy who founded this company and what is important is that he’s stayed up to this point,” Kuczmarski said.
In his Thursday letter, Mason took responsibility for Groupon’s disappointing performance, noting that the company’s shares have lost more than 75 percent of their value since Groupon’s offering in November 2011.
Groupon was the hottest new company in Chicago when it launched in 2008. Its small staff of a few dozen skyrocketed to more than 350 by 2009, according to Forbes magazine. Within 16 months, it had generated $1 billion in sales by offering consumers deep discounts on everything from local restaurant meals to laser surgery. By April 2010, valuation experts were putting a $1.5 billion price tag on the company.
That November, Google Inc. offered to buy Groupon for $6 billion, but Mason and his advisers thought the company was worth more. Groupon turned down the offer saying it wanted to focus on its own long-term growth.
But by 2011, Groupon still hadn’t turned a profit because of its huge marketing costs, which amounted to about – which added up to about $6 per coupon.
Groupon filed for an initial public offering in June, but accounting miscues caused a delay, and the stock ultimately closed after its first day of trading at $28 per share, which valued the company at almost $18 billion, but the stock has since tumbled as low $2.60 by November of 2012.
As of Thursday’s close, the company’s market capitalization stood at just $3 billion.
This week, Groupon posted a net loss of $81.1 million, or 12 cents per share, a showing that fell short of Wall Street estimates. The company’s stock fell to $4.24 Wednesday in after-hours trading. But after Mason’s resignation, shares rebounded, rising to $4.73 in after-hours trading on Thursday.
In his farewell email, Mason shared his insight on what went wrong and urged his employees to have confidence in moving forward. “My biggest regrets are the moments that I let a lack of data override my intuition on what’s best for our customers,” he wrote.
“You’re doing amazing things at Groupon and you deserve the outside world to give you a second chance.”