[millerc]

Dear Andrew,

One bad year and a couple missed objectives, and your boss fires you? Looks like you were dealing with somebody who doesn't invest in training his employees... you'll be much happier working for somebody else.

Love,

an observer

[mattmaroon]

It's not one bad year. Every year they've had, from a profit perspective, has been a bad year. We just didn't know how unstable the business model was when they were private. By the time merchants had a chance to figure out what selling a Groupon actually gets them (which for most is little more than a huge headache and a loss of money) Groupon was a public company.

Groupon built this massive juggernaut on a shaky premise, which is that merchants can sell a Groupon and more than recoup the lost revenues in future business. It's debatable whether merchants will keep selling these at 25% when most lose money on it and seem to get no long term benefit. It actually seems unlikely.

Groupon also spent more to acquire users than they made off them, figuring they'd make it up later, much like they were telling merchants. That's why they included the ridiculous ACSOI metric in their prospectus.

It's likely at this point that they need to pivot, and they probably just don't think Mason is the guy to do it. Maybe they think he should have done it sooner.

The nice thing about Groupon is they're in a great position to do it. The bad thing is it's going to be tough, and what they pivot too is uncertain.

[millerc]

Interesting argument. Seeing as Mason created from scratch a company valued at around $20B using Lefkofsky's seed investment of $1M, it seems to me like a very respectable accomplishment.

Whether the current business model is viable and how much they need to pivot if they do, that's hard to tell without walking a mile in their shoes. But if I only had to bet on one horse, I'd pick the one that has a proven record for a "very respectable accomplishment" and give him the tools he need to succeed.

If Lefkofsky thought the business was so bad, would he have taken the reigns himself?

[mattmaroon]

Well, no. He used Lefkosky's $1m, plus about $1.14 billion in venture funding to make a company that is now worth about $2.8 billion.

Groupon's market cap was just under $13b at IPO I think. Now it's under $3b. Losing 75%+ of your value isn't an accomplishment in the eyes of the public market, it's a dismal failure.

Remember the original dot com bubble? Lots of startups grew to multibillion dollar valuations, some even in the public market, then flamed out. Is that a "very respectable accomplishment"?

Lefkosky took over because it's quite common for the board to lead the hunt for the new CEO. Who else would do it?

And even if you assume that Groupon was well-managed pre-IPO, rather than a Ponzi scheme that used VC capital to buy users and hype themselves into an IPO and then dump a loser of a company onto buyers from the public market, that still doesn't mean Mason's the guy to get them to the next stage. Some people are good early stage CEOs but not late. I quite suspect Mason is neither though.