Groupon fires CEO Andrew Mason: Can a new leader turn the company around?
The former darling of Silicon Valley has floundered since going public
I've decided that I'd like to spend more time with my family," Groupon CEO Andrew Mason told his employees on Thursday. "Just kidding — I was fired today." So begins a refreshingly honest resignation letter that caused a spike in Groupon's share price, which has stumbled badly since the online deal site went public in 2011. Mason's ouster was widely expected, given Groupon's rapid evolution from the next hot Internet company to a fraught symbol of how quickly fortunes can change in the tech industry. But can a new CEO turn things around?
First, a quick recap of Groupon's rise and fall: The site offers discount coupons on a variety of goods and services, taking a cut from each deal that's fulfilled. Companies were initially eager to offer discounts, with the hopes that they could tap into a new reservoir of customers. Groupon was one of the first companies of its kind when it landed on the scene in 2008, and soon swelled to a 10,000-employee operation with a presence in dozens of countries. At the height of its popularity in late 2011, the company was valued at some $13 billion on the stock market.
It is now worth about $3 billion. So what happened? The company was caught using some sketchy accounting tricks, which unnerved investors. But a string of quarterly losses has been attributed to deeper factors — raising doubts about whether anyone can make the company profitable.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Analysts say that ditching Mason is a step in the right direction. Mason has an iconoclastic streak that can be endearing, and his personality shines through in his resignation letter, which is normally a medium for the blandest corporate speak. "You are doing amazing things at Groupon, and you deserve the outside world to give you a second chance," he wrote. "I'm getting in the way of that. A fresh CEO earns you that chance." But his antics, which have garnered much attention, haven't gone over well with investors who would prefer a more sober hand at the wheel. With Mason's departure, Groupon has indicated that it "wants to leave Never Never Land," says David Benoit at The Wall Street Journal.
The company will be led in the interim by Executive Chairman Eric Lefkofsky and Vice Chairman Ted Leonsis, an AOL veteran. Lefkofsky, Leonsis, and Groupon's future CEO will face numerous challenges. As Megan McArdle writes at The Daily Beast:
As a result, customers never became the return customers that businesses value so dearly, and businesses began to pull out of Groupon's scheme. Furthermore, Groupon's act was easy to imitate. According to the Associated Press:
And perhaps most disconcertingly, Groupon may be turning off potential customers with its aggressive marketing strategy (which also costs a ton). As Diane Brady at BloombergBusinessweek says:
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Many analysts say that Groupon will have to make root-and-branch changes to its business model if it wants to succeed. According to Drew Fitzgerald at The Wall Street Journal:
Ryu Spaeth is deputy editor at TheWeek.com. Follow him on Twitter.
-
7 beautiful towns to visit in Switzerland during the holidays
The Week Recommends Find bliss in these charming Swiss locales that blend the traditional with the modern
By Catherine Garcia, The Week US Published
-
The Week contest: Werewolf bill
Puzzles and Quizzes
By The Week US Published
-
'This needs to be a bigger deal'
Instant Opinion Opinion, comment and editorials of the day
By Justin Klawans, The Week US Published