Struggling Groupon fires CEO Andrew Mason
Andrew Mason, founder of online deal site Groupon Inc. and a Mt. Lebanon native, was fired on Thursday by the struggling company because it reported a bigger-than-expected loss and a weak revenue outlook.
Mason rejected a $6 billion merger offer from Google in 2010 before taking his company public in 2011 for $20 a share, which valued the company at $13 billion. Mason was said to have fretted that a sale to Google would sap employee morale and alienate business clients.
Groupon's stock has lost about 77 percent of its value since the IPO, losing $1.45, or 24 percent, on Thursday to close at $4.53. The stock, which soared as high as $31.14 in its debut on Nov. 4, 2011, gained 4 percent in after-hours trading upon news of Mason's firing.
Mason's ouster was anticipated for months and happened amid worries that people are tiring of the myriad daily online restaurant, spa and Botox deals that Groupon built its business on.
Mason sent a memo to employees after he was fired. In part, he said:
“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. If you're wondering why ... you haven't been paying attention. From controversial metrics ... to two quarters of missing our own expectations and a stock price that's hovering around one quarter of our listing price, the events of the last year and a half speak for themselves. As CEO, I am accountable.”
Groupon said Mason was not available for interviews. His parents, Robert and Lila Mason, declined to comment as they pulled out of the driveway of their home in Mt. Lebanon.
Executive Chairman Eric Lefkofsky and Vice Chairman Ted Leonsis were appointed to the Office of the Chief Executive while a replacement is found.
“Groupon will continue to invest in growth, and we are confident that with our deep management team and market-leading position, the company is well positioned for the future,” Leonsis said in a statement.
Mason, 32, grew up in Mt. Lebanon before moving to Chicago for college. He earned a bachelor's degree in music from Northwestern University.
In a 2010 interview with the Tribune-Review, Mason described Groupon as “a local shopping site,” tailored specifically to each city in which it operates.
“Every day, we feature one local business — it could be a restaurant, theater, spa, skydiving, just about anything cool to do in the city,” he said. “And we sell a gift certificate at a huge discount — 50, 60, 70 percent off, that you can buy, but only on that day, and then it's treated like cash.”
That August, Groupon sold 445,000 vouchers for retailer Gap, bringing in $11 million in revenue for the deal company's first-ever nationwide promotion. Groupon typically split revenue down the middle with its participating merchants.
The coupon offered $50 in Gap merchandise for $25, and demand was so high that Groupon's servers experienced technical difficulties.
The company quickly amassed 35 million registered users and a staff of 3,000, mostly in sales.
Groupon's explosive growth netted Mason a cover story on Forbes and an appearance on NBC's “Today” show.
The company's disappointing results and outlook fueled investor worry that people are growing fatigued with the online deals flooding inboxes daily and that the company's efforts to broaden into an e-commerce powerhouse haven't paid off.
Groupon said on Wednesday that first-quarter revenue will be $560 million to $610 million. Analysts on average had predicted $647.7 million, according to Bloomberg News.
Investors questioned whether Groupon's business model is sustainable and leads to growth over the long term — and whether the company can not only grow its customer base but make more from each subscriber.
Groupon had the advantage of being first. That meant brand recognition and investor demand, as evidenced by its strong public debut. But the model is easy to replicate. It spawned many copycats after its 2008 launch, from startups such as LivingSocial to established companies such as Google Inc. and Amazon.com Inc.
Groupon has faced scrutiny about its high marketing expenses, enormous employee base and the way it accounted for revenue.
In his letter to employees, Mason said:
“You are doing amazing things at Groupon, and you deserve the outside world to give you a second chance. I'm getting in the way of that. A fresh CEO earns you that chance. The board is aligned behind the strategy we've shared over the last few months, and I've never seen you working together more effectively as a global company — it's time to give Groupon a relief valve from the public noise.
“... This leadership change gives you some breathing room to break bad habits and deliver sustainable customer happiness — don't waste the opportunity! I will miss you terribly. Love, Andrew.”
The Associated Press and Trib Total Media staff writer Matt Santoni contributed to this report. John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or firstname.lastname@example.org.
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