16 ms·

Andrew Mason out at Groupon

202 points by lleims 14y ago

minimaxir 14y ago
...and GRPN is up 5% after-hours. Investors really didn't like him, did they?
- imjk 14y ago
  It was already down 25% for the day.
  - Silhouette 14y ago
    GRPN appears to have dropped more than 75% over the past couple of years. Barring some very unusual circumstances, that seems like a compelling argument for a change in leadership at any business.
- SODaniel 14y ago
  Pretty classic case of 'the blame has to land somewhere' after their abysmal performance since IPO. Considering the stock price/performance vs. expectations investors see any change as positive.
- untog 14y ago
  I think investors are just desperate for any signs of change. This is one such sign.
- mcphilip 14y ago
  I doubt you can attribute any dramatic rise in after hours stock price to actual 'investors' deciding to place buy orders seconds after hearing the news. The after hours action is most likely driven by the many algorithmic trading systems making trades based on news flow. In other words, we'll have to wait for some rational period of time before deciding if traditional buy and hold investors are excited by this change in leadership.
- mmuro 14y ago
  They've only turned a profit once since going public and the stock is down over 75% since then. Should have taken the $6 billion buyout from Google when they had the chance. Honestly, it all doesn't really matter after their IPO revealed bonuses were more important than investing into their business.
staunch 14y ago
From his twitter account: Yesterday: "Three oranges in a meeting with four of us? No question - I give my oranges to the others. #leadership" 15 minutes ago: "For Groupon Employees: https://www.jottit.com/v5wux/ (Apparently, sharing oranges is necessary but insufficient #leadership)" I'm sure he's not everyone's cup of tea, but I would totally work with this guy.
- swohns 14y ago
  Credit for the Godfather references!
- johndavidback 14y ago
  In hindsight it's easy to say bad things, but rewind a couple of years and Group was exploding, awesome place to work, and felt strong enough to say no to an acquisition by Google. Though I'll bet now the regret at that turndown has to be killing him, and many others.
  - Im_Mr_Manager 14y ago
    From what I've read on HN in the past it was Google that walked away from that deal during due diligence and not Groupon.
andyl 14y ago
Too bad for Mason. IMHO they should have sold to Google when they had the chance. There are many folks who applauded the decision to decline the offer. Build for the long-term, they said. In general I agree with that sentiment. But when you have a $6B offer on the table, you gotta put the kool-aid aside and be very objective about the future prospects for your company.
- ante_annum 14y ago
  I've heard from a lot in the Chicago startup community that was a ruse to get Microsoft to buy them (Google didn't offer 6B, but played along), playing on the stereotype that Microsoft goes for Google's scraps.
- dopamean 14y ago
  I said the same thing to friends of mine at the time and was roundly ridiculed when the company went public at that enormous 17B valuation. They hype was just that - hype. I think Groupon will be around for a while but I have a hard time seeing ever be worth more than it is now.
- larrys 14y ago
  "But when you have a $6B offer on the table" From my many years of experience in business I can say that anytime you have a serious offer on the table you have to decide if you are willing to risk going for door number two. You can always point to cases where people didn't sell out and ended up better but with business you have to look at the downside not just the upside. Over the years that is the biggest mistake that I have seen people make in negotiation. I'll give you an example with domains. I'm in the process of buying a domain for a startup and the startup will pay $50,000 maybe even $100,000 for the domain. But the owner won't even engage preferring to shoot for the stars and thinks he will get a million. He won't even state a price. At this point we will cut bait and find another name. I know fully well this business (I also own names) and I know that this domain has about a 2% chance of selling for anywhere near that amount in coming years. I have domains that I've held for 15 years and have never gotten a single offer on. I've had domains that I've held for 15 years that I've sold for big money. Anytime someone comes along with a serious offer I focus on how long it will take until the next offer will come in - if ever. Business and gambling are two different things.
ChuckMcM 14y ago
Well at some point the board has to act or risk becoming the target of a shareholder lawsuit.
- bcoates 14y ago
  Do those ever work? I thought shareholder lawsuits were literally a scam law firms ran on people emotional about losing money in the market.
  - gertef 14y ago
    > scam law firms ran on people emotional about losing money in the market. No, it's a scam they run to get a class-action settlement and protection from any other similar (possibly meritorious) lawsuits, regardless of who loses money in the market. Every major decision (such as a merger) by a company, is met by an ambulance-chase race to file class actions with boilerplate charges. Check the financial news ~7 days after any public-company acquisition happens for the near-duplicate stories with differing law firm names.
  - Mvandenbergh 14y ago
    Almost never. The whole "companies have to maximise shareholder value or the board will get sued" thing isn't really true. Shareholders get to vote for the board and they have a broad range of statutory protections that ensure company accounts are audited, compensation arrangements are disclosed, etc. But as far as a general right to make money? Nope. You'd only have a chance with that kind of lawsuit if the board made an obvious, colossal blunder that should have been obvious to anyone at the time.
  - ChuckMcM 14y ago
    They always cost money. I've been on a couple of boards and it is always advised that board members carry personal insurance against it as well. These suits often name board members and officers personally, in addition to the company. So whether or not it would prevail the incentive is to not have them start.
joeco 14y ago
Great opportunity for a company with huge reach to move in a completely different direction.
sethbannon 14y ago
What's the point of interim co-CEOs? Seems like an odd move.
- yajoe 14y ago
  No insider knowledge, but I've seen co-leads when someone departs for three reasons: 1) Make it clear to employees, shareholders, and the public that there will be another change coming. Everyone should know that a company run by co-CEOs is unlikely to be permanent. This also helps with recruiting since outside candidates know they have a legitimate shot. 2) Set up explicit competition between the two biggest contenders to win the slot. I personally believe this is dirty and guarantees the loser to leave (which I think is net bad -- the loser was a contender for CEO for a reason). 3) Reduce the need to fill someone's shoes. By giving what was one person's job to two people, those two people can focus on their areas and excel individually without unfair comparisons to their predecessor. This is especially important when the predecessor was a public figure. Think Tim Cook comparisons to Jobs. Microsoft did this with the E&D division when Robbie Bach left (Phones and Xbox went to different people).
  - wilfra 14y ago
    It's not #2 - or at least there is no risk of anybody 'leaving'. These are not executives, they are the majority shareholders and control the board.
- newman314 14y ago
  They were the other cofounders, IIRC.
- jfb 14y ago
  Learning from RIM?
deleted 14y ago
[deleted]
danilocampos 14y ago
This guy. Travel back in time with me to October, 2010. Stanford. Startup School. Andrew Mason has been talking, sharing the origin story of Groupon, the lessons learned about entrepreneurship, the pitfalls, the joys. He is fun and engaging. You wanna like him, you wanna see Groupon succeed. We get to the part of the talk where questions are asked and answered. He answers some early softballs. Then one brave soul stood up with a real query that only Mason could answer. Is Groupon a sustainable business, given what we'd been hearing from merchants online? It was as if a mask had dropped. Where once there was cheer and energy, there was now a sullenness. The man seemed affronted at the notion that his business would be challenged in this way. Despite the fact the opportunity to ask just such a question was one of the great values of a venue of this sort. Despite the fact that Groupon's sustainability had been the elephant in the room the whole time. This was right after some of the first stories from distressed Groupon merchants had been trickling out. Petulant, absent all of his previous ebullience, Mason asserted the business was sustainable, offered no supporting details, and demanded the next question. A good leader has the intellectual honesty to recognize their missteps and explain them, along with the remedies explored. The expectation for that is even more acute when you've been elevated to the role of mentor. It was in that moment, his phoniness laid bare, that I decided Groupon was likely melting puppies in its basement, Mason knew it, and didn't know how to reverse the operation.
- AmericanOP 14y ago
  He also hinted at a radical new product, some social Groupon 2.0 platform that never came to fruition. I'm more curious about that in retrospect and what happened. The real story at that moment in time was the flowering of hundreds of Groupon clones. "This guy" ...Get off it. Ideas > events > people. Leave it to HN, tearing down the mainstream success stories of our clan in ever decreasingly creative ways. BTW, he wasn't a happy guy. He described very clearly at that event he forgot what being happy felt like while building GRPN. Sorry to bust your editorial bubble, but when you make a bold + false assertion, your detractors will use it to debase your entire narrative. I'm learning that for a certain segment of humans the presence of rich people bring out claws and fangs, like a full moon.
  - 14y ago
arbuge 14y ago
Inevitable in hindsight...
joetek 14y ago
Full memo from Andrew Mason (his jottit.com link isn't working): People of Groupon, 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 in our S1 to our material weakness 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. 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. For those who are concerned about me, please don’t be - I love Groupon, and I’m terribly proud of what we’ve created. I’m OK with having failed at this part of the journey. If Groupon was Battletoads, it would be like I made it all the way to the Terra Tubes without dying on my first ever play through. I am so lucky to have had the opportunity to take the company this far with all of you. I’ll now take some time to decompress (FYI I’m looking for a good fat camp to lose my Groupon 40, if anyone has a suggestion), and then maybe I’ll figure out how to channel this experience into something productive. If there’s one piece of wisdom that this simple pilgrim would like to impart upon you: have the courage to start with the customer. My biggest regrets are the moments that I let a lack of data override my intuition on what’s best for our customers. 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
- jarcoal 14y ago
  I love this exit letter. Clearly a nice guy that was in too deep.
  - mcphilip 14y ago
    The NES Battletoads reference made me smile. Great inside joke to anyone who knows the pure torture of trying to get through the fiendishly hard first 8 levels without dying. Level 9, Terra Tubes, IMHO, is one of the hardest levels in any NES game ever created.
phil 14y ago
...And Lefkosky asserting control. Anyone who follows Groupon more closely understand what that's likely to mean for the changes in direction they had been trying to pull off?
- droopyEyelids 14y ago
  I worked at Groupon for about three years, during which time I witnessed Brad opening a box of Atlas Shruggeds which he gave out for christmas. I've heard Eric literally yelling in anger that certain departments within the company should not have scored so highly on the yearly employee survey that measured happiness/satisfaction. Now that I shared those anecdotes, your guess is as good as mine.
capkutay 14y ago
During my commute I pass Groupon's Palo Alto office every evening (I only go this route during the evening because it's closer to my gym). For such a large and publicized company, their building always seems empty. I never see people going in or out. I always see empty conference rooms in the window. Perhaps this doesn't reveal anything about the company, but the view from outside (literally) doesn't compare to what I see when I pass other tech companies in the area.
timmm 14y ago
In 2012 alone Groupon had a net loss of about HALF A BILLION dollars, just look at their financial statements. What an atrocity of a web business, just ugly.
edw519 14y ago
+----------------------------------+ | TODAY'S GROUPON DAILY DEAL | | | | 1 Hour of Outsource Counseling | | | | +---------+ | | $25.00 | BUY NOW | | | +---------+ | | | | 50% 137 2 days | | savings purchased remaining | +----------------------------------+
- edanm 14y ago
  I know you never really left HN, but it's really good to have you back edw519.
- matthewjhughes 14y ago
  Welcome back Ed. :)
wilfra 14y ago
Biggest lesson here is to go for Zuckerberg style control. Mason gave these guys control from the very beginning because he 'doesn't care about money' and didn't want to be greedy. Now look at him - he got fired from his own company while it's still an infant. Pincus, Zuck and many others will have as long as they want to turn their companies around and wont be out unless they decide to quit. They learned from Steve Jobs.
- Mvandenbergh 14y ago
  Because of the nature of their businesses Zuckerberg and Pincus didn't need serious amounts of money nearly as early. Of course they took VC money, but they didn't need it so early, so desperately nor did need so much of it.
  - wilfra 14y ago
    As his $700 severance package demonstrates, the guy just didn't care about money. That's admirable and I think he's awesome for it - but when it comes to whether or not you can be fired from your own company, it's foolish. He got outplayed by smarter and savvier businessmen who had been down this road many times before.
- yuhong 14y ago
  Well, there is this: http://news.ycombinator.com/item?id=4284524 http://news.ycombinator.com/item?id=4284524
jfb 14y ago
Those deck chairs would look much nicer over on the port side, no?
chetanahuja 14y ago
"CEO Andrew Mason Replaced By Eric Lefkofsky and Vice Chairman Ted Leonsis At Groupon" Ha, this is somewhat like Dick Chaney letting Bush take the fall for the Iraq fuck up and then take over in 2008 "to fix things". (before you start hitting downvotes, read some background about this guy). 1) http://www.businessinsider.com/groupons-cozy-deals-with-lefkofskys-marketing-logistics-and-law-firms-2013-2 http://www.businessinsider.com/groupons-cozy-deals-with-lefk... 2) http://mashable.com/2011/06/02/groupon-cash-out/ http://mashable.com/2011/06/02/groupon-cash-out/ "Altogether, $946.8 million, or roughly 86% of the funds raised across the three investments, was paid out to Groupon directors, officers and stockholders. Just $151.4 million was retained by the company to use as working capital and for general corporate purposes."
clobber 14y ago
Wow with Eric Lefkofsky as the new CEO they went from bad to worse. Lefkofsky has always been the one behind the scenes pulling all the strings from early investment, cashing out his $1 BILLION and to the IPO. Yikes!
BostonCFO2 14y ago
Groupon's accounting gimmickry is extensive, and began pre-IPO (recognizing full purchase price of coupon when they are only acting as an "agent" (middleman) not as a "principal" (i.e., making the food, owning the spas for the massages etc.), which as a CFO I can tell you is Accounting 101. Among other places: http://bit.ly/Y3hfft http://bit.ly/Y3hfft And yes Rocky Agrawal and the Grumpy Accountants Professors and PrivCo. And the accounting tricks continue - even most Wall Street analysts covering the company for a living have not picked up on it - but for "Groupon Goods last fall they changed the way they account for those purchases. (Remember for Goods their "deal-share" is even smaller than their 37% or so for restaurants/spas/etc. It's under 10% for tablets, laptops etc. So when they at first sold a $2000 flat screen TV, they booked (as forced by the SEC finally) just their $200 cut. When revenue growth slowed, they (meaning likely Eric Lefkofsky instructed) Groupon to find a way to recognize the entire $2,000 sales as their revenue. And the only way (again, speaking as a CFO who knows this intimately - not boasting my opinion is better than anyone else's, just sharing the real facts, I don't own or short the stock - and the only way they could recognize the entire $2,000 example TV sold is if they "took possession of it, then re-sold it" in plain language. And one of the requirements is that Groupon has (even briefly) the "risk of loss" (that is, the TV breaks while legally/technically in their possession before shipped to the buyer). I.e., find a way that Groupon's technically not just a deal middleman on Goods and let the buyer and seller deal with each other, but be the Reseller like Amazon. So they literally (and this is not speculation, this is in the SEC filings - not highlighted and sort of minimally mentioned, but it's there) - they literally state starting with their third quarter 2012 10Q that beginning that quarter Groupon signed a new contract retaining a 3rd party company to act on its behalf to receive the goods from the Goods merchant, then that company acting on Groupon's behalf - with a contract that says Groupon bears "all risk of loss" and then ships it to the buyer. Now that sounds awfully inefficient, and it is, because it has to be shipped twice, reducing Groupon's margins to near zero on Groupon Goods. But it takes Groupon Goods revenue from 10% of each sale to 100$ of each sale. Starting to get the picture? So in the last 2 quarters they reported a dramatic spike in Groupon Goods revenues (no profits of course) but analysts - not knowing any better - began to upgrade the stock, saying yes the daily deals business is slowing to almost 0$ year over year, but look at Groupon Goods! Its revenue is suddenly growing like gangbusters! (I have to give hat tip here to an Accounting Seminar that used it as an example, and to PrivCo who published a Research Note detailing it, but I checked everything in the SEC filings and can say with 100$ certainty, but of course you can confirm it yourself.) So price targets were raised, and many former bullish turned bearish analysis (like Ken Sena from Evercore) turned bullish again, and said Groupon is going to surprise all the naysayers! Groupon Goods is its true future, it's growing in triple digits in revenue now! (Because their revenue recognized went from 10$ of each sale to 100%, by having this fulfillment company acting on their behalf briefly taking possession of the goods and contract says Groupon has "all risk of loss" - even though the possession was sometimes for 10 minutes, since they just put it in a box and shipped it right away to the waiting buyer who had already pre-ordered it. No inventory, just in and right out the door. One more fact you should know (again gotta give hat tip to PrivCo securities lawyers on their staff who pointed this out), go to the section on "Related Party Transactions" (i.e. this is where a company is doing business or hiring a company owned by a senior Officer, Director or Major Shareholder). And in that section - brief as it is - it says one of those Related Party Transactions is that they retain and have a contract with a fulfillment company founded in mid-2012 that is owned by Eric Lefkofsky and Brad Keywell (Groupon's co-founders, Board members and largest shareholders). Yes you read that right. They saw daily deals declining sharply, and decided they had to find a way to "grow Revenue" - without actually selling any more stuff. So they quickly formed this company that signed exactly the contract terms needed verbatim that would allow the accountants to deem Groupon as having taken possession and acting as a principal / reseller and not an agent and recognize the entire Goods amount purchased. And most Wall Street analysts (Evercore's Ken Sena was on TODAY on BloombergTV still touting the Groupon Goods revenue growth as reason to buy the stock, even though daily deals fell for the first time ever year over year.) He's clueless, and he's telling his clients Buy based on Groupon Goods revenue growth spurt since last summer. I'll let the HN crew react to above instead of just saying out loud what I think of that or what you should. Share what you think of that.

202 points by lleims 14y ago

minimaxir 14y ago

...and GRPN is up 5% after-hours. Investors really didn't like him, did they?

imjk 14y ago
It was already down 25% for the day.
- Silhouette 14y ago
  GRPN appears to have dropped more than 75% over the past couple of years. Barring some very unusual circumstances, that seems like a compelling argument for a change in leadership at any business.
SODaniel 14y ago
Pretty classic case of 'the blame has to land somewhere' after their abysmal performance since IPO. Considering the stock price/performance vs. expectations investors see any change as positive.
untog 14y ago
I think investors are just desperate for any signs of change. This is one such sign.
mcphilip 14y ago
I doubt you can attribute any dramatic rise in after hours stock price to actual 'investors' deciding to place buy orders seconds after hearing the news. The after hours action is most likely driven by the many algorithmic trading systems making trades based on news flow. In other words, we'll have to wait for some rational period of time before deciding if traditional buy and hold investors are excited by this change in leadership.
mmuro 14y ago
They've only turned a profit once since going public and the stock is down over 75% since then. Should have taken the $6 billion buyout from Google when they had the chance. Honestly, it all doesn't really matter after their IPO revealed bonuses were more important than investing into their business.

staunch 14y ago

From his twitter account: Yesterday: "Three oranges in a meeting with four of us? No question - I give my oranges to the others. #leadership" 15 minutes ago: "For Groupon Employees: https://www.jottit.com/v5wux/ (Apparently, sharing oranges is necessary but insufficient #leadership)" I'm sure he's not everyone's cup of tea, but I would totally work with this guy.

swohns 14y ago
Credit for the Godfather references!
johndavidback 14y ago
In hindsight it's easy to say bad things, but rewind a couple of years and Group was exploding, awesome place to work, and felt strong enough to say no to an acquisition by Google. Though I'll bet now the regret at that turndown has to be killing him, and many others.
- Im_Mr_Manager 14y ago
  From what I've read on HN in the past it was Google that walked away from that deal during due diligence and not Groupon.

andyl 14y ago

Too bad for Mason. IMHO they should have sold to Google when they had the chance. There are many folks who applauded the decision to decline the offer. Build for the long-term, they said. In general I agree with that sentiment. But when you have a $6B offer on the table, you gotta put the kool-aid aside and be very objective about the future prospects for your company.

ante_annum 14y ago
I've heard from a lot in the Chicago startup community that was a ruse to get Microsoft to buy them (Google didn't offer 6B, but played along), playing on the stereotype that Microsoft goes for Google's scraps.
dopamean 14y ago
I said the same thing to friends of mine at the time and was roundly ridiculed when the company went public at that enormous 17B valuation. They hype was just that - hype. I think Groupon will be around for a while but I have a hard time seeing ever be worth more than it is now.
larrys 14y ago
"But when you have a $6B offer on the table" From my many years of experience in business I can say that anytime you have a serious offer on the table you have to decide if you are willing to risk going for door number two. You can always point to cases where people didn't sell out and ended up better but with business you have to look at the downside not just the upside. Over the years that is the biggest mistake that I have seen people make in negotiation. I'll give you an example with domains. I'm in the process of buying a domain for a startup and the startup will pay $50,000 maybe even $100,000 for the domain. But the owner won't even engage preferring to shoot for the stars and thinks he will get a million. He won't even state a price. At this point we will cut bait and find another name. I know fully well this business (I also own names) and I know that this domain has about a 2% chance of selling for anywhere near that amount in coming years. I have domains that I've held for 15 years and have never gotten a single offer on. I've had domains that I've held for 15 years that I've sold for big money. Anytime someone comes along with a serious offer I focus on how long it will take until the next offer will come in - if ever. Business and gambling are two different things.

ChuckMcM 14y ago

Well at some point the board has to act or risk becoming the target of a shareholder lawsuit.

bcoates 14y ago
Do those ever work? I thought shareholder lawsuits were literally a scam law firms ran on people emotional about losing money in the market.
- gertef 14y ago
  > scam law firms ran on people emotional about losing money in the market. No, it's a scam they run to get a class-action settlement and protection from any other similar (possibly meritorious) lawsuits, regardless of who loses money in the market. Every major decision (such as a merger) by a company, is met by an ambulance-chase race to file class actions with boilerplate charges. Check the financial news ~7 days after any public-company acquisition happens for the near-duplicate stories with differing law firm names.
- Mvandenbergh 14y ago
  Almost never. The whole "companies have to maximise shareholder value or the board will get sued" thing isn't really true. Shareholders get to vote for the board and they have a broad range of statutory protections that ensure company accounts are audited, compensation arrangements are disclosed, etc. But as far as a general right to make money? Nope. You'd only have a chance with that kind of lawsuit if the board made an obvious, colossal blunder that should have been obvious to anyone at the time.
- ChuckMcM 14y ago
  They always cost money. I've been on a couple of boards and it is always advised that board members carry personal insurance against it as well. These suits often name board members and officers personally, in addition to the company. So whether or not it would prevail the incentive is to not have them start.

joeco 14y ago

Great opportunity for a company with huge reach to move in a completely different direction.

sethbannon 14y ago

What's the point of interim co-CEOs? Seems like an odd move.

yajoe 14y ago
No insider knowledge, but I've seen co-leads when someone departs for three reasons: 1) Make it clear to employees, shareholders, and the public that there will be another change coming. Everyone should know that a company run by co-CEOs is unlikely to be permanent. This also helps with recruiting since outside candidates know they have a legitimate shot. 2) Set up explicit competition between the two biggest contenders to win the slot. I personally believe this is dirty and guarantees the loser to leave (which I think is net bad -- the loser was a contender for CEO for a reason). 3) Reduce the need to fill someone's shoes. By giving what was one person's job to two people, those two people can focus on their areas and excel individually without unfair comparisons to their predecessor. This is especially important when the predecessor was a public figure. Think Tim Cook comparisons to Jobs. Microsoft did this with the E&D division when Robbie Bach left (Phones and Xbox went to different people).
- wilfra 14y ago
  It's not #2 - or at least there is no risk of anybody 'leaving'. These are not executives, they are the majority shareholders and control the board.
newman314 14y ago
They were the other cofounders, IIRC.
jfb 14y ago
Learning from RIM?

deleted 14y ago

[deleted]

danilocampos 14y ago

This guy. Travel back in time with me to October, 2010. Stanford. Startup School. Andrew Mason has been talking, sharing the origin story of Groupon, the lessons learned about entrepreneurship, the pitfalls, the joys. He is fun and engaging. You wanna like him, you wanna see Groupon succeed. We get to the part of the talk where questions are asked and answered. He answers some early softballs. Then one brave soul stood up with a real query that only Mason could answer. Is Groupon a sustainable business, given what we'd been hearing from merchants online? It was as if a mask had dropped. Where once there was cheer and energy, there was now a sullenness. The man seemed affronted at the notion that his business would be challenged in this way. Despite the fact the opportunity to ask just such a question was one of the great values of a venue of this sort. Despite the fact that Groupon's sustainability had been the elephant in the room the whole time. This was right after some of the first stories from distressed Groupon merchants had been trickling out. Petulant, absent all of his previous ebullience, Mason asserted the business was sustainable, offered no supporting details, and demanded the next question. A good leader has the intellectual honesty to recognize their missteps and explain them, along with the remedies explored. The expectation for that is even more acute when you've been elevated to the role of mentor. It was in that moment, his phoniness laid bare, that I decided Groupon was likely melting puppies in its basement, Mason knew it, and didn't know how to reverse the operation.

AmericanOP 14y ago
He also hinted at a radical new product, some social Groupon 2.0 platform that never came to fruition. I'm more curious about that in retrospect and what happened. The real story at that moment in time was the flowering of hundreds of Groupon clones. "This guy" ...Get off it. Ideas > events > people. Leave it to HN, tearing down the mainstream success stories of our clan in ever decreasingly creative ways. BTW, he wasn't a happy guy. He described very clearly at that event he forgot what being happy felt like while building GRPN. Sorry to bust your editorial bubble, but when you make a bold + false assertion, your detractors will use it to debase your entire narrative. I'm learning that for a certain segment of humans the presence of rich people bring out claws and fangs, like a full moon.
- 14y ago

arbuge 14y ago

Inevitable in hindsight...

joetek 14y ago

Full memo from Andrew Mason (his jottit.com link isn't working): People of Groupon, 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 in our S1 to our material weakness 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. 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. For those who are concerned about me, please don’t be - I love Groupon, and I’m terribly proud of what we’ve created. I’m OK with having failed at this part of the journey. If Groupon was Battletoads, it would be like I made it all the way to the Terra Tubes without dying on my first ever play through. I am so lucky to have had the opportunity to take the company this far with all of you. I’ll now take some time to decompress (FYI I’m looking for a good fat camp to lose my Groupon 40, if anyone has a suggestion), and then maybe I’ll figure out how to channel this experience into something productive. If there’s one piece of wisdom that this simple pilgrim would like to impart upon you: have the courage to start with the customer. My biggest regrets are the moments that I let a lack of data override my intuition on what’s best for our customers. 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

jarcoal 14y ago
I love this exit letter. Clearly a nice guy that was in too deep.
- mcphilip 14y ago
  The NES Battletoads reference made me smile. Great inside joke to anyone who knows the pure torture of trying to get through the fiendishly hard first 8 levels without dying. Level 9, Terra Tubes, IMHO, is one of the hardest levels in any NES game ever created.

phil 14y ago

...And Lefkosky asserting control. Anyone who follows Groupon more closely understand what that's likely to mean for the changes in direction they had been trying to pull off?

droopyEyelids 14y ago
I worked at Groupon for about three years, during which time I witnessed Brad opening a box of Atlas Shruggeds which he gave out for christmas. I've heard Eric literally yelling in anger that certain departments within the company should not have scored so highly on the yearly employee survey that measured happiness/satisfaction. Now that I shared those anecdotes, your guess is as good as mine.

capkutay 14y ago

During my commute I pass Groupon's Palo Alto office every evening (I only go this route during the evening because it's closer to my gym). For such a large and publicized company, their building always seems empty. I never see people going in or out. I always see empty conference rooms in the window. Perhaps this doesn't reveal anything about the company, but the view from outside (literally) doesn't compare to what I see when I pass other tech companies in the area.

timmm 14y ago

In 2012 alone Groupon had a net loss of about HALF A BILLION dollars, just look at their financial statements. What an atrocity of a web business, just ugly.

edw519 14y ago

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edanm 14y ago
I know you never really left HN, but it's really good to have you back edw519.
matthewjhughes 14y ago
Welcome back Ed. :)

wilfra 14y ago

Biggest lesson here is to go for Zuckerberg style control. Mason gave these guys control from the very beginning because he 'doesn't care about money' and didn't want to be greedy. Now look at him - he got fired from his own company while it's still an infant. Pincus, Zuck and many others will have as long as they want to turn their companies around and wont be out unless they decide to quit. They learned from Steve Jobs.

Mvandenbergh 14y ago
Because of the nature of their businesses Zuckerberg and Pincus didn't need serious amounts of money nearly as early. Of course they took VC money, but they didn't need it so early, so desperately nor did need so much of it.
- wilfra 14y ago
  As his $700 severance package demonstrates, the guy just didn't care about money. That's admirable and I think he's awesome for it - but when it comes to whether or not you can be fired from your own company, it's foolish. He got outplayed by smarter and savvier businessmen who had been down this road many times before.
yuhong 14y ago
Well, there is this: http://news.ycombinator.com/item?id=4284524 http://news.ycombinator.com/item?id=4284524

jfb 14y ago

Those deck chairs would look much nicer over on the port side, no?

chetanahuja 14y ago

"CEO Andrew Mason Replaced By Eric Lefkofsky and Vice Chairman Ted Leonsis At Groupon" Ha, this is somewhat like Dick Chaney letting Bush take the fall for the Iraq fuck up and then take over in 2008 "to fix things". (before you start hitting downvotes, read some background about this guy). 1) http://www.businessinsider.com/groupons-cozy-deals-with-lefkofskys-marketing-logistics-and-law-firms-2013-2 http://www.businessinsider.com/groupons-cozy-deals-with-lefk... 2) http://mashable.com/2011/06/02/groupon-cash-out/ http://mashable.com/2011/06/02/groupon-cash-out/ "Altogether, $946.8 million, or roughly 86% of the funds raised across the three investments, was paid out to Groupon directors, officers and stockholders. Just $151.4 million was retained by the company to use as working capital and for general corporate purposes."

clobber 14y ago

Wow with Eric Lefkofsky as the new CEO they went from bad to worse. Lefkofsky has always been the one behind the scenes pulling all the strings from early investment, cashing out his $1 BILLION and to the IPO. Yikes!

BostonCFO2 14y ago

Groupon's accounting gimmickry is extensive, and began pre-IPO (recognizing full purchase price of coupon when they are only acting as an "agent" (middleman) not as a "principal" (i.e., making the food, owning the spas for the massages etc.), which as a CFO I can tell you is Accounting 101. Among other places: http://bit.ly/Y3hfft http://bit.ly/Y3hfft And yes Rocky Agrawal and the Grumpy Accountants Professors and PrivCo. And the accounting tricks continue - even most Wall Street analysts covering the company for a living have not picked up on it - but for "Groupon Goods last fall they changed the way they account for those purchases. (Remember for Goods their "deal-share" is even smaller than their 37% or so for restaurants/spas/etc. It's under 10% for tablets, laptops etc. So when they at first sold a $2000 flat screen TV, they booked (as forced by the SEC finally) just their $200 cut. When revenue growth slowed, they (meaning likely Eric Lefkofsky instructed) Groupon to find a way to recognize the entire $2,000 sales as their revenue. And the only way (again, speaking as a CFO who knows this intimately - not boasting my opinion is better than anyone else's, just sharing the real facts, I don't own or short the stock - and the only way they could recognize the entire $2,000 example TV sold is if they "took possession of it, then re-sold it" in plain language. And one of the requirements is that Groupon has (even briefly) the "risk of loss" (that is, the TV breaks while legally/technically in their possession before shipped to the buyer). I.e., find a way that Groupon's technically not just a deal middleman on Goods and let the buyer and seller deal with each other, but be the Reseller like Amazon. So they literally (and this is not speculation, this is in the SEC filings - not highlighted and sort of minimally mentioned, but it's there) - they literally state starting with their third quarter 2012 10Q that beginning that quarter Groupon signed a new contract retaining a 3rd party company to act on its behalf to receive the goods from the Goods merchant, then that company acting on Groupon's behalf - with a contract that says Groupon bears "all risk of loss" and then ships it to the buyer. Now that sounds awfully inefficient, and it is, because it has to be shipped twice, reducing Groupon's margins to near zero on Groupon Goods. But it takes Groupon Goods revenue from 10% of each sale to 100$ of each sale. Starting to get the picture? So in the last 2 quarters they reported a dramatic spike in Groupon Goods revenues (no profits of course) but analysts - not knowing any better - began to upgrade the stock, saying yes the daily deals business is slowing to almost 0$ year over year, but look at Groupon Goods! Its revenue is suddenly growing like gangbusters! (I have to give hat tip here to an Accounting Seminar that used it as an example, and to PrivCo who published a Research Note detailing it, but I checked everything in the SEC filings and can say with 100$ certainty, but of course you can confirm it yourself.) So price targets were raised, and many former bullish turned bearish analysis (like Ken Sena from Evercore) turned bullish again, and said Groupon is going to surprise all the naysayers! Groupon Goods is its true future, it's growing in triple digits in revenue now! (Because their revenue recognized went from 10$ of each sale to 100%, by having this fulfillment company acting on their behalf briefly taking possession of the goods and contract says Groupon has "all risk of loss" - even though the possession was sometimes for 10 minutes, since they just put it in a box and shipped it right away to the waiting buyer who had already pre-ordered it. No inventory, just in and right out the door. One more fact you should know (again gotta give hat tip to PrivCo securities lawyers on their staff who pointed this out), go to the section on "Related Party Transactions" (i.e. this is where a company is doing business or hiring a company owned by a senior Officer, Director or Major Shareholder). And in that section - brief as it is - it says one of those Related Party Transactions is that they retain and have a contract with a fulfillment company founded in mid-2012 that is owned by Eric Lefkofsky and Brad Keywell (Groupon's co-founders, Board members and largest shareholders). Yes you read that right. They saw daily deals declining sharply, and decided they had to find a way to "grow Revenue" - without actually selling any more stuff. So they quickly formed this company that signed exactly the contract terms needed verbatim that would allow the accountants to deem Groupon as having taken possession and acting as a principal / reseller and not an agent and recognize the entire Goods amount purchased. And most Wall Street analysts (Evercore's Ken Sena was on TODAY on BloombergTV still touting the Groupon Goods revenue growth as reason to buy the stock, even though daily deals fell for the first time ever year over year.) He's clueless, and he's telling his clients Buy based on Groupon Goods revenue growth spurt since last summer. I'll let the HN crew react to above instead of just saying out loud what I think of that or what you should. Share what you think of that.