Groupon CEO Andrew Mason was fired by the company’s board Thursday, less than 24 hours after dismal earnings sent the company’s stock price into a tailspin. The company is currently looking for a replacement, and board members Eric Lefkofsky and Ted Leonisis will serve as co-CEOs of Groupon until one is found.
Mason had been in the hot seat since last fall when rumors swirled that Lefkofsky and Groupon’s board were actively looking for a replacement. At the time, news that Tiger Global and other hedge funds were buying up Groupon stock had helped buoy the company’s share price, and the board decided to keep Mason in place.
“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 quipped in his exit letter, which was penned in the off-the-cuff, quirky style that defined time as Groupon’s chief.
After a meteoric rise, Groupon has floundered since its 2011 IPO. Its share price has dropped precipitously and its bottom line has languished, largely due to an international segment left in tatters after a mad dash for market share. Mason also oversaw a series of blunders since the company went public, ranging from embarrassing PR mishaps to investigations into the company’s accounting practices.
Before Groupon released its earnings Wednesday afternoon, the company’s stock was up nearly 30% since December and many analysts seemed optimistic about its future. But the earnings report depicted a business in crisis, with declining margins in both its local and ecommerce business forcing gross profit down 10% from a year earlier. And its Groupon Goods ecommerce business, which was once hailed as the future of the company, generated just $6 million in gross profit on $225 million in revenue.
With Lefkofsky and Leonisis at the helm, Groupon’s outlook remains grim — and its most difficult challenge is the company’s ongoing lack of strategic focus. Between an impetuous international expansion in 2010 and 2011 and an even more aimless push into ecommerce last year, the company has routinely sacrificed long-term innovation for immediate, topline growth. Where others continued to innovate and adapt, Groupon focused on optimizing and scaling its current services. Meanwhile, the company has allowed its core asset — its relationship with local merchants — to atrophy.
As chief executive, Mason bears the blame for much of Groupon’s strategic negligence. But he also seems to be responsible for the company’s most promising concept: the idea of being the operating system for local business. He penned a letter, introducing the concept to shareholders last May:
“We are building an integrated suite of tools and services that we believe will profoundly change the way we shop locally,” Mason wrote last year.“Today, Groupon is a marketing tool that connects consumers and merchants. Tomorrow, we aim to move upstream and serve as the entry point for local transactions.”
Since then, Groupon has snapped up a point of sale (POS) system in Breadcrumb and rolled out a payments initiative, but has done little to keep up with firms like eBay who share a similar vision. Transforming a marketplace is not an initiative; it’s a mission statement. But Groupon leadership never allowed itself to fully embrace the concept.
Following the news of Mason’s removal, Groupon shares — which lost over 24% of their value Thursday — were up over 4% in after-hours trading.
Here’s the full text of Mason’s statement on his removal:
(This is for Groupon employees, but I’m posting it publicly since it will leak anyway)
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.
Steven Jacobs is Street Fight’s deputy editor.