Counterparties: Andrew Mason’s disruptive behavior
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How should a CEO act? Andrew Mason, the co-founder of Groupon, is stepping down, and his legacy is already being defined with terms like “quirky” and “eccentric”. In a terrific resignation letter, Mason said he’d “like to spend more time with my family. Just kidding – I was fired today.” He may or may not have tweeted obscure Godfather references on the way out.
Of course, there’s one thing that determines whether adjectives like “quirky” are pejorative when describing a CEO: the stock price. Earlier this week, the company released another typical Groupon earnings report — revenue was up, but the company posted a $12.9 million operating loss, sending its stock down 24%. Groupon’s market cap is now roughly 75% lower than when it went public in 2011. This all comes more than a year after the company abandoned a controversial accounting method and restated years of earnings, basically halving its revenue.
In as co-CEO’s are Ted Leonsis and Groupon-co founder Eric Lefkofsky, whom Mason had reportedly been feuding with. But as Rolfe Winkler tweeted, it’s not clear that Mason was even Groupon’s biggest problem. The company has actually been doing better than that it was at the time of its IPO, in terms of revenue, billings and income (not that any of that helped Felix with his wager). But fewer people are using Groupon’s deals, and as Winkler noted this fall, half of the company’s cash was owed to its merchant partners.
Groupon also provides a lesson in how not to do late-stage investing. In January 2011, Several big Silicon Valley VC firms pumped $950 million into the company, at a reported valuation of $4.75 billion. Groupon went public that November. But, as Peter Kafka notes, that money didn’t really help the company: Groupon kept only $136 million of the proceeds. The rest went to “right back out the door, to employees and early investors.” By August the WSJ was reporting that those investors were running for the hills.
None of this is to completely excuse Andrew Mason. Still, it’s worth remembering that when a CEO of a struggling company toys with the idea of sleeping in his clothes, we call him strange. When a more successful CEO invites a Canadian politician to kite surf naked, we call him Richard Branson. — Ryan McCarthy
On to today’s links: