Counterparties: Andrew Mason’s disruptive behavior

March 1, 2013

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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:

Goldman’s lavish partner ball is back for the first time since the crisis – Kevin Roose

Billionaire Whimsy
Pete Peterson has squandered half a billion dollars on his misguided austerity crusade – Businessweek

EU Mess
An economic tragedy that everyone saw coming is now unfolding in Europe – Joe Weisenthal

Don’t listen to those silly “the sequester isn’t that bad” arguments – Josh Barro
Probably the most comprehensive sequester explainer you’ll ever read – Dylan Matthews

Life Is Not Fair
“Does Ben Bernanke care too much about unemployment?” – National Journal
Reminder: Bernanke has the second-worst unemployment record of any post-war Fed – Floyd Norris

Carl Icahn basically just going to be a vitamin salesman now – Matt Levine

Jamie Dimon, consistent flip-flopper – Ben Walsh

“How the hell is it going to be OK? The worst word in the English language is hope” – NYT

Says Science
Nearby supermassive black hole spins at close to the speed of light – Guardian

New Normal
Millennials don’t care about cars, and nobody cares about TV – Atlantic Cities

Chesapeake (and its former CEO) are under investigation by the SEC – Reuters

“Growth shares” – one way banks will avoid the EU bonus cap – Sarah Butcher

Goodbye Globe, hello global NYT – Jack Shafer

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Groupon has been a major disappointment. I stopped using them quite a while because they have not grown from ‘dumb’ aggregation of deals to a more useful, usage based model. I still get hundreds of offers, most of which makes no sense to me. I would much rather have Groupon send me 3 coupons a week and fine tune their strategy based on how I react to these offers …

Posted by InfiniteThought | Report as abusive

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