Groupon founder, CEO Andrew Mason says ‘I was fired today’
BY SANDRA GUY and MITCH DUDEK Staff Reporters February 28, 2013 1:30PM
Groupon CEO Andrew Mason speaks at an event last May. | Tom Cruze~Sun-Times
Bio of Andrew Mason
TITLE: Founder of Groupon Inc.; CEO until Thursday.
TWEET on Feb. 27: Three oranges in a meeting with four of us? No question — I give my oranges to the others. #leadership.
TWEET on Feb. 28: (Apparently, sharing oranges is necessary but insufficient #leadership).
EDUCATION: Bachelor’s degree in music from Northwestern University.
PROFESSIONAL EXPERIENCE: Founded Groupon in November 2008 and served as CEO until Thursday. Previously worked as a software developer with InnerWorkings Inc.
PERSONAL: Was once a keyboardist in a punk band.
Updated: April 2, 2013 6:31AM
The Chicago tech community lost its biggest and brightest star Thursday when golden boy and Groupon founder Andrew Mason got knocked from his CEO throne. The markets seemed to like the move Friday, with the stock opening up 3 percent.
Critics and admirers alike said Mason, 32, will never lose his cult-like status for having created what Forbes called the “fastest growing ever” global commerce business.
“He’s kind of like a folk hero,” said Andrew Wenum, 25, who runs a GRP21 brand building website and worked as a video producer at Groupon.
The Northwestern University music major fell victim to a common technology-industry phenomenon: The wunderkind had the great idea, but not the skills to run his business as it ballooned into a big public company.
The firing came three months after the board of directors first discussed Mason’s fate in the midst of Groupon’s stock and performance freefall. Investors and analysts have long said the daily-deal emails were growing wearisome and spam-like, and questioned Groupon’s struggle to grow with a variety of tactics.
The board on Thursday named two directors — founding investor and Executive Chairman Eric Lefkofsky and Vice Chairman Ted Leonsis — to the newly created “Office of the Chief Executive,” until it finds a new CEO.
Mason’s ouster followed the latest miserable earnings report. On Wednesday, the daily deal site announced a widening net loss and lower-than-expected forecast sales and operating results. On Thursday, shares plunged 24 percent, closing at $4.53 — 77 percent below its IPO price and all-time high.
Investors welcomed the change, sending the stock jumping 8 percent minutes after the 3:22 p.m. Central Time announcement.
In his trademark goofy yet smart-aleck way, Mason had tweeted a hint on Wednesday that he had given up his leadership post, saying, “Three oranges in a meeting with four of us. No question — I give my oranges to the others. #leadership”
On Thursday, he posted a memo to Jottit.com, saying, tongue-in-cheek, “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.” His tweet linking the memo said, “Apparently, sharing oranges is necessary but insufficient #leadership.”
The loss of Mason as Chicago’s most-acclaimed tech leader is bound to reverberate, but some say his contributions can’t be undone.
“He framed the skills of other entrepreneurs who were catapulted to other startups or who started their own,” Wenum said. “A place like this (1871 tech collaborative space) never would never exist without Groupon...he showed people it could be done.”
Michael Landers, 52, founder of Pixme2, a digital entertainment communications network startup, is among those who expect Mason to rise again.
“He’s going to do something again,” he said. “He won’t be able to sit idly by.”
Matt Moog, founder of Viewpoints Network consumer review and product rating service, head of tech networking group BuiltInChicago.org and a key player in creating the 1871 tech hub at the Merchandise Mart, said he hopes Mason starts a new business here.
“There is no other person in Chicago who could say they were younger than 30 when they started a multi-billion-dollar company,” Moog said, referring to Groupon’s estimated valuation when it turned down a $6 billion takeover offer from Google in December 2010.
Moog said Groupon represents 5 percent of the greater Chicago area’s digital-tech employment, and that several companies in the sector provide solid jobs and revenues.
“I don’t think the fortunes of the digital tech community rise and fall on Groupon,” he said.
Jason Kunesh, former director of user experience for the Obama campaign and director of product for the team’s dashboard organizing tool, said the Chicago tech scene “will be great.”
“There are a lot of good things happening in Chicago tech,” he said. “We have a proven entrepreneur with experience on the street, and Groupon is rebooting its leadership.”
Despite the fun, nonchalant image Mason portrayed, complaints hounded Groupon, with merchants saying they lost money and received little guidance on how to leverage the Groupon coupons, and former employees describing the company as a “white collar sweatshop” with a disorganized sales force. Groupon created some of its own headaches, too, with Mason talking out of turn during a so-called “quiet period” and the company being forced into financial accounting do-overs, before and after the IPO.
Experts in the corporate-office world said Groupon should hire from outside, even though Chief Operating Officer Kal Raman — promoted about the time talk of Mason’s uncertain future grew — has been mentioned as a possible successor.
Lou Kerner, founder of the Social Internet Fund, a New York-based investor in tech companies who first told the Sun-Times of Mason’s vulnerability last summer, said Groupon will look for “a big name, well known to the investment community” who can restore Wall Street’s and investors’ faith.
He speculated the new CEO might be a senior leader at Amazon, Google or another big tech company.
“It’s a very tempting job,” Kerner said. “It’s a very big footprint on which to have an impact.”
Kerner said he believes it’s “unimaginable” that Groupon would pick an internal candidate.
“They’ve shown they have a long history of internal incompetence. It wouldn’t give the investment community any faith,” he said.
Ryan Stanton, director of the crisis and litigation group at Levick, a Washington, D.C.-based reputation management firm, said Groupon should hire an outsider with a track record of “taking startups to the next level” and who can communicate Groupon’s competitive advantages.
“The board will be looking for a seasoned veteran who can bring a sense of maturity and reassure investors that the business model can thrive and succeed longterm,” Stanton said.
Mary Kelly, an economist and author of “Fifteen Ways to Grown Your Business in Every Economy,” said Groupon should hire someone from outside who has experience in satisfying customers — perhaps someone who has worked at a major restaurant or retailer.
Sameet Sinha, senior analyst at B. Riley and Co., said Groupon has the chance to hire someone who has managed a “multi-geographic sales team, preferably in the e-commerce industry, and to clean the slate at this point and start over, instead of missing out on promises made after the IPO. They have an option to write the story differently now.”