Groupon founder and chief executive Andrew Mason has been fired on the back of the group buying site’s December quarterly loss.
Mason sent a letter to all Groupon employees and posted it on Twitter explaining why he had been fired.
“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,” he said.
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Mason said a fresh chief executive would mean a “second chance” for Groupon and provide a “relief valve”.
“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 okay with having failed at this part of the journey,” he said.
Eric Lefkofsky and Ted Leonsis will fill Mason’s position until a replacement is found.
The changes to the company’s leadership come as Groupon stocks fell 26% to $4.43 in after-hours trade yesterday, as its “take rate” from holiday merchants in the quarter was lowered to maintain the market competitiveness of merchants.
Telsyte senior research analyst Sam Yip told SmartCompany all group buying sites are facing increased pressure on margins.
“The market has been around for three years, traditionally charging 30-50% on margins from merchants, but this is lower now because of increased competition and deals have to be sharper and more appealing to consumers.
“Group buying sites have to be a lot smarter with its dealings with merchants. It’s no longer just straight commissions; merchants are now also concerned with advertising and cross-promotions,” Yip says.
Groupon reported its fourth quarter 2012 loss, attributable to common stockholders, was $81.1 million, or $0.12 per share.
Despite the losses, Groupon reported fourth-quarter revenue increased 30% to $638.3 million from $492.2 million in the previous corresponding period.
Mason took Groupon public in November 2011, after rejecting a bid from Google. The company was listed on the Nasdaq stock exchange for $20.
Groupon was initially valued at $13 billion, but its value has been declining ever since. Overall, the company has shed more than three-quarters of its value since its initial IPO in November 2011.
Just yesterday, Mason commented on the company’s results, saying in a statement that customers still loved Groupon.
“Record billings growth this quarter is a clear signal that customers love Groupon.
“We will continue to invest in growth through 2013 as we see new opportunities to give our customers what they want,” Mason said.
Above: Mason’s letter.
Groupon is predicting operating income and revenue to increase in 2013.
“Revenue for the first quarter 2013 is expected to be between $560 million and $610 million, an increase of between 0% and 9% compared with first quarter 2012,” a Groupon statement says.
Reports the Groupon board were questioning Mason’s leadership capabilities started from late last November.
Bloomberg reported a source from the company said some directors were frustrated with Mason’s efforts to find new areas of growth amid ebbing demand for online coupons.
Groupon say its forecast for 2013 remains unchanged, despite the removal of Mason from the company.
In a statement issued this morning, executive chairman Lefkofsky, who has been appointed to the new office of the chief executive since Mason’s departure, thanked Mason for his dedication to Groupon.
“On behalf of the entire Groupon Board, I want to thank Andrew for his leadership, his creativity and his deep loyalty to Groupon. As a founder, Andrew helped invent the daily deals space, leading Groupon to become one of the fastest growing companies in history,” Lefkofsky says.
Leonsis also reiterated the company’s commitment to growth.
“Groupon will continue to invest in growth, and we are confident that with our deep management team and market-leading position, the company is well positioned for the future,” Leonsis says.
SmartCompany contacted the US office of Groupon, but it had no further comment.
Yip says the group buying market in Australia is currently consolidating.
“The number of companies out there has declined and the market has been consolidating.
“The main players you’re looking at are about eight who will continue to operate. The main threat now is from non-group buying sites which attract the group buying customers. Restaurant reservation sites are appearing which don’t have the same model, but they attract the same customers and allow people to make deals with restaurants for big table bookings,” Yip says.
Telsyte’s Australian Online Group Buying Study indicated the group buying industry grew slightly last year, up by 1.4 per cent in 2012 to $504 million.