"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," stated a candid memo from Andrew Mason, sent to Groupon employees yesterday.
The co-founder and now former CEO of the group-buying site added that if anyone was wondering why he had been fired, they "haven't been paying attention".
Groupon was an off-shoot of Mason's earlier project, The Point, which was essentially a social platform for people to get together and collectively solve problems, created in 2007.
After seeing the platform being used by some people to group together to get discounts on certain products and services, Mason's business partner, Eric Lefkofsky, suggested the use case be explored as a potential revenue stream for The Point. He pushed the idea until Groupon (derived from "group" and "coupon") was created as a side project in 2008.
Mason is credited with conceptualising the core characteristics of Groupon - including the concept of offering a deal a day, focusing on local businesses and only letting a deal come into effect if a certain number of people buy it. The idea caught on and spread like wildfire, leading to The Point becoming Groupon and subsequently one of the fastest-growing start-ups in history - hiring 10 000 people between 2009 and 2010, and expanding to 100 cities in 25 countries.
Groupon pursued an aggressive growth strategy, buying out similar daily-deal services in countries around the world - including Twangoo in SA. Groupon went public late in 2011 with a $12.7 billion valuation. However, even before filing its IPO, Groupon's business model began to come under intense scrutiny.
A disaster
In 2011, Forrester research analyst Sucharita Mulpuru said: "Groupon is a disaster. It's a shill that's going to be exposed pretty soon."
As the company continued to pursue its aggressive growth strategy, customer dissatisfaction also continued to grow - with complaints about Groupon's poor customer service and merchants not being able to meet demand becoming the norm.
Since going public in 2011, Groupon's stock price has fallen by about 75%. On Thursday, the company reported a surprise loss for the fourth quarter - revealing it had taken a smaller cut on daily deals during the holiday period in an effort to keep and attract merchants (while sacrificing revenue and profits). A disappointing first-quarter sales forecast added to the dismal figures, and drove Groupon stock down 26% on Thursday to $4.43.
In his letter to Groupon employees, Mason said: "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."
In a public statement, Groupon announced the leadership change and ousting of Mason, saying executive chairman Eric Lefkofsky and vice-chairman Ted Leonsis will assume leadership of the company, while they search for a new CEO.
Lefkofsky said: "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."
Leonsis added: "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."
'I'm getting in the way'
According to Lefkofsky and Leonsis, they are aware that Groupon's "operational and financial performance has eroded the confidence of many of our supporters, both inside and outside of the company. Now our task at hand is to win back their support."
Reuters quotes Macquarie Research analyst Tom White as saying: "Groupon is a very large, very complex multifaceted global business. It's got ambitions in a lot of different areas and categories. They are either going to have to find somebody who is a proven executer in handling complex businesses, or maybe this is a signal they are going to simplify."
Mason said to Groupon employees: "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 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!"
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