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Groupon Still Losing Money, CEO Is Fired And Leaks Final Email

Posted by ryuzaki0 on from the can't-even-use-the-subjunctive dept.

New submitter Inzkeeper writes with news that the CEO of Groupon met the axe today: "Groupon CEO Andrew Mason made public an email he sent to Groupon employees. He takes responsibility for the company's downturn, expresses his appreciation for his staff, and wishes them well. '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 Groupon was Battletoads, it would be like I made it all the way to the Terra Tubes without dying on my first ever play through.'" Despite increased revenues, they are still losing about $81 million each quarter, and Wall Street needs blood.

61 of 207 comments (clear)

  1. For those who are concerned about me by Ripp · · Score: 4, Insightful

    I bet most stopped right there.

    --
    Blech. Signatures.
    1. Re: For those who are concerned about me by geekoid · · Score: 4, Informative

      He is the founder, and probably know a lot of people therr personally.

      --
      The Kruger Dunning explains most post on /. http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect
    2. Re: For those who are concerned about me by multiben · · Score: 5, Insightful

      Harsh. It may be convenient to group people into nice neat categories eg. "All CEOs are terrible people with no feelings", but in reality the world is a much more varied place.

    3. Re: For those who are concerned about me by rekoil · · Score: 4, Informative

      His severance package is $378.36. not $378 thousand or $378 million, Three Hundred and Seventy Eight dollars and Thirty Six cents.

    4. Re: For those who are concerned about me by paiute · · Score: 5, Funny

      He got a Groupon for a $1 million severance package for only $500,000.

      --
      If Slashdot were chemistry it would look like this:Cadaverine
    5. Re: For those who are concerned about me by davester666 · · Score: 2

      Yeah, that totally sucks. Course, he can probably just cruise for awhile on the $200+ million in stock he's got...

      --
      Sleep your way to a whiter smile...date a dentist!
    6. Re: For those who are concerned about me by Dahamma · · Score: 2

      Or even if all that disappeared he might be able to barely squeak by with the $30M he already cashed out...

    7. Re: For those who are concerned about me by Anne+Thwacks · · Score: 4, Insightful

      I have no idea what the CEO is like, but from the first time I saw one of their promotions, I thought this is a really bad concept, and I would not invest a bean in it.

      --
      Sent from my ASR33 using ASCII
    8. Re: For those who are concerned about me by symbolset · · Score: 4, Interesting

      He had an idea and marketed it well. Then had an IPO where he gained hundreds of millions of real dollars in real money for the phantom value of a business that didn't work. Now that he's got the money he departs with a smile having been fired rather than quit so it's not his fault if it all goes horribly awry now since it wasn't of his own volition and his story can be it might have survived if only it had followed his secret plan.

      We ought to call this one the "clean and jerk". It's becoming a standard model. Some manage to repeat the process multiple times, like AOL.

      --
      Help stamp out iliturcy.
    9. Re: For those who are concerned about me by symbolset · · Score: 2

      maybe they should look for a CEO with at least a tenuous connection to reality.

      Good luck with that.

      --
      Help stamp out iliturcy.
    10. Re: For those who are concerned about me by PhamNguyen · · Score: 2

      It's like those poor fools attribute the rise of the company from nothing to him, and not just it's recent decline.

    11. Re: For those who are concerned about me by 1s44c · · Score: 4, Interesting

      Harsh. It may be convenient to group people into nice neat categories eg. "All CEOs are terrible people with no feelings", but in reality the world is a much more varied place.

      Good CEOs have to put the company above their personal feelings. If they can't do this they will strangle their company to death by making terrible decisions. On some level being a terrible person is part of the job.

      I've worked in a company where the CEO could not separate his personal feelings from work duties. When the money ran out he could not cut costs anywhere, he could not even retire off staff that got to retirement age. All his so called friends got lazy and only looked out for their own interests because they knew they could get away with it. If you were there you would love a good old fashioned sociopath CEO, at least they will fire 5 people to save 50.

    12. Re: For those who are concerned about me by daem0n1x · · Score: 3, Insightful

      Just like everything else in life, a good balance is the best thing. Mr. Niceguy does not make a good CEO, or a good leader in any human endeavour. But a society that glorifies psychopaths is horribly wrong.

    13. Re: For those who are concerned about me by bitt3n · · Score: 4, Funny

      I have no idea what the CEO is like, but from the first time I saw one of their promotions, I thought this is a really bad concept, and I would not invest a bean in it.

      what if we give you 50% off the second bean's worth

      --
      how many pairs of boxer shorts should you own?
    14. Re: For those who are concerned about me by fuzzybunny · · Score: 3, Interesting

      Empathy and calculated reason are not mutually exclusive.

      I manage a pretty large team, and work in turn for a guy who is far better than I am - I tend toward "nice", whereas this guy is best described as "lawful neutral". He's punctiliously fair, weighs the needs of the company and the overall population of employees with those of the individuals, and while he will give people a chance, does not brook avoidable failure.

      I am learning a shitload from the guy, but understand that he'd drop me at a moment's notice - and that is okay. He's completely transparent about this, not in a threatening way, just very matter-of-factly because it's what he needs to do to keep the organization running successfully. We all know this and in turn do our best.

      It's not black or white - "nice" vs. "utilitarian". Proper balance is everything.

      --
      Cole's Law: Thinly sliced cabbage
  2. His problem is that they're too small by Anonymous Coward · · Score: 5, Funny

    You need to be big like Amazon to lose money like that.

    1. Re:His problem is that they're too small by Sponge+Bath · · Score: 5, Funny

      Maybe Amazon should buy Groupon. Think of the synergies and new paradigms in losses!

    2. Re:His problem is that they're too small by Dahamma · · Score: 4, Insightful

      Or more accurately, they are getting boned because EVERYONE has a competing service. Barrier to entry on this concept is near zero.

  3. On the other end... by zoffdino · · Score: 5, Insightful

    There's a company that pumped the highest profit in a quarter without pumping oil. Massive cash pile, no debt. And Wall Street continues to punish it. Wall Street wants bloods.

    1. Re:On the other end... by Anonymous Coward · · Score: 2, Insightful

      Spare me your apologetics. Wall Street sees something in apple's future that you are unable to understand.

      the reason apple got to be so profitable was innovative design. these days, Apple's os looks the same as it did 5 years ago. Its smartphone got slightly bigger. The mp3 market is drying up. There are now hundreds of tablets on the market and apple releases a smaller one.

      The market isn't biased against apple. It's simply realizing that the wave of iPod,iPhone,iPad is over. If apple isn't creating their own market then they're just coasting along and their stock value should reflect that.

    2. Re:On the other end... by Anonymous Coward · · Score: 2, Insightful

      Nice post a AC, but you're wrong on all counts. If you weren't AC I'd take the time to explain why.

      I doubt that, if you had any sort of argument to make you'd have made it. Names are only needed when the poster is relying on his or her reputation, or when you're planning to launch a personal attack instead of making a real argument. But looking at the parent post, I guess it's just a case of a troll with a face slamming on one without.

      But just FYI, this entire thread is nothing but flamebait, plain and simple so I'll respond in kind... only a complete dipshit would even bother using a real account to respond to it.

    3. Re:On the other end... by _xeno_ · · Score: 3, Interesting

      Since you replied to the AC only to say you won't answer ACs, I'll reply logged in. Just for you.

      Apple's fucked. They have no future. Their latest iPhone was a large "meh." It wasn't a flop, but it certainly wasn't the success that earlier versions were.

      Samsung, on the other hand, is showing impressive growth in that sector. Apple pissed off Samsung and lost their best supplier of quality parts. As a result, all Apple products that were using Samsung parts are now much, much worse. The new "retinal MacBook" has screens that have a "burn in" problem and apparently tint horribly pink.

      There's no hotly anticipated Apple release on the horizon. No one really cares what the next iPad will be. Every other tablet on the market meets its standard. The lackluster iPhone 5 release means no one cares about the next iPhone either. Apparently Apple still makes computers, but no one who isn't an Apple fan cares about those.

      Where's the future for Apple? Unless they announce something big real soon now, Wall Street is absolutely right to dump them. Google Glass is going to release soon (maybe), what's Apple's answer to that?

      --
      You are in a maze of twisty little relative jumps, all alike.
    4. Re:On the other end... by ergo98 · · Score: 2

      I know, right? Being valued at $410 billion -- on the backs of two consumer products in a very fickle market -- is just brutally punishing, treating them like some fly-by-night nobodies. How grossly unfair.

    5. Re:On the other end... by quenda · · Score: 2

      And Wall Street continues to punish it.

      In what sense? The only real way Wall St can punish a company is by not loaning them money, which Apple has no need of.
      Are you complaining about the stock price? $400billion valuation is "punishment"!?
      It is very high already in terms of revenue, employees, etc.
      Apple is not a big company like Ford or General Electric, just very profitable at the moment. Stock price reflects the market opinion of future profit.

    6. Re:On the other end... by rtb61 · · Score: 2

      Oooh, you've angered the Apple marketdroids. Apple toys have become brat bait and that's never good for sales as it's considered tasteless. Now that's exactly what happens when you play the fad/fashion game, high profits but when the marketing loses it's bite as it always inevitably does, watch out. So groupon lots of noise and colour so that it could be sold and then hang on for the ride.

      --
      Chaos - everything, everywhere, everywhen
    7. Re:On the other end... by Anonymous Coward · · Score: 2, Insightful

      This is a fairly idiotic comment. "Apple's fucked". Really? You don't have anywhere else to go than "fucked" for that company? Nice digital logic; let's see how that works out for your stock portfolio.

      So according to you, with $137bn in cash reserves (1/3 their market cap), and a more profitable quarter than the same time last year, they are on an irrevocable death spiral? And based on iPhone 5 being slightly disappointing, and a handful of production issues, you think there is no possibility that they might come out with something more innovative within the next year or two?

      This isn't market analysis. This is anti-fanboyism,

      As for Google Glasses - because Google flashes its panties to strangers and Apple doesn't, that means Apple isn't wearing any? Your question, "what's Apple's answer to that?" is valid, but your assumption that they have none because you don't know about it is naive to the point of stupidity.

  4. If Groupon was Battletoads by drinkypoo · · Score: 5, Funny

    I nominate this for nerd meme of 2013. If slashdot was battletoads. If the republican national convention was battletoads. If shopping at Wal-Mart was battletoads. And then all those of us who never played it will have to make friends with gamefaqs all over again to understand WTF everyone is talking about.

    --
    "You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
    1. Re:If Groupon was Battletoads by eldavojohn · · Score: 4, Informative

      I nominate this for nerd meme of 2013. If slashdot was battletoads. If the republican national convention was battletoads. If shopping at Wal-Mart was battletoads. And then all those of us who never played it will have to make friends with gamefaqs all over again to understand WTF everyone is talking about.

      There hasn't been a Battletoads game released since 1994 but recently Battletoads has seen reemergence on boards like 4chan and Reddit. It has been used by Anonymous to prank scientology.

      I'd imagine he could have included that in there to try to make himself look like an average guy who's in on all the jokes (not the reality). It has also been used for trolling -- perhaps he was trolling? Put up a screenshot of Battletoads and ask "Is this Battletoads?"

      And then there's also the possibility that he really likes the game, wants to see a sequel and therefore decides that he can give it a ton of publicity by mentioning it in his farewell e-mail.

      Who knows or cares at this point?

      I found this hilarious from the article:

      In addition, Mason also has support on the eight-member board — director and former AOL exec Ted Leonsis has always been a key mentor to him, for example.

      What is this? Game of Thrones?

      --
      My work here is dung.
    2. Re:If Groupon was Battletoads by fuzzyfuzzyfungus · · Score: 5, Insightful

      I'm pretty sure that 'being CEO of a company built on skimming a percentage of the profits from businesses willing to lose money and make it up in volume' is epic trolling on a scale that most trolls will never even be able to dream of...

    3. Re:If Groupon was Battletoads by guttentag · · Score: 4, Insightful

      If Groupon was Battletoads, it would be short-lived, fictitious, and not popular with today's consumers. Maybe Groupon is Battletoads.

    4. Re:If Groupon was Battletoads by guttentag · · Score: 4, Interesting

      I used to work with someone who was close to Ted Leonsis. Ted's great infamous achievement is that he came up with the idea of blanketing the country in AOL disks. He made a lot of money at AOL and then got into buying DC-area sports teams. The media often liked to hold him up as a tech sector golden boy, but I can assure you that being close to Ted Leonsis is no guarantee of success. If anything, I find it interesting that Groupon's CEO was "mentored" by Ted, because I always thought the way Groupon advertised their coupon service was as strangely pervasive as AOL disks were. Put out enough and you're bound to get some return.

    5. Re:If Groupon was Battletoads by antifoidulus · · Score: 4, Funny

      And much like Battletoads Groupon seemed really cool at first, only to get frustratingly difficult very quickly to the point that most people just gave up.

      --
      Monstar L
    6. Re:If Groupon was Battletoads by reverseengineer · · Score: 4, Insightful

      The analogy between Battletoads and Groupon goes even deeper. Just as Battletoads had an infamous bug that prevented Player 2 from completing Level 11 (they would just sit motionless until they lost all their lives), Groupon looks like in the near future it will be stuck in Chapter 11.

      --
      "FDA staff reviewers expressed concern about the number of patients who were left out of the study because they died."
  5. They should have taken the $6B from Google by cryfreedomlove · · Score: 4, Insightful

    2 years ago Google offered $5B to $6B to buy Groupon. Groupon turned them down and today their market cap is $3B. Oops.

    1. Re:They should have taken the $6B from Google by the_humeister · · Score: 4, Insightful

      I'm not sure that's really what happened. I'll bet it's more like Google looked at their books, said "WTF???" and let Groupon "back away" from the deal to save face.

    2. Re:They should have taken the $6B from Google by rudy_wayne · · Score: 5, Interesting

      I'm not sure that's really what happened. I'll bet it's more like Google looked at their books, said "WTF???" and let Groupon "back away" from the deal to save face.

      That's a very real possibility. Another possibility is that Andrew Mason really did turn down Google's offer because he knew it would kill his scam. Google isn't just going to walk in and hand them a check for $6 Billion. There's a lot of "due diligence".

      Groupon was cooking the books, losing money but showing profitability. Mason was probably worried that if word got out that Google killed the deal because of what they found, Groupon would be tainted and that could put a serious damper on their IPO.

      Don't cry for Andrew Mason, the fired CEO. Thanks to Groupon's IPO he leaves a pretty wealthy guy. Which is what this was really all about all along.

    3. Re:They should have taken the $6B from Google by fldsofglry · · Score: 3, Informative

      A couple of reasons the deal didn't work out: http://www.businessinsider.com/groupon-google-deal-turn-down-2012-6 Supposedly, a break up fee of $800 million dollars wasn't enough for groupon to want the deal, and Google was afraid of being in antitrust court for years over whether the deal would actually go through. I was also told by a source somewhat close to the matter that Google wanted to groupon to offer a "break up fee" as insurance in case groupon's books weren't on the up and up. Some say that "insurance fee" sealed the fate of the deal as groupon didn't want Google to see their accounting procedures.

  6. Soooooo by roboticbebop · · Score: 2

    .. does this mean that everybody's caught on to their predatory business model?

    1. Re:Soooooo by tftp · · Score: 3, Insightful

      does this mean that everybody's caught on to their predatory business model?

      No, not everybody. Just those who haven't seen it from day zero.

    2. Re:Soooooo by CastrTroy · · Score: 4, Insightful

      The thing is, they could probably stand to make a lot of money if they weren't quite so predatory. I think that for the most part, the people who bought the groupons were quite happy. However, the businesses who offered the groupons often got shafted. I'm sure they could easily change the way they they deal with businesses to make sure they have a much better experience. For instance, most of the time they push for no limits on the number of coupons sold. Instead, there should always be a limit, because most businesses aren't set up to handle the amount of business that Groupon could send to them. Groupon would still make money off the deal, and would probably even have some repeat business.

      --

      Anthropic principle: We see the universe the way it is because if it were different we would not be here to see it.
    3. Re:Soooooo by fuzzyfuzzyfungus · · Score: 4, Funny

      .. does this mean that everybody's caught on to their predatory business model?

      It's worse than that: Not only is their business model predatory, it has a low first-mover advantage and minimal barriers to entry(and to the degree that the barriers are there, other people are way beyond them).

      There is nothing stopping a bevy of more-or-less-exact imitators ('livesocial' and friends); but there is also nothing stopping the people who already issue the consumer's credit card and the small businesses' hosted-payroll service from spinning something ('Bank Amerideals(tm)').

      Groupon was doubly screwed: not only are they vultures who are ultimately bad for the people they depend on to offer further offers, they are less efficient and well placed vultures than those who are already well entrenched. Bank of America, or any other major financial institution/credit card issuer, aren't creative enough to know their asses from a hole in the ground; but they are trivially better placed than groupon to skim a few extra percentage points from the transactions they already skim a few percentage points from.

    4. Re:Soooooo by geekoid · · Score: 2, Insightful

      Do you keep cutting and pasting that?

      Not all business lost money on every sale. Stupid ones that offered to much did. That's not Groupons fault, and Groupon isn't predetory.

      Yes, some idiot decides they are going to sell cup caked to an unlimited number of people for a dime, they are going to lose money.

      Of course, it never occurs to them to put a volume limit, or simply close earl;y when they realize they have made a mistake.

      It's all groupon's fault.
      I talk about this to every place I use a groupon at.

      --
      The Kruger Dunning explains most post on /. http://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect
    5. Re:Soooooo by Viceice · · Score: 2

      In the end, Groupon is just a marketing tool. It's up to you to be smart about using it. If repeat business does not happen, it's more likely a weakness of your business model than Groupon's fault.

      I once bought a coupon for a restaurant. The food was bad and when I complained, I was insulted by the owner.

      Needless to say, I did not go back, and it's really not Groupons fault.

      --
      Sometimes I wish I was a plumber, then I'd know how to deal with other people's shit.
  7. Funny, but I am reminded of the old joke... by rmdingler · · Score: 4, Funny

    I've always hated him, but I'll go to his funeral just to make sure he's really dead.

    --
    Happiness in intelligent people is the rarest thing I know.

    Ernest Hemingway

    1. Re:Funny, but I am reminded of the old joke... by Anonymous Coward · · Score: 5, Informative

      I don't know anything about him, but it was the best CEO firing letter ever.

      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. If you're wondering why... you haven't been paying attention.

      and

      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 Groupon was Battletoads, it would be like I made it all the way to the Terra Tubes without dying on my first ever play through. I am so lucky to have had the opportunity to take the company this far with all of you. I'll now take some time to decompress (FYI I'm looking for a good fat camp to lose my Groupon 40, if anyone has a suggestion), and then maybe I'll figure out how to channel this experience into something productive.

      I'm sure he made plenty of cash and now is a good time to get the hell away from GroupOn, toxic as it is.

  8. Battletoads, eh? by grouchomarxist · · Score: 2, Funny

    I have a theory of what the CEO was doing instead of fixing up Groupon.

  9. Battletoads? by OhANameWhatName · · Score: 4, Funny

    Now own up, who googled Battletoads?

  10. Yes! by Y2K+is+bogus · · Score: 4, Interesting

    Let's see, a company who cons small business into bad decisions by taking advantage of their inability to quickly do an ROI and assess risk, is themselves falling ill to their unmitigated growth and overhead.

    How much could it cost to run a company that just sells coupons?

    1. Re:Yes! by TheRealMindChild · · Score: 2

      if poor people can't do basic ROI in there head on the fly, they are going to have a hard time succeeding.

      Well, duh. Why do you think they are poor/small business?

      --

      "When life gives you lemons, don't make lemonade. Make life take the lemons back!" -- Cave Johnson
    2. Re:Yes! by Anonymous Coward · · Score: 3, Insightful

      Judging by the sheer amount of Pro-Groupon turfing you've been doing I'm guessing you've got money invested in them, or are just completely clueless. The entire model is geared to push retailers to short-sell their products or services, it's a lowest-bidder war between the merchants who are putting them out. Groupon also aggressively markets to businesses which are already on the verge of failing, using a line of basically "well it's worth a last ditch effort" and as long as they don't close shop in a week Groupon makes their money and the buyer get fucked as well.

      You also obviously don't understand the mind of the Coupon hunter- they are not going to PAY good money for a coupon if it's not a damn good deal. So what if I can save 10% to re-carpet my living room? I can get that deal any where in town. But when you're offering it at 50% of the best offer the competition runs, I might just decide it's time for some new floor coverings.

      But arguing with you is rather pointless, people have seen Groupon, tried it, and walked away with a bad taste in their mouth. The stock price is tanking because all they are doing is spending more and more cash with less and less to show for it. So 'turf away, Mr. Shill, 'turf away... if you do it enough who knows... You might get your next purchase of Astroturf for 25% the normal rate!

    3. Re:Yes! by fermion · · Score: 2
      In fact we have seen examples of Groupon developing deals with small businesses that have absolutely no value to the business. The deals are not structured to build long term loyalty, rather to provide a significant increase in sales over a short period of time but a price that does not cover costs.

      My question for Groupon is how can they sell a product that essentially costs nothing, with the provider of the coupon taking all the risk, and still not make a profit. It seems to me that they must be an issue with management for them to blow through all that cash.

      --
      "She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
  11. Battletoads! by rhazz · · Score: 2

    That's a classy (nerdy) way to go out! To lend weight to the Battletoads analogy, Terra Tubes is level 9 and this is level 3. As you'll see it is nearly impossible to succeed without knowing what is ahead of you. Normally you would have to fail many times before you learned enough about the upcoming obstacles to get through.

  12. try Ghost N' Goblins (NES) - by Cutting_Crew · · Score: 2

    this is one of those 'take your controller out of the NES socket and throw it across the room' hard.

  13. Re:Battletoads? by Binestar · · Score: 4, Informative

    No one with a 5 digit UID I can assure you that.

    --
    Do you Gentoo!?
  14. Great analogy by TsuruchiBrian · · Score: 2

    If Groupon was Battletoads, it would be like I made it all the way to the Terra Tubes without dying on my first ever play through.

    It is just like that especially if the consequences for dying in battletoads was losing $81 million each quarter. Usually when stakes are high, you don't get someone who's playing the game for the first time to be in charge.

  15. Re:Battletoads? by Intropy · · Score: 2

    I certainly know Battletoads. But Terra Tubes? I thought Battletoads only had three levels.

  16. Re:Battletoads? by Anne_Nonymous · · Score: 2

    The Russians apparently.

  17. Battletoads?!?!? by TiggertheMad · · Score: 2

    I nominate this for nerd meme of 2013. If slashdot was battletoads. If the republican national convention was battletoads. If shopping at Wal-Mart was battletoads. And then all those of us who never played it will have to make friends with gamefaqs all over again to understand WTF everyone is talking about.

    If this new meme you are pushing were battletoads, it would have crashed at the load screen.

    --

    HA! I just wasted some of your bandwidth with a frivolous sig!
  18. I'm sure banning all gun-related deals by Grimbleton · · Score: 2

    has greatly helped their profits!

  19. That's because it wouldn't have happened by Sycraft-fu · · Score: 3, Interesting

    See with a buyout offer, there's a lot too it. It isn't like when Google says "We'll give you $6 billion," that is final, that if Groupon says "Ok," Google has to hand over a check and it is done. No, rather it is the first step. Next step is the lawyers get together to draft some NDA type stuff, and then Google gets to go over what happens in the company. They get to look at the financials, the operations, all that shit. They get to have a real good look at what they are going to buy. Only if they are then happy, does it go on to a formal offer and then cash changing hands if that is signed.

    What Groupon knew would happen is Google would have a look at their books and realize they weren't making money, and had no plan as to how to. Google would then say "Ya, I'm thinking: no," and back out. That would screw over any IPO because people would ask "Well hang on, what did Google see that was wrong?"

    They figured, correctly, that if they just went public they could pull a fast one on people and get some cash. It appears they were right.

  20. Re:Battletoads? by mu51c10rd · · Score: 2

    3 leves, yes:
    hard, extremely difficult, and "who designed this impossibility?"