Former Groupon CEO Andrew Mason is moving to San Francisco.
In 2008, a Chicagoan made the coupon cool again. Andrew Mason, originally from Pittsburg, had the idea to drive customer traffic to hyper-local merchants at a time when the economy was spiraling downward.
Groupon Inc. was born and the deal-of-the-day coupon industry began to soar.
“He really thought he could do something cool for small businesses and social good,” said Eric Pitt, a former Groupon employee who worked at the company during its initial public offering in late 2011.
Mason created Groupon after his first business venture called ThePoint, which also stressed the idea of group action in the form of campaign contributions. He translated this idea to apply to the consumer: Groupon offered a deal and once enough people bought it, the Groupon applied.
For a while, Groupon’s growth was tremendous. In 2010, Mason turned down a $6 billion buyout offer from Google Inc. The company reported $760 million in revenue in 2010, up from $33 million the year prior. The New York Times called Groupon the “much-envied rising star in the constellation of new Internet companies.”
Although the idea of online coupons was nothing new, Groupon was able to cut deals in ways that were out of the ordinary, said Ben Edelman, associate professor of business administration at Harvard Business School.
However, management had “very little patience with getting these details right,” Edelman said. He added that Mason and his team had “little capability to see problems in advance.”
For example: Groupon offered a deal with a liquor merchant in Massachusetts before checking local laws, which prohibited discounts on liquor. Groupon was forced to retract the deal, and it was far from the only offer that had to be reworked, Edelman said.
“Groupon was not hesitant to jump into these businesses before they had figured out the important details that may have deterred others from jumping in,” Edelman said.
Groupon’s aggressive behavior was not the only worrisome thing. Regulators and investors questioned the company’s accounting practices because Groupon was not subtracting key expenses from its revenue figure. After the Securities and Exchange Commission forced the company to revise its financials in late 2011, the company reported sharply lower revenues.
But there were many investors who were happy to jump on Groupon’s bandwagon.
On the first day of trading at the New York Stock Exchange, Groupon shares surged 31 percent. The Wall Street Journal reported that it “set the tone” for other publicly traded tech companies.
And many of Groupon’s employees were supportive as well. Mason created his own version of the laid-back West Coast tech office complete with casual dress and office games.
The first time Pitt saw Mason was when he walked in on Pitt’s interview at Groupon. “I thought, ‘Oh, a CEO can be young, cool and wear jeans! It was the first taste of that that I ever had. It was a neat to be introduced to that structure of business.”
Groupon quickly became a hip place to work for people right out of college. “Andrew Mason is known as a little wacky himself,” reported 60 Minutes correspondent Lesley Stahl. Mason gave the revered news documentary show an exclusive interview just a few months after Groupon went public.
“If there’s any difference between me and a traditional CEO it’s that I’ve been unwilling to change myself or shape my personality around what’s expected,” Mason said in the interview. He added that Groupon’s personality is what keeps people opening its emails.
“There’s got to be something else there that keeps you engaged and keeps you from unsubscribing,” Mason said.
But Mason’s casual approach to leadership came under fire from outside the company.
“Their culture seems to be that there’s always room to joke around,” Edelman said. Groupon might use 100 words to describe one of its daily deals and then use other 200 words for humor.
“To me that seems incredibly misguided,” Edelman said. He noted that if customers are taking the deal seriously, the description should be serious as well.
As a growing number of competitors pushed Groupon to compete on a larger scale, the company began reexamining its style. Mason’s appearance in the office in jeans turned into public appearances in suits. In his 60 Minutes interview, Mason asked Stahl if he should be wearing a tie. “So maybe I am changing, because I might have not asked before,” he said.
Mason’s time at Groupon turned out to be fleeting. He was ousted as CEO in February 2013 after the company repeatedly missed earnings targets. The day Mason was fired, Groupon’s shares closed at $5.10, down more than 80 percent from its IPO price in November 2011.
“For those who are concerned about me, please don't be - I love Groupon, and I'm terribly proud of what we've created,” Mason wrote in an email to his employees. “I'm OK with having failed at this part of the journey…My biggest regrets are the moments that I let a lack of data override my intuition on what’s best for our customers,” he wrote.
Mason’s interim successor, Eric Lefkofsky, has not taken the same type of heat, even though Lefkofsky himself was a Groupon co-founder and played a big part in company decisions.
“You could say, ‘Well everyone was here and everyone’s to blame including the senior manager, the board, whatever,’” Lefkofsky said in an interview with Fast Company, his first as CEO. “But at the end of the day, the CEO is the CEO. And he makes those tough calls. If they go well, you’re a hero, and if they don’t go well, you’re accountable.”
As of mid-June, Groupon’s shares had risen 40 percent to around $7.15 a share since Mason’s departure. They are almost triple the company’s 52-week low of $2.60.
Still, Mason’s legacy lingers at Groupon and at 33 years old, he still has plenty of time to prove himself elsewhere. He remains a star to many and has plenty of journalists, investors and entrepreneurs fighting for his time.
In early May, Mason recorded a soundtrack to help entrepreneurs understand business better. He and his wife are in the process of moving to San Francisco. Mason says he will be mentoring San Francisco entrepreneurs at an incubator. But he isn’t cutting ties to Chicago where he owns a home.
"I feel very lucky to be alive at a time when someone like me can have a simple idea like Groupon that ends up impacting millions of people,” he wrote in his blog. “If there's a silver lining to leaving Groupon, it's the opportunity to start something new."