15th Aug 2013

The Controversial Groupon Story

In 2001 entrepreneur Eric Lefkofsky set up InnerWorkings, and by 2006 a young developer called Andrew Mason was employed at the company. When Mason needed seed money for an entrepreneurial venture of his own, The Point – which eventually turned into Groupon - Lefkofsky saw its potential and provided the funding. Initial hopes and expectations for the deal-of-the-day website were incredibly high. Groupon, which was founded by Mason in November 2008, had started small in Chicago, but by October 201 the site had 35 million users worldwide and Wall Street was taking notice. However, as Groupon went public in a much anticipated IPO in 2011 things quickly started to sour.

In a short space of time those early expectations were seemingly quashed after a series of setbacks. The company's easily replicated business model quickly resulted in numerous clones, the COO left after just five months to join Google, and Groupon had to deal with recurring accounting gaffes.

In February this year Groupon delivered a net loss of $81 million for the previous quarter; the following day founder and CEO Mason was fired and Lefkofsky took over as interim chief executive. In the months since Lefkofsky took on the top job, Groupon stock has more than doubled, meanwhile Mason - who holds a degree in music from Northwestern University – has released a motivational rock album called Hardly Workin’.

Ted Leonsis, chairman of Groupon stated that "The board is encouraged by Groupon's performance under Eric's leadership”, so this week Groupon announced that Lefkofsky has taken on the CEO role permanently, resulting in another well-needed stock price surge.

Though Lefkofsky’s appointment disappointed those who would have preferred an outsider, Leonsis explained “We have too much to do to take a transition right now…The next few years are critical, and we’re confident that Eric is the right leader for this stage of Groupon’s evolution.”

Lefkofsky has done a pretty good job of leading the turnaround thus far. He recently revealed plans to focus in on the international markets, while he has already been targeting smartphone and tablet users – with promising results.

Success as a leader is about having a clear vision, and knowing how to achieve it. So far in the Groupon story Lefkofsky has shown his ability for both. And Groupon’s future has started to look a little brighter.

Hilda Goold

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