The problems at Groupon go beyond the question of whether its business model of offering daily deals can sustain its growth trajectory. And beyond the price of the company's stock, which began trading at $20 a share in November 2011 and now sit below $5.
This is a company whose never-ending missteps are now culminating in an ugly boardroom drama. Well, on second thought maybe there's a way for things to get worse, though I can't even begin to imagine how.
By the time it's over, Groupon may find itself with someone other than Andrew Mason as its CEO.
On Wednesday, Mason faced a potentially embarrassing spectacle in New York, when he was interviewed at a conference. The questions were always going to be pointed. But instead of a general conversation about whether Groupon had lost its luster, Mason was asked directly if he was going to lose his job at the company's Thursday board meeting.
His response: "Here's a news flash. Our stock is down about 80 percent since we IPO'd a year ago. It would be weird if the board wasn't discussing whether I'm the right guy to do the job. It's actually their chief responsibility to ask that question, as they have asked that question in the past. The only thing unusual is that it's showing up in the newspapers."
Pretty unusual, indeed.
On Tuesday, just ahead of the conference and board meeting, a source close to Groupon's board took a giant swipe at Mason, anonymously suggesting to an influential tech journalist that the board might fire Mason this week.
Kara Swisher of the blog AllThingsD reported Tuesday that, according to an anonymous source, Groupon Chairman Eric Lefkofsky and board member Brad Keywell want Mason to be "more aggressive and public" about the company's turnaround effort.
The blog post -- titled "Is Andrew Mason on the Bubble as CEO of Groupon?" -- reported that Groupon board members "have been seriously discussing making major leadership changes at the Chicago-based daily deals company, including bringing in a more experienced CEO to take over for co-founder Andrew Mason."
The post didn't say Mason was definitely on the way out, but it suggested that members of the board were impatient with the CEO and the stock price.
The situation is mysterious. We don't know if one or several board members were directly responsible for the leak. But the damage has been done. Someone close to Mason has humiliated him and weakened his position as CEO and co-founder of Groupon.
We also don't know the motivation of the leaker. Was it to drum up support for an ouster? Certainly, if there was any other goal in mind, criticizing the CEO anonymously in the press likely failed.
It only means that when Mason does speak publicly his airtime will be consumed with defending himself, rather than the company. And that's exactly what happened Wednesday when he followed through on a previous commitment to speak at the Business Insider conference.
Exhibit A: "If I ever thought that I wasn't the right guy for the job, I'd be the first person to fire myself," Mason said.
And B, "I'm flattered that people would think that perhaps replacing me would eliminate some of these bumps," he said.
And C, "If I thought I wasn't the guy, I, as the founder and creator of Groupon, as a large shareholder, as a customer who loves the product that we've created, I care far more about the success of the business than I care about my role as CEO. I don't need that to feel good about what I've achieved."
Michael Sitrick, a crisis management expert based in Los Angeles, said that such leaks typically come from board members. There are eight of them at Groupon.
But the question Sitrick raised over and over in a conversation was what was the anonymous source's goal?
"Mobilizing support to force Andrew out?" Sitrick asked. "OK. That would be the only reason in my view to do it. Why else would you do it?"
And if it was to mount a campaign to oust Mason, had the board member -- if it was a board member -- "counted the votes" for and against Mason before speaking to the press? In other words, is there a true coup under way, or a single board member going rogue?
Sitrick said the timing has given the CEO an opportunity to mount a defense. Sitrick has seen "palace coups" thwarted by CEOs who use the day or two between the leak and the board meeting to raise support. He's also seen leaks heap so much pressure on board members that they feel cornered into a firing, or else risk being ridiculed themselves.
A Groupon spokesman declined to comment.
Corporate governance expert Charles Elson at the University of Delaware said the leak amounted to Mason's dismissal as being "almost a fait accompli." But if his dismissal is not a done deal, another possible scenario is that the leak was a trial balloon -- to see how the stock market might react to his potential ouster. If there was an outcry in support of Mason, then the issue would go away, Elson said.
Wall Street reacted mildly to the leak. But on Wednesday, after Mason's webcasted appearance at the conference, Groupon share rose, finishing up more than 11 percent to close at $4.42. That suggests some investors liked what they heard from the CEO. Maybe that supports the notion he can survive this debacle. But there's no denying he's been kneecapped.
Groupon pays two PR firms -- one for its board, the other for the company -- to prevent embarrassing mistakes.
And haphazard leaks only reinforce the perception that an immature and inexperienced band of clowns is at the helm of Groupon. Up to now, most of the criticism in that vein has been directed at Mason, who initially was adored and then later punished for his irreverent humor.
Now I'm wondering whether that criticism is better directed at the board.
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