Eric Lefkofsky says he intends to be chief executive of Groupon for "a
His tenure will end, he said in an interview late Wednesday, when Chicago-based Groupon has completed its transition from a daily deals company to a stable e-commerce company. His ambition, he said, is for Groupon to become the first place shoppers turn to when they "want to buy anything, anywhere, any time."
Lefkofsky and fellow board member Ted Leonsis had been serving as interim co-CEOs since founding CEO Andrew Mason was fired in February. Lefkofsky headed the day-to-day operations while Leonsis led the search for a new CEO.
The search didn't last long.
Groupon announced Lefkofsky's appointment as CEO and Leonsis' appointment as chairman in conjunction with its second-quarter earnings release Wednesday.
The results showed progress on several strategic fronts that Lefkofsky had outlined as priorities, such as reducing reliance on email blasts and building a repository of offers that consumers can browse on their mobile devices and desktops.
The long-term vision of becoming an e-commerce giant includes offering high-end restaurant meals and household products and vacations, not just discounted spa and house-cleaning services.
The plan, established during Mason's tenure, was further developed under Lefkofsky.
The board preferred continuity over the stress of a senior leadership transition during such a pivotal time, Lefkofsky told the Tribune in an interview.
"We realized the company was in a state where the very essence of the business model was still being built," Lefkofsky said. "We were in the midst of this huge migration from being an email-oriented company to a primarily mobile company. ... We were still at a very entrepreneurial state, building out the very foundation of the business model. And so instead of starting a search and looking for a CEO, the board decided I'd be the right guy."
Investors cheered the news and Groupon's better-than-expected quarterly results, which were released after the closing trading bell. Shares were up 21 percent in after-market trading.
Groupon's Wednesday closing stock price of $8.72, while still well below its $20 initial public offering price, represents a 70 percent increase since Lefkofsky and Leonsis took the reins.
Groupon said it lost $7.6 million from April to June, compared with a profit of $28.4 million in the same period last year. Revenue was $608.7 million, a 7 percent increase from a year earlier.
The company's revenue beat expectations of $606.1 million, according to Bloomberg.
As with previous quarters, the North American segment offset considerable weakness in international markets, where Groupon is overhauling operations. North American revenue jumped 45 percent, while revenue declined in other regions.
Lefkofsky's plans for Groupon are ambitious. He wants the company to dominate e-commerce, becoming the hub for every transaction between a consumer and merchant. The heart of this strategy is local commerce, but Groupon is also encroaching on Amazon's territory with its Goods business, which sells a wide variety of products online. Lefkofsky envisions a local angle to Goods as well, explaining during a Wednesday conference call that the company plans to offer in-store pickup for this segment.
Mobile transactions are also crucial. Nearly 50 percent of Groupon's North American sales were conducted on a mobile device in June, compared with 30 percent during the same month last year. Groupon is generating less business from its daily email blasts.
"We're trying to convey this basic message, which is, we want Groupon to be the place you start with when you want to buy anything, anywhere, any time," Lefkofsky said. "We want you checking Groupon first. You might find a great deal on something you're going to buy anyway."
This evolution is in the early stages, but Lefkofsky said he and Leonsis have injected a sharper sense of focus into Groupon.
"I have been able to help get rid of a lot of the noise and a lot of the distraction that was keeping an unbelievably talented team from doing their very best work," he said. "And that's probably the single biggest difference. We're now very focused on doing a few things very right, instead of focused on doing a lot of things OK. Maybe it's just the maturity of the team or maybe it's a certain amount of focus I bring -- whatever the root cause of it, it's working."
Mason's tenure, while a time of explosive growth, was marred by controversy and doomsday predictions about the company's future. Groupon suffered several setbacks in the prelude to its November 2011 IPO, and the stock price dropped rapidly after its debut. In late February, Mason left the company.
Lefkofsky has founded several Chicago-based technology companies and also created venture capital firm Lightbank with his longtime business partner, Brad Keywell. His history with Groupon dates to when the company was The Point, a startup founded by Mason that helped gather support for petitions and civic endeavors.
Lefkofsky pushed Mason to find a way to make money on his idea, and the pursuit of a revenue model led to the creation of the daily deals juggernaut.
Lefkofsky has served variously as Groupon's acting chief financial officer, acting chief operating officer and acting general counsel. Until February, when Mason departed, Lefkofsky had been away from Groupon's day-to-day operations for almost a year.
This year, Lefkofsky resigned from 13 boards to focus on Groupon. He remained on the board of MediaOcean, an advertising technology firm he co-founded with Keywell.
"It's the one board I stayed on," Lefkofsky said. "I'm still listed as a managing director at Lightbank because it's basically all of our money. It's kind of hard not to be that. But I asked them to take it off the website because it doesn't make any sense. I don't have any involvement with Lightbank, other than every once in a while I might go to a meeting. But basically, I'm completely disconnected from Lightbank and those companies because I'm 100 percent committed here."
According to a Wednesday regulatory filing, Lefkofsky's annual base salary at Groupon will be $1 and he will be eligible for an annual bonus of $500,000, prorated for this year. He also received 800,000 restricted stock units, of which half will vest in a year and 12.5 percent will vest at the end of each quarter after that.
Lefkofsky has experience as CEO, having held that position at InnerWorkings and sharing the role with Keywell at Echo Global Logistics. He said he doesn't think he will have outsize influence at Groupon.
"Any CEO is beholden to what the board wants to do," he said. "I'm one voice on the board. ... As a founder and the current CEO, I'm an important voice. There's no question about it. Ted's an important voice. But the board acts independently."
Lefkofsky declined to answer directly whether he has spoken with Mason since the founding CEO's ouster, but he spoke warmly of his "composure and grace" under tough circumstances.
"All of us felt a tremendous amount of tension and stress because the company was constantly in the media and the stock was going down," he said, adding: "There was just a lot of pressure."
(c)2013 the Chicago Tribune
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