Some Of The Smartest People In Business Were Pleading With Andrew Mason Not To Take Groupon Public
What went wrong?
It appears the answer is that it was all too much, too soon. Ben Popper at The Verge reports Groupon's top executives ignored the pleas of its big brain trust to hold off on taking the company public.
In the early spring of 2011, Marc Andreessen, Mary Meeker, and Howard Schultz all urged Groupon to wait on an IPO. Andreessen is a venture capitalist, Facebook board member, inventor of the modern web browser. Meeker is a venture capitalist, but spent years at Morgan Stanley covering the Internet. Schultz is the CEO of Starbucks.
In other words, this isn't a group of inexperienced fools. They know what they're talking about, which is why Groupon brought them in as advisors in the first place.
They thought Groupon just wasn't ready for the public market scrutiny. Groupon, while growing like crazy, was unprofitable and unstable. They knew what happened to companies like that.
But they were over ruled by Eric Lefkofsky, who co-founded Groupon, and had a controlling interest in the company. He, along with Oliver Samwer who had a big chunk of Groupon through acquisition, and Brad Keywell, Lefkofsky's investing partner, decided to go ahead with the IPO.
They went with the IPO because investment banks convinced Lefkofsky and Samwer that Groupon could be worth $25 billion.
We've heard from our own sources that when Google was trying to buy Groupon, Morgan Stanley banker Michael Grimes was on the phone with Groupon almost every day telling the executives they would be fools to take Google's low offer.
It worked. When Groupon rejected Google, its path was set.
But it probably ran down that path too quickly. Groupon wasn't ready for public life, and it showed. From flawed accounting metrics to a stock that cratered, Groupon quickly became a punching bag and a poster child for the most recent explosion in tech valuations.
As the stock cratered and earnings came up short Groupon had no choice but to fire Mason.