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In 2006, two freshmen from IIT-Delhi gathered enough spunk to knock at the door of Kalyanaraman Srinivasan, Amazon’s <keyword id="2463621" type="UNKNOWN" weightage="20" keywordseo="global-technology-head">global technology head</keyword> for retail, who was in India to set up a development center at Chennai and a regular at the Bangalore office of the global ecommerce biggie. The duo requested fifteen minutes of ‘we-time’ as they bubbled over a few ideas they considered path-breaking. They wanted to know which one they should focus on. “I took 1.5 seconds and said if they really wanted to be entrepreneurs, they must replicate Amazon in India and be patient about it,” says Srinivasan, in a southern accent cradling a Midwestern twang. The duo turned out to be Sachin Bansal and Binny Bansal who founded Indian ecommerce giant Flipkart the very next year, recently raising a billion dollars from investors to take on Amazon’s Indian foray. 
 Srinivasan’s advice bode well for the youngsters and made them very rich indeed but the operative word was “patient”. Despite zero signs of profitability in the ecommerce eddies, Srinivasan remains positive. After all, more than 20% of the GDP of the world comes from emerging markets with barely 3% of capital investment therein. In other words, there are not many tradable liquid securities out here, he reasons, adding that companies like Flipkart, Snapdeal and <keyword id="761157" type="ORGANIZATION" weightage="20" keywordseo="Infibeam">Infibeam</keyword>, where he has personally invested, will raise the tide. 
 
“The rising tide will raise all the boats first and every company will get irrational valuations but those who focus on customer experience in the long term, will stay there and go higher, and those who don’t, will fall off,” says Srinivasan. As a precursor, he points to the dotcom boom in the US in 1999-2000. “Trillions of dollars went into valuations there but the customer experience only got better…so the irrationality of valuations is relative,” he points out, observing the Indian ecommerce market potential to be in the $100-200 range and with only $6 billion active market, excluding train and flight tickets, Flipkart’s valuation of $5 billion makes perfect sense. 
 Today, the 44-year-old Kalyanaraman Srinivasan is Chief Operating Officer, <keyword id="384914" type="PERSON" weightage="20" keywordseo="Groupon">Groupon</keyword>, a portmanteau for group coupon, and at one time, the fastest growing company in the world that grew from $1 million in seed money to $1 billion in two years. On a whistlestop tour covering Korea, Hong Kong, Singapore and India, he met up with CD in the Delhi office of Groupon, housed in a rundown commercial complex in the southern part of the capital city. That’s where, over cuppa and crackers, he deconstructs the journey of a 15-year-old from poverty to power, politics at the workplace, lessons from Sam Walton, problem-solving from Amazon to startups, and how somewhere in between, he came to be known as Kal Raman. 
 
Education is salvation 
 
Born and raised in Mannarkoil in Tamil Nadu’s Tirunelveli district, down south of Chennai, Raman’s father, a tehsildar, passed away when he was all of 15. The family of four siblings struggled through the odds on his mother’s monthly pension of Rs 420. She was, however, uncompromising on her children’s education. That explains how liberally Raman uses this phrase—“Education is salvation.” 
 
After high school, Raman got through both medical and engineering college. While the medical college stood in his district, he opted for engineering in Chennai where he knew nobody. “I wanted to see how far I can fly,” he reminisces. Till today, Raman has a knack of making the tougher choice. It’s as if he’s conditioned that way. “The longer it takes to get something, the longer it stays with you….most of the things that look easy, are not good in the long term,” he says. 
 
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Not quite okay, Tata 
 
Raman’s first job was in Mumbai with Tata Consulting Engineers, where he landed up in slippers on his first day at work, sending his boss into a fit of rage. Upon hearing his story, he was not only given money to buy shoes but also fixed up at his friend’s Mumbai residence. Within a month, his boss sent him to Bangalore where he computerized the entire office administration. Thus started Raman’s steady rise in the world of information technology, and he did a lot of learning on his own, including ‘C’ programming. Just as he was about to get confirmed, he gave in his resignation since he signed up with TCS at Chennai. As a code jock, he ended up in Edinburgh servicing the Scottish Equitable Insurance Company and that’s where the first signs of friction with his boss became evident. 
 
As Raman deep-dove into the world of insurance, he figured the mathematical model of the company was completely flawed—if the company had more than 15% reimbursement, the resultant number would be a big negative, while the marketing documents of the company said that people would get 23% redemption. He tried explaining it to his boss but got cold shouldered. 
 
Raman would come in late and work well into the night. Being the last to leave, he was noticed by someone by the name Chris, who asked him why he stayed up so late despite being a programmer from an outsourced company. Upon being told of a questionable business model, Chris got curious and stayed up with Raman till 2 am one morning. A few days later, as Raman came in to work, his boss was pacing up anddown the room and glanced at him menacingly. He said that the European general manager of TCS had been called by the company and they were all going to see the management and that it concerned him. “If I were you, I would have packed my bags for India,” the boss said. Eventually, the trio entered a room with suits and at the head of the table, Chris sat in bespoke CEO attire. Before a word was uttered, Raman’s boss started making excuses and virtually disowned him, labeling him as a rotten apple in the TCS pantheon of “good and loyal workers”. That’s when Chris got up and silenced him, explaining why TCS needed to hire more people like Raman. “What my CPO and CIO couldn’t solve, a 22-yearold has done, and I thought it to be pertinent to acknowledge it in front of his bosses,” he said. 
 
The American Dream 
 For Raman, there was no looking back. With the help of Chris, he applied to companies in the US and got through <keyword id="46675" type="CITY" weightage="20" keywordseo="Wal-Mart">Wal-Mart</keyword>, where he rose to become the giant retailer’s technology director within a year. In fact, he admittedly got promoted 18 times that year from the lowest employee to the top rung, catching the eye of Wal-Mart promoters Sam and Rob Walton. He also picked up the invaluable lessons of long-term planning and customer-centricity from Sam Walton, the father of modern retail. That’s where Raman learnt business execution under his mentor, Doyle Graham, who again passed away at 45, exactly the age his father had died. Orphaned twice, Raman had no will to forge on. He hung around for six months before signing up with Blockbuster, the biggest DVD rental company then and as he predicted its doom, which eventually paved the way for newbies like Netflix, he started out afresh as CEO of drugstore.com. At Drugstore, he had an enviable board of directors, which included among others, Microsoft co-founder Paul Allen, Bill Gates’ wife and philanthropist Melissa Gates, Starbucks’ Howard Schultz and Amazon’s Jeff Bezos. 
 
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He ran Drugstore through the tumultuous 9/11 years as corporate America took a beating and share prices tumbled. When his recovery plan was rejected by the board, Raman knew it was time. However, Bezos sought him out and wanted him to go to Seattle to take a shot at some of the problems at Amazon. Raman, of course, chose the toughest one to crack—the non-media businesses were growing faster than media and Amazon was losing $200 million worth of free cash flow back then. He identified the problem and automated the entire retail infrastructure to solve it at one go. At that juncture, there were 6,000 people working at Amazon and he had 3,000 under him. Mission accomplished, Raman moved on to start his own venture Global Scholar with venture capitalist Michael Milken until selling out in 2010 and signing up as COO of Groupon in May 2012. “Now I joined Groupon when everyone wrote the company off and I love being the underdog,” he says. 
 
Galvanizing Groupon 
 
In 2012, Groupon’s international business was crumbling and it was left to Raman to steady the ship. Today, along with the domestic US business, the international division is in the black. “We are building a category, we are not building a company…. what Groupon is now, Amazon was in 2001,” he says. 
 
As he pumps in adrenaline to the business, Raman has a roadmap. He’s applying all that he learnt at Wal-Mart, keeping the merchant community engaged and customers happy by offering the lowest prices and an efficient delivery mechanism. Will he be able to pull it off? “We’re more worried about the long term and so we’re trying to get more efficient by passing off the savings to our merchants and customers so that they become more loyal to Groupon and check our website first before they go for any other transactions….we have about 1,600 people in technology to do that out of 12,000 worldwide,” he says. At $2.5 billion revenue and with zero debt, Raman’s optimism is well-founded. And while valuations like $8 billion scorch the terrace, he maintains a straight face and waits for the tide to raise the boats. What then, after he steers Groupon to the safe shores of supra-growth and profitability? “I’ll do something very big in education in India, with or without Groupon,” he says.

Meet Kal Raman, Groupon COO & Mentor To Flipkart’s Bansals

Now that <keyword id="384914" type="PERSON" weightage="60" keywordseo="Groupon">Groupon</keyword> has fired its CEO, <keyword id="488139" type="PERSON" weightage="60" keywordseo="Andrew-Mason">Andrew Mason</keyword>, the <keyword id="35621" type="UNKNOWN" weightage="60" keywordseo="e-commerce">e-commerce</keyword> company is largely in the hands of its current management team.
And more than half of its management team previously worked at the largest e-commerce company in the world, <keyword id="18635" type="CITY" weightage="60" keywordseo="Amazon">Amazon</keyword>.com.
(They of course report up to Groupon investors and board members Eric Lefkofsky and Ted Leonsis, who are acting as co-CEOs.)
Groupon is essentially in two businesses today.
One is its original daily-deals business, which has evolved into what's more or less a marketing platform for local businesses.
The other is Groupon Goods, which the company calls "curated e-commerce"-in other words, a selection of products for sale, usually at an attractive discount.
Aside from sharing a common base of customers Groupon can advertise local and e-commerce deals, these two businesses have little to do with each other.
But aside from Mason, who's now gone, Groupon's top executives have far more experience with the second business. And Groupon's e-commerce business has been performing far better than the local-deals business.
Here are all the ex-Amazon executives running Groupon today:
<ul>
<li>CFO Jason Child</li>
</ul>
<ul>
<li>COO <keyword id="1198416" type="PERSON" weightage="60" keywordseo="Kal-Raman">Kal Raman</keyword></li>
</ul>
<ul>
<li>Jeff Holden, SVP of product management</li>
</ul>
<ul>
<li>Rich Williams, SVP of global marketing</li>
</ul>
Other members of Groupon's top management team worked at Google, Microsoft, and Salesforce.com.Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.

Now Amazon Veterans Are Running Groupon

Now that <keyword id="384914" type="PERSON" weightage="60" keywordseo="Groupon">Groupon</keyword> has fired its CEO, <keyword id="488139" type="PERSON" weightage="60" keywordseo="Andrew-Mason">Andrew Mason</keyword>, the <keyword id="35621" type="UNKNOWN" weightage="60" keywordseo="e-commerce">e-commerce</keyword> company is largely in the hands of its current management team.
And more than half of its management team previously worked at the largest e-commerce company in the world, <keyword id="18635" type="CITY" weightage="60" keywordseo="Amazon">Amazon</keyword>.com.
(They of course report up to Groupon investors and board members Eric Lefkofsky and Ted Leonsis, who are acting as co-CEOs.)
Groupon is essentially in two businesses today.
One is its original daily-deals business, which has evolved into what's more or less a marketing platform for local businesses.
The other is Groupon Goods, which the company calls "curated e-commerce"—in other words, a selection of products for sale, usually at an attractive discount.
Aside from sharing a common base of customers Groupon can advertise local and e-commerce deals, these two businesses have little to do with each other.
But aside from Mason, who's now gone, Groupon's top executives have far more experience with the second business. And Groupon's e-commerce business has been performing far better than the local-deals business.
Here are all the ex-Amazon executives running Groupon today:
<ul>
<li>CFO Jason Child</li>
</ul>
<ul>
<li>COO <keyword id="1198416" type="PERSON" weightage="60" keywordseo="Kal-Raman">Kal Raman</keyword></li>
</ul>
<ul>
<li>Jeff Holden, SVP of product management</li>
</ul>
<ul>
<li>Rich Williams, SVP of global marketing</li>
</ul>
Other members of Groupon's top management team worked at Google, Microsoft, and Salesforce.com.Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.

<div class="image-container float_right" style="width:400px"><div class="image"></div><a href="http://www.flickr.com/photos/labor2008/3562626867/sizes/z/in/photostream/">aflcio flickr</a></div>On <keyword id="384914" type="PERSON" weightage="60" keywordseo="Groupon">Groupon</keyword>'s fourth-quarter earnings call, COO <keyword id="1198416" type="PERSON" weightage="60" keywordseo="Kal-Raman">Kal Raman</keyword>, who joined the daily-deals company last year to automate and improve operations, just dropped a big hint about <keyword id="6357067" type="EVENT" weightage="60" keywordseo="layoffs">layoffs</keyword>.
Raman said that in Groupon's international markets, twice as many people "touch a deal" as in the United States. In other words, Groupon is far less efficient in those markets.
He also talked about how the company will get "sustainable operating leverage" over costs in the first half of 2013.
He didn't discuss headcount changes, but those are both pretty obvious clues about what Groupon has to do.
Groupon made a <a href="http://www.businessinsider.com/groupon-layoffs-2012-11">small number of layoffs last fall</a>.
But it still has 10,000 employees—about 7,000 of which are stationed in international markets. Yet North America accounts for far more of its revenues—$375 million in the fourth quarter versus $263 million for international markets.
Groupon talks about bringing its North American "playbook" to international markets. That seems to require far fewer people per dollar of revenues.

Groupon's COO Just Signaled Plans For Massive International Layoffs

<div class="image-container float_right" style="width:400px"><div class="image"></div>NASDAQ</div>Until <a href="http://www.businessinsider.com/live-groupons-fourth-quarter-earnings-2013-2">today's earnings announcement</a>, things were looking good for <keyword id="488139" type="PERSON" weightage="60" keywordseo="Andrew-Mason">Andrew Mason</keyword>, the founder and CEO of <keyword id="384914" type="PERSON" weightage="60" keywordseo="Groupon">Groupon</keyword>.
The daily-deal company's stock had more than doubled from where it had bottomed out in November. It crossed $5—an important point for investor psychology and institutional support, since some mutual funds can't buy stocks trading below that point—early in the year.
In after-hours trading, it gave most of those gains up.
There's been a <a href="http://www.businessinsider.com/why-groupon-ceo-andrew-mason-wasnt-fired-2012-11">lot of speculation</a> about whether Andrew Mason will keep his job. The last word from the company was that the board and management <a href="http://www.businessinsider.com/groupon-ceo-andrew-mason-keeps-his-job-2012-11">were heads-down working on turning the company around</a>.
After this earnings disappointment and a dismal, low-growth outlook for the first quarter, it's not clear why Mason is the right person to do that.
The only thing that's going well for Groupon is its e-commerce business, <keyword id="788202" type="COMPANY" weightage="60" keywordseo="Groupon-Goods">Groupon Goods</keyword>. And Groupon has an executive, COO <keyword id="1198416" type="PERSON" weightage="60" keywordseo="Kal-Raman">Kal Raman</keyword>, who knows e-commerce well. He worked at Amazon and ran Drugstore.com. (Groupon has also been quietly staffing up with a host of Amazon veterans.)
So it's pretty obvious what Groupon needs to do: Milk the declining daily-deals business for cash flow by continuing to cut marketing costs; invest in Groupon Goods; and fix or dump its European business.
What you're left with is an interesting e-commerce business with a well-known brand, one that can potentially sidestep Amazon by focusing on surprising consumers with great one-off deals and unusual inventory. (By the time Amazon gets around to price-matching Groupon offerings, Groupon will have moved on to selling other stuff.)
The question is whether it makes sense for Groupon's quirky founder to run that business, or an experienced e-commerce executive.
By the stock price, it seems like the market is voting against Mason.

Sad To Say, But Andrew Mason Is Probably Not Going To Be Groupon's CEO Much Longer

<div class="KonaFilter image-container float_right click-to-enlarge"><div class="image"><a title_source="YouTube/Groupon" title_caption="A top-secret photo of Groupon's proposed new delivery method." class="zoomin" href="http://static2.businessinsider.com/image/52ab1d4d69beddae4a0aafc2-960/better-groupon-catapult-from-amazon-parody.png"></a>YouTube/GrouponA top-secret photo of <keyword id="384914" type="PERSON" weightage="60" keywordseo="Groupon">Groupon</keyword>'s proposed new delivery method.</div></div>There's been no shortage of criticism for <keyword id="18635" type="CITY" weightage="60" keywordseo="Amazon">Amazon</keyword>'s proposed drone delivery system in the days since founder and CEO Jeff Bezos first <a href="http://www.businessinsider.com/jeff-bezos-60-minutes-surprise-2013-12">unveiled his futuristic aspirations</a> on national television two Sundays ago.
Some, like the New York Times' Paul Krugman, <a href="http://www.businessinsider.com/paul-krugman-drone-deliveries-2013-12">have argued that the plan is technologically unfeasible</a>, while others have said <a href="http://www.businessinsider.com/amazon-drone-delivery-promo-would-be-illegal-in-us-2013-12">Amazon has legal hurdles to clear</a> before it can even think about implementing its <keyword id="94769" type="UNKNOWN" weightage="60" keywordseo="drones">drones</keyword> in the United States.
Now, Amazon's e-commerce rival Groupon <a href="http://www.youtube.com/watch?v=hWhFN7N-rmU">has a new critique</a>, albeit one that's entirely tongue-in-cheek: Amazon's drones just aren't as cool as the centuries-old technology Groupon will use to change commercial delivery forever.

Yes, <a href="http://en.wikipedia.org/wiki/Age_of_Empires">Age of Empires</a> fans will appreciate that Groupon says it has found good use for the catapult, a "proven, tested" technology that it says won't buzz past people's homes and take pictures of them in the shower. The parody video also includes a fake customer expressing appreciation that she won't have to encounter a "flying, scary robot."
While Groupon's "product announcement" is clearly a joke, its rivalry with Amazon is anything but. Though Groupon's couponing and e-commerce business <a href="http://www.businessinsider.com/new-groupon-ceo-morale-is-dramatically-better-than-it-was-under-andrew-mason-2013-8">stumbled during its first two years as a public company</a>, its board of directors still thinks it can be a $100 billion company (its market capitalization <a href="http://finance.yahoo.com/q?s=GRPN">currently hovers around $7 billion</a>) and <a href="http://www.businessinsider.com/groupon-we-can-be-a-100-billion-company-2013-5">challenge eBay and Amazon for dominance</a> in the mobile local commerce space.
And if that weren't enough reason for Groupon to take a shot at Amazon when the opportunity presented itself, the company's executive suite <a href="http://www.businessinsider.com/amazon-veterans-running-groupon-2013-2">currently includes a batch of ex-Amazon employees</a> - including <a href="http://www.linkedin.com/in/iw3dlyw7">CFO Jason Child</a> and <a href="http://www.linkedin.com/profile/view?id=7376342&amp;authType=NAME_SEARCH&amp;authToken=2Waz&amp;locale=en_US&amp;srchid=652126621386945543488&amp;srchindex=2&amp;srchtotal=14&amp;trk=vsrp_people_res_name&amp;trkInfo=VSRPsearchId%3A652126621386945543488%2CVSRPtargetId%3A7376342%2CVSRPcmpt%3Aprimary">COO Kal Raman</a>.
The battle lines are drawn. Now we just need to see whether Groupon's catapults can hold up against Amazon's drones.Disclosure: Jeff Bezos is an investor in Business Insider through his
personal investment company Bezos Expeditions.

Groupon Rips Amazon's Drone Plan With New 'Medieval' Delivery System

<div class="image-container float_right" style="width:400px"><div class="image"></div>YouTubeCould this Amazon executive run <keyword id="384914" type="PERSON" weightage="60" keywordseo="Groupon">Groupon</keyword>? Depends on which Groupon you're talking about.</div>To the last, <keyword id="488139" type="PERSON" weightage="60" keywordseo="Andrew-Mason">Andrew Mason</keyword> <a href="http://www.businessinsider.com/groupon-andrew-mason-interview-yext-2013-3">talked</a> about Groupon's potential to be the "operating system for local business."
Whoever replaces him as CEO of the Chicago-based Internet-commerce company will need to decide if that's going to be true.
Groupon is really in three businesses today: a declining daily-deals business; a nascent local-commerce business; and a booming e-commerce business.
The first two, combined, form what Groupon calls its "third-party" business—in other words, where Groupon primarily serves as a marketer for other merchants. While traditional daily deals are wearing out their welcome with consumers and merchants, Groupon has kept this business growing by offering a wider variety of services, marketed not through the gimmicky group-discount model but based on proximity and preference.
The third, Groupon Goods, is what's called a "curated" e-commerce business. Instead of trying to provide a comprehensive selection, Groupon offers a surprising, eclectic mix of products that it sells directly to consumers. It's growing explosively. 
And with Mason gone, Groupon Goods is the business that Groupon's remaining management team knows how to run—more than half of them worked at Amazon.com. None of them have substantial experience serving local businesses outside of their work at Groupon.
Groupon could correct that with its next CEO hire. Or it could double down on the e-commerce bet, which so far seems to be exceeding the company's own expectations.
One intriguing candidate is <keyword id="1761856" type="UNKNOWN" weightage="60" keywordseo="Sebastian-Gunningham">Sebastian Gunningham</keyword>, Amazon's senior vice president of seller services.
Gunningham was <a href="http://allthingsd.com/20110329/wanted-groupon-coo-must-like-cat-wrangling-lack-of-spotlight-and-international-travel-post-samwer/">previously thought to be a candidate for the COO job</a> that went first to Google executive Margo Georgiadis, who made a quick round trip back to the Googleplex, and then to Kal Raman, one of the many Amazon veterans running Groupon.
Gunningham has stepped in for a founder before, at his <a href="http://computerworld.co.nz/news.nsf/news/59D73ECCB7D89CF0CC256E3E00774B82">job as CEO of Peace Software</a>. And he has worked at Oracle and Apple—a blue-chip resume reassuring to Wall Street. He also has some of the <a href="http://www.eec-conference.com/es/ficha_ponentes/sebastian-gunningham/99/">international experience</a> Groupon needs, as it tries to correct the gap between the productivity of its U.S. and overseas operations.
(One question mark hanging over Gunningham is the odd way he disappeared from Amazon's list of top executives in its annual report, a <a href="http://www.businessinsider.com/amazon-executives-are-disappearing-2013-2">change about which Amazon has been tight-lipped</a>.)
Hiring someone like Gunningham, though, would be a sign that Groupon is doubling down on its e-commerce bet, at the expense of its vision of serving local businesses.
It's far harder to see plausible CEO candidates with experience running technology-driven marketing platforms for local businesses—what Groupon's daily-deals business could eventually evolve into. 
That vision of a local-business operating system is perhaps unique to Mason. And with Mason gone from the company he founded, perhaps it's time for the company to move on from that idea, too.

Groupon's Next CEO Must Choose Which Business It's Really In

<div class="image-container float_right" style="width:350px"><div class="image"></div>Michael Seto for Business Insider</div>Investors hated <a href="http://investor.groupon.com/releasedetail.cfm?ReleaseID=743818">Groupon's Q4 2012 earnings</a> — both revenue and non-GAAP earnings came in lighter than expected. That placed renewed <a href="http://www.businessinsider.com/andrew-mason-groupon-ceo-speculation-2013-2">pressure on CEO Andrew Mason</a>, whose job was called into question back in December.
I argued back then that <a href="http://www.businessinsider.com/why-groupon-ceo-andrew-mason-wasnt-fired-2012-11">his job was likely safer than the peanut gallery thinks it is</a>.
After this new set of numbers, I thought he was actually less likely to lose his job than he was before. But what do I know? <a href="http://www.businessinsider.com/groupons-cozy-deals-with-lefkofskys-marketing-logistics-and-law-firms-2013-2">He was just fired</a>.*
These charts show why Mason was not the disaster area much of the media portrayed him to be.
First, look at <keyword id="384914" type="PERSON" weightage="60" keywordseo="Groupon">Groupon</keyword>'s underlying economic fundamentals. 
For a long time the company was derided as an <a href="http://www.cbsnews.com/8301-505123_162-42749441/why-groupon-looks-a-lot-like-a-ponzi-scheme/">unprofitable Ponzi scheme</a>. But Q4's numbers show that, for the first time, Groupon's revenues are rising steadily. At the same time, Mason has gotten to grips with his operating costs. Operating costs — sales and marketing, mostly — are well south of revenues. It looked like Mason finally uncoupled his spend-money-to-make-money problem, and the business model at Groupon does actually work:
<div class="image-container click-to-enlarge" style="width:590px"><div class="image"><a title_source="Groupon" title_caption="" class="zoomin" href="http://static5.businessinsider.com/image/512e9bc76bb3f70372000021-960/screen%20shot%202013-02-27%20at%206.17.34%20pm.png"></a></div>Groupon</div>
The reason Groupon didn't make a profit on the bottom line this quarter is because the company has incurred a new set of costs to do with servicing its new Groupon Goods business — in which the company buys inventory and sells it directly to customers. As Bloomberg pointed out, <a href="http://www.bloomberg.com/news/2013-02-27/groupon-sales-miss-estimates-as-demand-wanes-for-daily-coupons.html">those costs should be temporary</a> as Groupon puts in place the necessary infrastructure to service a new business that already generates $225 million per quarter in sales.
Groupon's traditional business — daily deals — still has healthy numbers underpinning it. The company has more active customers than ever before:
<div class="image-container click-to-enlarge" style="width:590px"><div class="image"><a title_source="Groupon" title_caption="" class="zoomin" href="http://static6.businessinsider.com/image/512e9dce69bedda941000009-960/screen%20shot%202013-02-27%20at%206.21.47%20pm.jpg"></a></div>Groupon</div>
OK, so the average size of a customer deal is going down, but that's to be expected when you're servicing 41 million members. (For a parallel, there's a reason McDonald's serves 99 cent burgers and not $21 Michelin-starred meals.)
Mason didn't control the stock price, but he could control whether the company can grow and be profitable. The fact that he'd gotten revenues to go up while underlying day-to-day costs were going down suggests that Groupon is actually headed in the right direction.
Groupon is still a game of financial whack-a-mole, however.
It wouldn't be Groupon if there weren't big headaches, right?
The worst part of the business right now is Groupon's international operations. Those companies have lost $58 million in revenue since their peak in Q2 2012. It's a shrinking business propped up by robust U.S. growth:
<table class="image-container click-to-enlarge" width="200"><tr><td><div class="image"><a title_source="Groupon" title_caption="" class="zoomin" href="http://static4.businessinsider.com/image/512e9ba5eab8ea4973000016-960/screen shot 2013-02-27 at 6.05.24 pm.png"></a></div>Groupon</td></tr></table>
The problem here is that Groupon only has international operations because it went on a huge acquisition spree over the last couple of years. Groupon COO Kal Raman indicated <a href="http://www.businessinsider.com/groupon-coo-international-layoffs-2013-2">there would be layoffs in the division</a>, because it's inefficient compared to the U.S.
The stock doesn't reflect Groupon's fundamentals.
The board of directors' main priority seems to have been the stock price. If, on the other hand, its main priority was the underlying profitability of the company, then Mason should have been safe.
*This item was updated to reflect Mason's departure on Feb. 28. It originally stated that I felt his job was safe. Clearly, I was wrong.

You Searched For "Kal Raman" and got 8 results

Meet Kal Raman, Groupon COO & Mentor To Flipkart’s Bansals

Moinak Mitra

Now Amazon Veterans Are Running Groupon

Owen Thomas

Now Amazon Veterans Are Running Groupon

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Groupon's COO Just Signaled Plans For Massive International Layoffs

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Sad To Say, But Andrew Mason Is Probably Not Going To Be Groupon's CEO Much Longer

Owen Thomas

Groupon Rips Amazon's Drone Plan With New 'Medieval' Delivery System

Aaron Taube

Groupon's Next CEO Must Choose Which Business It's Really In

Owen Thomas

IGNORE THE HATERS: Why Groupon Is Actually Making Progress

Jim Edwards

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