Tag: groupon

Groupon CEO’s Exit Letter Reveals Generosity and References Battletoads

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If you’re wondering why we are posting the exit letter of  founder and former (as of yesterday) Groupon CEO Andrew Mason, we remind you that Groupon’s business health affects local small business; that NEA, a Maryland venture capital firm with Baltimore ties, is highly invested in Groupon; and that the daily deal company is now co-chaired by Marylander Ted Leonsis.  And it’s a brilliant letter. – The Eds.

(This is for Groupon employees, but I’m posting it publicly since it will leak anyway)

People of Groupon,

After four and a half intense and wonderful years as CEO of Groupon, I’ve decided that I’d like to spend more time with my family. Just kidding – I was fired today. If you’re wondering why… you haven’t been paying attention. From controversial metrics in our S1 to our material weakness to two quarters of missing our own expectations and a stock price that’s hovering around one quarter of our listing price, the events of the last year and a half speak for themselves. As CEO, I am accountable.

You are doing amazing things at Groupon, and you deserve the outside world to give you a second chance. I’m getting in the way of that. A fresh CEO earns you that chance. The board is aligned behind the strategy we’ve shared over the last few months, and I’ve never seen you working together more effectively as a global company – it’s time to give Groupon a relief valve from the public noise.

For those who are concerned about me, please don’t be – I love Groupon, and I’m terribly proud of what we’ve created. I’m OK with having failed at this part of the journey. If Groupon was Battletoads, it would be like I made it all the way to the Terra Tubes without dying on my first ever play through. I am so lucky to have had the opportunity to take the company this far with all of you. I’ll now take some time to decompress (FYI I’m looking for a good fat camp to lose my Groupon 40, if anyone has a suggestion), and then maybe I’ll figure out how to channel this experience into something productive.

If there’s one piece of wisdom that this simple pilgrim would like to impart upon you: have the courage to start with the customer. My biggest regrets are the moments that I let a lack of data override my intuition on what’s best for our customers. This leadership change gives you some breathing room to break bad habits and deliver sustainable customer happiness – don’t waste the opportunity!

I will miss you terribly.

Love,

Andrew

Baltimore-founded NEA’s Groupon Investment Valued at $2.3B, T. Rowe’s at $330M

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Courtesy of Citybizlist — Many pre-IPO investors tripled their money while early investors like New Enterprise Associates made astronomical returns as Groupon Inc. (Nasdaq: GRPN), the daily deals company, completed a $700 million initial public offering, the biggest by a dotcom since Google Inc.

Groupon shares touched $31 before closing at $26.11 on Nov. 4, giving investors a 31 percent boost on the opening day. The share price gave Groupon a valuation of $16.50 billion.

New Enterprise Associates was among the biggest gainers. Among the earliest investors in Groupon, NEA’s 87.45 million shares were valued at $2.28 billion, for a potential return of about 154x, according to peHUB, a venture and private equity news site run by Thomson Reuters.

Among other investors in citybizlist’s geographies, Boston-based Fidelity Investments and Baltimore-based T. Rowe Price were the biggest. Each invested $100 million in the Internet startup and their stake was each valued at $330.61 million on Nov. 4.

From New York, Morgan Stanley‘s $75 million investment grew to $247.96 million; and Allen & Company‘s $4 millioninvestment grew to $13.22 million.

Boston-based Battery Investors VIII LP‘s $23 million investment grew in value to $76.04 million, and Greylock XIII L.P.’s $65 million investment rose to $214.89 million.

Also, Dallas-based Maverick Fund Private Investments Ltd.’s portfolio grew to $165.30 million,from $50 million.

The following are some Groupon investors and the value of their holding as on Nov. 4:

read more at Citybizlist

Google Offers Launches in Baltimore — Who Wins and Who Loses?

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When Google’s six billion dollar offer to buy out Groupon was turned down last December, the Internet giant decided to create its own daily deal site. Google Offers (featuring discounts of 50% off and higher at local businesses) launched in Baltimore yesterday.

It’s certainly a good deal for Google and for consumers, and it may be bad news for Baltimore’s already saturated daily deal market. But what about the businesses that participate?

According to entrepreneur-blogger Rocky Agrawal, Google Offers (and daily deals sites in general) can be a losing game for businesses that participate. “The best customers for the deal sites are cheapskates who frequently buy deals. These are the worst customers for small businesses. Yet, [deal sites] are selling themselves as a way to acquire loyal customers.”

Agrawal also notes that the long term cost the business pays for a Google Offer promotion (in the form of deep discounts redeemed over the course of six months to a year) makes the venture easily as expensive as a print advertisement, which local businesses typically can’t afford.

What do you think? Have daily deal sites introduced you to businesses you now return to again and again? Or do you hop from deal to deal?

Groupon: The Billion Dollar Gamble

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There’s a whiff of the tech bubble surrounding Groupon, a company that — according to a recent article in the Times — seems staffed almost entirely by recent college graduates with non-lucrative majors. The 27-year old senior editor has a degree in poetry and feels “kind of old compared to everyone else.” Groupon’s 400-plus writers and editors are based in Chicago, and earn around $37,000 a year (for a new writer) to come up with zany ways to sell one of the most boring things out there — coupons. Oh, and they recently turned down a purported $6 billion buyout offer from Google. Is this the future of marketing?

(If you haven’t yet been inducted into the cult of Groupon, here’s how it works. Each day, each of the 177 North American cities that the company covers offers a discount on a local product or service, and you’ve got 24 hours to buy in. Recent Baltimore offerings include a $10 coupon good for $20 worth of food and drinks at Zen West, or $149 for two hours of labor from College Hunks Hauling Junk.) Baltimore-founded venture capital firm New Enterprise Associates was an early investor in Groupon. 

It’s actually a pretty simple business model; the Times argues that the reason Groupon dominated while other efforts failed is thanks to the very zaniness it cultivates in its copy. (“There comes a time in every cowboy’s life when he must become a cowman, leaving behind his spurs and hat for a cowbell, hooves, and a penchant for chewing grass.” That’s supposed to sell you the Zen West coupon, if you couldn’t tell.) You might find it endearingly irreverent or teeth-grittingly irritating, but it seems to work; the company’s already made more than a billion dollars from the businesses that seek out Groupon to give themselves a marketing bump.

But does it result in higher sales or repeat customers for the businesses themselves? That remains to be seen. For one, the very irreverance of the marketing copy can sometimes overshadow the product or service being sold. Then, there’s the fact that deal-loving Groupon buyers may not turn into those lucrative repeat customers after all.  Not so long ago I used a Groupon at a local coffee shop — one I’d never been to before — and asked the owner if the Groupon investment had worked out well for him. According to him, it just resulted in a bunch of thrifty one-time customers. I turned out to fall into that camp. The food was great, I loved the atmosphere — but, well, I just haven’t been back.

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