Andrew Mason’s Next Act: Groupon’s ex-CEO Releases a Music Album

Andrew Mason - Hardly Workin' music album
Groupon’s ex-CEO Andrew Mason is releasing a music album titled — appropriately enough — “Hardly Workin’.”

I’ve blogged before about the tribulations of Groupon and its “daily deal” couponing business.

The company has found it incredibly difficult to develop a sustaining business model, what with increased competition and the propensity for vendors to cease their participation after one or two deals due to disappointing program results.

With Groupon taking 50% of every deal plus a credit-card handling fee, far too many vendors found that they couldn’t make money on “daily deal” promotions, and often, “repeat business” from the ultra-price-savvy consumers who tend to participate in such schemes never materialized

Groupon founder and former CEO Andrew Mason was hardly the typical head of a dotcom business.  His business background was rather thin, despite having started a Saturday morning bagel delivery service in suburban Pittsburgh when he was just 15 years old.

Instead, Mason graduated from Northwestern University in 2003 with a degree in music, signaling where his interests truly lie.  After having worked at several Chicago-area tech companies, Mason managed to snag some seed money from Chicago entrepreneur Eric Lefkofsky, and Groupon was born in 2008.

By 2010, Groupon was the latest star in the constellation of online businesses, with annual revenues of ~$800 million.  In December of that year, Groupon was offered $6 billion to sell to Google, but Mason and his company board foolishly declined the offer.

But within two years, Groupon’s fortunes had turned dramatically for the worse.  Herb Greenberg of CNBC named Mason the “Worst CEO of the Year” in 2012, writing:

“Mason’s goofball antics, which can come off more like a big kid than company leader, almost make a mockery of corporate leadership – especially for a company with a market value of more than $3 billion.  It would be excusable, even endearing, if the company were doing well … but it’s not.”

After one too many missed quarterly goals, Groupon’s board of directors ousted Mason on February 28, 2013.  On the day of his dismissal, Mason wrote to his employees:

“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.”

But now Mason is back – just not in the same way.  This time, it’s as a musician.  The former punk band keyboardist (and also husband of pop singer Jenny Gillespie) is releasing an album titled “Hardly Workin’” that contains seven songs.  It was produced by Don Gehman, who has also worked with R.E.M. and John Mellencamp, among others.

Here’s what Mason has to say about his latest project:

“I managed over 12,000 people at Groupon, most under the age of 25.  One thing that surprised me was that many would arrive at orientation with minimal understanding of basic business wisdom.”

This album pulls some of the most important learnings from my years at the helm of one of the fastest-growing businesses in history, and packages them as music.  Executives, mid-level management and front-line employees are all sure to find valuable takeaways.”

*  *  *  *  *

“If you’re seeking business wisdom, you don’t need no MBA — look no further than the beauty that surrounds us every day …”

*  *  *  *  *

With lyrics like these, one wonders if Andrew Mason isn’t talking so much about 12,000 employees, but instead about himself!

Groupon’s Slow-Motion Train Wreck

Groupon failure of business modelI’ve blogged before (several times, actually) about the problems with Groupon’s business model and the difficulties it’s encountered since going public.

It seems that the twin whammies of new competitors plus merchants’ increasing unwillingness to take a bath on offering deep-discounted products and services to ultra price-sensitive consumers have been enough to send Groupon’s business into a financial tailspin.

One key takeaway from the Groupon couponing experience: Consumers who are attracted to bottom-of-the-barrel pricing have absolutely no brand loyalty thereafter – unless they’re offered a similarly extreme price discount the next time around.

Understandably, merchants aren’t much interested in marketing practices that boil down to being creative ways to divorce profits from sales.

And now, with yet another quarter of dismal financials just released, Groupon’s board of directors has done the inevitable: separating CEO and founder Andrew Mason from his company.

As the famously quirky Mason, who was once a student of music at Northwestern University, put it in a letter to Groupon employees (which he also released publicly “since it will leak anyway”):

“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.”

And then Mason goes on to summarize the ugly facts: two quarters of missing the company’s own financial expectations, along with a stock price that’s baely one-fifth of Groupon’s listing price when the company went public ~18 months ago.

Business observer and talk-show personality Jeff Macke has been merciless in his condemnation of Groupon’s recent business performance. He writes:

“In its short, ignominious history as a public company, Groupon crushed the hopes of more true believes than Santa Claus and Jim Jones combined. From its closing level on the day of its IPO in November 2011, GRPN shares have lost more than 80%, driven by accounting scandals, an ill-conceived international expansion and generally poor execution of a not-very-smart business model … What is fresh information is the company’s hideous earnings miss … when it reported a 12-cent loss versus expectations of a 2-cent gain.”

Late moves by the company to staunch the bleeding – such as taking a smaller cut of revenue on daily deals during the latest holiday season in an attempt to attract and keep merchants – haven’t been very successful and haven’t reassured investors.

In late 2012, Andrew Mason was dubbed “Worst CEO of the Year” by CNBC’s Herb Greenberg.  But not every business journalist and analyst has been completely critical of CEO Mason. In an interview with the New York Times, Stifel Nicolaus’ Jordan Rohan remarked: “I view Mason as a visionary idea generator. Few would argue with how impressive the Groupon organization was as it grew.”

But Mr. Rohan went on to report, “However, at some point it became the overgrown toddler of the Internet – operationally clumsy [and] not quite ready to make adult decisions.”

For many of us in the marketing field, peering at Groupon from the outside was like seeing a slow-moving train wreck in the making, so the latest news is pretty much what we expected.

But perhaps the biggest surprise is how similar it all looks to the ill-starred Internet pure-plays of the dotcom bubble a decade ago.