Groupon's New CEO May Be Its Best Deal Yet
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Groupon found a deal that seems to be working: Eric Lefkofsky.
Chicago-based Groupon announced that Lefkofsky, who had been temporarily running the daily deals website since founding CEO Andrew Mason was ousted in February, has been appointed permanent CEO by the board of directors. "The board is encouraged by Groupon's performance under Eric's leadership,” said Ted Leonsis, chairman of Groupon, in the second-quarter earnings statement released late Wednesday.
Groupon, a pioneer of the daily deals craze, was founded in 2008 and went public in a highly-anticipated IPO in 2011. But Groupon has struggled significantly since then, and after posting a loss of $81.1 million in the fourth quarter of last year, its board axed Mason. Over the past two years, Groupon’s stock price has gone from $26 a share on its first day of trading in November 2011 to less than $3 a share a year later.
Investors seemed pleased with the new CEO pick. Groupon’s stock was up more than 2 percent midday Thursday to hover near $11 a share.
Since leaving Groupon, Mason has been singing a different tune. Literally. He released a collection of seven songs that he titled “Hardly Workin” last month.
While Mason has been strumming away, Groupon has been banking on Lefkofsky to play the lead role in an epic comeback story. Lefkofsky is facing an uphill battle, but so far has been showing some positive signs. The total amount of North American sales made through Groupon rose 30 percent in the second quarter compared to the same quarter a year ago, according to the financial statement released Wednesday. Billings are a critical part of Groupon’s business model because the daily deal provider takes a cut from the transactions. The percentage that Groupon pockets varies on a case by case basis, depending on the merchant and the architecture of the deal, but is generally 50 percent of the price that the product or service sells for as part of the deal.
Users buying deals on their smartphones is a primary growth area for Groupon. More than half of the billings recorded in North America came from mobile devices in June, says Lefkofsky in the financial statement. And more than 50 million Groupon apps have been downloaded globally, he says.
Lefkofsky, 43, is a co-founder of Groupon and prior to being named the CEO was the company’s executive chairman. In addition to launching Groupon, Lefkofsky is a co-founder of the transportation management company Echo Global Logistics, the brand consultancy company InnerWorkings, the private investment firm Lightbank LLC and the electronic advertising administration company MediaBank, which merged with Donovan Data Systems to form MediaOcean in 2013.