In August 2010, a little over a year ago, Forbes Magazine proclaimed Groupon “the fastest growing company ever” with a then-reported revenue of over $700 million in 2010 alone. Groupon’s enigmatic founder and CEO, Andrew Mason, a former classical guitar major at Northwestern, was profiled everywhere from Chicago Magazine to last month’s Vanity Fair. It is not an exaggeration to say that Groupon put Chicago on the map as a technology and innovation hub for good.
But troubles at Groupon are adding up and, in anticipation of its forthcoming IPO, could lead to large-scale problems if actions are not taken swiftly to solve the company’s current woes.
The biggest, current issue at Groupon is revenue. According to the Wall Street Journal, the company’s revenue for 2010 was far from its previously-reported, extraordinary $713.4 million. In fact, it was half that at about $312 million. And that’s last year. The site has lost nearly $224 million in the first half of 2011 alone, according to CNN Money. And last year, Groupon was struck by news that the “Daily Deals” web phenomenon may actually be detrimental to local businesses.
Possible instability at the top is not good news for the tech company either. Earlier today, Groupon’s COO, Margo Georgiadis, jumped ship and returned to Google after only five months. In March 2011, former COO Rob Solomon, who was replaced by Georgiadis, left the company after only a year in Chicago. That’s two COOs out at Groupon in six months.
In her resignation letter, Georgiadis noted that the “company is on a terrific path” and that she has “complete confidence in the team’s ability to realize its mission.” She could be right. Groupon is evaluating its plans to go public on a week-by-week basis and there’s no sign that the move won’t happen in the near future. Lacking no buzz, the company still has a strong user base and local businesses eager to sign up. But with copycats abound, the novelty of Groupon has worn off. And with the company’s rookie mistakes, executive instability and revenue questions, not to mention overall volatility in the stock markets, Groupon could fall off the pedestal Forbes and many other media outlets so eagerly put it on last year.