Groupon CEO Andrew Mason stepped own after the daily-deals company reported dreadful earnings. Mason, who struggled to reverse heavy losses and a slide in the stock price, admitted he’d made mistakes. But he was right about one thing: how difficult it is for a fast-growing startup to be a public company. In a candid interview with Fast Company, held just weeks before his firing, Mason noted how much things change once a company does an initial public offering (IPO):
“What’s just depressing to me is how–and it’s not just for us, let me generalize it–the moment a company goes public the conversation shifts from how they’re trying to change the world and the product they’re building to how they’re making money.”
It’s a sentiment shared by many CEOs of newly public companies. After the champagne and confetti of the IPO party are gone, the hard work begins. Complying with securities regulations, filing audited financial statements, handling demands for information from shareholders and analysts – it’s easy to see why Mason was disillusioned.
It’s hard to speak about the long term when shareholders want results in the short term, especially if that’s what you promised them during the IPO road-show. And there’s a daily barometer – the stock price – that judges how well you are doing. But if you’re not ready for all of this scrutiny, you shouldn’t be public in the first place.
On top of these pressures, Mason seems to have made it more difficult for himself by raising quirkiness to a whole new level. He also had a higher profile in the media than was probably wise. Last month’s interview with Fast Company is a case in point. What exactly was he hoping to accomplish with the interview? Clarify the strategy? Save his job? Vent some frustrations? Perhaps all of those reasons were in his mind, but they don’t add up to a strong argument for speaking to the media.
When a company simply doesn’t have answers for questions about its strategy, it’s better to keep the CEO away from the limelight and focused on the business. Facebook, which also has been bloodied by the stock market and the press, has kept CEO Mark Zuckerberg on a very short media leash.
Ironically, Mason’s finest moment might have been his farewell memo. It’s direct and honest. Most remarkable of all, Mason utters the words that few CEOs in a crisis manage to spit out: “I’m accountable.”
Fortunately, Mason’s fall is cushioned by a big pile of cash. According to Groupon’s regulatory filings and reported by the WSJ, Mason took out more than $31 million before the company’s IPO. He retains a 7.1% stake in its Class A and Class B shares, valued at $226 million. Nice.