One Man's Opinion Why Groupon's Andrew Mason Is as Bad a CEO as Mark Hurd

December 27, 2010 at 11:44 am PT

There’s not just one reason, but six billion reasons why Groupon’s Andrew Mason is as bad as the scandalous Mark Hurd, by at least one academic’s assessment.

That’s gotta hurd, I mean hurt.

Sydney Finkelstein, a business professor at Dartmouth, appeared on NPR last week to discuss “The Worst CEOs of 2010,” and Mason rose to the top, along with BP’s Tony Hayward and HP’s Mark Hurd, both of whom lost their jobs.

Apparently, now that we are post-Gooponocalypse, or whatever you want to call it, the 30-year-old’s management skills are trading at a discount (and as the CEO of a company that negotiates steep price reductions on behalf of its customers, that seems somehow fitting).

It’s up to you how much weight you want to put in this comparison, which puts the leader of one of the hottest Internet start-ups on par with Hayward, who was heading up BP at the time of the Gulf oil spill, and Hurd, who resigned after having a relationship with a marketing consultant and is subject to a SEC investigation.

But hey, maybe it’s worth repeating since Finkelstein’s specializes in determining “why smart executives fail” and identifying “early warning signs for corporate disasters.” At least, that’s what his resume says.

So, in Finkelstein’s expert opinion, he sees a big fall on the horizon for Mason, who turned down $6 billion from Google.

What’s wrong with that?

Finkelstein: “Well, six billion reasons why that might not be the best thing to do.”

In his mind, Mason is more similar to Yahoo’s CEO Jerry Yang, who foolishly turned down Microsoft’s $30 billion buy-out offer, and less like Facebook founder Mark Zuckerberg, who smartly declined previous big-ticket bids.

“I may very well be wrong, but I’ll tell you, based on my own research and working with many organizations, I think Andrew Mason looked at Mark Zuckerberg as his role model–the founder and CEO of Facebook. And Zuckerberg had many opportunities to sell his business, and he didn’t. And you can see how incredibly valuable that company’s become….You don’t know what’s going to happen next. In the case of Groupon, there are plenty of other companies that are doing pretty much the same thing. Groupon is easily in the lead now, but there are companies like LivingSocial that have recently gotten a huge investment by Amazon.com. Now, that’s a pretty good backer, and that’ll be a serious competitor, as well.”

Tagged with: acquisition, Andrew Mason, BP, CEO, daily deal, Dartmouth, eMoney, Facebook, Google, Groupon, HP, investment, Jerry Yang, LivingSocial, Mark Hurd, Mark Zuckerberg, retail, retailers, shopping, Sydney Finkelstein, Tony Hayward, Tricia Duryee, Yahoo

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http://www.simplerna.com H2

This assumes GroupOn turned down Google.

What if there was no offer from Google? Was GroupOn-Google similar to the Yelp-Google deal that did not materialize?
http://twitter.com/sajid_v Sajid Husain

I agree with Finkelstein’s views. There are too many competitors to Groupon and the service Groupon is offering is not unique… This can be easily replicated. Mason may idolize Zuckerberg, but let’s face it, Groupon is no Facebook.
http://cyrusradfar.tumblr.com Cyrus Radfar

I agree there’s a lot of competition but this is a massive and growing market. Groupon will probably have more revenue in 2011 than Facebook. That’s a cash machine and Mason’s team surely knows better than any speculator how much of the market he’s tapped.

I think Mason can make good on his promise to his investors. Also, it should be remembered part of the reason for declining the $6B buyout was because of the possibility of govt. anti-trust intervention and Google disagreeing with Groupon’s need for a break-up fee.

Whatever happens, I don’t think it’s prudent to call Andrew a “bad CEO” or a “failure” for hitting for the fences. Andrew and his team have created more value in the last two years than thousands do in a life-time. Let’s keep some perspective.
Anonymous

Errrrr. There were lots of social networks and lots of group buying attempts. Mason and Zuckerberg’s execution is what helped them win.
http://pulse.yahoo.com/_MTPAPK2BCKNQTJGADPNR7XPGEY Ms. Green

at the end of the day is it your $6 billion?
Anonymous

This is honestly one of the poorest articles I’ve read on the site – this professor honestly has zero clue as to what he is talking about. Here is why:

1) Has this professor done any research into how many competitors and copycats Facebook has had in the past? You can fill up pages upon pages with companies that attempted to copy Facebook, no different than what we are seeing today with Groupon.

2) Does this professor have any idea of the business model, competitive advantages and strategy Groupon has in the marketplace? Based on his statements regarding the comparison to Facebook it is doubtful. Groupon has a vast network on both the consumer and merchant sides which gives it a major advantage in the marketplace. This is similar in a number of ways to the “network effects” of Facebook (between users), eBay (buyers and sellers) and Google Adwords / Adsense (publishers and ad buyers).

3) Does he have any idea why Groupon turned down Google? His answers suggest he doesn’t . The main reason that was reported is that Google was not ready to give Groupon an appropriate breakup fee if Government regulators stopped the deal from going through – it had nothing to do with the $6B valuation. The next year is going to be extremely critical for the company and if it started placing its resources into an acquisition that could fail, they would need a very solid insurance policy. Remember that when Google purchased Admob for $750M, they offered it with a $700M kill fee. The risk/reward ratio on this was likely too high for Groupon to follow through.

4) It is shocking that this prof who evidently is an expert in “Board of Director Effectiveness” (according to his resume), thinks Mason was the only decision maker on this deal (too boot in a CEO role and comparing him to other CEOS, when his voting rights are based on his BOD role along with eight others). Take a look at the Board of Directors page on Groupon…does this prof honestly think that Mason was the only one with voting rights?

5) He states that he “may very well be wrong, but based on his research…”. If his research does not consist of analyzing the situations that companies are faced with and using that as a basis for their decision making, then his research is totally useless. The only part here that was somewhat accurate in this statement is that “he may very well be wrong”.

6) This professor has put Mason up against some execs that have made some big mistakes (the jury on Hurd is still somewhat out). Has this guys even met Mason once face-to-face (or any of his supposed counterparts) to draw up these types of behavioral comparisons?

To Kara, Walt and everyone at All Things D, I love your site and your work – don’t stop doing it but please, please don’t put stuff like this up. This prof should be banned from the internet until he decides to actually do some research ;).
http://www.facebook.com/krissa88b Kris Ashton

It wasn’t actually the professor that said that. It was the author of this particular article that skewed his words to create sensationalism to the point of untruth… think National Enquirer.
“and Mason rose to the top, along with BP’s Tony Hayward and HP’s Mark Hurd, both of whom lost their jobs.”
Mason was never mentioned as a bad CEO, let alone there being any comparison to Hayward or Hurd. His name was brought up by the host of NPR News and there was some discussion as to Mason’s decision making but as the professor said “we’re looking into the crystal ball”. To even say that he said anything negative about Andrew Mason is almost a stretch.
http://www.facebook.com/mfarhan1 Mohammad Farhan Riaz

This is the answer!!!!
http://venturebeat.com/2010/12.....e=facebook
http://pulse.yahoo.com/_OSSS7LD2EAF2XK6IRI3W7OVBH4 Cvec

“So is Groupon another Amazon or another MySpace? Only time will tell.”

I like this as it’s one of the few statements that make sense on this post. It is darn right easy to decide which company has the right strategy or not, especially from the comfort of our arm chairs.

If we are that good with business strategies (professors and self-righteous bloggers included) then everyone should be running a successful business and not consulting or “blogging” from the safe sidelines.

Now, time itself is a cunning devil. It has a way of tricking us all. In the few years that I have been in business, sometimes it is just impossible to know who will hang around for the long haul. Was Groupon stupid for not going with google? Maybe we would never know. Time might not even tell. If Groupon goes belly up tomorrow, it might not be because it didn’t hook up with Google likewise if it becomes the next Amazon, it might not be because Mason made a smart choice.

Success, or the prediction of one, has more variables than modeling a storming weather but the impacts are more than a nasty hurricane.

When I think of how AOL, Netscape, MySpace, Geocities, etc., have ruled the internet in the past, it makes me pause before I start calling a CEO smart or dumb or predicting which company will rule the world.
Anonymous

@hech911 Maybe posting the article is not a bad move at all – you’ve had a chance to give us your opinion ?!
:-)
http://grouponclone.contussupport.com/ Contus

I agree with you that there is a lot of competition using groupon buying..based on that, groupon is a buying site like Groupclone Script or Living Social script.

One Man's Opinion Why Groupon's Andrew Mason Is as Bad a CEO as Mark Hurd

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