Groupon’s stock price continues to sink like a stone. The lock-up period expired last friday and shares have plummeted further since. At $8.95 a share — down from its 52-week high of a rip-roaring $31.14 a share — Groupon is now below Google’s $6 billion acquisition offer. Meanwhile, the investors in its $1 billion growth deal area flirting dangerously close to merely breaking even on the once-hot company.
The biggest loser in terms of sheer dollars is Eric Lefkofsky, the Chicago-based angel who put the earliest money into the company and had the largest stake. And, as PandoDaily has learned, he really only has himself to blame.
According to sources familiar with the company, the decision to go public so insanely early in the company’s life cycle was a hotly contested one among Groupon’s investors. Many of the Valley-based firms who invested at that growth round were staunchly opposed to the IPO’s timing, we hear, arguing the company simply wasn’t baked enough and wasn’t ready for the scrutiny of public markets.
The plan definitely deviated from companies like LinkedIn and Facebook who sought to put off IPOs as long as possible. That’s strange because people like Facebook board member Marc Andreessen and LinkedIn founder Reid Hoffman are both Groupon investors via Andreessen Horowitz and Greylock, respectively.
I’d long assumed it was CEO Andrew Mason or the staff pushing for the quick payday, but our source says it was two other individuals who were pounding the table and demanding that Groupon had to go and had to go right then. One was Lefkofsky, the Chicago-based former private equity investor and consultant, who has since started Lightbank to invest in more early stage companies. The other was PandoDaily’s favorite German copy-cat Oliver Samwer.
When Groupon went public and Lefkofsky — the largest shareholder — was made a billionaire several times over, he appeared to be rewarded for his insistence. But if you believe in this company at all, it’s hard to argue that the right call was to go public so early, before the skeletons were out of the closet and the business model was fully baked. Ever since its S1, the company has been doing defensive damage control. It backs up what I wrote earlier about Groupon: Whom startups pick as early investors and mentors can dramatically affect the outcome of a company.
Which brings us to Samwer, who Andrew Mason once described as “the best operator he had seen in his life.” I can only assume Mason has led an incredibly sheltered life. Samwer presided over the company’s single most blighted business: its costly, disorganized, and uneven international operations, which have been a profligate embarrassment in major markets like China and have been caught offering fraudulent deals in Brazil. And now, it seems he’s partially responsible for the dramatically bad misstep of rushing the IPO.
Learn from Mason’s mistakes, startups: Pick your mentors carefully.