At the PandoMonthly fireside chat tonight, Reid Hoffman, who was an early investor in Groupon, shared his thought’s on the company’s initial public offering.
As a bit of a history lesson for those that have forgotten, Groupon’s IPO was very messy. Upon entering the quiet period preceding its public listing, the company was immediately hit with a wave of criticism from the media — largely justified. Then, there were accounting irregularities for which the SEC hounded the company. To top it all off, the company’s share price has collapsed in the year since the company was publicly listed.
Hoffman, who had an inside look at the company’s IPO, offered a number of points that would be helpful for other companies looking to go public.
The first piece of advice from Hoffman is to not get distracted by media attention. Groupon was hit by wave after wave of negative press, which ended up distracting CEO Andrew Mason from working to make the IPO — and the underlying business — more successful. As Hoffman noted, “it diverts focus from the product stuff.”
The next piece of advice was to continue to focus on building out the product, which is what Mark Zuckerberg did as Facebook was preparing to go public. This means preparing for every eventuality, so that when the storms hit, you can deal with them quickly and return to building out the company. This is an extension of Hoffman’s attitude toward founders with product vision and a willingness to “go long.”
More specifically relating to the IPO, Hoffman says that Mason and his team failed to address a number of standard items on the pre-IPO checklist. The biggest issues, he says, is understanding what is the default conversation that the market will have about your company when a quiet period leaves you unable to respond. The LinkedIn founder declined to state that Groupon made a mistake in going public, but he did say that he thinks they could have made better decisions along the way.
As for Groupon’s current problems, including shareholder lawsuits, Hoffman continues to publicly support Andrew Mason. “I think he has very good product sensibilities. I think he has a good product base,” says Hoffman. And that means a bright future for the company is his view, as he believes “the game is still in front of them.”
Of course, Hoffman is an investor in Groupon, so supporting the company’s positions in public is expected.