Groupon, which has lost 99.4% of its value since its IPO, names a new CEO... based in Czech Republic
A dozen years ago, Groupon shot to fame popularizing the online group buying format, confidently rejecting a $6 billion acquisition offer from Google and instead going public with a $17.8 billion market cap. The company today says it has 14 million active users, but almost consistently for the last decade, its financial position has been in a slow decline -- with stagnation in its core business model, little success in efforts to diversify, declining revenues and ongoing losses.
And today comes the latest chapter in that story. The Chicago-based company, which today has a market cap of just $103 million (a drop of 99.4% from its public market debut), has appointed Dusan Senkypl, a current board member, as interim CEO. Senkypl will run the company... out of the Czech Republic.
His appointment is effective immediately, the company said in a statement today.
He replaces Kedar Deshpande, who had been Groupon's CEO for just 15 months. Before Groupon, Deshpande was an exec at Zappos for more than a decade, and after he took the Groupon job, he continued to be based out of Las Vegas. He will stay on for 60 more days to help with the transition, the company said.
Senkypl is a co-founder of Pale Fire Capital, a PE firm based in Prague (and named after the Nabokov novel?). Most of Pale Fire's investments are in businesses out of its home country and other parts of Europe. But it is also currently Groupon's biggest shareholder -- a role it has not held passively: The two businesses were embroiled in an activist fight last year that resulted in the firm getting two board seats at the company, one of which Senkypl holds.
“Since he joined the Board, Dusan has been very engaged as a director, providing important oversight on Groupon’s strategy and strengths and helping the company identify areas in need of improvement," noted Ted Leonsis, Groupon's chairman, in an upbeat take on the news.
Indeed. In November, Pale Fire announced that it was helping Groupon rebuild its whole technology team, starting with the appointment of a new CTO from one of its other portfolio companies.
The company has also been doing some other fairly intense restructuring, with its position not helped by the wider pressures on the technology sector and the economy overall: across two tranches in August 2022 and January 2023, it laid off around 1,000 employees, or roughly 30% of its workforce.
Groupon specifically has faced a host of challenges over the years. The very concept of group buying is structured on the concept of hype, which may have been a fateful, less-than-promising starting point. Even early on, and despite the predictions of it being a threat to Google and Amazon, others debated whether it could rightly be considered a "tech" company. But beyond this, Groupon -- despite making more than 40 acquisitions, including a host of clones across international markets, plus a number of interesting e-commerce and fintech businesses -- failed to find other hooks to diversify itself.
Meanwhile, a key marketing route for the company -- email -- died a small death when Google changed how subscription emails were categorized (and could be more easily ignored). And of course, dozens of other platforms and innovations have emerged targeting customers who are looking to buy the kind of experiences and services that companies like Groupon sell.
Senkypl and Groupon have a tall order ahead of them to turn all this around. But the new CEO believes that there is still an opportunity to fix what isn't working.
“I have a deep appreciation for the dedication that has gone into building this company and am honored to guide Groupon through its transformation and turnaround,” Senkypl said in a statement. “With unique local inventory, over 14 million active local customers and millions of visitor sessions per month, Groupon has valuable assets capable of fueling significant growth when paired with operational excellence. I am excited to build on that foundation to further scale the company’s marketplace and drive increased value for all stakeholders. I have built multiple businesses from the ground up that operated at scale with hundreds of millions of users, and I believe I know what we need to do at Groupon to take the company to the next level.”
For some context on those numbers: 14 million might sound like a big number, but recall that when the company first filed to go public back in 2011, it said it had more than 83 million registered subscribers, with around 15.8 million of them having purchased Groupon deals. There is a lot of work to do, in other words, to get people to care about Groupon again.