Twelve years ago, Groupon rose to popularity by introducing the concept of online group purchases. They did this by resolutely rejecting Google’s $6 billion buyout offer and went public instead with a $17.8 billion market valuation. Although the firm claims to have 14 million active users, its financial status has been slowly deteriorating for the previous ten years due to stasis in its primary business model, failure to diversify, diminishing sales, and persistent losses.
The most recent chapter of that tale begins today. The Chicago-based firm has named Dusan Senkypl, a current board member, the temporary CEO. The company’s market valuation is barely $103 million, down 99.4% from when it first entered the public market. The business will be managed by Senkypl from the Czech Republic.
According to a statement released by the business today, his appointment is effective immediately.
Kedar Deshpande, who led Groupon for barely 15 months, is replaced by him. Deshpande spent more than ten years as an executive at Zappos before joining Groupon, and even after accepting the position, he maintained his Las Vegas base of operations. According to the business, he will continue working for another 60 days to aid with the changeover.
Senkypl is a co-founder of Pale Fire Capital, a Prague-based PE firm with the same name as a Nabokov novel, perhaps? Most of Pale Fire’s investments are in companies outside its native Europe and other regions. But, it is also at the moment Groupon’s largest shareholder, a position it has not held idly: The two companies were involved in an activist battle last year that led to the firm winning two board seats at the business, one of which is held by Senkypl.
The chairman of Groupon, Ted Leonsis, expressed optimism about the situation: “Since he joined the Board, Dusan has been actively engaged as a director, giving vital oversight on Groupon’s strategy and capabilities and helping the firm identify areas in need of development.
Indeed. Pale Fire said in November that it was assisting Groupon in completely restructuring its IT staff, beginning with hiring a new CTO from one of its other portfolio businesses.
The larger constraints on the technology industry and the economy as a whole have not helped the business’s position. During two tranches in August 2022 and January 2023, the company laid off over 1,000 people, or nearly 30% of its staff.
Particularly Groupon has had several difficulties throughout the years. The foundation of group buying is the idea of hype, which may have been a fateful or unfavorable starting point. Others questioned whether it could be categorized as a “tech” firm even before it became a household name, despite forecasts that it would pose a challenge to Google and Amazon. Yet after completing more than 40 acquisitions, including several copies in other international markets, and several intriguing e-commerce and fintech companies, Groupon could not diversify further.
Nevertheless, Google’s shift in how subscription emails were classified caused the company’s primary marketing channel, email, to almost disappear (and could be more easily ignored). Of course, scores of additional inventions and platforms have also been developed to appeal to customers who want to purchase the experiences and services that merchants like Groupon market.
Senkypl and Groupon have a hard task ahead of them to turn things around. But, the new CEO thinks there is still time to make the necessary adjustments.
Senkypl stated, “I admire the commitment to developing this company and am proud to steer Groupon through its change and revival. Combined with operational efficiency, Groupon’s unique local inventory, over 14 million active local clients, and millions of monthly visitor sessions may fuel tremendous growth. I am eager to build on that basis to grow the company’s marketplace further and provide value to all stakeholders. I’ve started from scratch in several companies that have scaled to serve hundreds of millions of customers, and I think I know what we need to do at Groupon to advance the business.
For some context on those figures: 14 million might sound like a lot, but keep in mind that the firm claimed to have more than 83 million registered users when it initially filed to go public back in 2011, with over 15.8 million of them having purchased Groupon deals. So to persuade consumers to care about Groupon again, much work must be done.