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Groupon IPO In Jeopardy As They Violate SEC Rules
By: Gini Dietrich | August 31, 2011 |
On the radio yesterday, they did an interview with Daniel Kibblesmith, a 27-year-old comedy writer for Groupon.
Rumor has it he’s one of Chicago’s most eligible bachelors.
And, apparently last night, he was the guy date on The Millionaire Matchmaker. I’ve never seen the show, but I’ve heard the guys who are typically on there are douchebags.
But that’s neither here nor there.
Because, at the same time the RedEye was calling Kibblesmith most eligible bachelor (five days ago), Andrew Mason was firing off a memo to his staff saying everything the media is saying about their impending IPO is fine. He countered every point, including janky accounting practices and whether or not they’re running low on cash, which is all fine and dandy.
But the email made its way into the media stream.
During the period that they are required to be quiet as they approach their IPO.
The email likely has violated the SEC rules that a company must not release anything during the period leading up to the initial public offering. This is to prevent pump and dumb scams or insider trading on the stock market.
But the reason I’m writing about it today is because, right before that email was sent, Bradford Williams, the vice president of global communications at Groupon, quit. And the story in BusinessInsider makes it sound as though Mason wouldn’t listen to counsel from Williams and just did what he wanted anyway.
So let’s review:
- Six days ago, the RedEye calls a Groupon executive a most eligible bachelor.
- Six day ago, Andrew Mason fires off an email to his team that is leaked to the media.
- Yesterday morning, Kibblesmith appears on Chicago radio, doing interviews about his show’s appearance and his role at Groupon.
- Last night, Chicago’s most eligible bachelor appeared on The Millionaire Matchmaker.
- Last night, BusinessInsider breaks the news that Williams quit…most likely a week ago, before all of this happened.
We talk a lot here about what we would have done if we were counseling News Corp. or Kenneth Cole or Tiger Woods. But, finally, a PR professional got it right.
Bravo, Williams, for standing up for what you believe in, knowing the SEC rules around the dark period, and telling your boss where to stick it when he doesn’t listen to your counsel…because you were right.
Oh, and P.S., the SEC has a history of pulling a company’s IPO for pulling stunts like this. Groupon, you’ve been warned. You were stupid to walk away from the Google $6B offering. Don’t be stupid again.
115 comments
I saw that Millionaire Matchmaker - the next day I became aware of Groupon's public issues. I thought "that's some odd timing."
Apparently it's worse than I thought. Thanks for outlining all of this.
@SarahSteidinger thanks for the RT, Sarah - you a @Groupon fan? Also glad you got power back! In Natick we were out for ~2 days
@eric_andersen Thanks, Eric! We're happy about power too! Used to be huge @Groupon fan, not so much anymore
Just read this in peHub: "In my story, I cited two analysts, one of whom — Scott Sweet, the principal researcher of Tampa-based IPO Boutique — told me that market rumors ascribing Groupon a valuation of $25 billion were “colossally absurd.” I also quoted Sam Hamadeh, founder of the private company research company PrivCo in New York, who said Groupon will be bouncing payroll checks in six months if it doesn’t go public or raise more money from investors."
I've heard nothing but negative comments and frustration regarding Groupon, from people who can't redeem their offers to businesses who nearly went bankrupt over less-than-stellar "deals." Considering the actions of its leaders, I now know why. Bravo to Williams.
@LoVilla It definitely isn't a "bring more loyal customers to me" business opportunity. I really don't want them to fail - we need some success in this economy. But I just saw that they violated the rules again today. Sigh...
@ginidietrich haha, deal. For the innocent bystanders: http://www.sanfranciscocreameryco.com/kitchen_sink.html
1 Like
Uhm...stupid once...stupid twice....you know it is gonna happen. There is arrogance in the air and I have been doing the math. I flat out are against the daily deal pricing/revenue structure for the businesses. Very very high cost of reaching people.
Wait did you say Douchebag? I am telling @KenMueller on you.
This reminds me a bit of the 20-something wunderkinds of the .com era who believed the laws of physics and business somehow didn't apply to them. Were it not the hundreds of millions of dollars that were lost and the thousands of workers, consultants and investors who were left holding the bag, stories from those days appear almost quaint now. Oh those sock puppets were oh-so cute.
Funny thing is, the SEC doesn't much care about quaint. Or cute. Or arrogance. Like the IRS, CIA and FBI, the SEC tends to take its job pretty darned seriously. I'll be surprised if this Groupon IPO doesn't become a PileOnGroupon event.
You can't fix stupid. Or arrogant.
Bravo to Bradford Williams for making the rest of us proud. He deserves not only to land on his feet but to land on 'em in a new pair of Berlukis. Or maybe just some flip-flops on a Mediterranean vacation.
1 Like
@RogerFriedensen Apparently some big-time investor has already approached him, applauding him, and offering him a job.
Gini, why were they stupid to walk away from the 6B offering? Do you know the details of the offer Google was even giving? Do you think Google was just going to hand them a check for 6B without stipulations based upon future earnings etc? And for what percentage of the company and voting control? Until we see what type of capital they are able to raise via IPO or a private offering (more ways to raise money than an IPO), it is rather silly at this point to say Groupon was stupid to walk away from Google. I have no idea how you can draw this conclusion without A: knowing the exact details and B: knowing the finality of their public/private stock offering.
@Nick You're absolutely right that I'm not there and I don't know the details. I talked about this, at length, last winter when the news came out that they turned the offer down. But I've been in the business world long enough to know that they won't see that kind of money again. Even if their IPO isn't pulled, the economy is worse now than it was in November. The stock market starts down nearly every day. They won't do better in an IPO than they could have on the private market. Six. Billion. Dollars.
@Nick I think it's because they didn't anticipate the reaction to their business model in the marketplace when they told Google to take a hike. Now they aren't getting repeat business, their numbers are flattening, they've become arrogant, and they've jeopardized their IPO by violating SEC rules. Let's just say this--if all those trends continue, $6B will seem pretty generous.
@rustyspeidel@Nick Plus Google was probably willing to let them run it nearly as is - it wasn't like they were buying TECH- they need the sales people and email lists... now the competition is fierce, the market is TIRED, and he has made some BAD decisions on how to run his company
@Nick@rustyspeidel Nick, traffic does not = sales. This article gives you a decent idea why the model as is can't be sustained: http://www.bnet.com/blog/advertising-business/ceos-naked-yoga-video-aside-is-groupon-approaching-its-endgame/9917
as rusty suggests, this thing can't last forever without some MAJOR overhaul
That's right, you can't. You can only speculate. Their traffic is up over 315% since last year. How is that flattening? Because of a month? Groupon could very well end faltering and at the end perhaps taking that offer could have been their best bet, but at this stage to use exact language is just, well, crazy. @faybiz @rustyspeidel
It's easy to draw that conclusion...read the articles and stories coming out about them. 'Nuff said.
@GloriPerez Um, no. Not a good thing. You can get your IPO pulled AND sued by your investors.
@ginidietrich yeah they tend to carry a little (or a lot) of that subject.. it will be the demise
And? Who is Groupon's PR counsel? Any good crisis comms pro would have never let it get this far - unless Mason knew the advice and is riding shot-gun...
@ElissaFreeman That's exactly what they're saying - he was getting the counsel (the right counsel) and completely ignoring it.
@ElissaFreeman Uhm I am their PR Counsel. I told them to get drunk and flip the bird at everyone. That was @ginidietrich 's advice to me when I called her in a panic.
I like the convictions of the Flack but also know that it is another case of bad idea jeans from the startup
Too bad. I was hoping to short Groupon when they went public. All the retailers I talked to wouldn't use them again.
@Jack Rayher Same here. When clients ask us if they should try them, we recommend only if they have an inventory excess. Because it's not going to bring them loyal customers.
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