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    Published on: March 1, 2013

    by Kevin Coupe

    Groupon Inc.'s board of directors announced yesterday that Andrew Mason, the founder and CEO of the daily deals pioneer, has been fired. He is being replaced on an interim basis by Chairman Eric Lefkofsky and board member Ted Leonsis as the company looks for a new permanent CEO.

    To be sure, the firing seemed justified. Mason was a controversial figure. Some wondered if he were mature enough or had sufficient business acumen to grow the company. And certainly the company's sales and stock price suggest that a new CEO might be the best move for Groupon.

    That said, Mason is, at least for the moment, my hero ... because of the email he sent to all of Groupon's employees yesterday. Here it is:

    People of Groupon,

    After four and a half intense and wonderful years as CEO of Groupon, I've decided that I'd like to spend more time with my family. Just kidding - I was fired today. If you're wondering why... you haven't been paying attention. From controversial metrics in our S1 to our material weakness to two quarters of missing our own expectations and a stock price that's hovering around one quarter of our listing price, the events of the last year and a half speak for themselves. As CEO, I am accountable.

    You are doing amazing things at Groupon, and you deserve the outside world to give you a second chance. I'm getting in the way of that. A fresh CEO earns you that chance. The board is aligned behind the strategy we've shared over the last few months, and I've never seen you working together more effectively as a global company - it's time to give Groupon a relief valve from the public noise.

    For those who are concerned about me, please don't be - I love Groupon, and I'm terribly proud of what we've created. I'm OK with having failed at this part of the journey. If Groupon was Battletoads, it would be like I made it all the way to the Terra Tubes without dying on my first ever play through. I am so lucky to have had the opportunity to take the company this far with all of you. I'll now take some time to decompress (FYI I'm looking for a good fat camp to lose my Groupon 40, if anyone has a suggestion), and then maybe I'll figure out how to channel this experience into something productive.

    If there's one piece of wisdom that this simple pilgrim would like to impart upon you: have the courage to start with the customer. My biggest regrets are the moments that I let a lack of data override my intuition on what's best for our customers. This leadership change gives you some breathing room to break bad habits and deliver sustainable customer happiness - don't waste the opportunity!

    I will miss you terribly.

    Love,

    Andrew


    That is a great email. Mason simultaneously a) took responsibility, b) accepted culpability, c) gave a pep talk, and d) offered a bit of parting wisdom framed as a lesson he learned. And, he did it all with self-deprecating humor.

    That's the way to go out.

    I will say this. I have no idea what the hell Battletoads is. (Actually, I do...but only because I Googled it.) But not only does he get points for that reference, but he also gets extra points for a Godfather reference that he made in a final Tweet...

    Three oranges in a meeting with four of us? No question - I give my oranges to the others.

    Mason may not have been the best CEO. But at least on this morning's evidence, he seems like a stand-up guy.
    KC's View:

    Published on: March 1, 2013

    by Kevin Coupe

    Groupon Inc.'s board of directors announced yesterday that Andrew Mason, the founder and CEO of the daily deals pioneer, has been fired. He is being replaced on an interim basis by Chairman Eric Lefkofsky and board member Ted Leonsis as the company looks for a new permanent CEO.

    To be sure, the firing seemed justified. Mason was a controversial figure. Some wondered if he were mature enough or had sufficient business acumen to grow the company. And certainly the company's sales and stock price suggest that a new CEO might be the best move for Groupon.

    That said, Mason is, at least for the moment, my hero ... because of the email he sent to all of Groupon's employees yesterday. Here it is:

    People of Groupon,

    After four and a half intense and wonderful years as CEO of Groupon, I've decided that I'd like to spend more time with my family. Just kidding - I was fired today. If you're wondering why... you haven't been paying attention. From controversial metrics in our S1 to our material weakness to two quarters of missing our own expectations and a stock price that's hovering around one quarter of our listing price, the events of the last year and a half speak for themselves. As CEO, I am accountable.

    You are doing amazing things at Groupon, and you deserve the outside world to give you a second chance. I'm getting in the way of that. A fresh CEO earns you that chance. The board is aligned behind the strategy we've shared over the last few months, and I've never seen you working together more effectively as a global company - it's time to give Groupon a relief valve from the public noise.

    For those who are concerned about me, please don't be - I love Groupon, and I'm terribly proud of what we've created. I'm OK with having failed at this part of the journey. If Groupon was Battletoads, it would be like I made it all the way to the Terra Tubes without dying on my first ever play through. I am so lucky to have had the opportunity to take the company this far with all of you. I'll now take some time to decompress (FYI I'm looking for a good fat camp to lose my Groupon 40, if anyone has a suggestion), and then maybe I'll figure out how to channel this experience into something productive.

    If there's one piece of wisdom that this simple pilgrim would like to impart upon you: have the courage to start with the customer. My biggest regrets are the moments that I let a lack of data override my intuition on what's best for our customers. This leadership change gives you some breathing room to break bad habits and deliver sustainable customer happiness - don't waste the opportunity!

    I will miss you terribly.

    Love,

    Andrew


    That is a great email. Mason simultaneously a) took responsibility, b) accepted culpability, c) gave a pep talk, and d) offered a bit of parting wisdom framed as a lesson he learned. And, he did it all with self-deprecating humor.

    That's the way to go out.

    I will say this. I have no idea what the hell Battletoads is. (Actually, I do...but only because I Googled it.) But not only does he get points for that reference, but he also gets extra points for a Godfather reference that he made in a final Tweet...

    Three oranges in a meeting with four of us? No question - I give my oranges to the others.

    Mason may not have been the best CEO. But at least on this morning's evidence, he seems like a stand-up guy.
    KC's View:

    Published on: March 1, 2013

    Bloomberg reports this morning that Publix Super Markets is interested in possibly making a bid for Harris Teeter Supermarkets, which said last month that it is exploring strategic options, including a possible sale.

    Ahold also is said to be interested in Harris Teeter, and the story notes that if they both make a play for the retailer,which has a market value of more than $2 billion, it could result in an "active auction."

    If Publix were to make a move for Harris Teeter, the story says, it would be unusual since the company "rarely makes acquisitions," though it "has more than adequate capacity on its balance sheet to finance” a deal.
    KC's View:
    It would be an interesting and uncharacteristic move for Publix, but from what I hear, the betting seems to be right now that if anyone buys Harris Teeter, it will be Ahold.

    Published on: March 1, 2013

    The New York Times Sunday Magazine, available online now, there is an interesting piece about the beer business by Adam Davidson.

    An excerpt:

    "In 1978, there were 89 breweries in the United States; at the beginning of this year, there were 2,336, with an average of one new brewery per day. Most of them are tiny, but a handful, like Sam Adams and Sierra Nevada, have become large national brands. At the same time, sales of Budweiser in the United States have dropped for 25 consecutive years.

    "So I was surprised to learn that the Justice Department is worried that Anheuser-Busch InBev, the conglomerate that owns Bud, is on the cusp of becoming an abusive monopoly. In January, the department sued AB InBev to prevent it from buying the rest of Mexico’s Grupo Modelo, a company in which it already carries a 50 percent stake.

    "The case is not built on any leaked documents about some secret plan to abuse market power and raise prices. Instead, it’s based on the work of Justice Department economists who, using game theory and complex forecasting models, are able to predict what an even bigger AB InBev will do. Their analysis suggests that the firm, regardless of who is running it, will inevitably break the law."

    What's interesting is the global climate that is driving AB InBev's decision-making processes:

    "The goal of the Grupo Modelo merger, the company has stated, is to gear up for the big beer fight of the 21st century. As the traditional beer markets of the United States, Europe and Japan age, the most lucrative markets will be in China, India, Latin America, Eastern Europe, the wealthier countries of Africa and other places where, every single day, millions of young consumers will buy their first legal beer. On this front, AB InBev is already facing staunch competition from Denmark’s Carlsberg, Britain’s SABMiller and Japan’s Asahi. It’s not exactly worried about Sam Adams and Sierra Nevada."

    Fascinating reading. Check it out.
    KC's View:

    Published on: March 1, 2013

    • Walmart put out a press release yesterday saying that it has saved its customers $2.3 billion on produce prices over the first two years of its push to sell healthier products.

    The announcement came as First Lady Michelle Obama visited a Springfield, Missouri, Walmart and lauded the company for its efforts.

    Walmart said that it has committed to "improve the nutritional quality of Walmart’s Great Value brand and national food brands by reducing sodium by 25 percent, added sugars by 10 percent and removing all industrially produced trans fats by the end of 2015." And, it says it has reduced sugars by more than 10 percent and reduced sodium by more than nine percent "across targeted categories." The company said that the number of products "containing industrially produced trans fats fell by 50 percent."
    KC's View:

    Published on: March 1, 2013

    The Christian Science Monitor repeats that US bricks-and-mortar bookstores had a decent year in 2012 - no worse than 2011, but not really any better, either.

    According to the story, preliminary estimates from the US Census Bureau "indicate a 0.5 percent decrease in sales during 2012, with total sales coming in at $15.21 billion. Sales total for 2011 were $15.28 billion.

    "The data also shows, however, that sales numbers for December 2012 increased 2.9 percent from the sales for December 2011, with bookstores selling $1.69 billion worth of items over the 2012 holiday month, according to the Bureau ... The overall story of 2012 for US bookstores was more up-and-down than anything. Sales numbers were higher than in 2011 for the months of April, May, June, July, October, November, and December. Numbers fell for February, March, August, and September, while they were even with 2011 sales figures in January."
    KC's View:
    Bricks-and-mortar booksellers should not see stagnation as some sort of victory.

    I do think that there is a role for such businesses, but I also think that they may need to find a new value proposition that creates in the mind of the modern shopper a reason not to use Amazon as a default option when purchasing books (and everything else).

    Published on: March 1, 2013

    There is a terrific story in Fast Company about the so-called "hidden menus" featured by some fast food companies - popular items that are no on menu boards but that can be ordered by those "in the know."

    Think "animal style" burgers at In-N-Out. Or, for the purposes of this story, the "quesarito," a hidden menu item that may - or may not - be available from Chipotle.

    Writer Mark Wilson embarks on an Indiana Jones-style hunt for the truth behind the quesarito, which may or may not be available from Chipotle, and certainly not at all Chipotles, and certainly not at high-traffic hours.

    There are certain operational advantages to hidden menu items - for example, because they are no technically on the menu, companies don't have to provide calorie and other nutritional information. (Probably a good thing in most cases ... the quesarito is described as a full sized burrito wrapped inside a quesadilla.)

    You can read the whole story here.
    KC's View:
    What's interesting to me about hidden menus is that they create a sense of community among customers, connecting them in some sort of fundamental way to the fast feeder. It's like going to a restaurant where you are a regular, knowing that the chef will make you something that isn't on the menu. Or like going to a bar where the bartender knows your name and what your favorite drink is. (Think Norm, in "Cheers.")

    That kind of community has real business value.

    Published on: March 1, 2013

    • Apple Inc. said yesterday that there have been more than one billion downloads from iTunes U, which is the educational component of Apple's iTunes service, offering not just college classes but also K-12 instruction.

    The iTunes U library is described as "the biggest online resource of its kind in the world," connecting "students and educators from over 30 countries."
    KC's View:
    I just found this number to be amazing, so I had to share it with you.

    Published on: March 1, 2013

    • The Chicago Tribune reports that McDonald's is eliminating certain menu items - including the apple walnut salad and Chicken Selects, and maybe even its Angus Third Pounder - as it prepares to introduce new items during the spring and summer. Among these new items, according to the story, are expected to be "the McWrap sandwich with lettuce, tomato, cucumber, grilled or fried chicken, and a choice of sauce. The Oak Brook-based burger giant has additionally been testing chicken wings."

    • The Los Angeles Times reports that Jamba Juice is "expanding its current lineup of orange, carrot and wheat grass juice to include eight options made with apples, lemons, ginger, pineapples, beets and kale. That includes chilled choices such as a mix of orange, apple, pineapple and ginger, all pressed on the spot. There are also hot juices inspired by Jamba fans in South Korea."

    According to the story, "The juice rollout is being paired with a new store prototype debuting Thursday in Santa Monica, a city already crammed with juice bars and juice cleanse devotees." This store "is the first of about 100 stores to be revamped this year, mostly in California and New York."

    The story notes that the company also is expanding with "up to 1,000 more JambaGo self-serve kiosk machines in schools, convenience stores and other properties," as well as a new drive-through prototype.
    KC's View:

    Published on: March 1, 2013

    We've been having a lot of discussion here on MNB recently about the whole "equitable pay" issue, with a lot of attention being paid to whether senior executives with stratospheric compensation packages are putting distance between themselves and the people on the front lines in a way that can hurt the business.

    One MNB user wrote:

    Kevin, don’t oversimplify the issue. What you seem to be saying is that we need to pay people at the top less and people at entry level more. We need to acknowledge that front line people are what makes or breaks our organization. Those that aspire to continue to grow and move up in an organization that have the ability can do just that.
     
    42 years ago, I was a part time stock clerk at my local Super Duper making $1.75 an hour. I have never begrudged my Supervisors or anyone in a corporate executive position their compensation. I worked hard to move up the proverbial corporate ladder. Some people I worked with at the time did not have either the ambition or the ability to do what I did.
     
    What we are creating today, with assistance from our federal government, is a type of class warfare between what they are calling the “haves” and “have nots.” This is not the way go grow in an organization, by tearing down what many people have worked hard to attain. Those who have continued to grow with an organization need to never forget the experience and how they were able to get there and continue to help those people within the organization reach their goals.


    In thinking about the issue, I think I need to be clear that I am not begrudging senior executives pay that recognizes their talents, experience and responsibilities. Far from it. And yes, I think it is important to give people on the front lines something to which they can aspire. I'm just arguing that maybe these higher compensation levels have gotten out of whack, and that in a number of cases, they help create a chasm between the front lines and headquarters. Which never is good for business.

    MNB user Rich Heiland wrote:

    I just returned from more than two weeks in Australia and New Zealand, working mostly with small businesses. In Australia the minimum wage is just over $14 an hour. I heard none of my clients whining about it or even talking about it compared with businesses in this country who seem to feel paying a living wage will bankrupt them. The reality is that when people are paid enough so that basics like a roof over the head and food on the table are taken care of they tend to perform better and stay longer – exceptions readily conceded up front. But as a rule……
     
    It would seem to me we need to be removing the stigma of “low wage workers” by dealing in a realistic fashion with what “low” means and is. Frankly, my experience tells me that when a business person tells me paying a living wage will bankrupt them I have no trouble finding several other reasons among their business practices for poor performance. It’s usually not the employees or their compensation. And, I won’t go into how the Aussie health care system takes benefits off the table as a competitive issue between employers…


    And then, there was this email from MNB user David Livingston:

    Don't expect businesses to simply start handing out raises to the less ambitious and unproductive people in our society.  We are all free to opt into higher paying work any time we want.  You can choose to hustle carts at Walmart or you can choose to work on an oil rig in Alaska and make 10 time more money.  It comes down to personal decisions.  If one chooses a minimum wage career and then complains about low wages, it is a classless and cowardly response to  complain.  Brave people go out to work every day in high wage, risky jobs that require a great sacrifice and ambition.  To simply hand out raises to the unmotivated is a slap in the face to these brave hard working people.

    I don't know where to start...

    People on the front lines of organizations are not necessarily unproductive or less ambitious. And I'm not suggesting that we should hand out raises to people who do not deserve them ... just that we need to rethink that that word "deserve" means. I know smart CEOs who would argue that the people on the front lines are, in fact, the most important people in their organizations, because they are the people who interact with the shoppers. Observing that these people sometimes are undervalued and underpaid is hardly "classless or cowardly" ... it actually is and should be part of a continuing conversation about value and values in US business.

    I know this is going to come as a rude shock to you, but the choice is not always just between working as a Walmart greeter and working on an oil rig in Alaska. And the choices are not always simple - they can be dictated by all sorts of factors that have nothing to do with ambition or bravery or willingness to sacrifice.

    Do I think that people have to be personally responsible for their own career and life decisions? Of course. It seems to me that people always can find ways to better themselves, to educate themselves, to improve their own lives and those of their children. But sometimes, life gets in the way. People have bad luck. Parents or children get sick and need to be cared for. Economies go into recession. Options can be limited by reality (unless, apparently, you are willing to go to Alaska and work on an oil rig).

    I'm only running your email because I think it is symptomatic of the "epistemic closure" that some people have in this country, and that we talk about here on MNB from time to time. We cannot be convinced that our own world views are so absolute and correct that we cannot allow for the fact that other people don't always have the same opportunities, options and even luck that we have.

    And I know you'll disagree with this, but to me, the best leaders are the ones who understand that these issues exist, wrestle with them, try to resolve them within their organizations, and, yes, are willing to engage in this continuing conversation about value and values.




    I asked the other day what the over/under is on when we'll discover horse meat in beef products being sold in the US.

    MNB user Rosemary Fifield wrote:

    The trouble is, you have to test for something in order to identify it. Who knows what we should be testing for?
     
    MNB user Steve Rash wrote:

    l'll bet you dinner that horse meat WILL show up in the U.S.  When?  Probably a day or two after the sequester kicks in and the food inspectors get laid off in an effort to scare the public.

    MNB user Mike Franklin wrote:

    30 days…
     
    Prop Bet: it won’t be found by the USDA.


    From another reader:

    I think the $1 billion annual taxpayer cost of the continuous meat inspection program makes the likelihood of horse or other non-beef meat in US meat products extremely remote.

    However, I'd accept the increased risk of a little horse meat now and then for a $1 billion federal expenditure cut.
      

    You may be in a minority on that one...




    On another subject, one MNB user wrote:

    I loved your comments on the new Amazon commercial with the man and the woman on the beach.  Can't wait to see it.  What people may not realize is that the LGBT community has become one of the most lucrative demographics in this country, with somewhere between $750-800 billion in spending power (various statistical agencies vary a bit), making them the second largest demographic in the way of expendable income.  Couple that with a surveyed loyalty to manufacturers and retailers that support LGBT individuals with their policies of north of 70% in the LGBT community, and you have an un-ignorable opportunity that companies like Amazon absolutely must speak to.  I believe a similar study of brand/retailer loyalty across all demographics is something below 20%.
     
    I don't know what is more exciting - to see progressive companies like Amazon marketing to the LGBT community in a fun and savvy way or to be alive at a time when hearts and minds are changing so rapidly across our country.  Probably both!





    Finally, regarding the sudden departure of Walmart's chief administrative officer, MNB user Robin Russell wrote:

    He's leaving for a life of contemplation and prayer.....oh, sorry, that's the Pope.....

    Funny line. Wish I'd thought of it.
    KC's View:

    Published on: March 1, 2013

    I know that most of you don't live in the metropolitan New York area, but for those who do ... I just want to let you know that I'll be doing an author's event on Monday, March 4, at 7:30 pm, at the Westport Public Library in Westport, CT, talking about our book, "The Big Picture: Essential Business Lessons from the Movies." There will be plenty of time for chat afterwards, and if some of you show up and are interested, there's probably a local pub we could walk to afterwards for a beer or glass of wine.

    You can get more information here.




    Been sort of a crazy week, so I have no new movies or books to talk about...I'll try to make up for it next week.

    I did, however, enjoy the 2010 Padrillos Malbec, from Argentina...which was great the other day with a wonderful spinach and roasted garlic risotto that I had at Chef Geoff's Downtown in Washington, DC.




    Have a great weekend...and I'll see you Monday.

    Slàinte!
    KC's View: