Groupon's Flawed Business Model Leads to a Leadership Rift

Groupon’s melodrama is discounting dual-class share structures. Chief Executive Andrew Mason and Chairman Eric Lefkofsky appear locked in a dysfunctional battle over how to run the flailing company. The board is keeping Mason at the helm, but the fighting probably isn’t over. Super-voting shares like the ones both men own are meant to give founders flexibility. But Groupon is a reminder of just how dangerous the arrangement can be. Any company would be in disarray with this kind of performance. Groupon shares are down about 80 percent since they debuted on the market a year ago. Rivals are struggling, too. Last month, for example, Amazon wrote down nearly its entire investment in LivingSocial. Groupon’s coupon revenue is falling sharply and the company is devoting more space in daily emails to offering goods directly. The strategy looks shaky: margins on good sales are about a thir...