April 26, 2012 at 3:13 PM ET
While Groupon (GRPN) CEO Andrew Mason might have had only one beer during an employee meeting Wednesday, he could be nursing a headache as a result.
At a town hall meeting attended via webcast by the Wall Street Journal, Mason talked about "not taking stupid risks" and emphasized "quality and control." Those are words that investors, rattled by the daily deal company's fourth quarter earnings restatement, would have been glad to hear, if it hadn't been accompanied by a less-reassuring statement: "Sorry, too much beer."
On Thursday, Groupon spokeswoman Julie Mossler defended the CEO and his choice of beverage. "I've never seen Andrew drunk," she told msnbc.com. "It's a really relaxed environment… It's not like him drinking a beer or not drinking a beer sends a particular message."
Corporate reputation experts disagree.
"With beer or alcohol, most of the signals those send diminish a leader's credibility and authority," said Chris Tennyson, a senior partner at public relations firm Fleishman-Hillard. Tennyson said if Mason was trying to send a message of informality and camaraderie, it was lost in translation.
There is something to be said for 31-year-old Mason's everyman approach to management. It could motivate employees, which is something the young company will need in abundance as it grows. "It's really important to a culture of a company that management and employees can see eye to eye," said Rick Summer, senior equity analyst at Morningstar. As for the beer, "It's the stereotypical start-up culture." Mossler also spoke of the importance of Groupon's corporate culture and preserving that as it grows.
But as a public company worth billions of dollars, some experts say it's time for Groupon to shed the scrappy start-up image.
"Reputations are built on expectations, and the expectation of Groupon is that it's really not fully grown up," said Elliot Schreiber, executive director of the Center for Corporate Reputation Management at Drexel University. "It shows a lack of leadership judgment and I think a lot of investors are going to put pressure and say, this company needs to bring in an adult."
"I wish he could blame it on beer all the time," said Edward Woo, senior research analyst at Ascendiant Capital Markets. "Unfortunately, he's proven that even when sober, he's not the most experienced CEO."
Summer said Groupon was distracted in its pre-IPO stage and initial months as a public company by management and accounting glitches, many of which stem from inexperience. "It seems to be that there's not necessarily an understanding of what organizational structure you need to run a public company," he said.
Investors seem to agree. Since going public in November at $20, Groupon's stock now trades at around $12 a share. The silver lining is this low valuation is likely to keep insiders from dumping the stock at the earliest opportunity, analysts at Evercore Partners wrote in a recent research note. "We believe the top 5 holders, which constitute about 50 percent of ownership, will demonstrate restraint when these lockups expire and wait for a better exit point," they wrote.
"Investors won't give them the benefit of the doubt until they've shown they have good control," Woo said. "Obviously, the credibility with management is very poor right now."
Some say the company needs leaders with more experience to overcome its challenges. The Wall Street Journal cited unnamed sources saying Groupon would add additional members to its board and senior management team. Mossler wouldn't comment about the board, but said the company has brought on new hires in recent weeks and "we will continue" to do so.
"It's fine trying to be an Internet start-up culture and be really cool," said Schreiber. "But you're taking adult money."