Company board looking first at external candidates.
NEW YORK: Daily deal website Groupon’s Chief Operating Officer Kal Raman, 43, who was a strong contender to be the next Chief Executive Officer of the company following the ouster of founder Andrew Mason, is now out of reckoning for the position, at least for now.
Company sources told Bloomberg that Groupon’s board plans to find someone from outside the company to replace Mason. Directors expect to hire an executive-recruiting firm in the next two weeks and aim to find a new CEO within three to six months, said the one of the people, who asked not to be named because the matter is private, said the report.
Mason was terminated from his post after the company lost a fifth of its value and for its consistently disappointing quarterly earnings. The move was hardly a surprise, with several critics on Wall Street clamoring for Mason’s departure November, reported Venture Beat. And until Groupon finds a replacement, executive chairman Eric Lefkofsky and vice chairman Ted Leonsis have been appointed as temporary leaders.
The company’s dismal financial results come just as consumer demand for online-coupon services like Groupon have drastically cooled down compared to a year ago. However, it seems that the board is still confident in the group-deal business model, just not its execution thus far, said the Beat.
The new CEO will need to create a money-making business and restore credibility at the Chicago-based company, which lost $723.8 million in the past three years. Limiting the search to external candidates means Groupon is not currently considering insiders such as Raman, also known as Kalyanaraman Srinivasan, a veteran of Amazon.com Inc. (AMZN) and EBay Inc. (EBAY).
A graduate of the College of Engineering in Guindy, Chennai, Raman, has also worked at the Tata Consulting Engineers in Mumbai, and the Tata Consultancy Services in Chennai. He founded GlobalScholar.com in 2006, which was sold four years later to US-based product firm Scantron Corp for $140 million. He was also a part of founding team at online retailer Drugstore.com, where he served as the chief executive from 2001 to 2004.
Eric Lefkofsky and Ted Leonsis, the board members leading the search and running Groupon during its transition, have been ruled out as candidates for the permanent CEO role along with other directors, said Paul Taaffe, a spokesman for Groupon. He declined to provide details on the executive search, said Bloomberg.
Groupon executives may be considered if suitable candidates cannot be found outside the company, the people said.
Raman was promoted to COO and given oversight of global sales and operations in November, after joining Groupon in April. Other Groupon managers with experience at large e- commerce companies include Chief Financial Officer Jason Child and Jeff Holden, a senior vice president of product management. Both previously worked at Seattle-based Amazon, the largest online retailer.
Headhunters may struggle to find an executive willing to handle company oversight while taking orders from Lefkofsky, Groupon’s executive chairman, co-founder and largest shareholder, Adam Charlson, executive vice president of DHR International Inc., said in an interview last week.
Groupon has no plans to change its business model after firing Mason, CFO Child said at a Deutsche Bank AG conference yesterday.