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Jackson: Eric Lefkofsky Should Be Groupon's Permanent CEO

NEW YORK (TheStreet) -- With the firing of Andrew Mason as Groupon (GRPN) CEO the day after the last earnings call, Groupon almost recaptured all of its 25% in post-earnings lost value in a matter of days.

Even though the stock has slipped back in the last few days to the low $5s, it's clear that investors are happier with Mason gone than with him.

It's clear Mason just didn't deliver after making repeated promises. After the last 18 months of a continued grind down in the stock price, Groupon's board decided enough was enough and replaced him with Eric Lefkofsky -- the company's chairman -- and Ted Leonsis as co-CEOs.

Not surprisingly, Lefkofsky and Leonsis were both the most active members of the board. They were the big names who had stayed on the board after others like Howard Schultz of Starbucks (SBUX) had left after all the accounting hiccups. Earlier this week, in Fast Company, Lefkofsky gave his first interview as co-CEO of Groupon.

What's most interesting about the article is that, at the time of Mason's firing and Lefkofsky/Leonsis taking over, Groupon said it would immediately start to look for a replacement. Yet, in this interview, Lefkofsky says he is now full-time at Groupon and has also handed over his other commitments from his investment company Lightbank to his partner and Groupon board member Brad Keywell.

And, from Lefkofsky's tough talk in the interview, he certainly doesn't sound like he's going anywhere.

Eric Lefkofsky is 44 and has had his hands in starting, building and selling several businesses over his career. However, nothing he's touched has ever grown so violently as Groupon. If I was him, I'm not so sure I would be eager to bring on an outsider. Who could that person be to lead a company like Groupon with its combination of sales and engineering?

Groupon experimented with bringing in a COO from Google (GOOG) a couple of years ago and it ended up being a disaster for both her and Groupon.

If Groupon is going to tap an insider, the most likely successor would be Kal Raman. Raman is ex-Amazon.com (AMZN) and drugstore.com. He appears to be doing a good job at Groupon so far. However, he's just not that seasoned yet at the company. It would be a big risk passing the baton to him at this stage.

Therefore, Lefkofsky is probably the best person to continue on as full-time CEO for now. Lefkofsky is a founder of the company and has been actively involved in it throughout its lifetime.

People love to characterize Lefkofsky as some evil villain who sells companies to others before they go bankrupt, sells stock at the top, and pushes aggressive accounting. Yet, if capitalism was a sport, Eric Lefkofsky would be winning.

I know I'll get a lot of hate mail for that, but look at the objective facts and it's simply the truth. If a guy has the chance to step on the gas and present his financials in an aggressive way just because the various accounting bodies say that it's ok, how can you fault him for that?

If he takes a lot of money off the table at the time of an IPO, does he lack confidence in the business long-term or is he a good risk manager who is simply being prudent after a long investment period with no liquidity?

Eric Lefkofsky has always been part of the heart and soul of Groupon. He's been part of its incredible success and will now be accountable for its failings or victories from here on.

I would argue that this company -- and most tech companies -- need its founders as leaders. They have the respect internally. They know the business deeply. The bodies of tech companies often reject leaders that come from the outside who just don't seem to gel with the company culture.

One of the knocks against Mason -- although he got better in the last two years -- is that he was more of an engineer than a salesman. He wanted to press a few buttons from the top and have the financial results pop out the other side.

Yet, Groupon relies on a huge sales force to makes those results happen. There wasn't always that love from the CEO to sales that the sales folks wanted (sales folks are often very needy too!).

Lefkofsky is less a technocrat and more an operator. He respects sales although he won't kowtow to them.

Will he be respected by Wall Street? As long as he delivers the numbers. There's good reason to believe that Lefkofsky could oversee an important inflection point in the next quarter or two.

If Europe stabilizes and just simply stops bleeding cash, Groupon's numbers will look very good. The company will also continue to watch goods grow and seek to promote its pull approach where more users come to its web and mobile sites to search for deals rather than just waiting for push emails.

I had thought Mason would deliver signs of a turnaround in the fourth quarter. He didn't and he's now gone. Time and patience simply ran out for him. But we could finally see evidence of that turnaround in the next report.

If so, Eric Lefkofsky will look like a hero.

At the time of publication the author was long GRPN.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Eric Jackson is founder and Managing Member of Ironfire Capital and the general partner and investment manager of Ironfire Capital US Fund LP and Ironfire Capital International Fund, Ltd. In January 2007, Jackson started the world's first Internet-based campaign to increase shareholder value at Yahoo!, leading to a change in CEOs in 2007. He also spoke out in favor of Yahoo!'s accepting Microsoft's buyout offer in 2008. Global Proxy Watch named Jackson as one of its 10 "Stars" who positively influenced international corporate governance and shareowner value in 2007.

Prior to founding Ironfire Capital, Jackson was President and CEO of Jackson Leadership Systems, Inc., a leadership, strategy, and governance consulting firm. He completed his Ph.D. in the Management Department at the Columbia University Graduate School of Business in New York, with a specialization in Strategic Management and Corporate Governance, and holds a B.A. from McGill University.

He was previously Vice President of Strategy and Business Development at VoiceGenie Technologies, a software firm now owned by Alcatel-Lucent. In 2004, Jackson founded the Young Patrons' Circle at the Royal Ontario Museum in Toronto, which is now the second-largest social and philanthropic group of its kind in North America, raising $500,000 annually for the museum. You can follow Jackson on Twitter at www.twitter.com/ericjackson or @ericjackson.

You can contact Eric by emailing him at eric.jackson@thestreet.com.

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