Get it together Groupon, you’re making Chicago look bad

Groupon is a company that few understand completely. Its meteoric rise, massive initial public offering, accounting quirks, hiring binges and global expansion, coupled with its continued financial losses make it a unique corporation. Being so individual is not in and of itself something bad, or something to be avoided, but it can make for some very awkward situations.

A young company, expanding as quickly as it can, working to take advantage of favorable market conditions, is a firm that you would grant a measure of slack to when it comes to its financial apparatus. A little wiggle room for mistakes is, I think, reasonable. However, once a firm goes public, they can no longer afford that luxury. The investing class, and public at large, demand complete transparency and accuracy. Period.

Groupon, however, never got the message. The company, also known for its irreverence and trail-blazing tactics, remains uncontrolled, and error-prone in its financials. The recent forced restatement of its earnings aside, what caused many investors to sit upright in fear was the following note from the firm’s account, Ernst & Young, stating that error was caused by a “material weakness in its internal controls.” That’s damning.

Now, Groupon’s largest detractors have likened the firm to a scheme of some variety, a sort of corporate ruse that will never generate profits. I don’t agree with that. My knowledge of Groupon contains information gleaned from friends near to the company; the firm itself is sincere in its wish to grow, and generate profits, as far as I can tell.

However, it continues to commit financial gaffes on a regular enough basis that if the firm isn’t named the Mitt Romney of technology companies soon, I shall be disappointed.

Chicago, the city that Groupon is tethered to, has long leaned on the company as proof that high-growth, expensive, and wild companies can be spawned here in the Second City. For some time, Groupon was an effective halo firm the for the area, living proof of its ascendency. But more recently, Groupon has become something that people more whisper about than cheer.

The mistakes, errors, and other financial issues need to stop. Not the least of which for Groupon investors, the company is underwater when compared to its IPO price, but also for the city that has attached much of its reputation to it. It’s time to grow up, Groupon.

For a fantastic run-through of Groupon’s recent mistakes, Time has the best piece.