The least surprising breaking news of the year

Groupon is entering a new era.

CNNMoney is reporting that CEO Andrew Mason is out at the company that he founded.

I wrote in November that it was likely that Mason was going to get fired. He survived that quarterly earnings period, but couldn't survive the most recent results.

It's not much of a surprise because of two things. First, they should have taken Google's offer to buyout for some $6 billion. Upon passing on that, they needed to diversify and earn revenue from that diversification fast.

Groupon started to diversify, including such things as a new credit card processing service (a highly watered down market as it is), but it was basically too little, too late.

So where does the company go from here? They will name an interim CEO, but from there the company has a few options.

They are now a major target for a takeover at a huge discount to what Google offered. They may also keep trying to further diversify their offerings and basically 'restart' the company. Third, they may end up going private.

It's a bit too early to say which way the company will go, but we will likely know by the end of the year.

Oh Groupon!

It is being reported by Yahoo! that Groupon CEO Andrew Mason is about to get canned by his own company.

Getting fired sucks. I can't imagine what it would be like to be fired by a company that I founded. If the reports end up being true, it certainly wouldn't be the first time this happened, and it certainly won't be the last time it happens.

However, if it hasn't been made clear by anyone who has a clue about the 'daily deals' industry, their time is over - at least how the industry is currently structured.

Do a quick Google search on the experience that companies have had when they utilize these deals. Sure, it may be great for a particular business or a one time, small deal but most businesses have had a negative experience.

Even when I had my own business, there was a short time where I was hounded on a daily basis by Groupon, LivingSocial and the others, to sign up and have a deal. However, I had done my homework and there was zero upside and it would have been nothing but a money loser for me. I think most businesses have experienced that and I was smart enough to apply those lessons to my business.

Speaking of LivingSocial, when was the last time you saw a commercial for them? It used to be every commercial break (sometimes more than once a break) on nearly every channel. I think now, it has been six months or more since I last saw their commercials aired.

That being said, I see only two ways forward with this particular industry. First, if there is going to be a national model, there can only be one or two companies - and they can't take 50 percent of the revenue from the merchant right off the top (after the discount is applied). They must take a smaller cut from the merchants to even have a chance of getting some of those companies back.

Otherwise, it's going to just be some local model that is run by a local business. I've primarily seen local newspapers and TV stations getting in on this business. They likely do this because they are able to take a smaller cut of the revenue from the merchant because it includes something along the lines of advertising - so it's more of a win/win for the media company and the merchant.

I'm sure the 'daily deals' industry isn't going anywhere, but unless the firms such as Groupon and LivingSocial change, folks like Mr. Mason are not going to find themselves in the industry much longer.

Oh Groupon

It was announced earlier this afternoon that Groupon had lost $42.7 million dollars in their first quarter as a public company.

Among many reasons, it didn't help that they had an effective tax rate of nearly 1600 percent. Sure that is due to various rates due to expansion expenses in various locations across the globe. But they will need to bring that down significantly in the near future.

However, I foresee a lot of problems going forward for Groupon.

For those that do not know, Groupon and a whole host of other companies (Living Social is most prominent), customers sign up to receive emails regarding specials for various businesses in their area. In most cases, it is for at least 50 percent off of products and services.

It is great for the customer, especially if there are offers that appeal to them on a regular basis. It can be good for a business to increase foot traffic or move product.

But many businesses just lose out when it comes to these types of products. Here is one story and there are hundreds more just like this.

When I had my business, representatives from Living Social dropped by on a regular basis wanting me to run deals, especially towards the end. I was already getting my ass kicked. I didn't need to take a greater beating.

I tried to get the reps to give me solid scenarios where I would actually be able to break even. They couldn't do it. The closest was for them where the customer would pay $10 for $20 worth of product, excluding liquor.

From there, Living Social would take 50 percent, or $5. Then they had all of these other ancillary and processing fees, that would end up yielding me around $2.70. I would take a loss no matter how much alcohol I could move. My costs were not around 15 percent. I never had a chance of breaking even, let alone making a profit. Groupon is very similar in nature.

If they are to ever achieve long term success, they will have to change their business model to attract and retain more businesses. Far too many have been chased off after losing too much money, time and reputation from experiences gone bad. If there are no businesses using Groupon and the like, there will be no customers.

Groupon needs to listen to more to their former customers like what I linked to above. If not, this type of business will go the way of pets.com.