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Groupon backers Lefkofsky, Keywell say no regrets

Updated: October 9, 2012 10:18PM



Groupon co-founding funders Eric Lefkofsky and Brad Keywell told CNBC.com’s “Morning Brief” that they have no regrets about keeping the Chicago-based deal site independent, and that the company can be successful in the long term, even though its stock has lost 74 percent of its value.

Groupon’s stock closed Tuesday at $5.27. It debuted at $20 a share Nov. 4, 2011.

Lefkofsky and Keywell were on CNBC Monday morning to talk about Ideas Week, a weeklong gathering in Chicago of tech leaders and innovators for panel discussions and “lab” visits to companies. Keywell founded the event.

Lefkofsky said Google’s takeover offer for Groupon in late 2010 couldn’t overshadow the potential Groupon showed for growing on its own. The offer was reportedly $6 billion, and Groupon turned it down in early December 2010.

“When a business [such as Groupon] is growing that fast, it’s hard to know at any point whether to sell or doubledown on your investment,” Lefkofsky said. “We looked at it and said, ‘This business is so young and has so much potential, we want to see that through.’ I don’t think any of us regret that decision.”

However, Lefkofsky said companies may wait longer before they go public because of new rules that allow them to have twice as many shareholders as before, and given the public markets’ unforgiving attitude toward young companies such as Zynga and Groupon.

“[Groupon] is still just in its infancy, and the public markets haven’t been as forgiving maybe as they were historically,” Lefkofsky said of four-year-old Groupon, which is headquartered in the old Montgomery Ward building and employs more than 12,000 worldwide.

Lefkofksy said the two other businesses that he has led to public offerings, print procurement company InnerWorkings Inc. and freight logistics company Echo Global Logistics, also had volatile stock prices in the past and ultimately have performed well.

Keywell said he can’t base his moods on the stock price, and anyone who does will be pretty moody.

“It doesn’t feel good when stocks go down, but you’ve got to be real focused on building real value,” he said.

Forbes reported in its October issue that Keywell’s stock value in Groupon has fallen to $320 million from $1.21 billion, down $890 million; Lefkofsky’s to $1.03 billion from $3.8 billion, down $2.77 billion, and CEO Andrew Mason’s to $210 million from $1.23 billion, down $1.02 billion.

Lefkofsky and Keywell also run investment fund Lightbank, which has started nine companies and backed more than 50 startups, and which serves, along with Keywell’s Chicago Ideas Week event this week, as part of their bigger goal of investing in and growing Chicago’s technology community.

Ideas Week is a forum featuring world-renowned artists, innovators, business leaders and others to talk about important trends and breakthroughs that can improve the world, whether it’s in design, science, engineering or community building.

Keywell said he believes Ideas Week brings to Chicago the power of hearing “great, provocative thinkers and doers,” while Lefkofsky said the Ideas Week is part of his and Keywell’s goal of “turning Chicago into a world-class tech and innovation hub.”

In an earlier interview with the Sun-Times about Ideas Week, Keywell said, “We’re creating a platform of innovation that doesn’t exist in Chicago or the Midwest.”



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