As Groupon stock hovers near its lowest level since its November public offering, resumes are beginning to flow from people who work there. Some recruiters say they are seeing more current and former Groupon sales employees looking for new jobs.
Henry Glickel, a recruiter based in Salem, N.H., said he saw more than 40 resumes in a recent 36-day span from candidates working for Groupon and candidates who recently stopped working for the Chicago-based daily deal site.
"For me to have that kind of activity tied to any one company is extraordinary," said Glickel, president of Sales Recruiters Inc., which places about 100 candidates a year across several industries.
Ken Sundheim at the New York-based recruiting firm KAS Placement said he also is receiving more resumes from current and former Groupon sales folks. Candidates looking for Web jobs are less interested in working for daily deal companies, he said.
"Now when we tell people that we have jobs with Google, Twitter and Groupon, Groupon rarely gets picked first or even second," said Sundheim, whose firm places about 160 candidates a year for clients ranging from Fortune 500 companies to small and medium-size organizations.
With U.S. unemployment above 8%, Groupon still draws applicants for both sales and tech jobs. But, unlike recruiters for sales positions, tech recruiters said they haven't noticed an unusual number of resumes from Groupon engineers looking to leave the company. Groupon hires between 50 and 80 people every two weeks in North America, said Julie Mossler, a spokeswoman for Groupon in Chicago. As of March 31, Groupon employed 12,548 people, with 5,735 working in sales, according to the company's latest financial statements. That is up from 7,107 employees, with 3,556 working in sales, in the first quarter of 2011.
"We continue to recruit heavily and attract some of the brightest talent not only from the Midwest but around the country," said Mossler. "A significant amount of candidates are referrals from existing employees, who wouldn't recommend Groupon to friends and family if they didn't truly enjoy coming to work every day." Groupon isn't planning any layoffs, she said.
Groupon, which launched in November 2008, offers online coupons for goods and services at local businesses in the U.S. and around the world. The company makes a profit by keeping about 50% of all revenue made from those discounted deals. As with most daily deal sites, Groupon's salespeople are vital to the company's growth as the ones responsible for generating business from local merchants.
Bad news becomes incredibly nerve-wracking for people who work there”
Groupon is the largest of the daily deal businesses in terms of market share and headcount, according to the research firm Yipit. Groupon's biggest competitor, the Washington, D.C.-based LivingSocial, which launched in July 2009, has more than 5,000 employees and hires about 15 sales people each week to fill new positions and make up for turnover, the company said. Two other big names, Amazon Local and Google Offers, do not release information about their revenue and employment, the companies said.
Many other daily deal sites that have popped up within the last three years, such as BuyWithMe, DealHopper and Savemore.com, no longer exist. More than 1,000 daily deal sites around the world were acquired or went out of business in the last 12 months, according to the trade website Daily Deal Media. According to the same data, 132 new sites were created in the same time span.
The slide in Groupon's stock price and what it says about whether the company and the industry as a whole can keep growing, has job seekers questioning the merits of employment at such businesses. "Continual bad news about a company's performance becomes incredibly nerve-racking and demoralizing for the people who work there," said Michael Adler, a managing partner at the New York-based recruiting firm AC Lion, which specializes in placing people at e-commerce and online media companies, including Amazon, Google and WebMD.
'Get Me Out'
"The same problems lie with all of these local daily deal sites across all areas of the business, from sales to engineering,'" said Adler. "I've had a lot of candidates who have gone to other big daily deal sites and they've called me saying, 'Get me the hell out of here.'"
Though Google remains a top pick among job candidates, the uncertainty surrounding the daily deal business has made its Google Offers division a less appealing choice for job seekers interested in joining the Internet giant, said Adler. Google declined to comment on its hiring for Google Offers.
Three IT recruiting firms, Menlo Park, Calif.-based Robert Half Technology, Schaumburg, Ill.-based Digital Staffing and Hailey, Idaho-based Redfish Technology, said they haven't noticed IT specialists looking to leave Groupon. Leah O'Flynn, an executive recruiter at Redfish, said she has seen six resumes from Groupon engineers since March, which she described as a "normal amount."
The only daily deal site to go public so far, Groupon debuted on the stock market in November 2011 with a valuation of $12.7 billion. The company is valued at about $7 billion and its stock price has gone from a high of $31.14 a share to a low of $8.80 a share.
Questions about the company's business come on top of what some employees describe as a pressured work environment for those in sales.
Kyle Guffey, 35, said that when he started as an outside account executive for Groupon in Oklahoma City in November 2010, the company offered him a base salary of $45,000 with a 7% commission on every sale. Seven months into the job, Groupon cut his team's commissions to 3.5%. That turned into 1.5% for those who were unable to meet their full sales quotas.
They Grouponed our commissions
"Even if we hit 98% of our goals, we would only get 1.5% of those deals," said Guffey. "Essentially, they Grouponed our commissions. The phrase 'we need to squeeze as much gross profit as possible out of every deal' became a regular phrase. The way I felt when I left was that they had hired me for my Rolodex and when they got to the bottom of it, they were done with me."
Mossler at Groupon declined to comment on the company's changing sales commissions. "Groupon is partially a performance-based sales organization," she said. "It's not only healthy, but critical to the success of any sales team to invest in talent and replace those who underperform."
Two former Groupon sales employees who didn't want to be identified said they recently quit because of the increased pressure to bring in deals. They would get warning letters from the company about their performance if they couldn't get merchants to agree to deals.
"The way my team looked it at is that we were continuously sprinting a marathon that would reset as soon as we were about to reach the goal," said one former Groupon employee who left in April and asked not to be named. Out of a team of 15 sales reps in his location, two resigned and one was fired between March and April, he said. Another former Groupon employee who recently left said the work was "becoming more and more like telemarketing."
The challenges facing Groupon and its employees have deepened as the company's rapid growth has slowed, said Jordan Rohan, an analyst with Stifel Nicolaus & Company who covers Groupon.
"The biggest risk for the people there is running a three-and-a-half-year-old Internet company with over 10,000 employees," he said. "The other big risk is merchant exhaustion with daily deals, despite what the company says. That presents a real problem if you care about keeping your sales force motivated."
Following the company's IPO, Groupon offered employees restricted stock units as a means of retention, said Guffey. The offer came in an email from CEO Andrew Mason, addressing the company's employees as "sea monkeys," he said. "That turned out to be 125 shares and the trick was that you had to stay on board for two years before those shares vested," Guffey said. "That wasn't going to keep me there." Groupon declined to comment on its employee incentive plans.
Aside from the fall in the company's share price, Groupon has suffered from accounting errors, which have led to the restructuring of its board of directors and the loss of two chief operating officers.
"People are beginning to know of Groupon as the company that keeps messing up due to its arrogance," said Harry Joiner, an e-commerce recruiter based in Atlanta.
Some daily deal sites have started exploring new ways to bring in revenue. LivingSocial has held off on its own IPO plans and is now renting out physical space to merchants.
"We have been exploring several new areas of business, including our recent push into the travel industry," said LivingSocial spokesman Brendan Lewis. "All of these different areas that we're driving into aren't the result of a weakening of the daily deals market, but instead a natural maturation of our company."
One risk for salespeople in the daily deals business is the lack of opportunity for growth in their careers, said Adler.
"Selling online coupon deals to local merchants for $5,000 to $10,000 is not very transferrable when you're looking to move on to a bigger publisher or website that wants prior experience doing $100,000 to $300,000 ad campaigns," he said.
Write to Damian Ghigliotty at Damian.Ghigliotty@dowjones.com