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Groupon is Effectively Insolvent

m.minyanville.com

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Re: Groupon is Effectively Insolvent

#71

Post by Cherian_Abraham »

michael_dorfman wrote: post #67
Cherian_Abraham wrote: post #66

Earlier quoted context omitted.

I cant agree with that. When I invest, I have some expectations as to how that money should be invested, and for a company that is in desperate need of cash inflow to sustain its growth, thats where it should go. Period. Not to the coffers of early investors and employees. No one has any problem with them cashing out a part of their equity. This however (almost 400 million went to an early investor couple!) was a car…

When I invest, I have some expectations as to how that money should be invested More than that, you have a prospectus (or term sheet) that will specify those kinds of things. In this case, the Series G investors knew exactly where the money was going, and they were ok with that. As for the public getting scammed, the SEC has a metric buttload of regulations aimed at seeing that that doesn't happen.

I am not worried about the Investors who led the G round being scammed out of anything. They knew what they were getting in to. I was pointing out how irresponsible this move was, on the part of the Groupon team to allow this to happen. One one side, you have a company bleeding money aching for growth and spending over 200 million just in Ads and over 320 million in salaries to their 8000 sales staff. And you choose to cash out instead of plowing it in to maybe eking out a better profit margin than last year? They are not even trying, for Christ's sake!

And I dont have to look that far back to see how effective the SEC has been, with their metric ton buttload of regulations. You dont live in the US, do you?

Re: Groupon is Effectively Insolvent

#72

Post by jbooth »

Macsenour wrote: post #47

Don't roll your eyes, but this is exactly what Reagan did to the Russians. Basically, spend more and faster than the other guy until he cries uncle. Groupon is raising money, spending like crazy to be the top dog. When the other "coupon" companies can't keep up, Groupon will buy them, retaining their #1 position. Once all of the others are gone or reduced to a tiny size, they'll go back to a sustainable model. This e…

Think about that for a second: Is "I'm going to be stupid and hope it convinces my enemies to be even stupider" a winning strategy? Wouldn't "I'm going to be smart" be a better one?

The Russians were done before Reagan was even elected. Google "Brehznev", or "Afghanistan". The rest of the line is just stupid hagiography from people who loved the way Reagan gave a speech.

And the reason they lost Eastern Europe was because of artists and hipsters in East Germany.

It wasn't from reverse-psychology mind control forcing them to spend money, it was because they had a crap economy and needed a military to suppress internal dissent.

Re: Groupon is Effectively Insolvent

#73

Post by rayiner »

bcrescimanno wrote: post #29
3am wrote: post #27

Earlier quoted context omitted.

"The only argument to say that they're not a ponzi scheme is that there's actually a legitimate business with revenue associated with it." That isn't a minor point. There is a big different between stupid investors with full information and a Ponzi scheme. It is not an abstract argument. The first is common, the second will land you in prison.

If the purpose of a business is to generate profit for its owners (investors), then the only business Groupon has successfully operated to this point has been a ponzi scheme. Just because it's common doesn't mean it's not a ponzi scheme. It's just a ponzi scheme in a pretty dress. I'd be willing to go further and say it's just as bad because if you read their S1 and their made up accounting "principles," they're actu…

You're basically saying that any business that doesn't generate profits from day 1 is a ponzi scheme. This is a ridiculous position to take.

Re: Groupon is Effectively Insolvent

#74

Post by jfager »

ChuckMcM wrote: post #44
wccrawford wrote: post #2

They're trading that temporary debt for hypergrowth, as the article says. "For the remainder of the year they had $669 million in revenue (simply staggering), but had a net loss attributable to Groupon of $398 million. This year, Q1 results showed revenue growth continuing to soar, with revenues of $644 million, but a net loss attributable to Groupon of $102 million." So the time periods were different, but the reven…

Their strategy reminds me most of the telecom strategy in the 90's. Since as many have pointed out there are few barriers to entry, one possible strategy is to get so big so fast that your the 800lb gorilla before anyone realizes the opportunity. That said, their losses do seem to be coming down relative to their revenue which would imply they have some idea of the 'recipe' that would make money in this space and are…

The major difference is that telecoms have at least some kind of user lock-in, so it makes sense to go after hypergrowth to get that user before your competitor does. Groupon has zero such lock-in - a user actually has an incentive to sign up for as many deal sites as they can, because a good deal could come from anywhere.

Re: Groupon is Effectively Insolvent

#75

Post by sedev »

tzs wrote: post #12
click170 wrote: post #6

Earlier quoted context omitted.

When I click the link all I get is "Error establishing database connection", so thanks for copy/pasting.

In case anyone is curious, the design aspect of the site that pissed me off is that it blocks resizing the text. I found it too small to comfortably read, and hitting my browser's "make bigger" button just makes all the other elements on the page bigger, not the text.

And if you visit it with JavaScript turned off, you get a "Fuck You" popover. If all your site is doing is giving me some text content, and your site completely breaks with JavaScript off, you're a bad programmer and a bad person.

Re: Groupon is Effectively Insolvent

#76

Post by borism »

natrius wrote: post #64
Apocryphon wrote: post #53

Earlier quoted context omitted.

The 2000s really did teach us that anything related to economics is a Ponzi scheme. Hell, does the federal budget qualify as a Ponzi scheme?

A large portion of the federal budget consists of transfer payments from today's working population to retirees, with the expectation that tomorrow's working population will make similar transfer payments to today's.

There may be some Ponzi aspects to US Federal budget, but that isn't it.

How is transferring money from workers to non-workers is reminiscent of a Ponzi sceme in any way? There's no imaginary wealth being created, it's just a transfer of wealth from younger to older generation. I wouldn't bet that future young will be as silent about it as we are, but I wouldn't completely discard it as a "Ponzi scheme" either.

Re: Groupon is Effectively Insolvent

#77

Post by kwantam »

mynameishere wrote: post #51
dustingetz wrote: post #42

Earlier quoted context omitted.

quoted from http://shortlogic.tumblr.com/post/5834390772/right-now-our-d... : "Right now our desk is seeing something they’ve never seen before. It currently costs roughly 100% annualized to short LNKD. So put in monthly terms, if you borrowed $20,000 of LNKD to short, each month you would have to pay an 8.3% borrowing charge (100% / 12 months = 8.3%) or $1667 per month. That is absolutely unreal. Of course this char…

There are no shares to borrow that I can find. The options are so expensive I'm tempted to buy some shares. You can make 4 percent writing june calls (15 days). Annualize that.

You probably want something to hedge your long position while you write calls against it, though, or at least limit the downside a bit. After all, you're betting that the stock will go down.

Go long, buy some out of money puts, and write calls against your long position, hoping that you get to write enough calls that the cost of the puts is covered?

Re: Groupon is Effectively Insolvent

#78

Post by jasonlotito »

cosgroveb wrote: post #61
jasonlotito wrote: post #59

Earlier quoted context omitted.

It's okay. Technically, this thread about resizing text is off topic. =) And, as I mentioned: Yes, I know about the CSS problems that prevent text resizing. I've just always thought it should be considered a browser bug if it doesn't work. After all, if the UI gives you the option to increase the size of the text, it should increase the size of the text regardless of the CSS on the page.

I opened a bug with Chromium if you feel like starring it :) http://code.google.com/p/chromium/issues/detail?id=84888 It will probably get marked Wontfix but hey I tried!

I've also added that the UI of Chrome makes Zoom available despite the content of the page not being able to zoom. And starred it.

Though, I'm a FF4 user. =)

Re: Groupon is Effectively Insolvent

#79

Post by natrius »

borism wrote: post #76
natrius wrote: post #64

Earlier quoted context omitted.

A large portion of the federal budget consists of transfer payments from today's working population to retirees, with the expectation that tomorrow's working population will make similar transfer payments to today's.

There may be some Ponzi aspects to US Federal budget, but that isn't it. How is transferring money from workers to non-workers is reminiscent of a Ponzi sceme in any way? There's no imaginary wealth being created, it's just a transfer of wealth from younger to older generation. I wouldn't bet that future young will be as silent about it as we are, but I wouldn't completely discard it as a "Ponzi scheme" either.

I've led us off on a tangent, so I'll be brief and I won't respond after this.

There is no guarantee that there will be enough workers in the next generation to cover the workers who are paying today. Without new recruits, the system fails to meet it's promises.

Re: Groupon is Effectively Insolvent

#80

Post by paylesworth »

narrator wrote: post #39
tzs wrote: post #4

To save people having to fight with that sites asshole design, here's the text: I'll start by tipping my hat to Andrew Mason. He caught social mood just right, creating a coupon/local/flashmob hybrid business model at the perfect time, and has created the fastest-growing company on a revenue basis in American history. That being said, it's operating like a Ponzi scheme that needs constant infusions of cash to stay af…

What is it with everything being described as a Ponzi scheme these days? Groupon, Bitcoin, Subprime MBSs, Social Security, etc.

Maybe we need to have a Godwin's Law for Ponzi schemes.
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