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Groupon is Effectively Insolvent

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Re: Groupon is Effectively Insolvent

#81

Post by kevindication »

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!

Wouldn't it be possible to override this with a user agent stylesheet?

Re: Groupon is Effectively Insolvent

#82

Post by VladRussian »

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…

>this is exactly what Reagan did to the Russians.

So Reagan decreased the price of oil in the mid-80ies? :

http://www.wtrg.com/oil_graphs/oilprice1947.gif

Calling an evil empire an "Evil Empire" has especially dramatic effect when the evil empire is just plain running out of money :)

Re: Groupon is Effectively Insolvent

#83

Post by brazzy »

natrius wrote: post #79
borism wrote: post #76

Earlier quoted context omitted.

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.

However, while the system may end up paying out less than it promised at some point, it will not collapse completely.

Re: Groupon is Effectively Insolvent

#84

Post by [deleted] »

unreal37 wrote: post #49
kno wrote: post #28

Earlier quoted context omitted.

Can anyone explain how these guys spend money on the business, how can cost of running Groupon be so high?

Advertising. Groupon spends $100 million a month on buying web ads on Facebook and such. They're buying users essentially..

[deleted]

Re: Groupon is Effectively Insolvent

#85

Post by jerf »

argv_empty wrote: post #32
jerf wrote: post #10

Earlier quoted context omitted.

I think it probably translates to "Groupon is sustainable relative to a Ponzi scheme", which, even as a big Groupon skeptic for a long time now, I wouldn't challenge. A Ponzi scheme has no business other than selling ahead; Groupon does have a model for revenue. It may not work, but it really isn't fair to call it a Ponzi scheme. Bad business maybe, but not a Ponzi scheme. Ponzi schemes really ought to be reserved fo…

A Ponzi scheme has no business other than selling ahead Charles Ponzi arbitraged postage coupons (and resorted to selling ahead when that failed to turn profit). Strict application of your definition makes Ponzi's scheme not a Ponzi scheme.

All the sources I found online suggested that he started with the stamp selling, possibly legitimately, then transitioned into what we now call a Ponzi scheme, on a scale that could not possibly have been a result of the putative business. "It was uncovered that, in order to reach the level of investments that were made, 160 million coupons would have needed to be issued. In reality, only 27,000 had been. Soon afterward, Ponzi was arrested and indicted." [1] It wasn't a Ponzi scheme until he took the step into fradulent payouts.

As skeptical as I am about Groupon, it may work, in that it is not impossible by four orders of magnitude. Maybe they've got some brilliant pivot planned. Ponzi could never have made good using his putative business plan without fundamentally rewriting mathematics. But the real point isn't even that his plan was impossible, but that he wasn't executing the putative plan. Groupon is definitely soliciting businesses and issuing coupons.

[1]: http://www.mijiki.com/what-is-a-ponzi-scheme.html - I mean this to show my work here, I'm not sure that's a trustworthy site.

Re: Groupon is Effectively Insolvent

#86

Post by learc83 »

cosgroveb wrote: post #41
jasonlotito wrote: post #21

Earlier quoted context omitted.

Use a browser that lets you resize text? Before you say anything, I already know. I just think this is a problem with the browser, not with a site. The browser should be able to resize the text. If it can't, it's a browser failure.

Shoot. I downvoted you jason, sorry. I looked at the site's CSS and I think the problem we're experiencing is due to this site using -webkit-text-size-adjust: none; The text does not grow in size at all in Chrome for me (while the other page elements do... the text gets squished which gives it some illusion of growing). I tested it in Firefox 4 and increasing the font size works fine... So, I know you've been downvot…

It seems the CSS is written like that because the link was to the mobile version of the site.

Re: Groupon is Effectively Insolvent

#87

Post by lotu »

brazzy wrote: post #83
natrius wrote: post #79

Earlier quoted context omitted.

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.

However, while the system may end up paying out less than it promised at some point, it will not collapse completely.

Many people consider their Social Security payments to be promises to them, in exchange for paying the Social Security tax. The difference between Social Security and a Ponize schema is you can stop putting money into a Ponzie scheme if you believe that you won't be getting the money back. If people had the option to stop paying in to Social Security then it would have collapsed a long time ago.

Re: Groupon is Effectively Insolvent

#88

Post by bcrescimanno »

rayiner wrote: post #73
bcrescimanno wrote: post #29

Earlier quoted context omitted.

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.

Really? That's what you concluded from reading my comments? I'm almost tempted to call "troll" and not respond; but against my better judgment, I'll bite.

Any business that does not generate profit is NOT a ponzi scheme and I did not even begin to imply that was the case. Any business which pays out dividends to their investors based ONLY on money secured from later investors is operating a de facto ponzi scheme.

[edit] It's fine for early business to operate at a loss; it's not ok for an early business to funnel money to early investors while still operating at a loss.

Re: Groupon is Effectively Insolvent

#89

Post by bcrescimanno »

3am wrote: post #60
bcrescimanno wrote: post #29

Earlier quoted context omitted.

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…

fwiw, I upvoted both of your comments. I think it's obvious this is a difficult subject based on how many intelligent people disagree on it. I very strongly disagree with your conclusion, but I respect it and disagree with the downvotes.

Totally fair to disagree. I've enjoyed the discussion. It's forced me to re-evaluate my thinking on the topic. While I still think there are strong elements of a ponzi scheme at work here and that there truly is a de facto ponzi scheme; Groupon doesn't really qualify as an de jure ponzi scheme.

That said; what's more important than the vocabulary is understanding the total lack of ethics happening here--and the fact that (unlike the early investors who are now going to make their big bucks) the general public who are foolish enough to buy into Groupon will likely never see that investment returned and the only reason the early investors will get money is the investment capital from the IPO will be funneled to them.

Re: Groupon is Effectively Insolvent

#90

Post by SwellJoe »

wccrawford wrote: post #26
SwellJoe wrote: post #7

Earlier quoted context omitted.

Groupon is sustainable I'm curious what you base this assertion on?

Based on the numbers provided. While they were doing their 'hypergrowth', they managed to improve their income/expense ratio. That's pretty impressive to me. When they stop spending so much money on growing, it should be easy to show a profit.

When they stop spending so much money on growing, it should be easy to show a profit.

I'm not convinced that this follows from what we know about the numbers. It looks like one could just as easily make a case for the numbers indicating that the moment Groupon stops spending like crazy, their revenue will drop like a rock. What if they must cold-call dozens or hundreds of businesses in order to generate a sale? What if there isn't a way to sustain that without those aggressive sales tactics and the huge staff of sales people? What if they can't keep consumer interest without spending millions on marketing? What if there is a saturation point where people are simply bored of Groupon deals? (I unsubscribed after about 4 days, but I'm not much of a coupon kinda guy, so I don't know that I'm the ideal data point.)

I'm not saying it can't be true, I'm just saying I don't see that it is obvious that the hypothesis that there is a super-profitable business (or, at least profitable enough to justify their current valuation) underneath all the growth expenses is true.

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