On Grouponzi

Some thoughts on this:

A. Spending on customer acquisition is building real barriers to entry.

I tend to agree with DHH that the barriers to entry will never be high enough in the daily deal area. Also, as Groupon seeks to stay ahead of daily deal competitors, it cannibalizes its own business model – namely, the artificial scarcity and urgency of daily bargains reverts to more and more on-demand variety. We see this already.

B. Spending on direct sales is building a valuable collection of local merchants.

Others have built directories of local businesses before. The Yellow Pages, Yahoo are examples. Yelp, etc. are more modern examples. Can Groupon unlock a profitable business model from their collection?

C. Spending on marketing is building enough public goodwill to transcend value propositions altogether.

Groupon is a great brand name, so far. Public goodwill is damn fickle, though. I'd like to think that consumers require a real value proposition from their favorite brands, but I'm not sure that they always do.

When it comes to daily deals, I doubt consumers will chose Groupon over a better deal, just because of the Groupon name.

Does anyone here have any loyalty to one group-based buying service over another? I certainly don't.

I just feel as if the only justification for this new round of founding MG brings to the table, is that a) they will be able to cut back spending (=profit) and b) Google and Facebook are producing similar products, so it must be something good. Personally, I'm convinced by neither arguments and would argue that it isn't just risky, but pretty much doomed to fail (or rather, be a really bad investment for the public).

"Why not hate on Linked In's 500 P/E IPO that has already lost 25% off it's high?"

I assume the hate is partly financial advice of sorts, and there's no great need to harp on Linkedin after its stock goes down. Besides, there was hate on Linkedin just before and after the IPO.