Groupon is Effectively Insolvent • Hacker News Board

Re: Groupon is Effectively Insolvent

#111

Post by bartl » Sun, Jun 05, 2011, 10:21 AM UTC

click170 wrote: post #6

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…

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

When I click the link, with javascript disabled by NoScript, I get:

>JavaScript for Mobile Safari is currently turned off.

Eh? I'm running Firefox 4 on Windows XP...

Re: Groupon is Effectively Insolvent

#112

Post by ChuckMcM » Mon, Jun 06, 2011, 10:54 PM UTC

jfager wrote: post #74

ChuckMcM wrote: post #44

Earlier quoted context omitted.

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.

True, but vendors do have lock-in. If you get big fast enough and cover a metro area with in place agreements to couponize offerings that makes it harder for a new player to sell to the same business. Basically you're asking Joes Pizza Parlor and Nail Salon to send offers to two networks now. Unless Groupon completely screwed the relationship from the beginning this will be 'harder' (in the sense that small business doesn't really want to manage a bunch of vendors so there is natural resistance to taking on new ones).

That being said, it creates an opportunity for an 'offer market maker' which is to say a clearing house which can put your offer on various channels (via Groupon via CloneOn or whatever) offer enhanced analytics about how well it does and let you slosh around your limited advertising/marketing dollars.

Re: Groupon is Effectively Insolvent

#113

Post by jfager » Tue, Jun 07, 2011, 12:24 AM UTC

ChuckMcM wrote: post #112

jfager wrote: post #74

Earlier quoted context omitted.

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.

True, but vendors do have lock-in. If you get big fast enough and cover a metro area with in place agreements to couponize offerings that makes it harder for a new player to sell to the same business. Basically you're asking Joes Pizza Parlor and Nail Salon to send offers to two networks now. Unless Groupon completely screwed the relationship from the beginning this will be 'harder' (in the sense that small business…

Actually, this is why I think Square is so well positioned. They're offering a full suite of merchant services, from payment processing to loyalty program management to proximity advertising, and there's nothing stopping them from joining the coupon space if they were inclined to do so.

To lock in the vendor that doesn't want to deal with multiple companies, I think you're going to have to provide a lot more than occasional access to an email list.