51–60 of 129 posts
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I'm guessing there was some pretty big performance (possibly profit) incentives for the founders and they knew they had no chance of hitting them. So their next option to cash everyone out and make a ton of $ was IPO.
From what I heard they were bucking for a breakup payment of 5 billion - that would have been within an order of magnitude of what the Groupon investors would have liked to have.
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The question is whether this is a fad or not. Companies always try new marketing tricks. The type of marketing that stays is the marketing that benefits the company. This type of group buying is relatively new and lots of companies (small and large) are testing it out. They're willing to chance making a bad decision to see whether it works or not. The question isn't whether Groupon is getting a decent cut, but whethe…
I'm guessing you don't know this -- Even if a groupon expires, you can redeem it for the purchase price. Ref: http://www.groupon.com/terms#terms-of-sale
The long-term problem is simply this: Groupon isn't adding value to anyone. For customers, Groupon adds almost no value. A great marketing deal will get publicized anyway - there are hundreds of websites devoted to coupon/code sharing. So if a business wants to offer 50% off, they could spend five minutes mailing a couple of these sites, and there would be plenty of publicity for their deal. For almost all businesses…
And yet my girlfriend and her friends spend a shit-load of money on items they find on it, because "it's such good value".
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I have said this before and I will say it again. Groupon were idiots to leave money on the table and walk away when they were working with Google. They will never be able to get that much free cash ever again.
First, they did take quite a bit of money off the table. Second, they are on target to do a $25+ billion IPO (ie, 4x the Google price). Doesn't sound idiotic to me.
But the bigger problem is the implication that Groupon will not adjust its economics in the future. Groupon could slash SG&A, sales and marketing to become wildly profitable and still grow quickly. It's actually quite amazing how long Groupon has managed to take a whopping 25% cut. This is likely to diminish as discounts become smaller and merchants negotiate better terms. But still healthy enough to support a very large business.
> businesses should become profitable before they become big
The opposite is true of most or all of the big internet businesses.
> Groupon's fundamental problem is that it has not yet discovered a viable business model
Taking a 25% cut of sales is a fantastically viable business model.
> I have no problem letting investors finance my cheap consumption. But as far as an investment goes, Groupon is looking about as profitable as giving away your merchandise for 90% off.
These statements are just wrong. Merchants are financing your cheap consumption. Who is giving merchandise away for 90% off? Where does that come from?
I am far from a Groupon apologist but so much of the "analysis" on the company is so bad. Comparisons to Pointcast, Pets.com or Webvan are totally unfounded. This company is generating massive cash flows.
The long-term problem is simply this: Groupon isn't adding value to anyone. For customers, Groupon adds almost no value. A great marketing deal will get publicized anyway - there are hundreds of websites devoted to coupon/code sharing. So if a business wants to offer 50% off, they could spend five minutes mailing a couple of these sites, and there would be plenty of publicity for their deal. For almost all businesses…
I really don't understand this part of human psychology. We cheer entrepreneurs on, until they see a massive success, at which point we feel compelled to point out that their achievement is meaningless and we knew it all along. Are people really that jealous?
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The choice there is not to go through anyone at all. It's not like all businesses wanted to hold flash 75% sales and just didn't know how before Groupon.
I'm not a business owner, so I can't talk authoritatively on the subject, but I think there's something in the combination of wide audience and well-known number of pre-paid vouchers that make GroupOn more attractive than old-world sales marketing. Then there's something in their skimming 50% off that's quite less attractive.
I don't do deals myself, but I find the trend interesting.
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First, they did take quite a bit of money off the table. Second, they are on target to do a $25+ billion IPO (ie, 4x the Google price). Doesn't sound idiotic to me.
I can say that my site is IPOing for 50 billion...until I actually raise the amount, it's just a dream. Same with groupon...yes they want to raise that much...but it's just a pipe dream at this point
It's almost as if people derive personal satisfaction from poking holes in Groupon's success (or any startup, for that matter). Groupon has no viable business model, people will get tired of Zynga's games, Twitter can't monetize, Facebook will be killed by Google+/is useless/the ads on it aren't worth anything, etc. Every time one of these things gets pointed out, people show up and start high-fiving each other, say…