Groupon has no viable business model • Hacker News Board

Re: Groupon has no viable business model

#71

Post by pbreit » Wed, Aug 17, 2011, 6:51 PM UTC

a5seo wrote: post #66

pbreit wrote: post #59

Earlier quoted context omitted.

What are you talking about? Groupon's IPO could occur in a matter of weeks. Bankers have been selected. Road show planning is under way. Barring a global economic meltdown, Groupon is likely to IPO for $20-30 billion. Unless your site is Facebook, Twitter or Zynga, I don't think your comment has merit.

it wont be hard for them to IPO on a small float at 20-30B valuation... what will be hard is for VC's and employees to sell at that valuation once the lockup expires.

Some will get paid out in the IPO, some will get paid out in a secondary and I doubt the stock will collapse on lockup expiration (it rarely does).

Re: Groupon has no viable business model

#72

Post by chollida1 » Wed, Aug 17, 2011, 6:55 PM UTC

spanktheuser wrote: post #21

I'm not terribly impressed with this article. It rehashes the thinking of HN and other bloggers without adding anything new - other than the HBR logo at the top. I guess that's important for people who let HBR tell them what to believe. And the following point just seems completely wrong to me: >> And unlike the very few successful companies that scaled before they were profitable (think Facebook or Amazon), Groupon'…

> Can someone explain how Amazon's consumers benefit from network effects?

I mostly agree with you but if I had to think of a few things that I benefit from due to Amazon's size:

- cheaper prices due to size, in terms of book discounts, shipping discounts, etc - recommendations - book reviews - faster shipping due to amazon.ca, co.uk, etc, as opposed to having to get everything shipped from amazon.com

Re: Groupon has no viable business model

#73

Post by jellicle » Wed, Aug 17, 2011, 6:55 PM UTC

tptacek wrote: post #47

jellicle wrote: post #46

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…

It is simply not true that a "great deal" will get publicized by itself, or that any pre-2009 channel for publicizing great deals was effective for most businesses. I find this comment facile. Small businesses die all the time because nobody discovers them. I don't know about Groupon, but it's flat out wrong to say that small businesses don't have the problem Groupon claims be addressing. They clearly do have the pro…

> It is simply not true that a "great deal" will get publicized by itself

I said spend five minutes emailing. If I'm selling widgets for $25 when the usual, accepted price in commerce is $100 (which is the standard Groupon deal, right?) and I spend five minutes emailing the widget fanatics mailing list, I guarantee that a LOT of people will discover my offer to sell widgets for $25. The deal will spread all by itself given a very minimal amount of priming by the business owner.

It won't spread if I'm offering to sell widgets for $99 instead of $100. But $25? Yes.

> I don't know about Groupon, but it's flat out wrong to say that small businesses don't have the problem Groupon claims be addressing. They clearly do have the problem.

No, no businesses have a problem of not being able to find customers to buy things at prices well below the store's cost. If I buy wine at $10 per bottle and instead of selling it at $20/bottle, I decide to sell it at $5/bottle, I assure you I will find plenty of customers. And that's what Groupon is offering - the "opportunity" to find customers who are willing to buy your products for below what it cost you to put them on your store shelves.

A useful service would be to find customers who are willing to pay full retail price for your products. That's a service that retailers would and should pay money for. That isn't what Groupon is offering.

Re: Groupon has no viable business model

#74

Post by iand » Wed, Aug 17, 2011, 7:00 PM UTC

coffeemug wrote: post #57

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…

Some of us have a healthy suspicion of large companies. I've seen so many lose their way, forget employees and customers are individuals and grow arrogant and lazy. For me its not jealousy or resentment at success, just a preference for successful companies that operate at human scale.

Re: Groupon has no viable business model

#75

Post by jellicle » Wed, Aug 17, 2011, 7:09 PM UTC

coffeemug wrote: post #57

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…

I'm pleased for success which is built on providing real value to real people.

I'm not pleased at, say, Bernie Madoff's success. (Over 15 highly successful years in business, and only one unsuccessful one!) IMHO, he wasn't providing real value to people and his apparent success was only due to fraudulent accounting. According to Wikipedia, Madoff's brother invested $32,000 and received profits of $16 million - an impressive rate of return. Am I a nattering nabob of negativity for poo-pooing this "success"?

I believe Groupon is in the Madoff category, or close to it...

Re: Groupon has no viable business model

#76

Post by RandallBrown » Wed, Aug 17, 2011, 7:16 PM UTC

peteretep wrote: post #53

jellicle wrote: post #46

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…

> For customers, Groupon adds almost no value 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".

I think they meant customers as in business paying groupon for the deals.

Re: Groupon has no viable business model

#77

Post by desireco42 » Wed, Aug 17, 2011, 7:21 PM UTC

must be slow week when people 'write' these articles. this is such a flame bait.

I wish my small biz doesn't have success like groupon. there are issues with how they do business etc, but they are both greatest and biggest deal makers for small biz.

Re: Groupon has no viable business model

#78

Post by nrml » Wed, Aug 17, 2011, 7:21 PM UTC

jellicle wrote: post #46

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…

> Groupon isn't adding value to anyone.

I agree. There are several arguments about the perceived value to the consumer regarding 'great deals'. But that's not how a business should attack attracting new customers and converting them into return customers.

With that in mind, the intended value to the customer is to find new establishments and sample their product/services where they might become regular customers. Right now all people see is: 'HALF OFF FOOD, K THX'.

Re: Groupon has no viable business model

#79

Post by hariis » Wed, Aug 17, 2011, 7:23 PM UTC

tptacek wrote: post #47

jellicle wrote: post #46

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…

It is simply not true that a "great deal" will get publicized by itself, or that any pre-2009 channel for publicizing great deals was effective for most businesses. I find this comment facile. Small businesses die all the time because nobody discovers them. I don't know about Groupon, but it's flat out wrong to say that small businesses don't have the problem Groupon claims be addressing. They clearly do have the pro…

Nobody discovers them because they offer dud deals like "Buy 1 get 1 Free" when you buy 2 drinks at full price etc.

Groupon ensures that the deals are good

Re: Groupon has no viable business model

#80

Post by hariis » Wed, Aug 17, 2011, 7:28 PM UTC

jellicle wrote: post #73

tptacek wrote: post #47

Earlier quoted context omitted.

It is simply not true that a "great deal" will get publicized by itself, or that any pre-2009 channel for publicizing great deals was effective for most businesses. I find this comment facile. Small businesses die all the time because nobody discovers them. I don't know about Groupon, but it's flat out wrong to say that small businesses don't have the problem Groupon claims be addressing. They clearly do have the pro…

> It is simply not true that a "great deal" will get publicized by itself I said spend five minutes emailing. If I'm selling widgets for $25 when the usual, accepted price in commerce is $100 (which is the standard Groupon deal, right?) and I spend five minutes emailing the widget fanatics mailing list, I guarantee that a LOT of people will discover my offer to sell widgets for $25. The deal will spread all by itself…

>A useful service would be to find customers who are willing to pay full retail price for your products.

The intent is that once you try and if the businesses treats the customer well, they would pay full price the next time. It is the businesses who don't understand this, that don't end up reaping the benefits.