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Groupon has no viable business model

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Re: Groupon has no viable business model

#111

Post by sdfkdfdfjdfng »

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…

What's your point? We shouldn't be poking holes in faulty business models? I don't think that's a good idea. Groupon is quite embarrassing, the Pets.com of web 2.0 for sure. On top of that, the founders are greedy crooks.

I think Twitter is in a far better position...it has taken me a while to realize this, but the truth is that they don't need a business model, really, they can just sell their data to people who do have a business model (like Google). Twitter will sell when it can get a really good bidding war between FB and Google, and maybe MS too. Now, they may screw it up and only get a few million, but this is still going to be a huge success by non-silicon valley standards.

Re: Groupon has no viable business model

#112

Post by blauwbilgorgel »

acak wrote: post #7

It's interesting that a smart company like Google almost paid $6B for them. Did they not understand the business model well enough or did they just want it to bolster other services (like payments) despite it not being profitable? How Google Offers goes should tell us. Maybe they've found a way to make the model work.

Even if Youtube is not profitable, Google has gained a lot of power over the online video format (see also Webm), justifying the buy.

Google aims to organize all the information in the world. Video is a large part of that and that should only grow.

The same take I have on the $6B offer. Controlling a large space of the growing local/group buying market is valuable to Google.

And just imagine Groupon coupled with Google Adwords (Adwords could upsell their clientele a Groupon offer) or Google Adsense (temporary offers could show on the entire content network). Or Groupon coupled with Google Base/Google Merchant Center. Or Groupon coupled with Google Maps. The true power would come from the collaborations and the future growth where Google would have secured a place.

No matter the hard business model, social buying/local offer sites are clearly here to stay.

Re: Groupon has no viable business model

#113

Post by yid »

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…

Few can tolerate the success of others in large doses, especially when they are involved in the same activity and have achieved less. It's not unique to entrepreneurship nor technology.

Re: Groupon has no viable business model

#114

Post by pbreit »

phereford wrote: post #96
pbreit wrote: post #61

Earlier quoted context omitted.

> business owners (national and local) that participate on Groupon, for the most part, are having bad experiences My understanding is that Groupon's satisfaction rate is well above 50%. It seems that everyone forgets that, at worst, this is an advertising expense that guarantees revenue and foot traffic.

It is 100% dependant on industry. Ask any retailer if a Groupon makes sense when they depend on the margins their products produce. The only way it makes sense is if they are able to get large volume discounts on whatever they are trying to sell. Just running some #s here. Local clothing ship buys jewelry for $5/piece and marks it up to $15. Groupon takes 75% of the $15. Groupon takes $11.25 out of the $15 and you ju…

25 cents to get someone through the door is the best deal on the planet.

Re: Groupon has no viable business model

#115

Post by pbreit »

jellicle wrote: post #75
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 imp…

Comparing Groupon to Madoff is a bit of a stretch.

Re: Groupon has no viable business model

#116

Post by pbreit »

sdfkdfdfjdfng wrote: post #111
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…

What's your point? We shouldn't be poking holes in faulty business models? I don't think that's a good idea. Groupon is quite embarrassing, the Pets.com of web 2.0 for sure. On top of that, the founders are greedy crooks. I think Twitter is in a far better position...it has taken me a while to realize this, but the truth is that they don't need a business model, really, they can just sell their data to people who do…

Can you back up calling Groupon's founders "greedy crooks"? That's quite an accusation.

Re: Groupon has no viable business model

#117

Post by peteretep »

duggan wrote: post #89
taeric wrote: post #86

Earlier quoted context omitted.

Parent's point stands. We have actively spent some money at places my wife found a groupon for that we otherwise would have spent no money at.

Groupon's modus operandi is that the business is (usually) making a loss or zero/negligible profit from the deal for the opportunity to generate future (post-groupon) business from those customers (or their friends). Spending no money at all might either be worse (they've lost more than they earned) or no better (zero sum) than buying the coupon depending on your future intentions. Or do you mean that you've returned…

In our case, we haven't returned. Whenever she gets her hair cut now, she finds somewhere that's on offer, which is a specialization of the bigger point, that she nows uses GroupOn with the expectation that there will be a deal on something she wants...

Re: Groupon has no viable business model

#118

Post by jonnathanson »

cletus wrote: post #70
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…

There are certainly cases of naysayers besmirching companies and entrepreneurs. There are also cheerleaders who get sucked into hype and think every new thing is going to change the world forever. The truth of course is somewhere in between. You can't judge people or what they say on whether it's positive or negative but on the merit of what's said. I for one have been critical of Groupon [1], even before the S1 fili…

"The biggest problem for Google+ (IMHO) is that people are tired of using social networking not that people are tired of using Facebook."

I think this is true to an extent. But I would refine it even further, because the distinction matters: People are tired of using social networking sites. Walled gardens. Neo-portals. Whatever you want to call sites like Facebook, of which Facebook is simply the most prominent and successful example. (Also, I would be careful to distinguish that, by "people," we really mean "some people." Clearly, not everyone is as sick of social networking and/or Facebook as we might like to think.)

Some elements of social networking will always be useful, and people will probably want to continue using them. But I question whether everyone will keep wanting to use a central destination/portal for all their social networking needs.

This could be a very good thing for Google+. But only if Google+ resists the temptation simply to build a new Facebook, and make the Google+ site the core of the Google+ experience. That's not the way to go. And Google doesn't need to go there, because it can monetize its user activity in so many other ways. Google+ still has room to evolve into a distributed, decentralized social networking experience -- wherein social networking is a feature, and not a destination.

Of course, that sort of experience might still be a ways off. And it still raises the thorny question of who owns the central pillars in the social platform, like user identity and the social graph. (Though, if the history of social networking -- and even of email services -- has anything to tell us, it's that users don't necessarily mind rebuilding identity/credentials and graphs all that much, up to a point).

Re: Groupon has no viable business model

#119

Post by mgkimsal »

pbreit wrote: post #114
phereford wrote: post #96

Earlier quoted context omitted.

It is 100% dependant on industry. Ask any retailer if a Groupon makes sense when they depend on the margins their products produce. The only way it makes sense is if they are able to get large volume discounts on whatever they are trying to sell. Just running some #s here. Local clothing ship buys jewelry for $5/piece and marks it up to $15. Groupon takes 75% of the $15. Groupon takes $11.25 out of the $15 and you ju…

25 cents to get someone through the door is the best deal on the planet.

It really depends on who that 'someone' is.

A tire-kicker who has no intention of ever becoming a customer in the future, and just wants their 'deal' - no one wants those customers. Groupon doesn't seem to offer any way to segment or market your message/deal to subsets of people differentiated on any other signal besides those customers that "want a deal".

Re: Groupon has no viable business model

#120

Post by pbreit »

pbreit wrote: post #116
sdfkdfdfjdfng wrote: post #111

Earlier quoted context omitted.

What's your point? We shouldn't be poking holes in faulty business models? I don't think that's a good idea. Groupon is quite embarrassing, the Pets.com of web 2.0 for sure. On top of that, the founders are greedy crooks. I think Twitter is in a far better position...it has taken me a while to realize this, but the truth is that they don't need a business model, really, they can just sell their data to people who do…

Can you back up calling Groupon's founders "greedy crooks"? That's quite an accusation.

Why the downvote? "crooks" implies criminality. Is that really what is being suggested?
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