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The Fall of Groupon: Is the Daily-Deals Site Running Out of Cash?

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Re: The Fall of Groupon: Is the Daily-Deals Site Running Out of Cash?

#51

Post by r00fus »

ForrestN wrote: post #34

The competition for most outlandish criticism of Groupon is getting really boring. All of these articles ignore the same basic facts. Groupon is spending a huge amount on customer acquisition. They've stated numerous times that this is a short-term competitive play, to try to create as much of an advantage as possible to counteract the dozens of clones by building up their brand awareness and subscriber list. The ide…

None of this "land grab" reasoning answers my concern I raised earlier ( http://news.ycombinator.com/item?id=2870094 )... how is Groupon going to defend their landgrab? There are NO BARRIERS in this market, as far as anyone can explain to me.

I'd love to hear any reasonable argument as to how Groupon will defend it's ground. It's not like the big boys (Google: Offers, Amazon: LivingSocial) are ignoring the space either.

Re: The Fall of Groupon: Is the Daily-Deals Site Running Out of Cash?

#52

Post by r00fus »

jprobert wrote: post #45

The business model of Groupon is eerily similar to that of the US. Use current cash/bonds to fund payables and hope that it doesn't get out of control. For the US it already has but at least the US can raise the debt ceiling and print more money... something that Groupon can not do.

The analogy also fails because the USG has weaponry (spending more than everyone else in the world combined) and Groupon does not.

Re: The Fall of Groupon: Is the Daily-Deals Site Running Out of Cash?

#53

Post by ig1 »

yuvadam wrote: post #25
ig1 wrote: post #18

The problem with all of these analysises is that they focus on rather meaningless things. Lots of companies operate with bigger debt than assets, as long you have incoming cash you can just get a bridging loan against it. What profitability comes down to is what the lifetime value of a user (in this case we have two types of users, consumers and providers) is and the cost of acquiring a user. Nothing else really matt…

Let's stop with the Amazon analogy. Yes, Groupon, like early-day-Amazon, is bleeding cash on customer acquisition. It ends there. Amazon was building a retail infrastructure and they succeeded in providing value to their customers. Groupon is busy spending truckloads of cash on luring businesses into their pyramid scheme, while founders and early-stage VCs are cashing in. Pray tell how either customers or businesses…

I'd like to see you build a global local salesforce tomorrow. Groupon's infrastructure isn't technological but rather operational and human resource based, something which is actually much harder to duplicate than technology.

It's likely the reason that Google wanted to buy them isn't for daily deals, but the fact that they've got a huge salesforce with expertise in selling to local businesses.

Local business ad spend in the US alone is a $100bn dollar market, only a tiny percentage of which is spent online at the moment, but the only way to reach this audience is direct sales. And that's something that google doesn't have the people infrastructure for.

Re: The Fall of Groupon: Is the Daily-Deals Site Running Out of Cash?

#54

Post by ig1 »

freshhawk wrote: post #24
ig1 wrote: post #18

The problem with all of these analysises is that they focus on rather meaningless things. Lots of companies operate with bigger debt than assets, as long you have incoming cash you can just get a bridging loan against it. What profitability comes down to is what the lifetime value of a user (in this case we have two types of users, consumers and providers) is and the cost of acquiring a user. Nothing else really matt…

You're missing the part where it's become obvious that Groupon is spending more on provider aquisition than their lifetime value and they are spending a lot on consumer aquisition, more than what most analysts would put as a high end of consumer lifetime value. Sure, it's a new market and there are some unknowns, but the only route to success with their current strategy is fanaticaly loyal consumers (who are very dis…

I'm not saying Groupon has a good business, I'm saying that most of these articles are talking about complete irrelevancies.

LTV and acquisition costs are the important metrics that we should be judging them by, not the ones presented in this article.

Re: The Fall of Groupon: Is the Daily-Deals Site Running Out of Cash?

#55

Post by shawndrost »

ForrestN wrote: post #34

The competition for most outlandish criticism of Groupon is getting really boring. All of these articles ignore the same basic facts. Groupon is spending a huge amount on customer acquisition. They've stated numerous times that this is a short-term competitive play, to try to create as much of an advantage as possible to counteract the dozens of clones by building up their brand awareness and subscriber list. The ide…

I'm in full agreement. Relatedly, why so much hatred for Groupon's ACSOI metric? If you believe you've got a great business, expansion via deficit spending is one possible strategy. If you're pursuing this strategy, you'll need metrics that show how you would be doing if you weren't expanding via deficit spending. Reasonable people can disagree about whether Groupon is a great business at its core, and whether the ACSOI accurately reflects how Groupon would be doing if they weren't expanding via deficit spending... but the widespread derision that they're "trying to claim they're profitable when they're not" seems intentionally obtuse.

Re: The Fall of Groupon: Is the Daily-Deals Site Running Out of Cash?

#56

Post by ForrestN »

switch wrote: post #48
ForrestN wrote: post #41

Earlier quoted context omitted.

Thanks for the support. Clearly I have yet to master the paradigm of "adding value" that classifies it's increasingly clear that groupon is essentially a ponzi scheme with some graphic design. can't wait for the post mortem documentary a la "the smartest guys in the room" as more valuable than my comment. Will continue to try and adapt to the local culture.

No, it's not that. It's your flawed assumption that everyone else is wrong and you're right. Groupon may or may not be a viable business. However, your assumption is guiding you and you haven't provided enough data or facts. Your opinion doesn't really matter or your annoyance that everyone is picking on poor Groupon. There are a lot of red flags and you are avoiding mentioning them and not mentioning very much suppo…

Well, in so far as I believe my argument, I guess I think others are wrong. But all of this is conjecture, that's what we're doing here, right? I could go back and cite a bunch of press releases, b that burden of proof isn't being applied to those who are making all of these claims about Groupon being a scam. Anyway I'm mostly disputing arguments rather than making positive claims.

Re: The Fall of Groupon: Is the Daily-Deals Site Running Out of Cash?

#57

Post by ForrestN »

r00fus wrote: post #51
ForrestN wrote: post #34

The competition for most outlandish criticism of Groupon is getting really boring. All of these articles ignore the same basic facts. Groupon is spending a huge amount on customer acquisition. They've stated numerous times that this is a short-term competitive play, to try to create as much of an advantage as possible to counteract the dozens of clones by building up their brand awareness and subscriber list. The ide…

None of this "land grab" reasoning answers my concern I raised earlier ( http://news.ycombinator.com/item?id=2870094 )... how is Groupon going to defend their landgrab? There are NO BARRIERS in this market, as far as anyone can explain to me. I'd love to hear any reasonable argument as to how Groupon will defend it's ground. It's not like the big boys (Google: Offers, Amazon: LivingSocial) are ignoring the space eith…

As. I said, I'm not convinced this will work. I think you raise a good question. Their argument would be that, like Amazon or any number of other companies that spend a ton of time at the beginning being unprofitable in competitive spheres, wthey are building up lots of forms of entrenchment that together constitute a barrier to entry.

Things like brand awareness, relationships with large national merchants, mailing list, I'm sure they are working on systems to tailor deals to user's buying profile, "groupon now", travel deals, etc. Amazon's barrier is that they have so much available for purchase no one can compete with their breadth. If Groupon's list is the biggest, maybe they can leverage it to exclusive partnerships to the detriment of competitors.

Again, I'm not sure this will work, but you're not calling them a scam. You just think they're overvalued, or that their competitive strategy is flawed. I would never argue that they are certain to succeed, I just think a lot of this Madoff nonsense is overblown.

Re: The Fall of Groupon: Is the Daily-Deals Site Running Out of Cash?

#58

Post by pbreit »

switch wrote: post #48
ForrestN wrote: post #41

Earlier quoted context omitted.

Thanks for the support. Clearly I have yet to master the paradigm of "adding value" that classifies it's increasingly clear that groupon is essentially a ponzi scheme with some graphic design. can't wait for the post mortem documentary a la "the smartest guys in the room" as more valuable than my comment. Will continue to try and adapt to the local culture.

No, it's not that. It's your flawed assumption that everyone else is wrong and you're right. Groupon may or may not be a viable business. However, your assumption is guiding you and you haven't provided enough data or facts. Your opinion doesn't really matter or your annoyance that everyone is picking on poor Groupon. There are a lot of red flags and you are avoiding mentioning them and not mentioning very much suppo…

The post you are referring to has quite a few more solid points than most of what I read here. The fact is, the post was downvoted because some set of HNers both disagree that Groupon could be a viable business and feel that downvoting is the proper way to express disagreement in HN. It's completely lame.

Re: The Fall of Groupon: Is the Daily-Deals Site Running Out of Cash?

#59

Post by pbreit »

pbreit wrote: post #42
ForrestN wrote: post #41

Earlier quoted context omitted.

Thanks for the support. Clearly I have yet to master the paradigm of "adding value" that classifies it's increasingly clear that groupon is essentially a ponzi scheme with some graphic design. can't wait for the post mortem documentary a la "the smartest guys in the room" as more valuable than my comment. Will continue to try and adapt to the local culture.

It's lame that HNers are so blind to the reality of the Groupon case. It's even more lame that some HN members use downvoting to express disagreement.

If you disagree with a post, you should post a reply with your arguments. Downvoting should not be used for simple disagreement.

Re: The Fall of Groupon: Is the Daily-Deals Site Running Out of Cash?

#60

Post by tokenadult »

pbreit wrote: post #59
pbreit wrote: post #42

Earlier quoted context omitted.

It's lame that HNers are so blind to the reality of the Groupon case. It's even more lame that some HN members use downvoting to express disagreement.

If you disagree with a post, you should post a reply with your arguments. Downvoting should not be used for simple disagreement.

Downvoting should not be used for simple disagreement.

That's nowhere in the Hacker News Guidelines.

http://ycombinator.com/newsguidelines.html

You are, of course, entitled to your opinion about how to use downvoting, but other users here are entitled to theirs.

Here is what pg said about the matter 1280 days ago:

http://news.ycombinator.com/item?id=117171

"I think it's ok to use the up and down arrows to express agreement. Obviously the uparrows aren't only for applauding politeness, so it seems reasonable that the downarrows aren't only for booing rudeness."

There have been refinements in the site software since then, notably the change of a few months ago to hide individual comment karma scores from readers other than the comment's individual author, but there has never been a statement from site management that downvotes must necessarily be explained. Sometimes the best way to respond to a comment that is not thoughtful and well informed is to downvote it.

When pg wrote his post earlier this year "Ask HN: How to stave off decline of HN?"

http://news.ycombinator.com/item?id=2403696

He wrote, "The problem has several components: comments that are (a) mean and/or (b) dumb that (c) get massively upvoted." By implication, some comments don't deserve any upvotes, and may indeed deserve downvotes without further subcomments.

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