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Groupon Plunges as Board Members Reportedly Leaving

thestreet.com

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Re: Groupon Plunges as Board Members Reportedly Leaving

#31

Post by chrisacky »

Big fat I told you so (to anyone on HN I've predicted this to in the past)...

Board Member/Director leaves... and what this signals:

[1] Employees Confused.

[2] Investors are going to really pissed off.

[3] Stock is most likely going to continue to fall. (The signalling from this step down is huge).

[4] It hints at possibility that the directors have had something to hide; something has been discovered; they have been secretly pushed out; or they have found out that something unethical has been going on in higher management and want to distance themselves from the company. Put another way, jumping out of a company when you aren't even pushed, when you are massively vested in it's success pretty much signals to everyone that Groupon is a sinking ship.

If they haven't filed bankruptcy by 2013 I'd be mightily impressed!

I can't wait to hear what Rocky Agrawal has to say about this.

Re: Groupon Plunges as Board Members Reportedly Leaving

#32

Post by mikeash »

ljlolel wrote: post #30
scarmig wrote: post #24

Earlier quoted context omitted.

Facebook is bubbly, but there's a world of difference between having your value inflated by a bubble and what's effectively accounting fraud.

Groupon is definitely worse than Facebook, but still, http://www.jperla.com/blog/post/facebook-is-a-ponzi-scheme

Seems like any financial structure that isn't indefinitely sustainable gets described as a "Ponzi scheme" these days. What that post describes isn't a Ponzi scheme at all. The defining characteristic of such a thing is using the money from new investors to pay returns to old investors, thus making the investment appear legitimate. It's completely unrelated to Facebook advertising.

Maybe their business model is unsustainable, but its nothing like a Ponzi scheme.

Re: Groupon Plunges as Board Members Reportedly Leaving

#33

Post by ssmall »

pyre wrote: post #17
kin wrote: post #14

Earlier quoted context omitted.

Besides the occasional unethical sales methods by some of its employees, were there any other scandals that I'm not aware of?

The 'creative' accounting on their initial IPO paperwork was a scandal of sorts, but I don't think it left the IT blogosphere.

They talked a fair amount about it on Marketplace, a public radio show about business and economics. Still isn't exactly mainstream but its outside the tech news circle.

Re: Groupon Plunges as Board Members Reportedly Leaving

#35

Post by Mizza »

corin_ wrote: post #25
calpaterson wrote: post #19

Earlier quoted context omitted.

Pets.com was not ostensibly a tech company either. Their business model was also criticised. There was much collateral damage from their decline.

Back then selling products online was enough to make you a "tech company", it's a very different landscape out there now.

So how many YC companies are "tech companies" by today's definition, then?

Re: Groupon Plunges as Board Members Reportedly Leaving

#36

Post by harlanlewis »

larrys wrote: post #27
huggyface wrote: post #12

Earlier quoted context omitted.

Groupon is hardly even a tech company, and their business model is one that has been seriously criticized since the outset. There will be little collateral damage from their decline.

"There will be little collateral damage" Added: Yes there will be collateral damaged. They are dotcom. They operate a website and they send their deals by email. The founder is young, does silly things (cat on head picture not something they do at Boeing or GE) and has been profiled in major media. They will be associated with tech whether deserved or not. Defacto. If there was no connection nobody in our "business"…

Whose perspective are you describing?

There may be a world of folks who think Groupon = tech = uses email = young, but that definition presupposes failure for all tech companies because of their inherent silliness.

Re: Groupon Plunges as Board Members Reportedly Leaving

#37

Post by corin_ »

Mizza wrote: post #35
corin_ wrote: post #25

Earlier quoted context omitted.

Back then selling products online was enough to make you a "tech company", it's a very different landscape out there now.

So how many YC companies are "tech companies" by today's definition, then?

Good question, and I think the answer has to be subjective.

My attempt at an answer: companies that either do things that couldn't be done before they were online because of the nature of the product/service, or where it couldn't be done before because the code has is complex.

So pets.com, really they were doing what shops had been doing for years, they just happened to do it online. Reddit on the other hand, there's not really an offline equivilent. Hipmunk, there's offline equivilents (travel agents) but the tech behind Hipmunk is what makes is a good company, not just "we've moved our travel agency online".

But yeah, no doubt there are YC companies that aren't necceasrily "tech companies", and on the other side there are companies not thought of as tech companies where technology plays a huge, huge role.

Re: Groupon Plunges as Board Members Reportedly Leaving

#38

Post by ahi »

trotsky wrote: post #28
AlexMuir wrote: post #10

When a director with a lot to lose (Howard Schultz) leaves so suddenly, one can guarantee that there's something coming which significantly threatens his position outside Groupon and/or reputation. So much so, that he is willing to piss off investors, employees and co-directors by upping and leaving. I suspect that the writing is on the wall for Groupon. I'm going to predict that it won't see 2013 without serious res…

For what it's worth, these two were both on the audit committee which was criticized in the wake of the earnings restatements last month: "Groupon needs a new audit committee with much more financial expertise," said James Post, a management professor at Boston University. http://articles.chicagotribune.com/2012-04-12/business/chi-g...

I don't really buy that. If CFO and auditors are doing their job any reasonably competent business professional can provide adequate oversight. If the board member isn't capable of adequate oversight the problem lies with the financial information they are being given, very rarely the board members.

Re: Groupon Plunges as Board Members Reportedly Leaving

#40

Post by fennecfoxen »

mikeash wrote: post #32
ljlolel wrote: post #30

Earlier quoted context omitted.

Groupon is definitely worse than Facebook, but still, http://www.jperla.com/blog/post/facebook-is-a-ponzi-scheme

Seems like any financial structure that isn't indefinitely sustainable gets described as a "Ponzi scheme" these days. What that post describes isn't a Ponzi scheme at all. The defining characteristic of such a thing is using the money from new investors to pay returns to old investors, thus making the investment appear legitimate. It's completely unrelated to Facebook advertising. Maybe their business model is unsust…

I'm not even sure that their business model is unsustainable. The growth that would be necessary to justify their current valuation is probably unsustainable, mind you. But there's easily a good little business there. It just happens to not be worth 7 billion dollars :)
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