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The rise of the “successful” unsustainable company

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Re: The rise of the “successful” unsustainable company

#11

Post by antr »

danso wrote: post #7
api wrote: post #2

This is diplomatic and charitable. When I see a repeat pattern of GroupOn and Zynga type companies I see someone who knows how to pump and dump. It's not quite fraud but it's getting close, given how loose these sorts of people typically play the truth.

I have to strongly disagree with comparing Groupon to any of the OP's failed examples. Groupon may well run into the ground, but consider that: a) It was the first big success in its space b) at its peak, hired dozens (hundreds?) of actual employees, even copywriters from journalistic institutions. c) Had a huge, huge base of customers Groupon's leaders should be faulted for the various strategies and actions that ha…

Success? GroupOn isn't profitable, it hasn't even returned via income the equity invested + accumulated losses. Anyone can hire tonnes of people, pay them, provide a service/product, and still deliver negative equity returns. Anyone.

Re: The rise of the “successful” unsustainable company

#13

Post by nicholassmith »

Unfortunately it seems like a lot of the time people are building companies for exits, rather than long term products. There's exceptions of course, but how much of that is now the expectation that to get the funding to do something you've got to be aiming for $xm dollars at exit.

I've got no problems with people exiting like that, but it makes me wonder where all the pressure to sell up and move on comes from.

Re: The rise of the “successful” unsustainable company

#15

Post by veb »

ergest wrote: post #6

Finally someone is talking about this! I've always felt that the "new" tech companies bring very little value to consumers and are thus not profitable long term (but of course the early investors and founders already made their money) The incentives of many VCs and "angels" are at opposite ends with sustainability, consumer value and long term success.

What kind of bugs me is why the small start-ups who are actually making money from day one don't really receive much money. I mean, $700,000 (pulled from thin air) in funding is good, don't get me wrong - but if they're making money and they have a decent business plan, why aren't THEY receiving $41,000,000 in funding?

Re: The rise of the “successful” unsustainable company

#17

Post by hnriot »

nicholassmith wrote: post #13

Unfortunately it seems like a lot of the time people are building companies for exits, rather than long term products. There's exceptions of course, but how much of that is now the expectation that to get the funding to do something you've got to be aiming for $xm dollars at exit. I've got no problems with people exiting like that, but it makes me wonder where all the pressure to sell up and move on comes from.

This might be a good strategy - the skill set required to get a company off the group is very different from long term growth and sustainability. By exiting, the skills are compartmentalized. I worked for a company that made networking products, at the time they were ahead of Cisco's tech, but Cisco had by far better penetration into the CIO world. The sales cycle was too long for a small startup and we practically ran out of money just waiting for companies to evaluate our product. It was clear that the company would do far better inside an existing sales infrastructure, so we exited and moved on to things we did best.

Not building a company for the long haul isn't necessarily a bad thing, provided the business itself has the ability to grow elsewhere.

Re: The rise of the “successful” unsustainable company

#18

Post by TeMPOraL »

danso wrote: post #7
api wrote: post #2

This is diplomatic and charitable. When I see a repeat pattern of GroupOn and Zynga type companies I see someone who knows how to pump and dump. It's not quite fraud but it's getting close, given how loose these sorts of people typically play the truth.

I have to strongly disagree with comparing Groupon to any of the OP's failed examples. Groupon may well run into the ground, but consider that: a) It was the first big success in its space b) at its peak, hired dozens (hundreds?) of actual employees, even copywriters from journalistic institutions. c) Had a huge, huge base of customers Groupon's leaders should be faulted for the various strategies and actions that ha…

GroupOn had also this ridiculous idea that small businesses can earn return customers by offering them extremely huge discounts.

Re: The rise of the “successful” unsustainable company

#19

Post by megablast »

TeMPOraL wrote: post #18
danso wrote: post #7

Earlier quoted context omitted.

I have to strongly disagree with comparing Groupon to any of the OP's failed examples. Groupon may well run into the ground, but consider that: a) It was the first big success in its space b) at its peak, hired dozens (hundreds?) of actual employees, even copywriters from journalistic institutions. c) Had a huge, huge base of customers Groupon's leaders should be faulted for the various strategies and actions that ha…

GroupOn had also this ridiculous idea that small businesses can earn return customers by offering them extremely huge discounts.

If you look at it as a form of advertising, it is a great idea. And I am sure there are a number of returning customers.

Re: The rise of the “successful” unsustainable company

#20

Post by padobson »

danso wrote: post #7
api wrote: post #2

This is diplomatic and charitable. When I see a repeat pattern of GroupOn and Zynga type companies I see someone who knows how to pump and dump. It's not quite fraud but it's getting close, given how loose these sorts of people typically play the truth.

I have to strongly disagree with comparing Groupon to any of the OP's failed examples. Groupon may well run into the ground, but consider that: a) It was the first big success in its space b) at its peak, hired dozens (hundreds?) of actual employees, even copywriters from journalistic institutions. c) Had a huge, huge base of customers Groupon's leaders should be faulted for the various strategies and actions that ha…

I don't think the author of the post is arguing that GroupOn isn't a good product, it's just not a sustainable business. The company they build fills a need for its customers, but it doesn't make money for GroupOn by fulfilling that need.
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