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The rise of the “successful” unsustainable company

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Re: The rise of the “successful” unsustainable company

#101

Post by gsmaverick »

mindstab wrote: post #25

I'm surprised no one's mentioned Twitter. They are one of the most successful internet things and yet they still don't seem to have any really solid way to monetize that. They are now part of culture but are they revenue positive? The things they are doing lately don't make sense until you take that into account: Restricting 3rd party apps and APIs? Seems to be driving users away... Except that if all your users are…

Except that it's not unsustainable and in fact doing pretty well in terms of revenue (http://adage.com/article/digital/twitter-ad-revenue-reach-13...). I know it's fashionable to hate on Twitter but it flies in the face of reality.

Re: The rise of the “successful” unsustainable company

#102

Post by lwat »

pg wrote: post #63
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.

Calling Zynga and Groupon pump-and-dump schemes is a mark of one's one's understanding of business in much the same way that believing vaccines cause autism is a mark of one's understanding of science. Mark Pincus and Andrew Mason are both still running these companies. Running a public company that's doing badly is extraordinarily painful. No one would bring that on himself.

> Running a public company that's doing badly is extraordinarily painful. No one would bring that on himself.

I would openly run a company into the ground if I got hundreds of millions of dollars in the process like they Zynga or Groupon guys did.

Re: The rise of the “successful” unsustainable company

#103

Post by tptacek »

staunch wrote: post #75
ahi wrote: post #71

Earlier quoted context omitted.

Pincus and Mason may still be running them, but they both already cashed out big time.

Don't you see how that defies the notion that it was a pump and dump? Why would they (with tens of millions of dollars) stick around? No one can force them to stay. They're already obscenely rich. Think about what their motivations must be.

As I noted above, this isn't really an argument. Sanjay Kumar made hundreds of millions of dollars from CA and could have left long before he was indicted having already ensured that none of his grandchildren would ever have to work a day in their lives.

Re: The rise of the “successful” unsustainable company

#104

Post by ahi »

9999 wrote: post #98
corford wrote: post #88

Earlier quoted context omitted.

These guys obviously aren't the sort of people that are happy to lie by the beach reading a book, quietly enjoying their millions. They're alpha dogs in the absolute worst sense of the word. They thrive off ego, winning, power, greed, narcissism and all those other lovely traits most people pulling similar moves seem to have. Think Gordon Geko. Remove the pin stripe suit, fast forward 30 years and change the modus op…

That thing that you said there does not describe Andrew Mason in any way shape or form. He used to post on a forum that I spent a lot of time on in the early 00s. He's a clever, funny guy, and he took most of his lessons in ethics from Steve Albini. Before Groupon, he created The Point which was a group funding site for social initiatives that in many ways resembled Kickstarter.

Maybe not Mason, but it seems like a reasonable assessment of Lefkofsky.

Re: The rise of the “successful” unsustainable company

#106

Post by staunch »

tptacek wrote: post #103
staunch wrote: post #75

Earlier quoted context omitted.

Don't you see how that defies the notion that it was a pump and dump? Why would they (with tens of millions of dollars) stick around? No one can force them to stay. They're already obscenely rich. Think about what their motivations must be.

As I noted above, this isn't really an argument. Sanjay Kumar made hundreds of millions of dollars from CA and could have left long before he was indicted having already ensured that none of his grandchildren would ever have to work a day in their lives.

If you think they're sticking around to make more money, then they must be trying to repair the company's stock price. Or you think they're still there out of a sense of pride or guilt.

Either way it's not a pump and dump, and their goal is to turn the company around.

Re: The rise of the “successful” unsustainable company

#107

Post by tesseractive »

ahi wrote: post #104
9999 wrote: post #98

Earlier quoted context omitted.

That thing that you said there does not describe Andrew Mason in any way shape or form. He used to post on a forum that I spent a lot of time on in the early 00s. He's a clever, funny guy, and he took most of his lessons in ethics from Steve Albini. Before Groupon, he created The Point which was a group funding site for social initiatives that in many ways resembled Kickstarter.

Maybe not Mason, but it seems like a reasonable assessment of Lefkofsky.

This. You could believe that Mason was acting in a completely earnest fashion, but was too naive to realize he was being manipulated by Lefkofsky.

As Excutive Chairman in a non-operational role, Lefkofsky is under only a fraction of the unpleasant pressure Mason is under as CEO. If he were guilty of behaving in this way, that would actually jibe pretty well with pg's assertion about people not wanting to run struggling public companies if they can avoid it.

Personally, I am no expert on Groupon. I make no claims that Lefkofsky has behaved in that way, because I don't have any evidence to either validate or invalidate such a hypothesis. It's simply not clear to me that such an accusation is obviously false, as pg claims.

Re: The rise of the “successful” unsustainable company

#108

Post by tesseractive »

carbocation wrote: post #30
megablast wrote: post #19

Earlier quoted context omitted.

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.

Well, that is the proposition. It turns out it may be false, which in fact would explain why Groupon is doing poorly. Giving discounts may induce the most price sensitive to use your service. They will continue to be price sensitive, and stop using your service once the cost returns to normal. If the opposite were true, and if business actually did profit from this approach, then it is likely that Groupon would be ki…

A hypothetical ideal business in this segment would find a way to profit off of attracting people interesting in sampling new businesses for long-term patronage rather than making its money off of the price sensitive. The idea would be that you would find a way to make the proposition most appealing to people who are looking for a new... hairstylist/florist/gym/supermarket/whatever, and either avoid targeting offers at people who are likely to sample at a low price and move on, or make the offer less appealing to them.

This has been a key part of the mailing list business for many years -- lists that target people who have recently moved, gotten pregnant or had a baby, gotten married, and so on. Special offers with unusually good deals are then offered, because the chance of converting a percentage of the recipients into long-term customers makes it worth it.

If this kind of business model has been translated to online effectively, I'm not familiar with it. Certainly some of that effect can be achieved with the right search keywords or the right websites to advertise on (e.g. baby name sites), but businesses like Groupon and Living Social have brought in many more price sensitive customers than actual long-term business prospects, which is one of the big reasons why they are not more successful.

Re: The rise of the “successful” unsustainable company

#109

Post by drumdance »

rms wrote: post #97
drumdance wrote: post #78

Earlier quoted context omitted.

Yes, but he can cash in and quit. Why hasn't he? I've never run a public company but I know some who did during the first dot-com crash and it was not pleasant.

Because that signal might destroy the company?

So what? If he's the sociopath everyone makes him out to be, who already has more money than God, what's the big deal?

My point is that "good vs. evil" style commentary is useless. It automatically lowers the commenters' mean IQ by 15 points.

This, of course, is the reason discussing politics (as opposed to policy) is generally a waste of time.

Re: The rise of the “successful” unsustainable company

#110

Post by prostoalex »

enraged_camel wrote: post #34
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…

>>It was the first big success in its space Success that is not sustainable is not success. >>and a lot if its downfall comes from how easy it is to copycat it. No, I don't think so. The real (and perhaps the only) reason Groupon is not sustainable is because the fundamental assumption that the business model rests on turned out to be false. Let me explain. The original idea was that Groupon would team up with a busi…

>> Success that is not sustainable is not success.

You're confusing the product and the company. iPod in your definition is not a success, and neither is Sony Walkman.

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