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Groupon Is Laying Off 1,100, Shutters Operations in 7 Countries

337 points by kp25 11y ago

kardos 11y ago
Looks like businesses have collectively realised that groupon is a miserable deal and it's finally caught up with them, after having been running on fumes [1] for a couple years now. [1] http://blog.bodellconsulting.com/2013/03/01/groupon-a-bad-deal-for-restaurants-and-everyone-else-including-groupon/ http://blog.bodellconsulting.com/2013/03/01/groupon-a-bad-de...
- antidaily 11y ago
  Is it running on fumes? They still have significant revenues and loyal customers and a million sales people.
  - adventured 11y ago
    It's not running on fumes. It would have been more accurate to say that it is growing more slowly (and as of the last few quarters, has seen its growth flat-line). 2012: $2.33b in sales 2013: $2.57b in sales 2014: $3.19b in sales Their biggest problem is the inability to achieve profitability on $3 billion in sales after so many years in business. They still have $1.1 billion in cash however, and have reduced their bleed rate to a benign level.
    - fredkbloggs 11y ago
      > Their biggest problem is the inability to achieve profitability on $3 billion in sales after so many years in business. They still have $1.1 billion in cash however Doesn't this just mean the investors would be better off winding it down and investing the $1.1b in something that is profitable, or at the very least has a higher ceiling? It doesn't seem all that likely that the latest round of cutbacks is going to turn this into a profitable company and even if it does, the scope for profits is very limited. As you say, they've been going for a long time and nothing is really getting better. Even the 2.5% you get from the S&P 500 would be a better use for that billion in cash.
      - astrodust 11y ago
        Sadly, a lot of tech companies would perform better if they threw their cash into index-driven mutual funds.
        smeyer 11y ago
        By virtue of the way indices work, a lot of public companies in general would have been better off throwing their cash in index-driven mutual funds. That being said, if it were easy to tell ahead of time which these companies are, it would be easy as an investor to beat index-driven mutual funds.
        bduerst 11y ago
        And they would risk losing investors. Why would someone put money into a company that invests in index-funds, when you can just invest in index-funds?
        fredkbloggs 11y ago
        Right. That's why I suggested Groupon be wound down, not that they continue operating at a loss but invest their cash differently. This does raise an interesting question, though. There seem to be a lot of corporations out there that have no obvious reason for existing: minimal to negative profitability on a sustained basis, uninspiring business with little potential, and a long track record that doesn't suggest a turnaround is likely. Groupon is just one of many. Presumably in many cases, equity in these corporations is held primarily or even entirely by index funds. Why should such a company remain in business? By definition, if all your shareholders are indexers, there is not a single person alive who considers you an above-average investment. In a rational market, such a company would be wound down or the price of its shares would fall so low that it would be taken over by someone who believes he can do better. But the index funds create a sort of circular reasoning, or perhaps an isolated reality separated from outside feedback, allowing these zombies to keep living. A variant of this was covered by http://www.bloombergview.com/articles/2015-07-22/index-funds-may-work-a-little-too-well http://www.bloombergview.com/articles/2015-07-22/index-funds..., but this seems like a more extreme case. Of course, Groupon's "institutional ownership", which includes various active and passive funds, pensions, endowments, etc. is only 65% per Google Finance. There are corporations with 100% and even >100% institutional ownership (i.e., there are a lot of non-institutional shorts). Why do they continue to exist, and what can be done to kill them off?
  - kardos 11y ago
    They don't have a million sales people -_-, 11.8k employees total is a better estimate [1], dropping to 10.7k soon. Maybe fumes was not the right word. The things they offer as "deals" are fumes. I just loaded the Toronto section, and saw "$179 for $2392 worth of laser hair removal" with >200 sold. I don't believe that the $2392 figure is not grossly inflated. Also "$430 for a $899 iPhone", but then you notice "condition: refurbished". These things don't come across as credible promotions, but rather the result of someone packaging something up to appear to be a promotion, but it's just a normal price disguised in some way. Perhaps there are some actual promotions on there, but these pseudo-promotions reduce the credibility as a whole. So what's special about groupon again? I can get normal price things anytime/anywhere, and not have to go through the hassle of buying the coupon in a specific time frame, and only be able to use it in a different specific time frame and another dozen restrictions. [1] http://www.bloomberg.com/research/stocks/snapshot/snapshot.asp?ticker=GRPN http://www.bloomberg.com/research/stocks/snapshot/snapshot.a...
    - deleted 11y ago
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- mooreds 11y ago
  My brother in law runs a restaurant back east, and he said that Groupon has been a great channel for driving business. Anecdata, I know. I think there's a business opportunity to help people running groupons capture the most value out of the leads (at the least, sign them up for an email newsletter).
  - bpicolo 11y ago
    I think it depends on the business. Someone up top mentioned it was a great way for them to try scuba, sky diving, etc. That's not the sort of thing you necessarily see a lot of repeat traffic for. Not sure.
    - mooreds 11y ago
      Right. Seems like a restaurant (or hotel, nails place, anything that you could use more often, etc) is a better use case.
    - PeterisP 11y ago
      Scuba and skydiving are the exact type of hobbies where if you make people interested, then you can get a lot of very expensive follow-up business. You won't get most of them hooked up; and if you make the first experience a lousy one because of Groupon pricing issues, then you won't get any of them hooked up, but in general if your business current weak point is excess capacity and a need to bring in new people to the hobby (since your current customers are doing it as much as they can and won't do more), then a deeply discounted first trial is pretty much the main way to do that.
  - saalweachter 11y ago
    It could also vary widely based on whether or not advertising was a business's greatest problem. If your biggest problem was that not enough people know about or had tried your restaurant, Groupons probably did a lot of good. If your biggest problem was that your food wasn't really that great or your prices were too high or you were in a terribly inconvenient location or your staff was unbearable, then getting more people in the door doesn't really help anything in the long run.
- devit 11y ago
  Isn't this kind of thing beneficial if run with more reasonable margins and a subscription model for customers? Basically, the customer subscribes to the service and gets discounted meals at the cost of not being able to choose the restaurant himself. Restaurants can use the service whenever they expect to have empty tables, allowing to still profit for them, but with a reduced profit margin. I'm not sure if it works for restaurants in particular, but it should work for businesses that cannot easily change supply levels, aren't selling something that is completely a commodity and ideally where varying suppliers is enjoyable for customers.
  - kardos 11y ago
    > Restaurants can use the service whenever they expect to have empty tables, allowing to still profit for them, but with a reduced profit margin. Businesses receive 20-25% of retail price when they take a groupon deal, so you'd need a profit margin >75% to even entertain that idea. Also it cannibalises some of your existing customers, converting your 75%+ profit margin customers into near zero or loss customers. I'd leave the tables empty.
    - Someone1234 11y ago
      Playing devil's advocate here... You do have to consider the advertising in the calculation. If they spend $2K/year on advertising now, and a GroupOn sale might be viewed by 10K/people and purchased by 100-150, then still might come out ahead even with $0 or -$10/head ($1500 in loss for the GroupOn). If a place is doing a GroupOn it is unlikely a zero revenue person will displace a paying person, since the place would have to be almost at capacity for that to make sense (and if they're that popular, why are they doing a GroupOn?). But then the real question is: "How effective of an advertising platform is GroupOn?" And that I do not know. PS - Anecdotally I have read that the "type" of customer GroupOn attracts might hurt it further (people claim they're very demanding, hard to please, and unlikely to return). But anecdotes and anecdotes, have to take them with a pinch of salt. PPS - I myself wouldn't do a GroupOn because I would feel like it was de-valuing the establishment. It sets the new "normal" to the discounted price.
- whistlerbrk 11y ago
  Business owners really ought to know what their margins are. I feel bad for the ones who got pressured into bad deals, but they have to know what their literal bottom line is.
  - dragonwriter 11y ago
    The value proposition with Groupon is largely that you are selling a limited deal at promotional prices (i.e., ones which you would not be profitable sustaining) to build business. It was essentially, when it was novel, a new acquisition channel. Even business owners that new their margins wouldn't know its value to their business without testing it in their actual circumstances.
    - CPLX 11y ago
      > It was essentially, when it was novel, a new acquisition channel. It also had a touch of loan-sharking from what I understand. I could be wrong about the exact details but I believe one of the main attractions was that a business could do a Groupon, and get all the money from the Groupons sold as soon as the promo was completed, but still have weeks or months for the customers to actually trickle in and claim the offer. Which may have led to a lot of the frustrations people had actually redeeming them, getting on the schedule for massages or reservations, etc.
      - dragonwriter 11y ago
        How is that "loan-sharking"? Seems to be pretty much just run of sale of redeemable credits. Loan-sharking means that someone is making money by charging high interest rates on loans -- here, the "loan", insofar as there is one, is effectively from the customer to the business, and there is no interest being charged on it.
        CPLX 11y ago
        It was intended as a euphemism, not a literal example of loan sharking. But the analogy holds. Selling something for 20% of its value with the expectation of having to fulfill the order in a few months is effectively the same as paying an extreme rate of interest on short term business financing.
mef 11y ago
Interesting when taken in the context of yesterday's Unit Economics post. http://blog.samaltman.com/unit-economics http://blog.samaltman.com/unit-economics I have never seen Silicon Valley so willing to invest in companies that have well-understood financials showing they will probably always lose money.
- seiji 11y ago
  Groupon was a deliberately calculated scam once it started getting huge investment though. Investors are always willing to burn the long term (the public) if they can pop the short term (themselves).
  - austenallred 11y ago
    [citation needed] Seriously though, the Groupon deal wasn't always ideal for every company, but how do you justify calling it a "deliberately calculated scam?"
    - seiji 11y ago
      things like http://www.sequenceinc.com/fraudfiles/2011/10/groupon-ipo-investors-beware-the-unaudited-financial-statements/ http://www.sequenceinc.com/fraudfiles/2011/10/groupon-ipo-in... or http://www.thinktrade.net/ipo-fraud.php http://www.thinktrade.net/ipo-fraud.php or http://www.bloomberg.com/news/articles/2013-09-20/groupon-loses-bid-to-dismiss-ipo-securities-fraud-lawsuit http://www.bloomberg.com/news/articles/2013-09-20/groupon-lo... or http://www.bloombergview.com/articles/2012-04-04/groupon-ipo-scandal-is-the-sleaze-that-s-legal http://www.bloombergview.com/articles/2012-04-04/groupon-ipo... (edit: we're talking about groupon the corporate entity, not the product(s) they offer.)
  - rhino369 11y ago
    If it was a scam they would have cashed out at the top.
    - seiji 11y ago
jimhefferon 11y ago
Even if it was a good deal, who has room in their life for the 1046-th marketing gimmick? Please, interweb geniuses, think of something better.
- cableshaft 11y ago
  Yeah, is there a medical condition called "Marginally Useful Apps Used as a Trojan Horse for Marketing Crap You Don't Need" Fatigue? Because I'm pretty sure I've got that.
- ghaff 11y ago
  Yeah, for me, there was a certain novelty value to Groupon and its ilk. But, after the third time I had to go out of my way to redeem something that it wasn't really convenient to redeem, I sort of lost interest. That, combined with the general decline in the quality of deals, meant that at some point it just wasn't worth opening the emails.
confluence 11y ago
That's a long fall from Google practically begging them to take fat stacks of cash.
- deleted 11y ago
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- rprospero 11y ago
  I remember, back during their heyday, listening to pundits discuss how Groupon was going to run Google out of business if Google couldn't find a better way to offer daily deals. I regularly saw people mentioning Groupon in the same breath as Amazon and Apple when speaking of tech giants.
  - nasalgoat 11y ago
    All I remember what thinking that they were insane to not take the buyout. Seems I was right.
    - TheGrassyKnoll 11y ago
      Couldn't agree more. Creation of a Google-Groupon axis would've been powerful.
ceejayoz 11y ago
Anyone getting their emails has known it was coming for a long time. They used up all the good places pretty quickly - they got the return customers and didn't need to re-run coupons. Now it's all weight loss scams, online courses "worth" $2k but sold for $20, and even sex toys lately.
- violentvinyl 11y ago
  Exactly this. It stopped being a good way to discover local places you may not have heard of and instead became a way to shove cheaply mass produced junk or freely mass produced digital junk in to eveyone's mailbox.
  - taevis 11y ago
    With that in mind, what services are good at finding local places? I figure services like Yelp and Groupon had this in mind, but generally attract the people who have negative experiences or opinions to share them.
    - ceejayoz 11y ago
      I discount any Yelp review that's 1 or 5 stars. Tends to have good results.
- awjr 11y ago
  Well this probably has to do with Groupon deals being "bad" for many restaurants/local businesses and not wanting to be burnt by them. I used to take the restaurant ones, and ensure I bought drinks etc and tip appropriately for the full value of the meal. Speaking to some of the proprietors/staff, people would come in, eat the offer and drink water, then leave without tipping and never be seen again.
- shostack 11y ago
  You hit on something interesting there. If Groupon delivered great long-term value, they'd have repeat customers. But that wasn't the case. One might then think "that's fine, I'll just use it once to launch my business" and that could be fine for some time as there's always new businesses being started. However once word got around that it wasn't worth it and didn't drive repeat business, that was the other shoe dropping.
hcrisp 11y ago
Will Groupon founder Brad Keywell's newer venture, Uptake, face a similar outcome? A recent Forbes article suggests he's better at starting a company than running it.
- sync 11y ago
  Is this it? Looks ridiculous. http://uptake.com http://uptake.com
  - noelsusman 11y ago
    That's a crowded space to get into these days. You're competing directly with the big boys at Microsoft, Google, IBM, etc. as well as countless other startups. This seems especially difficult to do when you don't even have a product to sell. Also that website is horrendous.
    - pavornyoh 11y ago
      I agree. That uptake website needs a lot of work. What the heck is that?
  - seibelj 11y ago
    > We solve problems in cancer genomics that make trains run faster. Uh... sure...
- bbarn 11y ago
  Chicago dev here. Lots of friends in the groupon circle I know have been unhappy and left. Know two people at uptake, both miserable there. They seem to have a big problem with claiming/trying to be a great place to work, but executing poorly.
  - alasdair_ 11y ago
    Groupon was, at one point, the largest rails install in the world. They had some REALLY good Rails guys. Then they ditched the entire codebase for node.js and a lot of the best Rails developers quit soon after.
andyleclair 11y ago
Good.
bane 11y ago
I'll be honest, I know Groupon and its ilk are terrible business, but as a user of the service I've had lots of fun exploring activities and restaurants that I literally would never have bothered with or known about. In the last few weeks I've taken a Scuba lesson, a Horse Riding lesson, an intro to art class, found a couple new amazing sandwich shops. I took an amazing trip to Ireland for something like 50% off the lowest rate we could find, and it forced us to explore virtually the entire country since the package had us in different castles every couple nights. I've visited some oddball museums I hadn't bothered with before. I would have probably not done almost any of these things, or been more judicious in what I went to. I've found some new things that I'll be returning to, and some things that I won't. As a customer, these kinds of services are amazing. And really all they're doing is centralizing good deals. A less "grow fast and explode like a Unicorn" business model would probably make it work better for participating businesses.
- josefresco 11y ago
  Lots of things might be great for consumers, but for businesses it just doesn't make sense. Besides what I've read, I've heard from business owners/clients who try "group" discount services, but walk away feeling that it did little to help their customer growth long term. Would you be willing to pay more for those same experiences?
  - bane 11y ago
    I agree. Personally, I'm not sure my retention on things I've tried has been great for the businesses doing the offering. Things seem to end up a few different ways: 1) I love what they're offering, but I want to do their thing somewhere else, so another business gets the benefit. 2) I don't like what they're offering, oh well, gave it a try 3) I like what they're offering and they're in the right place for me to continue doing business with them #1 is the hardest for businesses, and I admit to engaging in a fair amount of "Groupon tourism", where I'll go a little out of my way to try something just because I got it for cheap on Groupon. For #2, sometimes there's a reason why places aren't doing well and turn to Groupon to try to boost sales, sometimes it's just a bad fit for me as a consumer. For example, I just used a Groupon for a local new Mexican place in my area. Turns out the reason their gorgeous restaurant is mostly empty is because the food sucks. There's a Mexican place down the road from them with low budget hand-made booths that's exploding with customers, the difference is that their food is good. I'd say I probably stick with less than 10% of the new places I find through Groupon. I'd probably be willing to pay more to try new things...but not a whole lot more. As a consumer I have to change my basic behavior patterns and maybe travel out of my way to try something new, I feel like I'm meeting the place halfway. Sometimes I have to travel someplace I've never been before, and after getting there I'll know if it's reasonable to continue coming out there. The horse lesson I took I enjoyed, but it's also an hour of hard driving to get there, while I live right on the edge of plentiful horse country. Now I know I had fun taking a lesson, I might give a go at one of the local places, but I'll probably not return to the place I used the Groupon with. There's also places, like a zipline center I Grouponed at. It was cool, I'll return. But it's not like it's an every week kind of place. So I think businesses also have to consider their model. I wouldn't have tried it without the Groupon, but it acted more like an advertisement would. I also went to a high-speed gokart center on a Groupon. Turns out they already have lots of business, but it's all dedicated racers who knew what they were doing. When I went there I had to sit through a half hour of safety training videos, and when I got on the track it was terrifying because everybody else was hardcore and very aggressive. It could have been fun if everybody wasn't taking it so seriously, or they bundled all the Grouponers into a beginner league or something. So I don't think it worked as an expansion of their basic business. I think business issues with Groupon are more complicated than people give credit for.
bryanlarsen 11y ago
Have any of the groupon competitors reached critical mass? I realize that a large number of "me-too" competitors were started when Groupon exploded, but it seems to me a "groupon that doesn't suck" could be a pretty good business.
- kawsper 11y ago
  In Denmark we have http://downtown.dk http://downtown.dk, they managed to get traction here before Groupon, so they have had most of the market, however it seems like Groupon have been eating parts of their business recently. As an aside Groupon seems to be 100% https, where downtown is only partly https :(
  - wodenokoto 11y ago
    We have a lot of Groupon alternatives in Denmark, from online sites to discount boxes you buy physically in stores, most of them taking considerably less than 50%.
- mikepurvis 11y ago
  Making it not suck for the businesses would be great for actually having a regular rotation. At that point, though, you're basically completing with these guys: http://www.adsave.ca/ http://www.adsave.ca/
- tedunangst 11y ago
  Does "Restaurant Week" count?
eloff 11y ago
This article doesn't tell the whole story. As a user of Groupon Panama, I can tell you that they face stiff competition here from a Groupon clone, ofertasimple. I think they're exiting because it was a small market to begin with and they haven't been able to win it. Many people, including myself, find the competing service superior.
therealmarv 11y ago
1,100 ? On what did they all work?
- waterside81 11y ago
  Outbound sales I'd imagine. It takes a lot of people to make calls to businesses to convince them to sign up for Groupon, how to structure their deals etc.
  - tootie 11y ago
    Wasn't that a scene in Silicon Valley? Their competitor had like 3 developers and 100 salesmen.
    - mason240 11y ago
      That sounds about right though. The developers are really just building a CMS that should be able to in theory handle an infinite amount of cities, while securing a new sale for one city every day could be a full time job (and probably done best by someone actually in that city).
swang 11y ago
> "We believe that in order for our geographic footprint to be an even bigger advantage, we need to focus our energy and dollars on fewer countries." Did this company spokesperson just pass first year business writing? It's like the writing prompt was, "Your company is downsizing, what is the most absurd way you can describe it?" I couldn't help but laugh at the sentence.
- fredkbloggs 11y ago
  Glad someone else noticed this. I kinda glossed over it at first, then read it again and broke it down thusly: 1. Our footprint is a big advantage today (presumably this means more reach). 2. We want to make that advantage bigger. 3. Therefore we are reducing our footprint. At first it sounds like an outright contradiction. But it does make sense, in a very convoluted sort of way. The advantage of having broad reach will be increased by exiting those markets that are losers for them, because the (still presumably fairly broad) range of markets they're staying in will be more profitable overall. But it would have been much simpler to just say "We're exiting a handful of smaller markets where we aren't leading or growing, focusing our efforts where they're doing the most good." But I guess you can't say that these days.
- tedunangst 11y ago
  Smaller is the new bigger!
k__ 11y ago
The deals I saw, felt rather crazy to me. A friend of mine paid 100€ for 100 pizzas, one every day. Also 100€ for 100 pasta dishes. The idea seemed to be, that the service could plan ahead, because he knew months before how much ingredients to buy. The delivery service who offered this deals closed down after a month, so in the end every meal did cost my friend about ~3€, which isn't bad.
sidcool 11y ago
Sad for a startup that showed great promise. How's LivingSocial doing?
- rosege 11y ago
  going pretty strong i gather from someone who works there - they did get acquired though a while ago
peter303 11y ago
Sometimes you dont see the flaws in a business idea until it is practiced for a while. In Groupons case it was an idea to easy to copy and businesses who though they were get a short deal. I thought it was worthwhile to try out.
InfiniteEntropy 11y ago
Good. I got on their mailing list through a permutation generator on names/emails and it took me months to get off that craplist.
deleted 11y ago
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- jbooth 11y ago
  No need to out the guy's name -- you can make the same point without it, he's just doing his job
  - redblacktree 11y ago
    Hey, maybe he'll get some leads from this post. Anyone want to work for Groupon?
- snowmaker 11y ago
  The two aren't really related. The TC article shows that they are laying off sales people in marginal countries where they aren't doing as well, and changing their strategy to invest more in technology and less in sales. That's entirely consistent with them hiring mobile developers in the US.
brightball 11y ago
Wondered when that was going to happen. Don't get me wrong, I liked the concept but when you don't get repeat business because the structure is so bad it's just not a good sign. At least they sold high...wait...
Laaw 11y ago
I've never heard of this negative reaction to Groupon like you folks are describing. What was the negative side? Was it not a good advertising investment for companies? Were expectations not being set correctly by Groupon? Do they take too much of a cut? Are they just jerks to the companies? Is there room in this space to not be a shitty actor?
- JoeAltmaier 11y ago
  Let me guess: Groupon agents (who got a commission?) would push for the best deal possible; naïve pizza joints and dry cleaners would do it. Response would be overwhelming, leaving the company broke after a month. Rinse and repeat. There was nobody in the process who would/could responsibly manage the actual value of the coupon. So they were either useless or debilitatingly lavish.
- wpietri 11y ago
  This was widely discussed when Groupon was hot: http://techcrunch.com/2011/06/13/why-groupon-is-poised-for-collapse/ http://techcrunch.com/2011/06/13/why-groupon-is-poised-for-c... There were also substantial concerns that the whole thing was basically a fancy, web-scale pump and dump: http://www.thestreet.com/story/11661220/1/is-groupon-a-scam-or-just-misunderstood.html http://www.thestreet.com/story/11661220/1/is-groupon-a-scam-... In my view, the whole "daily deals" thing that they started with was always unsustainable at scale. It's one of those things that works well in small doses, but as you scale it up the value declines. However, it was novel enough and generated enough volume that it took small business owners a while to collectively realize that Groupon promotions didn't help them in the long term.
- lotharbot 11y ago
  I think some of this is inherent to the model, and part of the problem is that businesses aren't building the right expectation in to their budget. They're thinking in terms of getting a bunch of ordinary customers in by giving them 50% off of an entree, and given their metrics on ordinary customers, that seems like a good deal -- a coupon of the same sort, sent out in one of those mailers, would pay for itself easily. But Groupon is bringing in a different set of customers -- low-value customers who don't provide much repeat business and often pick a fight over trying to get an even steeper discount. Wait staff often complain of Groupon'ers either not tipping at all, or tipping a low percentage and basing their low percentage off of the discounted bill (such that the net tip is like 1/4 to 1/3 of what it would normally be for the same meal.) Some places complain about Groupon'ers overstaying their welcome -- they come in for half price entrees, don't order appetizers or drinks or dessert, and stay at the table for 3 hours eating wave after wave of complimentary breadsticks. They're the ones still at the water park when the staff locked the gates ten minutes ago. They come in multiple times in the next week trying to return something for full price or otherwise scam the store. Many places report an excess of complaints of the "I'd like to speak to your manager, you're doing a terrible job" variety directed at their best employees, because people are unhappy paying 50% when they think they can somehow get it down to 45%, or they're unhappy paying 50% for 100% of the experience when they think they can stretch it to 105% of the experience. This doesn't happen to every company, but it does happen to some companies and leaves them feeling pretty burned.
pearjuice 11y ago
So on what contract were these 1100 people employed? 0 hours guaranteed, get in and get paid for the hours you work and your contract can be terminated any day? It always baffles me to see a thousand(s) of people getting laid of with the flick of a finger. That's like an equal amount of people added to the economy unemployed, right now.
- jgroszko 11y ago
  Illinois is an at-will state, so like any other employee in the state they can be let go at any time for any reason, with the exception of a few protected classes, since we also have a state Employment Non-Discrimination law.
- teraflop 11y ago
  I'm guessing you're not from the US? That's pretty much how it works here, except for government or unionized jobs. Most employees, whether hourly or salaried, don't have any kind of employment contract.
deleted 11y ago
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Rambition 11y ago
I've had in a hand in a few Groupon/daily deal campaigns for some clients and their experiences all seemed to depend on the quality of the product/service they could provide. An established restaurant I would find it hard to believe they would extract value out of this type of discount. However, a new product to market that believes a customer can have a good enough experience and can deliver on that the first time they try it out, may be more apt to succeed on daily deal type of sites. It follows the "free trial" model of direct response (without the shady autobilling on the backend), just get the product in their hands and let it do the talking for you. As a consumer, I love the model. As a business owner/marketer, the results have been so/so.
teachrdan 11y ago
Anyone else notice they refer to Puerto Rico as "international"? Fun Fact 1: It's a US territory, where residents are US citizens but can't vote for president. Fun Fact 2: Journalists these days ain't what they used to be. https://en.wikipedia.org/wiki/Puerto_Rico https://en.wikipedia.org/wiki/Puerto_Rico
- smackfu 11y ago
  I didn't realize that Puerto Rico had its own top level domain: http://www.groupon.com.pr/pages/home http://www.groupon.com.pr/pages/home Apparently the site is shut-down already.
- tsotha 11y ago
  Puerto Rico is a US territory, but technically it's not part of the US. They refer to it as "international" because it is.
w4f7z 11y ago
With this announcement coming shortly after the OrderUp acquisition I wonder if this is signaling a larger shift at Groupon.
geyang 11y ago
It is just a badly ran business. The Chinese version of Groupon is ran by the very competent Xing WANG, who was a physics graduate student. And last time I looked at it Meituan was worth $15B.
- rev_bird 11y ago
  Not really sure why "was a physics graduate student" means anything about his business acumen here. Eric Lefkofsky has a law degree, Brad Keywell has a JD and an MBA, we could do this all day. Having a graduate degree in a hard science could certainly suggest a person has a different way of approaching business, but Wang dropped out so he could unapologetically clone other people's ideas.
  - edgyswingset 11y ago
    I think the OP is stating the opposite, that being a physics grad student would imply he probably couldn't run the business as well as the Groupon founders.
    - rev_bird 11y ago
      Ah, well then I'm a doofus. That makes sense. Apologies, OP.
    - code_duck 11y ago
      However, in the same sentence he's described as 'very competent'.
- turingbook 11y ago
  Minor correction: Xing Wang was an ECS Phd candidate at University of Delaware, and he studied electrical engineering at Tsinghua University.
emiranda 11y ago
What is the significance of this line? "taking a pre-tax charge of $35 million in the process" It cost them 35 million to lay off 1,100 folks? They are getting a tax cut?
jgalt212 11y ago
some quotes from the snake oil salesman Groupon May Be Fastest-Growing Company Ever http://www.cnbc.com/id/40454493 http://www.cnbc.com/id/40454493 Groupon is going to be wildly profitable. -Eric Lefkofsky http://www.bloomberg.com/news/articles/2011-06-05/groupon-chairman-lefkofsky-says-coupon-company-will-be-wildly-profitable- http://www.bloomberg.com/news/articles/2011-06-05/groupon-ch... Is Andrew Mason still a YC part-time partner?
theworstshill 11y ago
Half of Groupon's failure is the email spam model, another half is the business partners. If you signed up for a service where you give discounts and got any less than a shining smiling face when I come in with one, guess what - I'm not coming back to you. Groupon should have screened businesses the same way Apple screens apps, very carefully.
michaelbuddy 11y ago
I feel like the small business man or woman was hurt the most by groupon, whether it be the mom pop shop or the family owned franchise. And when you exploit them, you hurt America basically. And that isn't a biz model that people can get behind. Had groupon done things differently, we'd be reading a very different article today.
mikeyouse 11y ago
I feel very similar to this blog post I read a few years ago, calling the Groupon era "The Locust Economy".. It wasn't good for businesses, consumers logically just abused the mechanism until these companies were ruined.. http://www.ribbonfarm.com/2013/04/03/the-locust-economy/ http://www.ribbonfarm.com/2013/04/03/the-locust-economy/ Thinking about locusts and the behavior of customers around services like Groupon, I’ve become convinced that the phrase “sharing economy” is mostly a case of putting lipstick on a pig. What we have here is a locust economy.
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arjn 11y ago
I'm not terribly surprised. I stopped using Groupon 3-4 years ago after a couple of bad experiences, watching the CEO in an interview on TV and also learning about how some small businesses were negatively affected. I think there is a class of business ideas that may seem good in the beginning but eventually fail for various reasons.
arjn 11y ago
I'm not terribly surprised. I stopped using Groupon 3-4 years ago after a couple of bad experiences, watching the CEO in an interview on TV and also learning about how some small businesses were negatively affected. I think there is a class of business ideas that may seem good in the beginning but eventually fail for various reasons.
chx 11y ago
Much to my surprise, I've found Groupon to feature killer deals for discounted refurbished phones, tablets, etc. I've gotten a 32GB Nexus 7 (2nd gen) LTE for $200 , they have a Samsung S5 right now for $270 (but check reviews, caveat emptor etc).
jhou2 11y ago
At first I thought this was bad news for Groupon, but after reading about it, it seems like a logical strategy. Groupon recently exited Turkey and Greece, which makes a lot of sense considering the economic turmoil in those countries and in the region in general. The 7 countries that were affected in this news were fairly small markets. Since when was Uruguay a major player in the global economy? The layoffs of 1100 mostly in sales and customer service seems reasonable when operations in 7 countries are shut down. Groupon has over 10,000 employees. A 10% reduction in staff trims some of the low performers. Microsoft and Amazon probably cut more staff each year with their stack rankings. (I know MS supposedly killed off their stack rankings, but I have a feeling it still exists albeit in a less visible capacity.) Overall, I think these moves make Groupon stronger, more competitive, more focused and more capable in a cutthroat market.
somberi 11y ago
A good article to read and reflect on - From 5 years ago. http://www.newyorker.com/magazine/2010/12/20/groupon-clipping http://www.newyorker.com/magazine/2010/12/20/groupon-clippin... Some points that caught my attention (edited by me) ...Groupon’s got a healthy business. Almost forty million people, in more than a hundred and fifty cities around the world, have signed up for its e-mails,...Groupon isn’t going away. Unlike many Web companies, it’s been profitable from the start. (It takes fifty per cent of the revenue in every deal.) This year, it had half a billion dollars in sales, and estimates are that, before long, it could have as much as two billion dollars in revenue." End of my edits. India, where groupon is hugely popular, has behaved like a spin-off. It recently independently raised 20MM from Sequoia.

337 points by kp25 11y ago

Looks like businesses have collectively realised that groupon is a miserable deal and it's finally caught up with them, after having been running on fumes [1] for a couple years now. [1] http://blog.bodellconsulting.com/2013/03/01/groupon-a-bad-deal-for-restaurants-and-everyone-else-including-groupon/ http://blog.bodellconsulting.com/2013/03/01/groupon-a-bad-de...

antidaily 11y ago
Is it running on fumes? They still have significant revenues and loyal customers and a million sales people.
- adventured 11y ago
  It's not running on fumes. It would have been more accurate to say that it is growing more slowly (and as of the last few quarters, has seen its growth flat-line). 2012: $2.33b in sales 2013: $2.57b in sales 2014: $3.19b in sales Their biggest problem is the inability to achieve profitability on $3 billion in sales after so many years in business. They still have $1.1 billion in cash however, and have reduced their bleed rate to a benign level.
  - fredkbloggs 11y ago
    > Their biggest problem is the inability to achieve profitability on $3 billion in sales after so many years in business. They still have $1.1 billion in cash however Doesn't this just mean the investors would be better off winding it down and investing the $1.1b in something that is profitable, or at the very least has a higher ceiling? It doesn't seem all that likely that the latest round of cutbacks is going to turn this into a profitable company and even if it does, the scope for profits is very limited. As you say, they've been going for a long time and nothing is really getting better. Even the 2.5% you get from the S&P 500 would be a better use for that billion in cash.
    - astrodust 11y ago
      Sadly, a lot of tech companies would perform better if they threw their cash into index-driven mutual funds.
      - smeyer 11y ago
        By virtue of the way indices work, a lot of public companies in general would have been better off throwing their cash in index-driven mutual funds. That being said, if it were easy to tell ahead of time which these companies are, it would be easy as an investor to beat index-driven mutual funds.
      - bduerst 11y ago
        And they would risk losing investors. Why would someone put money into a company that invests in index-funds, when you can just invest in index-funds?
        fredkbloggs 11y ago
        Right. That's why I suggested Groupon be wound down, not that they continue operating at a loss but invest their cash differently. This does raise an interesting question, though. There seem to be a lot of corporations out there that have no obvious reason for existing: minimal to negative profitability on a sustained basis, uninspiring business with little potential, and a long track record that doesn't suggest a turnaround is likely. Groupon is just one of many. Presumably in many cases, equity in these corporations is held primarily or even entirely by index funds. Why should such a company remain in business? By definition, if all your shareholders are indexers, there is not a single person alive who considers you an above-average investment. In a rational market, such a company would be wound down or the price of its shares would fall so low that it would be taken over by someone who believes he can do better. But the index funds create a sort of circular reasoning, or perhaps an isolated reality separated from outside feedback, allowing these zombies to keep living. A variant of this was covered by http://www.bloombergview.com/articles/2015-07-22/index-funds-may-work-a-little-too-well http://www.bloombergview.com/articles/2015-07-22/index-funds..., but this seems like a more extreme case. Of course, Groupon's "institutional ownership", which includes various active and passive funds, pensions, endowments, etc. is only 65% per Google Finance. There are corporations with 100% and even >100% institutional ownership (i.e., there are a lot of non-institutional shorts). Why do they continue to exist, and what can be done to kill them off?
- kardos 11y ago
  They don't have a million sales people -_-, 11.8k employees total is a better estimate [1], dropping to 10.7k soon. Maybe fumes was not the right word. The things they offer as "deals" are fumes. I just loaded the Toronto section, and saw "$179 for $2392 worth of laser hair removal" with >200 sold. I don't believe that the $2392 figure is not grossly inflated. Also "$430 for a $899 iPhone", but then you notice "condition: refurbished". These things don't come across as credible promotions, but rather the result of someone packaging something up to appear to be a promotion, but it's just a normal price disguised in some way. Perhaps there are some actual promotions on there, but these pseudo-promotions reduce the credibility as a whole. So what's special about groupon again? I can get normal price things anytime/anywhere, and not have to go through the hassle of buying the coupon in a specific time frame, and only be able to use it in a different specific time frame and another dozen restrictions. [1] http://www.bloomberg.com/research/stocks/snapshot/snapshot.asp?ticker=GRPN http://www.bloomberg.com/research/stocks/snapshot/snapshot.a...
  - deleted 11y ago
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mooreds 11y ago
My brother in law runs a restaurant back east, and he said that Groupon has been a great channel for driving business. Anecdata, I know. I think there's a business opportunity to help people running groupons capture the most value out of the leads (at the least, sign them up for an email newsletter).
- bpicolo 11y ago
  I think it depends on the business. Someone up top mentioned it was a great way for them to try scuba, sky diving, etc. That's not the sort of thing you necessarily see a lot of repeat traffic for. Not sure.
  - mooreds 11y ago
    Right. Seems like a restaurant (or hotel, nails place, anything that you could use more often, etc) is a better use case.
  - PeterisP 11y ago
    Scuba and skydiving are the exact type of hobbies where if you make people interested, then you can get a lot of very expensive follow-up business. You won't get most of them hooked up; and if you make the first experience a lousy one because of Groupon pricing issues, then you won't get any of them hooked up, but in general if your business current weak point is excess capacity and a need to bring in new people to the hobby (since your current customers are doing it as much as they can and won't do more), then a deeply discounted first trial is pretty much the main way to do that.
- saalweachter 11y ago
  It could also vary widely based on whether or not advertising was a business's greatest problem. If your biggest problem was that not enough people know about or had tried your restaurant, Groupons probably did a lot of good. If your biggest problem was that your food wasn't really that great or your prices were too high or you were in a terribly inconvenient location or your staff was unbearable, then getting more people in the door doesn't really help anything in the long run.
devit 11y ago
Isn't this kind of thing beneficial if run with more reasonable margins and a subscription model for customers? Basically, the customer subscribes to the service and gets discounted meals at the cost of not being able to choose the restaurant himself. Restaurants can use the service whenever they expect to have empty tables, allowing to still profit for them, but with a reduced profit margin. I'm not sure if it works for restaurants in particular, but it should work for businesses that cannot easily change supply levels, aren't selling something that is completely a commodity and ideally where varying suppliers is enjoyable for customers.
- kardos 11y ago
  > Restaurants can use the service whenever they expect to have empty tables, allowing to still profit for them, but with a reduced profit margin. Businesses receive 20-25% of retail price when they take a groupon deal, so you'd need a profit margin >75% to even entertain that idea. Also it cannibalises some of your existing customers, converting your 75%+ profit margin customers into near zero or loss customers. I'd leave the tables empty.
  - Someone1234 11y ago
    Playing devil's advocate here... You do have to consider the advertising in the calculation. If they spend $2K/year on advertising now, and a GroupOn sale might be viewed by 10K/people and purchased by 100-150, then still might come out ahead even with $0 or -$10/head ($1500 in loss for the GroupOn). If a place is doing a GroupOn it is unlikely a zero revenue person will displace a paying person, since the place would have to be almost at capacity for that to make sense (and if they're that popular, why are they doing a GroupOn?). But then the real question is: "How effective of an advertising platform is GroupOn?" And that I do not know. PS - Anecdotally I have read that the "type" of customer GroupOn attracts might hurt it further (people claim they're very demanding, hard to please, and unlikely to return). But anecdotes and anecdotes, have to take them with a pinch of salt. PPS - I myself wouldn't do a GroupOn because I would feel like it was de-valuing the establishment. It sets the new "normal" to the discounted price.
whistlerbrk 11y ago
Business owners really ought to know what their margins are. I feel bad for the ones who got pressured into bad deals, but they have to know what their literal bottom line is.
- dragonwriter 11y ago
  The value proposition with Groupon is largely that you are selling a limited deal at promotional prices (i.e., ones which you would not be profitable sustaining) to build business. It was essentially, when it was novel, a new acquisition channel. Even business owners that new their margins wouldn't know its value to their business without testing it in their actual circumstances.
  - CPLX 11y ago
    > It was essentially, when it was novel, a new acquisition channel. It also had a touch of loan-sharking from what I understand. I could be wrong about the exact details but I believe one of the main attractions was that a business could do a Groupon, and get all the money from the Groupons sold as soon as the promo was completed, but still have weeks or months for the customers to actually trickle in and claim the offer. Which may have led to a lot of the frustrations people had actually redeeming them, getting on the schedule for massages or reservations, etc.
    - dragonwriter 11y ago
      How is that "loan-sharking"? Seems to be pretty much just run of sale of redeemable credits. Loan-sharking means that someone is making money by charging high interest rates on loans -- here, the "loan", insofar as there is one, is effectively from the customer to the business, and there is no interest being charged on it.
      - CPLX 11y ago
        It was intended as a euphemism, not a literal example of loan sharking. But the analogy holds. Selling something for 20% of its value with the expectation of having to fulfill the order in a few months is effectively the same as paying an extreme rate of interest on short term business financing.

mef 11y ago

Interesting when taken in the context of yesterday's Unit Economics post. http://blog.samaltman.com/unit-economics http://blog.samaltman.com/unit-economics I have never seen Silicon Valley so willing to invest in companies that have well-understood financials showing they will probably always lose money.

seiji 11y ago
Groupon was a deliberately calculated scam once it started getting huge investment though. Investors are always willing to burn the long term (the public) if they can pop the short term (themselves).
- austenallred 11y ago
  [citation needed] Seriously though, the Groupon deal wasn't always ideal for every company, but how do you justify calling it a "deliberately calculated scam?"
  - seiji 11y ago
    things like http://www.sequenceinc.com/fraudfiles/2011/10/groupon-ipo-investors-beware-the-unaudited-financial-statements/ http://www.sequenceinc.com/fraudfiles/2011/10/groupon-ipo-in... or http://www.thinktrade.net/ipo-fraud.php http://www.thinktrade.net/ipo-fraud.php or http://www.bloomberg.com/news/articles/2013-09-20/groupon-loses-bid-to-dismiss-ipo-securities-fraud-lawsuit http://www.bloomberg.com/news/articles/2013-09-20/groupon-lo... or http://www.bloombergview.com/articles/2012-04-04/groupon-ipo-scandal-is-the-sleaze-that-s-legal http://www.bloombergview.com/articles/2012-04-04/groupon-ipo... (edit: we're talking about groupon the corporate entity, not the product(s) they offer.)
- rhino369 11y ago
  If it was a scam they would have cashed out at the top.
  - seiji 11y ago

jimhefferon 11y ago

Even if it was a good deal, who has room in their life for the 1046-th marketing gimmick? Please, interweb geniuses, think of something better.

cableshaft 11y ago
Yeah, is there a medical condition called "Marginally Useful Apps Used as a Trojan Horse for Marketing Crap You Don't Need" Fatigue? Because I'm pretty sure I've got that.
ghaff 11y ago
Yeah, for me, there was a certain novelty value to Groupon and its ilk. But, after the third time I had to go out of my way to redeem something that it wasn't really convenient to redeem, I sort of lost interest. That, combined with the general decline in the quality of deals, meant that at some point it just wasn't worth opening the emails.

confluence 11y ago

That's a long fall from Google practically begging them to take fat stacks of cash.

deleted 11y ago
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rprospero 11y ago
I remember, back during their heyday, listening to pundits discuss how Groupon was going to run Google out of business if Google couldn't find a better way to offer daily deals. I regularly saw people mentioning Groupon in the same breath as Amazon and Apple when speaking of tech giants.
- nasalgoat 11y ago
  All I remember what thinking that they were insane to not take the buyout. Seems I was right.
  - TheGrassyKnoll 11y ago
    Couldn't agree more. Creation of a Google-Groupon axis would've been powerful.

ceejayoz 11y ago

Anyone getting their emails has known it was coming for a long time. They used up all the good places pretty quickly - they got the return customers and didn't need to re-run coupons. Now it's all weight loss scams, online courses "worth" $2k but sold for $20, and even sex toys lately.

violentvinyl 11y ago
Exactly this. It stopped being a good way to discover local places you may not have heard of and instead became a way to shove cheaply mass produced junk or freely mass produced digital junk in to eveyone's mailbox.
- taevis 11y ago
  With that in mind, what services are good at finding local places? I figure services like Yelp and Groupon had this in mind, but generally attract the people who have negative experiences or opinions to share them.
  - ceejayoz 11y ago
    I discount any Yelp review that's 1 or 5 stars. Tends to have good results.
awjr 11y ago
Well this probably has to do with Groupon deals being "bad" for many restaurants/local businesses and not wanting to be burnt by them. I used to take the restaurant ones, and ensure I bought drinks etc and tip appropriately for the full value of the meal. Speaking to some of the proprietors/staff, people would come in, eat the offer and drink water, then leave without tipping and never be seen again.
shostack 11y ago
You hit on something interesting there. If Groupon delivered great long-term value, they'd have repeat customers. But that wasn't the case. One might then think "that's fine, I'll just use it once to launch my business" and that could be fine for some time as there's always new businesses being started. However once word got around that it wasn't worth it and didn't drive repeat business, that was the other shoe dropping.

hcrisp 11y ago

Will Groupon founder Brad Keywell's newer venture, Uptake, face a similar outcome? A recent Forbes article suggests he's better at starting a company than running it.

sync 11y ago
Is this it? Looks ridiculous. http://uptake.com http://uptake.com
- noelsusman 11y ago
  That's a crowded space to get into these days. You're competing directly with the big boys at Microsoft, Google, IBM, etc. as well as countless other startups. This seems especially difficult to do when you don't even have a product to sell. Also that website is horrendous.
  - pavornyoh 11y ago
    I agree. That uptake website needs a lot of work. What the heck is that?
- seibelj 11y ago
  > We solve problems in cancer genomics that make trains run faster. Uh... sure...
bbarn 11y ago
Chicago dev here. Lots of friends in the groupon circle I know have been unhappy and left. Know two people at uptake, both miserable there. They seem to have a big problem with claiming/trying to be a great place to work, but executing poorly.
- alasdair_ 11y ago
  Groupon was, at one point, the largest rails install in the world. They had some REALLY good Rails guys. Then they ditched the entire codebase for node.js and a lot of the best Rails developers quit soon after.

andyleclair 11y ago

Good.

bane 11y ago

I'll be honest, I know Groupon and its ilk are terrible business, but as a user of the service I've had lots of fun exploring activities and restaurants that I literally would never have bothered with or known about. In the last few weeks I've taken a Scuba lesson, a Horse Riding lesson, an intro to art class, found a couple new amazing sandwich shops. I took an amazing trip to Ireland for something like 50% off the lowest rate we could find, and it forced us to explore virtually the entire country since the package had us in different castles every couple nights. I've visited some oddball museums I hadn't bothered with before. I would have probably not done almost any of these things, or been more judicious in what I went to. I've found some new things that I'll be returning to, and some things that I won't. As a customer, these kinds of services are amazing. And really all they're doing is centralizing good deals. A less "grow fast and explode like a Unicorn" business model would probably make it work better for participating businesses.

josefresco 11y ago
Lots of things might be great for consumers, but for businesses it just doesn't make sense. Besides what I've read, I've heard from business owners/clients who try "group" discount services, but walk away feeling that it did little to help their customer growth long term. Would you be willing to pay more for those same experiences?
- bane 11y ago
  I agree. Personally, I'm not sure my retention on things I've tried has been great for the businesses doing the offering. Things seem to end up a few different ways: 1) I love what they're offering, but I want to do their thing somewhere else, so another business gets the benefit. 2) I don't like what they're offering, oh well, gave it a try 3) I like what they're offering and they're in the right place for me to continue doing business with them #1 is the hardest for businesses, and I admit to engaging in a fair amount of "Groupon tourism", where I'll go a little out of my way to try something just because I got it for cheap on Groupon. For #2, sometimes there's a reason why places aren't doing well and turn to Groupon to try to boost sales, sometimes it's just a bad fit for me as a consumer. For example, I just used a Groupon for a local new Mexican place in my area. Turns out the reason their gorgeous restaurant is mostly empty is because the food sucks. There's a Mexican place down the road from them with low budget hand-made booths that's exploding with customers, the difference is that their food is good. I'd say I probably stick with less than 10% of the new places I find through Groupon. I'd probably be willing to pay more to try new things...but not a whole lot more. As a consumer I have to change my basic behavior patterns and maybe travel out of my way to try something new, I feel like I'm meeting the place halfway. Sometimes I have to travel someplace I've never been before, and after getting there I'll know if it's reasonable to continue coming out there. The horse lesson I took I enjoyed, but it's also an hour of hard driving to get there, while I live right on the edge of plentiful horse country. Now I know I had fun taking a lesson, I might give a go at one of the local places, but I'll probably not return to the place I used the Groupon with. There's also places, like a zipline center I Grouponed at. It was cool, I'll return. But it's not like it's an every week kind of place. So I think businesses also have to consider their model. I wouldn't have tried it without the Groupon, but it acted more like an advertisement would. I also went to a high-speed gokart center on a Groupon. Turns out they already have lots of business, but it's all dedicated racers who knew what they were doing. When I went there I had to sit through a half hour of safety training videos, and when I got on the track it was terrifying because everybody else was hardcore and very aggressive. It could have been fun if everybody wasn't taking it so seriously, or they bundled all the Grouponers into a beginner league or something. So I don't think it worked as an expansion of their basic business. I think business issues with Groupon are more complicated than people give credit for.

bryanlarsen 11y ago

Have any of the groupon competitors reached critical mass? I realize that a large number of "me-too" competitors were started when Groupon exploded, but it seems to me a "groupon that doesn't suck" could be a pretty good business.

kawsper 11y ago
In Denmark we have http://downtown.dk http://downtown.dk, they managed to get traction here before Groupon, so they have had most of the market, however it seems like Groupon have been eating parts of their business recently. As an aside Groupon seems to be 100% https, where downtown is only partly https :(
- wodenokoto 11y ago
  We have a lot of Groupon alternatives in Denmark, from online sites to discount boxes you buy physically in stores, most of them taking considerably less than 50%.
mikepurvis 11y ago
Making it not suck for the businesses would be great for actually having a regular rotation. At that point, though, you're basically completing with these guys: http://www.adsave.ca/ http://www.adsave.ca/
tedunangst 11y ago
Does "Restaurant Week" count?

eloff 11y ago

This article doesn't tell the whole story. As a user of Groupon Panama, I can tell you that they face stiff competition here from a Groupon clone, ofertasimple. I think they're exiting because it was a small market to begin with and they haven't been able to win it. Many people, including myself, find the competing service superior.

therealmarv 11y ago

1,100 ? On what did they all work?

waterside81 11y ago
Outbound sales I'd imagine. It takes a lot of people to make calls to businesses to convince them to sign up for Groupon, how to structure their deals etc.
- tootie 11y ago
  Wasn't that a scene in Silicon Valley? Their competitor had like 3 developers and 100 salesmen.
  - mason240 11y ago
    That sounds about right though. The developers are really just building a CMS that should be able to in theory handle an infinite amount of cities, while securing a new sale for one city every day could be a full time job (and probably done best by someone actually in that city).

swang 11y ago

> "We believe that in order for our geographic footprint to be an even bigger advantage, we need to focus our energy and dollars on fewer countries." Did this company spokesperson just pass first year business writing? It's like the writing prompt was, "Your company is downsizing, what is the most absurd way you can describe it?" I couldn't help but laugh at the sentence.

fredkbloggs 11y ago
Glad someone else noticed this. I kinda glossed over it at first, then read it again and broke it down thusly: 1. Our footprint is a big advantage today (presumably this means more reach). 2. We want to make that advantage bigger. 3. Therefore we are reducing our footprint. At first it sounds like an outright contradiction. But it does make sense, in a very convoluted sort of way. The advantage of having broad reach will be increased by exiting those markets that are losers for them, because the (still presumably fairly broad) range of markets they're staying in will be more profitable overall. But it would have been much simpler to just say "We're exiting a handful of smaller markets where we aren't leading or growing, focusing our efforts where they're doing the most good." But I guess you can't say that these days.
tedunangst 11y ago
Smaller is the new bigger!

k__ 11y ago

The deals I saw, felt rather crazy to me. A friend of mine paid 100€ for 100 pizzas, one every day. Also 100€ for 100 pasta dishes. The idea seemed to be, that the service could plan ahead, because he knew months before how much ingredients to buy. The delivery service who offered this deals closed down after a month, so in the end every meal did cost my friend about ~3€, which isn't bad.

sidcool 11y ago

Sad for a startup that showed great promise. How's LivingSocial doing?

rosege 11y ago
going pretty strong i gather from someone who works there - they did get acquired though a while ago

peter303 11y ago

Sometimes you dont see the flaws in a business idea until it is practiced for a while. In Groupons case it was an idea to easy to copy and businesses who though they were get a short deal. I thought it was worthwhile to try out.

InfiniteEntropy 11y ago

Good. I got on their mailing list through a permutation generator on names/emails and it took me months to get off that craplist.

deleted 11y ago

[deleted]

jbooth 11y ago
No need to out the guy's name -- you can make the same point without it, he's just doing his job
- redblacktree 11y ago
  Hey, maybe he'll get some leads from this post. Anyone want to work for Groupon?
snowmaker 11y ago
The two aren't really related. The TC article shows that they are laying off sales people in marginal countries where they aren't doing as well, and changing their strategy to invest more in technology and less in sales. That's entirely consistent with them hiring mobile developers in the US.

brightball 11y ago

Wondered when that was going to happen. Don't get me wrong, I liked the concept but when you don't get repeat business because the structure is so bad it's just not a good sign. At least they sold high...wait...

Laaw 11y ago

I've never heard of this negative reaction to Groupon like you folks are describing. What was the negative side? Was it not a good advertising investment for companies? Were expectations not being set correctly by Groupon? Do they take too much of a cut? Are they just jerks to the companies? Is there room in this space to not be a shitty actor?

JoeAltmaier 11y ago
Let me guess: Groupon agents (who got a commission?) would push for the best deal possible; naïve pizza joints and dry cleaners would do it. Response would be overwhelming, leaving the company broke after a month. Rinse and repeat. There was nobody in the process who would/could responsibly manage the actual value of the coupon. So they were either useless or debilitatingly lavish.
wpietri 11y ago
This was widely discussed when Groupon was hot: http://techcrunch.com/2011/06/13/why-groupon-is-poised-for-collapse/ http://techcrunch.com/2011/06/13/why-groupon-is-poised-for-c... There were also substantial concerns that the whole thing was basically a fancy, web-scale pump and dump: http://www.thestreet.com/story/11661220/1/is-groupon-a-scam-or-just-misunderstood.html http://www.thestreet.com/story/11661220/1/is-groupon-a-scam-... In my view, the whole "daily deals" thing that they started with was always unsustainable at scale. It's one of those things that works well in small doses, but as you scale it up the value declines. However, it was novel enough and generated enough volume that it took small business owners a while to collectively realize that Groupon promotions didn't help them in the long term.
lotharbot 11y ago
I think some of this is inherent to the model, and part of the problem is that businesses aren't building the right expectation in to their budget. They're thinking in terms of getting a bunch of ordinary customers in by giving them 50% off of an entree, and given their metrics on ordinary customers, that seems like a good deal -- a coupon of the same sort, sent out in one of those mailers, would pay for itself easily. But Groupon is bringing in a different set of customers -- low-value customers who don't provide much repeat business and often pick a fight over trying to get an even steeper discount. Wait staff often complain of Groupon'ers either not tipping at all, or tipping a low percentage and basing their low percentage off of the discounted bill (such that the net tip is like 1/4 to 1/3 of what it would normally be for the same meal.) Some places complain about Groupon'ers overstaying their welcome -- they come in for half price entrees, don't order appetizers or drinks or dessert, and stay at the table for 3 hours eating wave after wave of complimentary breadsticks. They're the ones still at the water park when the staff locked the gates ten minutes ago. They come in multiple times in the next week trying to return something for full price or otherwise scam the store. Many places report an excess of complaints of the "I'd like to speak to your manager, you're doing a terrible job" variety directed at their best employees, because people are unhappy paying 50% when they think they can somehow get it down to 45%, or they're unhappy paying 50% for 100% of the experience when they think they can stretch it to 105% of the experience. This doesn't happen to every company, but it does happen to some companies and leaves them feeling pretty burned.

pearjuice 11y ago

So on what contract were these 1100 people employed? 0 hours guaranteed, get in and get paid for the hours you work and your contract can be terminated any day? It always baffles me to see a thousand(s) of people getting laid of with the flick of a finger. That's like an equal amount of people added to the economy unemployed, right now.

jgroszko 11y ago
Illinois is an at-will state, so like any other employee in the state they can be let go at any time for any reason, with the exception of a few protected classes, since we also have a state Employment Non-Discrimination law.
teraflop 11y ago
I'm guessing you're not from the US? That's pretty much how it works here, except for government or unionized jobs. Most employees, whether hourly or salaried, don't have any kind of employment contract.

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Rambition 11y ago

I've had in a hand in a few Groupon/daily deal campaigns for some clients and their experiences all seemed to depend on the quality of the product/service they could provide. An established restaurant I would find it hard to believe they would extract value out of this type of discount. However, a new product to market that believes a customer can have a good enough experience and can deliver on that the first time they try it out, may be more apt to succeed on daily deal type of sites. It follows the "free trial" model of direct response (without the shady autobilling on the backend), just get the product in their hands and let it do the talking for you. As a consumer, I love the model. As a business owner/marketer, the results have been so/so.

teachrdan 11y ago

Anyone else notice they refer to Puerto Rico as "international"? Fun Fact 1: It's a US territory, where residents are US citizens but can't vote for president. Fun Fact 2: Journalists these days ain't what they used to be. https://en.wikipedia.org/wiki/Puerto_Rico https://en.wikipedia.org/wiki/Puerto_Rico

smackfu 11y ago
I didn't realize that Puerto Rico had its own top level domain: http://www.groupon.com.pr/pages/home http://www.groupon.com.pr/pages/home Apparently the site is shut-down already.
tsotha 11y ago
Puerto Rico is a US territory, but technically it's not part of the US. They refer to it as "international" because it is.

w4f7z 11y ago

With this announcement coming shortly after the OrderUp acquisition I wonder if this is signaling a larger shift at Groupon.

geyang 11y ago

It is just a badly ran business. The Chinese version of Groupon is ran by the very competent Xing WANG, who was a physics graduate student. And last time I looked at it Meituan was worth $15B.

rev_bird 11y ago
Not really sure why "was a physics graduate student" means anything about his business acumen here. Eric Lefkofsky has a law degree, Brad Keywell has a JD and an MBA, we could do this all day. Having a graduate degree in a hard science could certainly suggest a person has a different way of approaching business, but Wang dropped out so he could unapologetically clone other people's ideas.
- edgyswingset 11y ago
  I think the OP is stating the opposite, that being a physics grad student would imply he probably couldn't run the business as well as the Groupon founders.
  - rev_bird 11y ago
    Ah, well then I'm a doofus. That makes sense. Apologies, OP.
  - code_duck 11y ago
    However, in the same sentence he's described as 'very competent'.
turingbook 11y ago
Minor correction: Xing Wang was an ECS Phd candidate at University of Delaware, and he studied electrical engineering at Tsinghua University.

emiranda 11y ago

What is the significance of this line? "taking a pre-tax charge of $35 million in the process" It cost them 35 million to lay off 1,100 folks? They are getting a tax cut?

jgalt212 11y ago

some quotes from the snake oil salesman Groupon May Be Fastest-Growing Company Ever http://www.cnbc.com/id/40454493 http://www.cnbc.com/id/40454493 Groupon is going to be wildly profitable. -Eric Lefkofsky http://www.bloomberg.com/news/articles/2011-06-05/groupon-chairman-lefkofsky-says-coupon-company-will-be-wildly-profitable- http://www.bloomberg.com/news/articles/2011-06-05/groupon-ch... Is Andrew Mason still a YC part-time partner?

theworstshill 11y ago

Half of Groupon's failure is the email spam model, another half is the business partners. If you signed up for a service where you give discounts and got any less than a shining smiling face when I come in with one, guess what - I'm not coming back to you. Groupon should have screened businesses the same way Apple screens apps, very carefully.

michaelbuddy 11y ago

I feel like the small business man or woman was hurt the most by groupon, whether it be the mom pop shop or the family owned franchise. And when you exploit them, you hurt America basically. And that isn't a biz model that people can get behind. Had groupon done things differently, we'd be reading a very different article today.

mikeyouse 11y ago

I feel very similar to this blog post I read a few years ago, calling the Groupon era "The Locust Economy".. It wasn't good for businesses, consumers logically just abused the mechanism until these companies were ruined.. http://www.ribbonfarm.com/2013/04/03/the-locust-economy/ http://www.ribbonfarm.com/2013/04/03/the-locust-economy/ Thinking about locusts and the behavior of customers around services like Groupon, I’ve become convinced that the phrase “sharing economy” is mostly a case of putting lipstick on a pig. What we have here is a locust economy.

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arjn 11y ago

I'm not terribly surprised. I stopped using Groupon 3-4 years ago after a couple of bad experiences, watching the CEO in an interview on TV and also learning about how some small businesses were negatively affected. I think there is a class of business ideas that may seem good in the beginning but eventually fail for various reasons.

arjn 11y ago

chx 11y ago

Much to my surprise, I've found Groupon to feature killer deals for discounted refurbished phones, tablets, etc. I've gotten a 32GB Nexus 7 (2nd gen) LTE for $200 , they have a Samsung S5 right now for $270 (but check reviews, caveat emptor etc).

jhou2 11y ago

At first I thought this was bad news for Groupon, but after reading about it, it seems like a logical strategy. Groupon recently exited Turkey and Greece, which makes a lot of sense considering the economic turmoil in those countries and in the region in general. The 7 countries that were affected in this news were fairly small markets. Since when was Uruguay a major player in the global economy? The layoffs of 1100 mostly in sales and customer service seems reasonable when operations in 7 countries are shut down. Groupon has over 10,000 employees. A 10% reduction in staff trims some of the low performers. Microsoft and Amazon probably cut more staff each year with their stack rankings. (I know MS supposedly killed off their stack rankings, but I have a feeling it still exists albeit in a less visible capacity.) Overall, I think these moves make Groupon stronger, more competitive, more focused and more capable in a cutthroat market.

somberi 11y ago

A good article to read and reflect on - From 5 years ago. http://www.newyorker.com/magazine/2010/12/20/groupon-clipping http://www.newyorker.com/magazine/2010/12/20/groupon-clippin... Some points that caught my attention (edited by me) ...Groupon’s got a healthy business. Almost forty million people, in more than a hundred and fifty cities around the world, have signed up for its e-mails,...Groupon isn’t going away. Unlike many Web companies, it’s been profitable from the start. (It takes fifty per cent of the revenue in every deal.) This year, it had half a billion dollars in sales, and estimates are that, before long, it could have as much as two billion dollars in revenue." End of my edits. India, where groupon is hugely popular, has behaved like a spin-off. It recently independently raised 20MM from Sequoia.