4 ms·

One key point in this - long term vs short term thinking. I was a groupon user / and higher value to restaurants I'd like to think (ie, strong income, would go

One key point in this - long term vs short term thinking. I was a groupon user / and higher value to restaurants I'd like to think (ie, strong income, would go out to eat at a nice place, if I liked a new place I'd go to it more) but also someone who doesn't want a lot of hassle, time is money etc. Groupon went from actually good deals, hassle free, to endless marketing emails / wall to wall shlock deals (50% off supposed $300/hr personal trainers? 20% off the latest MLM scam) and lots of scammy / scummy merchants who did everything they could to rip you off. These dying places pulled every bogus trick. I'm sure there are cheap customers willing to fight through it all, but the money is probably in the folks able and willing to pay bigger $ just looking for an excuse to try some place new. Then you read all the crap the groupon sales managers pulled to get folks on board (ignoring do not call, threatening bad yelp reviews). Yuck.

rhombocombus 8y ago
I managed a bikeshop/tavern prior to my transition into tech and we did a lot of groupon promotions. Their sales folks were super greasy and it was almost impossible to opt out once you were in, whether or not it made business sense to continue. It was an effective loss leader at first, but sometimes we would get punished with a throng of grouponers at peak times and we LOST money in a bar. It was a greasy business and I never gave them a dime after I left that job.
wpietri 8y ago
Doesn't that dying-place-pulling-every-trick thing describe Groupon's arc itself? I think of Groupon itself as one big pump-and-dump. I don't see that there was ever a long term for it, not outside of a niche business. Promotional coupons are not exactly a new idea. If Groupon had stayed small and figured out a way to bring businesses new customers that stuck around, it might have had a future. But they used the power of the internet in exactly the wrong way. The internet can get you instant volume by getting many people to act in concert. But limited-capacity local businesses don't want a flash mob; it's a bad experience for all concerned. And the internet can collect niche audiences and really serve them. But Groupon's best niche audience is cheapskates who are super focused on going from great deal to great deal. Carefully managed this might have been a decent small business, but I don't think it could ever have been a large one. And I think they must have known they were fucked from the start. When they IPOed, 86% of the money raised, over $800m, went into the pockets of insiders.
- smacktoward 8y ago
  > Promotional coupons are not exactly a new idea. The new idea was using the Internet to build a gigantic new audience for those coupons. Once you have that audience, you then become more attractive to businesses that want to advertise to it. In other words, Groupon was just a 21st century version of the age old "pennysaver" (https://en.wikipedia.org/wiki/Pennysaver https://en.wikipedia.org/wiki/Pennysaver) publications you can pick up in places like coffee shops, or that you get periodically in the mail (ugh). An electronic pennysaver could possibly have worked, if they'd grown organically and kept the operation lean. But instead they went the other way, figuring if they got big enough fast enough they could then use the size of their audience to muscle the advertisers who wanted to reach that audience into swallowing hugely disadvantageous terms in exchange for access. (See http://www.slate.com/articles/technology/technology/2012/08/groupon_earnings_report_the_daily_deals_site_s_crummy_business_model_is_finally_dead_hooray_.html http://www.slate.com/articles/technology/technology/2012/08/...) for details on that.) It worked for a while, when their rapid growth made them look like an unstoppable juggernaut that any small business was going to have to learn to live with. But then the growth stopped and smart advertisers fled as they realized that the terms made dealing with Groupon more trouble than it was worth, which meant the one choice Groupon had left to justify its valuation was to get into bed with scuzzy advertisers looking to rip off that big audience. But then the audience eventually realized it was getting ripped off, and boom, death spiral.
monksy 8y ago
Honestly, I'm glad to hear this. It means that the older values: Your consideration and treatment of the customer determine your success. Trying to run a business into the ground "for profit" is a dumb thing to do.

rhombocombus 8y ago

I managed a bikeshop/tavern prior to my transition into tech and we did a lot of groupon promotions. Their sales folks were super greasy and it was almost impossible to opt out once you were in, whether or not it made business sense to continue. It was an effective loss leader at first, but sometimes we would get punished with a throng of grouponers at peak times and we LOST money in a bar. It was a greasy business and I never gave them a dime after I left that job.

wpietri 8y ago

Doesn't that dying-place-pulling-every-trick thing describe Groupon's arc itself? I think of Groupon itself as one big pump-and-dump. I don't see that there was ever a long term for it, not outside of a niche business. Promotional coupons are not exactly a new idea. If Groupon had stayed small and figured out a way to bring businesses new customers that stuck around, it might have had a future. But they used the power of the internet in exactly the wrong way. The internet can get you instant volume by getting many people to act in concert. But limited-capacity local businesses don't want a flash mob; it's a bad experience for all concerned. And the internet can collect niche audiences and really serve them. But Groupon's best niche audience is cheapskates who are super focused on going from great deal to great deal. Carefully managed this might have been a decent small business, but I don't think it could ever have been a large one. And I think they must have known they were fucked from the start. When they IPOed, 86% of the money raised, over $800m, went into the pockets of insiders.

smacktoward 8y ago
> Promotional coupons are not exactly a new idea. The new idea was using the Internet to build a gigantic new audience for those coupons. Once you have that audience, you then become more attractive to businesses that want to advertise to it. In other words, Groupon was just a 21st century version of the age old "pennysaver" (https://en.wikipedia.org/wiki/Pennysaver https://en.wikipedia.org/wiki/Pennysaver) publications you can pick up in places like coffee shops, or that you get periodically in the mail (ugh). An electronic pennysaver could possibly have worked, if they'd grown organically and kept the operation lean. But instead they went the other way, figuring if they got big enough fast enough they could then use the size of their audience to muscle the advertisers who wanted to reach that audience into swallowing hugely disadvantageous terms in exchange for access. (See http://www.slate.com/articles/technology/technology/2012/08/groupon_earnings_report_the_daily_deals_site_s_crummy_business_model_is_finally_dead_hooray_.html http://www.slate.com/articles/technology/technology/2012/08/...) for details on that.) It worked for a while, when their rapid growth made them look like an unstoppable juggernaut that any small business was going to have to learn to live with. But then the growth stopped and smart advertisers fled as they realized that the terms made dealing with Groupon more trouble than it was worth, which meant the one choice Groupon had left to justify its valuation was to get into bed with scuzzy advertisers looking to rip off that big audience. But then the audience eventually realized it was getting ripped off, and boom, death spiral.

monksy 8y ago

Honestly, I'm glad to hear this. It means that the older values: Your consideration and treatment of the customer determine your success. Trying to run a business into the ground "for profit" is a dumb thing to do.