4 ms·

I see a similar sentiment in this comment section that I saw around the time Facebook rejected the 2 billion acquisition offer from Yahoo. The fact is, this co

by c2 16y ago

I see a similar sentiment in this comment section that I saw around the time Facebook rejected the 2 billion acquisition offer from Yahoo. The fact is, this company has executed well enough to reach a large revenue number very quickly. It's easy to say if you don't work there that they should have sold, but putting myself in this company's shoes, I think their growth potential is actually much higher not being a Google subsidiary.

earl 16y ago
Yeah, but where's their moat? Contrast to FB -- the value of the network increases as more people are in it. How does groupon build a moat? Just because more people groupon, does it make competitors less valuable? Is it a barrier to have emails from livingsocial and groupon arriving in your inbox every day? Groupon is almost the complement of fb -- fb had huge lockin, but no obvious monetization method. Groupon has obvious monetization, but no lockin that I can see. I also question in the long run how many businesses have large enough customer LTVs that selling stuff below cost is worth it to hook customers. Hearing from eg hair salons that groupon people aren't customers but are bargain hunters isn't promising. My prediction -- in 3 years, groupon will regret this if they haven't found a different sucker. Maybe comcast? I'd be happy to be wrong -- it's always awesome when people succeed.
- browser411 16y ago
  Groupon has a great network effect. They have 25MM users and tens of thousands of local businesses. It's not as good of a moat as FB but still damn nice. Also, I'd argue that FB has a very obvious monetization: advertising. They supposedly generate $1B+ in ad rev.
  - earl 16y ago
    But in 2005 -- or when the Y acquisition was being debated -- it wasn't obvious that fb would be able to monetize their enormous quantity of pageviews. In any case, the enormous email list groupon has is awesome... but I think LivingSocial will be able to replicate that. And once you're on both email lists, then what does groupon have over competitors?
  - notahacker 16y ago
    25 million members of a mailing list is not a $6 billion defensible advantage.
- revorad 16y ago
  What's Amazon's lockin? Apple's moat? The fact that a zillion Groupon clones are springing up shows that this market is HUGE. Lockins, moats don't matter. Regarding customer satisfaction, if the majority are happy then it's OK. The CEO quoted 98% customers being happy in a recent interview. So the few unhappy stories you hear are probably anecdotes. Groupon may itself not be a social network, but it knows how to use the power of existing social networks. You don't necessarily have to be a software company to be a big sustainable business on the web. Web infrastructure and social networks are now commodities, and the most creative businesses will make a lot of money utilising them.
  - earl 16y ago
    amazon's moat: cheap prices via the infrastructure they've built around efficient storage, warehousing, and delivery. Try finding most of the stuff they sell for materially less money once you take into account delivery costs. A deserved reputation for great customer service. Variety. Amazon prime -- $79 / year and I just don't bother shopping anywhere else. Kindle -- a 3rd gen ereader with an experience no one else replicates. Their huge marketplace of used books -- practically every text I want can be had for less money by buying used, but only on their site. Apple's moat: for ipod: your music library that doesn't play on any other devices. Their ecosystem of products that all work together and become more valuable the more apple stuff you have. See airplay ( http://www.apple.com/itunes/airplay/ http://www.apple.com/itunes/airplay/ ) or how apple tv streams video from apple devices. For their laptops, as Gosling said, it's a unix with qa and taste. For iPhone, your app library, your music, and selling devices with quality and taste.
    - revorad 16y ago
      Agreed but if someone had the balls to compete with either of those, there's nothing stopping them. Zappos has shown that the way to beat Amazon is not by competing on price. Groupon is an advertising company, which knows how to leverage technology. It's not like they invented email marketing. They just know how to use it damn well. When you are selling other people's stuff, the only limitation is how much stuff other people are selling, which is apparently infinite. See Google.

by c2 16y ago

earl 16y ago

Yeah, but where's their moat? Contrast to FB -- the value of the network increases as more people are in it. How does groupon build a moat? Just because more people groupon, does it make competitors less valuable? Is it a barrier to have emails from livingsocial and groupon arriving in your inbox every day? Groupon is almost the complement of fb -- fb had huge lockin, but no obvious monetization method. Groupon has obvious monetization, but no lockin that I can see. I also question in the long run how many businesses have large enough customer LTVs that selling stuff below cost is worth it to hook customers. Hearing from eg hair salons that groupon people aren't customers but are bargain hunters isn't promising. My prediction -- in 3 years, groupon will regret this if they haven't found a different sucker. Maybe comcast? I'd be happy to be wrong -- it's always awesome when people succeed.

browser411 16y ago
Groupon has a great network effect. They have 25MM users and tens of thousands of local businesses. It's not as good of a moat as FB but still damn nice. Also, I'd argue that FB has a very obvious monetization: advertising. They supposedly generate $1B+ in ad rev.
- earl 16y ago
  But in 2005 -- or when the Y acquisition was being debated -- it wasn't obvious that fb would be able to monetize their enormous quantity of pageviews. In any case, the enormous email list groupon has is awesome... but I think LivingSocial will be able to replicate that. And once you're on both email lists, then what does groupon have over competitors?
- notahacker 16y ago
  25 million members of a mailing list is not a $6 billion defensible advantage.
revorad 16y ago
What's Amazon's lockin? Apple's moat? The fact that a zillion Groupon clones are springing up shows that this market is HUGE. Lockins, moats don't matter. Regarding customer satisfaction, if the majority are happy then it's OK. The CEO quoted 98% customers being happy in a recent interview. So the few unhappy stories you hear are probably anecdotes. Groupon may itself not be a social network, but it knows how to use the power of existing social networks. You don't necessarily have to be a software company to be a big sustainable business on the web. Web infrastructure and social networks are now commodities, and the most creative businesses will make a lot of money utilising them.
- earl 16y ago
  amazon's moat: cheap prices via the infrastructure they've built around efficient storage, warehousing, and delivery. Try finding most of the stuff they sell for materially less money once you take into account delivery costs. A deserved reputation for great customer service. Variety. Amazon prime -- $79 / year and I just don't bother shopping anywhere else. Kindle -- a 3rd gen ereader with an experience no one else replicates. Their huge marketplace of used books -- practically every text I want can be had for less money by buying used, but only on their site. Apple's moat: for ipod: your music library that doesn't play on any other devices. Their ecosystem of products that all work together and become more valuable the more apple stuff you have. See airplay ( http://www.apple.com/itunes/airplay/ http://www.apple.com/itunes/airplay/ ) or how apple tv streams video from apple devices. For their laptops, as Gosling said, it's a unix with qa and taste. For iPhone, your app library, your music, and selling devices with quality and taste.
  - revorad 16y ago
    Agreed but if someone had the balls to compete with either of those, there's nothing stopping them. Zappos has shown that the way to beat Amazon is not by competing on price. Groupon is an advertising company, which knows how to leverage technology. It's not like they invented email marketing. They just know how to use it damn well. When you are selling other people's stuff, the only limitation is how much stuff other people are selling, which is apparently infinite. See Google.