4 ms·
> Supposedly Groupon is making nearly $2 billion a year in revenue. Of which somewhere between $1 and $1.5 billion are pass-through, going to local merchants.
by tntr 16y ago
> Supposedly Groupon is making nearly $2 billion a year in revenue.
Of which somewhere between $1 and $1.5 billion are pass-through, going to local merchants.
Assuming actual revenue is the more widely-reported $500m, I'm not sure how far that goes when you have 3000 employees.
Recall that MySpace was putting up similar revenue numbers but with only a single profitable quarter, making something like $10m.
Revenue alone is meaningless. I can increase my revenue at any time by selling things at a loss. What's the profit?
I assume GroupOn must have real profits in order to turn down that much cash. We've seen just as often though that companies are deluded, like PointCast or Digg. It would be easy to settle this point by looking at profits. Curious how companies jealously guard that information but loudly trumpet "Revenues!"
That alone should be enough to convince anyone how meaningless revenues are.
- steve19 16y agoI remember seeing the words "profit is fallacy, cashflow is king" on a poster in an accountants office. Profit is an accounting construct. Positive cashflow is real and can sustain a business for a long time. (Note: cashflow != revenue)
- tntr 16y agoThat's because accrual accounting is just another way to cook the books. http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P06_1340 http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P06... People might object to that characterization because it's so "standard". That's how you get these notions that cash flow is "better" than profit -- the language gets tortured so that profit doesn't mean profit any more because the ledger is a fantasy. In cash method accounting, profit is profit. In accrual accounting, profit is whatever number you pencil in. To be clear, I'm talking about money in your hands, not someone else's.
- rdl 16y agoCash accounting in my experience is a much "better" way to cook the books than accrual accounting. You can easily and unintentionally screw yourself if you're collecting cash up front for a product which involves future costs. The only system I have found to work is accrual combined with customer prepayment (to eliminate credit risk; or just be very good at receivables management, which not everyone is) and aggressive cashflow management. The biggest problems with accrual go away if you don't have to worry about customer payment risk or accidentally running out of cash in the short term. You can lie to yourself (and others) with numbers with either kind of accounting, but it's harder to accidentally kill yourself with a conservative system.