4 ms·

"The only argument to say that they're not a ponzi scheme is that there's actually a legitimate business with revenue associated with it." That isn't a minor p

by 3am 15y ago

"The only argument to say that they're not a ponzi scheme is that there's actually a legitimate business with revenue associated with it." That isn't a minor point. There is a big different between stupid investors with full information and a Ponzi scheme. It is not an abstract argument. The first is common, the second will land you in prison.

bcrescimanno 15y ago
If the purpose of a business is to generate profit for its owners (investors), then the only business Groupon has successfully operated to this point has been a ponzi scheme. Just because it's common doesn't mean it's not a ponzi scheme. It's just a ponzi scheme in a pretty dress. I'd be willing to go further and say it's just as bad because if you read their S1 and their made up accounting "principles," they're actually attempting to deliberately mislead people into thinking the business is in a much better state than it really is. Again, it may be possible to transform Groupon into a legitimate business going forward; however, to this point, it's been anything but that.
- 3am 15y ago
  fwiw, I upvoted both of your comments. I think it's obvious this is a difficult subject based on how many intelligent people disagree on it. I very strongly disagree with your conclusion, but I respect it and disagree with the downvotes.
  - bcrescimanno 15y ago
    Totally fair to disagree. I've enjoyed the discussion. It's forced me to re-evaluate my thinking on the topic. While I still think there are strong elements of a ponzi scheme at work here and that there truly is a de facto ponzi scheme; Groupon doesn't really qualify as an de jure ponzi scheme. That said; what's more important than the vocabulary is understanding the total lack of ethics happening here--and the fact that (unlike the early investors who are now going to make their big bucks) the general public who are foolish enough to buy into Groupon will likely never see that investment returned and the only reason the early investors will get money is the investment capital from the IPO will be funneled to them.
- rayiner 15y ago
  You're basically saying that any business that doesn't generate profits from day 1 is a ponzi scheme. This is a ridiculous position to take.
  - bcrescimanno 15y ago
    Really? That's what you concluded from reading my comments? I'm almost tempted to call "troll" and not respond; but against my better judgment, I'll bite. Any business that does not generate profit is NOT a ponzi scheme and I did not even begin to imply that was the case. Any business which pays out dividends to their investors based ONLY on money secured from later investors is operating a de facto ponzi scheme. [edit] It's fine for early business to operate at a loss; it's not ok for an early business to funnel money to early investors while still operating at a loss.

by 3am 15y ago

bcrescimanno 15y ago

If the purpose of a business is to generate profit for its owners (investors), then the only business Groupon has successfully operated to this point has been a ponzi scheme. Just because it's common doesn't mean it's not a ponzi scheme. It's just a ponzi scheme in a pretty dress. I'd be willing to go further and say it's just as bad because if you read their S1 and their made up accounting "principles," they're actually attempting to deliberately mislead people into thinking the business is in a much better state than it really is. Again, it may be possible to transform Groupon into a legitimate business going forward; however, to this point, it's been anything but that.

3am 15y ago
fwiw, I upvoted both of your comments. I think it's obvious this is a difficult subject based on how many intelligent people disagree on it. I very strongly disagree with your conclusion, but I respect it and disagree with the downvotes.
- bcrescimanno 15y ago
  Totally fair to disagree. I've enjoyed the discussion. It's forced me to re-evaluate my thinking on the topic. While I still think there are strong elements of a ponzi scheme at work here and that there truly is a de facto ponzi scheme; Groupon doesn't really qualify as an de jure ponzi scheme. That said; what's more important than the vocabulary is understanding the total lack of ethics happening here--and the fact that (unlike the early investors who are now going to make their big bucks) the general public who are foolish enough to buy into Groupon will likely never see that investment returned and the only reason the early investors will get money is the investment capital from the IPO will be funneled to them.
rayiner 15y ago
You're basically saying that any business that doesn't generate profits from day 1 is a ponzi scheme. This is a ridiculous position to take.
- bcrescimanno 15y ago
  Really? That's what you concluded from reading my comments? I'm almost tempted to call "troll" and not respond; but against my better judgment, I'll bite. Any business that does not generate profit is NOT a ponzi scheme and I did not even begin to imply that was the case. Any business which pays out dividends to their investors based ONLY on money secured from later investors is operating a de facto ponzi scheme. [edit] It's fine for early business to operate at a loss; it's not ok for an early business to funnel money to early investors while still operating at a loss.