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Don't roll your eyes, but this is exactly what Reagan did to the Russians. Basically, spend more and faster than the other guy until he cries uncle. Groupon is

Don't roll your eyes, but this is exactly what Reagan did to the Russians. Basically, spend more and faster than the other guy until he cries uncle. Groupon is raising money, spending like crazy to be the top dog. When the other "coupon" companies can't keep up, Groupon will buy them, retaining their #1 position. Once all of the others are gone or reduced to a tiny size, they'll go back to a sustainable model. This explains why they have a focus on hyper growth. What do you think?

petercooper 15y ago
Perhaps. It took Amazon 6 years to turn a profit, and a mere $5m on $1bn revenue at that.
- spullara 15y ago
  Totally true. At least one year in there it looks like they lost almost $1.5B: http://www.wolframalpha.com/input/?i=amazon+profit+from+1994+to+2010 http://www.wolframalpha.com/input/?i=amazon+profit+from+1994...
georgemcbay 15y ago
"Don't roll your eyes, but this is exactly what Reagan did to the Russians. Basically, spend more and faster than the other guy until he cries uncle." Has that really worked out for us so well over the long term? Certainly we can't pin our all of our current economic issues on Reagan as we've done a lot of spending and borrowing long after he left office, but once you get the snowball rolling down the hill very fast it becomes increasingly difficult to slow it down or stop it even after it has served whatever its original purpose was.
snorkel 15y ago
The hypergrowth strategy worked well for pets.com and webvan. What could go wrong?
jbooth 15y ago
Think about that for a second: Is "I'm going to be stupid and hope it convinces my enemies to be even stupider" a winning strategy? Wouldn't "I'm going to be smart" be a better one? The Russians were done before Reagan was even elected. Google "Brehznev", or "Afghanistan". The rest of the line is just stupid hagiography from people who loved the way Reagan gave a speech. And the reason they lost Eastern Europe was because of artists and hipsters in East Germany. It wasn't from reverse-psychology mind control forcing them to spend money, it was because they had a crap economy and needed a military to suppress internal dissent.
VladRussian 15y ago
>this is exactly what Reagan did to the Russians. So Reagan decreased the price of oil in the mid-80ies? : http://www.wtrg.com/oil_graphs/oilprice1947.gif http://www.wtrg.com/oil_graphs/oilprice1947.gif Calling an evil empire an "Evil Empire" has especially dramatic effect when the evil empire is just plain running out of money :)
chopsueyar 15y ago
I think Groupon won't have enough money to acquire competitors because they have to give half of their revenue back to the merchants AND pay back all these other investors. The "other" coupon companies probably have profitable business models, not based on market-share, but profitability. It depends what each company's exit strategy is. The barriers to entry to this type of business are not that difficult, particularly on a local level (which is where the business activity takes place). Show a deal of the day, take payment, print coupon, have a way for merchant to verify coupon, and have a sales guy getting new deals of the day. This is probably the type of business that does worse at scale. Here's the key: Make the deal relevant to the city you are spending a shit-ton of advertising in, not some business 40 miles away. ... Reagan Russia deficit spending comparison. Is this what Bush II and Obama are doing to China, too? I always thought Reagan single-handedly ended communism, simply by saying, "Tear down this wall!" Who knew deficit spending was they key to defeating communism? It must be working in China. We finally have the youth engaged in free-market capitalism, selling their own human organs to purchase iPads. U S A!

petercooper 15y ago

Perhaps. It took Amazon 6 years to turn a profit, and a mere $5m on $1bn revenue at that.

spullara 15y ago
Totally true. At least one year in there it looks like they lost almost $1.5B: http://www.wolframalpha.com/input/?i=amazon+profit+from+1994+to+2010 http://www.wolframalpha.com/input/?i=amazon+profit+from+1994...

georgemcbay 15y ago

"Don't roll your eyes, but this is exactly what Reagan did to the Russians. Basically, spend more and faster than the other guy until he cries uncle." Has that really worked out for us so well over the long term? Certainly we can't pin our all of our current economic issues on Reagan as we've done a lot of spending and borrowing long after he left office, but once you get the snowball rolling down the hill very fast it becomes increasingly difficult to slow it down or stop it even after it has served whatever its original purpose was.

snorkel 15y ago

The hypergrowth strategy worked well for pets.com and webvan. What could go wrong?

jbooth 15y ago

Think about that for a second: Is "I'm going to be stupid and hope it convinces my enemies to be even stupider" a winning strategy? Wouldn't "I'm going to be smart" be a better one? The Russians were done before Reagan was even elected. Google "Brehznev", or "Afghanistan". The rest of the line is just stupid hagiography from people who loved the way Reagan gave a speech. And the reason they lost Eastern Europe was because of artists and hipsters in East Germany. It wasn't from reverse-psychology mind control forcing them to spend money, it was because they had a crap economy and needed a military to suppress internal dissent.

VladRussian 15y ago

>this is exactly what Reagan did to the Russians. So Reagan decreased the price of oil in the mid-80ies? : http://www.wtrg.com/oil_graphs/oilprice1947.gif http://www.wtrg.com/oil_graphs/oilprice1947.gif Calling an evil empire an "Evil Empire" has especially dramatic effect when the evil empire is just plain running out of money :)

chopsueyar 15y ago

I think Groupon won't have enough money to acquire competitors because they have to give half of their revenue back to the merchants AND pay back all these other investors. The "other" coupon companies probably have profitable business models, not based on market-share, but profitability. It depends what each company's exit strategy is. The barriers to entry to this type of business are not that difficult, particularly on a local level (which is where the business activity takes place). Show a deal of the day, take payment, print coupon, have a way for merchant to verify coupon, and have a sales guy getting new deals of the day. This is probably the type of business that does worse at scale. Here's the key: Make the deal relevant to the city you are spending a shit-ton of advertising in, not some business 40 miles away. ... Reagan Russia deficit spending comparison. Is this what Bush II and Obama are doing to China, too? I always thought Reagan single-handedly ended communism, simply by saying, "Tear down this wall!" Who knew deficit spending was they key to defeating communism? It must be working in China. We finally have the youth engaged in free-market capitalism, selling their own human organs to purchase iPads. U S A!