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This is a technicality, but there's a difference between a Ponzi scheme and a pyramid scheme. A Ponzi scheme needs an information asymmetry: investors don't kno

This is a technicality, but there's a difference between a Ponzi scheme and a pyramid scheme. A Ponzi scheme needs an information asymmetry: investors don't know that their money is being used to pay off previous investors. A pyramid scheme is open about the way it works and the pyramid nature, but people invest anyway. Since Groupon's investment and revenue strategies are known to all, this would be closer to a pyramid scheme than a Ponzi scheme.

JackWebbHeller 15y ago
I was wondering this too and spent the past 20 minutes reading the (very good) Wiki articles on both Ponzi and Pyramid schemes. I'd agree this is closer to Pyramid than Ponzi. Side-note: Fascinating to read how the "Magic 8-Ball" model of Pyramid Schemes works: http://en.wikipedia.org/wiki/Pyramid_Scheme#The_.22Eight-Ball.22_model http://en.wikipedia.org/wiki/Pyramid_Scheme#The_.22Eight-Bal...
joe_the_user 15y ago
So the difference is what? It's easier to blame the participants in a pyramid scheme than in a Ponzi scheme? Now that this stuff is becoming so common, I guess the approaches of "find the bigger fool" and "have your alibi in hand" are being honed to science...
deleted 15y ago
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stretchwithme 15y ago
I thought a pyramid is multi-level marketing. I get n people to pay me something while they each get n people and so on until there aren't any other people entering the scheme. How is Groupon like that?
- ThomPete 15y ago
  With multi level marketing you are actually selling a product. A straight out pyramid scheme you don't sell anything or at least it's not necessary.
MarketingMuppet 15y ago
I would prob argue that Groupon as a company is neither. However, their fund-raising model is clearly a pyramid scheme where early and mid investors are 'banking' not on the business model itself paying out but ONLY on the fact that they will be able to dump their share as part of an IPO. Who here really thinks any of the 1 billion investors in the last round are looking at 'holding on through thick and thin'?

JackWebbHeller 15y ago

I was wondering this too and spent the past 20 minutes reading the (very good) Wiki articles on both Ponzi and Pyramid schemes. I'd agree this is closer to Pyramid than Ponzi. Side-note: Fascinating to read how the "Magic 8-Ball" model of Pyramid Schemes works: http://en.wikipedia.org/wiki/Pyramid_Scheme#The_.22Eight-Ball.22_model http://en.wikipedia.org/wiki/Pyramid_Scheme#The_.22Eight-Bal...

joe_the_user 15y ago

So the difference is what? It's easier to blame the participants in a pyramid scheme than in a Ponzi scheme? Now that this stuff is becoming so common, I guess the approaches of "find the bigger fool" and "have your alibi in hand" are being honed to science...

deleted 15y ago

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stretchwithme 15y ago

I thought a pyramid is multi-level marketing. I get n people to pay me something while they each get n people and so on until there aren't any other people entering the scheme. How is Groupon like that?

ThomPete 15y ago
With multi level marketing you are actually selling a product. A straight out pyramid scheme you don't sell anything or at least it's not necessary.

MarketingMuppet 15y ago

I would prob argue that Groupon as a company is neither. However, their fund-raising model is clearly a pyramid scheme where early and mid investors are 'banking' not on the business model itself paying out but ONLY on the fact that they will be able to dump their share as part of an IPO. Who here really thinks any of the 1 billion investors in the last round are looking at 'holding on through thick and thin'?