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Well its a good thing $810M of their $946M round paid out the founders and early investors. Now no one but the late round VC's and the 5000 employees get stuck

Well its a good thing $810M of their $946M round paid out the founders and early investors. Now no one but the late round VC's and the 5000 employees get stuck holding the bag if this thing implodes. This is the problem with those early payouts (I don't mind these in theory but this case was egregious). There's not a lot of incentive anymore for the people running the company to do anything but what they're currently doing. They've already had their exit.

maukdaddy 15y ago
100% correct and it really makes me wonder what the late round VCs were thinking. The only I can come up with is pure greed - willing to take an enormous risk for future IPO (above and beyond typical VC risk)
- joe_the_user 15y ago
  Well, If we're wildly speculating, we could also imagine kick-backs and money laundering. I know nothing of Groupon's financing. I know Digital Sky was a large, late investor in Facebook. And they are controlled by a Russian oligarch. Wealthy criminals are sometimes willing to invest in unprofitable businesses to launder money, buy influence and hope that a bigger fool will follow them.
  - lnxkrnl 15y ago
    If Yuri Milner is the Russian mafia money man. He is f*cked. Most of his investments are going to implode in a double dip recession, and bring down the rest of Silicon Valley elites.
mchusma 15y ago
These investors are big boys, so if they wanted to buy out founders then more power to them. Early investors, the ones who would potentially be screwed by this, often have a provision allowing them to sell too. It's not a greed issue (implying morality), it's simply a stupidity issue.
pbreit 15y ago
There is one palatable explanation although I have not seen any confirmation: the early payouts assuaged investors and executives who might have preferred the Google deal. Also, there are many examples of fantastically wealthy folks who remain quite motivated.
ahi 15y ago
Oh, it's way worse than the late round VC's and the 5000 employees. All those small businesses don't get their share of the groupons immediately. When it implodes, and I think it will, thousands of small businesses will have the unenviable decision of whether or not they honor groupons they weren't paid for.

maukdaddy 15y ago

100% correct and it really makes me wonder what the late round VCs were thinking. The only I can come up with is pure greed - willing to take an enormous risk for future IPO (above and beyond typical VC risk)

joe_the_user 15y ago
Well, If we're wildly speculating, we could also imagine kick-backs and money laundering. I know nothing of Groupon's financing. I know Digital Sky was a large, late investor in Facebook. And they are controlled by a Russian oligarch. Wealthy criminals are sometimes willing to invest in unprofitable businesses to launder money, buy influence and hope that a bigger fool will follow them.
- lnxkrnl 15y ago
  If Yuri Milner is the Russian mafia money man. He is f*cked. Most of his investments are going to implode in a double dip recession, and bring down the rest of Silicon Valley elites.

mchusma 15y ago

These investors are big boys, so if they wanted to buy out founders then more power to them. Early investors, the ones who would potentially be screwed by this, often have a provision allowing them to sell too. It's not a greed issue (implying morality), it's simply a stupidity issue.

pbreit 15y ago

There is one palatable explanation although I have not seen any confirmation: the early payouts assuaged investors and executives who might have preferred the Google deal. Also, there are many examples of fantastically wealthy folks who remain quite motivated.

ahi 15y ago

Oh, it's way worse than the late round VC's and the 5000 employees. All those small businesses don't get their share of the groupons immediately. When it implodes, and I think it will, thousands of small businesses will have the unenviable decision of whether or not they honor groupons they weren't paid for.