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I'd have to agree. By that definition, most startups are Ponzi Schemes. If you grow faster than the GDP, you're most likely cannibalizing other businesses. Even

I'd have to agree. By that definition, most startups are Ponzi Schemes. If you grow faster than the GDP, you're most likely cannibalizing other businesses. Eventually you'll run out of competitors to cannibalize and your growth rate will flatten to approach the background growth. If your stock price is predicated on the unsustainable growth rate, it will collapse. But that's not a Ponzi Scheme. If Facebook took in revenues from new customers and used them to buy fake click-throughs for existing customers to inflate their ad rates, then THAT would be a Ponzi Scheme.

ljlolel 14y ago
No, you misunderstand. High growth is not a ponzi scheme. High growth with no value is. Going flat is fine, Google did that. Losing a lot of traffic because people stop using your worthless site entirely is bad. Groupon will do that.
- mikeryan 14y ago
  High growth with no value is. No its not a Ponzi Scheme is a type of fraud where the con man pays out early investors from proceeds from later investors.
  - gnaritas 14y ago
    And also includes the intent to defraud, otherwise insurance would meet your criteria.
- jbigelow76 14y ago
  I never really get the hate on Groupon from a business model standpoint, I get it from an execution standpoint but not the business model. I've derived quite a bit of value from Groupon myself, as have several people I know. They failed in execution because it appears they don't value their relationship with vendors as evidenced by not letting them impose limits in the number of coupons sold. Mom and Pop restaurants don't scale like startups and many were left with really bad experiences from being ill equipped to deal with a massive influx of customers in a short time frame, and consequently the customers ended up having a bad experience as well. This wasn't universal but it seems to have been frequent enough to have severely tarnished the brand. If Groupon had been better stewards of their relationships with their merchants instead of sacrificing them in the name of growth I don't think anybody would lump them into the "ponzi scheme" camp. Groupon could have gone about it differently, Bernie Madoff probably could not have.
jerf 14y ago
"If you grow faster than the GDP, you're most likely cannibalizing other businesses." That sounds an awful lot like zero-sum thinking.
- vannevar 14y ago
  No, just simple mathematics. It's certainly possible for a company to actually create wealth faster than the average rate, but it's much more likely to be cannibalizing. Were it otherwise, of course, average economic growth would be higher. There is nothing contradictory in saying that most business growth comes from creative destruction (ie, cannibalization) and also that the net sum of business activity produces slow growth.

ljlolel 14y ago

No, you misunderstand. High growth is not a ponzi scheme. High growth with no value is. Going flat is fine, Google did that. Losing a lot of traffic because people stop using your worthless site entirely is bad. Groupon will do that.

mikeryan 14y ago
High growth with no value is. No its not a Ponzi Scheme is a type of fraud where the con man pays out early investors from proceeds from later investors.
- gnaritas 14y ago
  And also includes the intent to defraud, otherwise insurance would meet your criteria.
jbigelow76 14y ago
I never really get the hate on Groupon from a business model standpoint, I get it from an execution standpoint but not the business model. I've derived quite a bit of value from Groupon myself, as have several people I know. They failed in execution because it appears they don't value their relationship with vendors as evidenced by not letting them impose limits in the number of coupons sold. Mom and Pop restaurants don't scale like startups and many were left with really bad experiences from being ill equipped to deal with a massive influx of customers in a short time frame, and consequently the customers ended up having a bad experience as well. This wasn't universal but it seems to have been frequent enough to have severely tarnished the brand. If Groupon had been better stewards of their relationships with their merchants instead of sacrificing them in the name of growth I don't think anybody would lump them into the "ponzi scheme" camp. Groupon could have gone about it differently, Bernie Madoff probably could not have.

jerf 14y ago

"If you grow faster than the GDP, you're most likely cannibalizing other businesses." That sounds an awful lot like zero-sum thinking.

vannevar 14y ago
No, just simple mathematics. It's certainly possible for a company to actually create wealth faster than the average rate, but it's much more likely to be cannibalizing. Were it otherwise, of course, average economic growth would be higher. There is nothing contradictory in saying that most business growth comes from creative destruction (ie, cannibalization) and also that the net sum of business activity produces slow growth.