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Everyone pointed to the ponzi scheme nature of the Facebook IPO, but Groupon's IPO really should be the standard of the ponzi scheme IPO. The investors and own

Everyone pointed to the ponzi scheme nature of the Facebook IPO, but Groupon's IPO really should be the standard of the ponzi scheme IPO. The investors and owners of the company knew the entire revenue model would collapse in on itself, and the only way to make money on the whole thing before it all disappeared was to IPO - sell this worthless POS to someone else and let them hold all the shares when the bubble pops. The nature of the ponzi scheme is that the last people in get hurt the most - sounds remarkably like this IPO. The very nature of the IPO itself should have raised red flags to everyone (just as Facebook's did). Early investors are all dumping shares, founders are dumping shares - in lieu of insider trading laws, it's the surest sign that something is amiss. You really think if the company was expecting the same massive growth that the only people with the insider knowledge of that happening would be selling shares? You think John Rockefeller was selling shares of Standard Oil?

herval 14y ago
what's "ponziesque" about the Facebook IPO?
- KaoruAoiShiho 14y ago
  According to him, if your company ever loses value, it becomes a ponzi scheme.
jessedhillon 14y ago
The investors and owners of the company knew the entire revenue model would collapse in on itself, Is it me, or has the standard of proof on HN dropped to immeasurable levels? What's that? Hmm? Oh no, I didn't say anything, not me. Just doing my part in the two minutes hate against anyone who isn't an engineer. We all know engineers are the unappreciated man-gods oppressed by the investor class. Boo investors! Hiss!
- pessimizer 14y ago
  Nobody mentioned engineers. It was a statement about more savvy investors with insider knowledge screwing less savvy investors without insider knowledge. Your criticism is like accusing somebody calling out unscrupulous used car dealers who sell lemons of hating people who own cars.
- heretohelp 14y ago
  I take it you didn't follow the investment rounds that preceded the IPO. We're talking about leadership that took 90% of a nearly $950 million investment round right off the table into their pockets. If you don't know the subject matter, GTFO.
  - jessedhillon 14y ago
    You take it incorrectly. Now what?
    - heretohelp 14y ago
      If you see nothing wrong with what they did, I have some really hot stocks to tell you about.
      - jessedhillon 14y ago
        I'm sorry, perhaps you are unaware of this fact: the term "Ponzi scheme" has a specific meaning, which an activity either conforms to or it does not. If it does conform to that definition, then you should be able to present material facts about the activity which would cause a reasonable person to reach that conclusion. Likewise, when a person makes statements about the mental states of another, such as what those people did or did not know, that is a statement of fact. If you assert those facts, then you should have evidence to demonstrate that such things are true. Unfortunately, all you have are poorly formed, emotionally charged opinions informed by a couple of articles you read on TechCrunch. Or maybe the WSJ if you're a little more rigorous. What you don't have are sufficient facts to warrant the conclusions you're defending, unless -- and this is my point -- you have such a low standard for truth that practically any statement can be considered substantiated, so long as it agrees with your prejudices about who deserves wealth and what constitutes success.
        heretohelp 14y ago
        Where did I say ponzi scheme?
joering2 14y ago
> the only way to make money on the whole thing before it all disappeared was to IPO Did he make or though he would make more from IPO than from Google's $6B offer? Don't think so. If Mason would be "all about the money", like you imply, he would have sold this "ponzi scheme" to Google in a heartbeat. Over the years, following his story, it looks to me like he truly believes/d in his idea and that there is a business model/revenue model in it.
- jeremyt 14y ago
  If I recall correctly, groupon raised something like $100 million immediately after they rejected Google's offer. At the time, I remember reading that almost the entirety of the investment went to buy out early investors. So it looks like Mason got the best of both worlds: he got the cash out a substantial number of shares and then hang on for the IPO upside. You also forget to mention that the Google deal was contingent upon due diligence, which now, in hindsight, may not have even successfully gone through.
  - joering2 14y ago
    Google's stock and cash worth $6B is still better offer to than rising $100MM. Not only first is 60x more, but it is also the ultimate exit (done deal - wash your hands go to the bank to cash the check), versus "$100MM investment" is just a gas for a business to sustain it and move it forward. So still you haven't convinced me that Mason was after the money. I think he obsessively believed in the idea, which to me (personally) has no merits from business perspective, therefore from the investor/stockholder perspective this is a nightmarish position to be in, but one has to agree Mason did build something good: he gave jobs to thousands unemployed and stimulated the recessed economy by providing platform for both businesses and customers to continue selling and buying. edit: I don't believe Mason had a crystal ball to predict how future will look.
    - jeremyt 14y ago
      Sorry, I was incorrect, it turns out they raised $1 billion, most of which went to the existing investors. Of course, reasonable people can disagree on this, but I think the questionable accounting standards (see: adjusted consolidated segment operating income) that they made up to hide their huge weaknesses before the IPO came straight from the top. I think Mason knew the wheels were coming off even before the Google offer, and he decided to take the guaranteed 1 billion instead of risking not making it through due diligence with Google. Then, push the accelerator to the floor, try to obfuscate the numbers as much as possible, and get away with as much money as possible before the IPO investors were left holding the bag.
unreal37 14y ago
I agree that the founders/early investors of Groupon acted quite suspiciously, cashing out billions of dollars in value before the IPO and at the IPO - which tends to mean they would rather have cash than shares in their own company. But the sad thing is that all investors invested with their eyes open to it. You can't call it a Ponzi scheme because everyone knew of Groupons profit challenges BEFORE the IPO. This is just IPO greed / tech bubble meets reality, if anything. Groupon was never worth what the people who bought the shares thought it was. Speculation is not illegal though. If the shares doubled/tripled post IPO, they would have all made off like bandits, so I feel no sympathy for them.

herval 14y ago

what's "ponziesque" about the Facebook IPO?

KaoruAoiShiho 14y ago
According to him, if your company ever loses value, it becomes a ponzi scheme.

jessedhillon 14y ago

The investors and owners of the company knew the entire revenue model would collapse in on itself, Is it me, or has the standard of proof on HN dropped to immeasurable levels? What's that? Hmm? Oh no, I didn't say anything, not me. Just doing my part in the two minutes hate against anyone who isn't an engineer. We all know engineers are the unappreciated man-gods oppressed by the investor class. Boo investors! Hiss!

pessimizer 14y ago
Nobody mentioned engineers. It was a statement about more savvy investors with insider knowledge screwing less savvy investors without insider knowledge. Your criticism is like accusing somebody calling out unscrupulous used car dealers who sell lemons of hating people who own cars.
heretohelp 14y ago
I take it you didn't follow the investment rounds that preceded the IPO. We're talking about leadership that took 90% of a nearly $950 million investment round right off the table into their pockets. If you don't know the subject matter, GTFO.
- jessedhillon 14y ago
  You take it incorrectly. Now what?
  - heretohelp 14y ago
    If you see nothing wrong with what they did, I have some really hot stocks to tell you about.
    - jessedhillon 14y ago
      I'm sorry, perhaps you are unaware of this fact: the term "Ponzi scheme" has a specific meaning, which an activity either conforms to or it does not. If it does conform to that definition, then you should be able to present material facts about the activity which would cause a reasonable person to reach that conclusion. Likewise, when a person makes statements about the mental states of another, such as what those people did or did not know, that is a statement of fact. If you assert those facts, then you should have evidence to demonstrate that such things are true. Unfortunately, all you have are poorly formed, emotionally charged opinions informed by a couple of articles you read on TechCrunch. Or maybe the WSJ if you're a little more rigorous. What you don't have are sufficient facts to warrant the conclusions you're defending, unless -- and this is my point -- you have such a low standard for truth that practically any statement can be considered substantiated, so long as it agrees with your prejudices about who deserves wealth and what constitutes success.
      - heretohelp 14y ago
        Where did I say ponzi scheme?

joering2 14y ago

> the only way to make money on the whole thing before it all disappeared was to IPO Did he make or though he would make more from IPO than from Google's $6B offer? Don't think so. If Mason would be "all about the money", like you imply, he would have sold this "ponzi scheme" to Google in a heartbeat. Over the years, following his story, it looks to me like he truly believes/d in his idea and that there is a business model/revenue model in it.

jeremyt 14y ago
If I recall correctly, groupon raised something like $100 million immediately after they rejected Google's offer. At the time, I remember reading that almost the entirety of the investment went to buy out early investors. So it looks like Mason got the best of both worlds: he got the cash out a substantial number of shares and then hang on for the IPO upside. You also forget to mention that the Google deal was contingent upon due diligence, which now, in hindsight, may not have even successfully gone through.
- joering2 14y ago
  Google's stock and cash worth $6B is still better offer to than rising $100MM. Not only first is 60x more, but it is also the ultimate exit (done deal - wash your hands go to the bank to cash the check), versus "$100MM investment" is just a gas for a business to sustain it and move it forward. So still you haven't convinced me that Mason was after the money. I think he obsessively believed in the idea, which to me (personally) has no merits from business perspective, therefore from the investor/stockholder perspective this is a nightmarish position to be in, but one has to agree Mason did build something good: he gave jobs to thousands unemployed and stimulated the recessed economy by providing platform for both businesses and customers to continue selling and buying. edit: I don't believe Mason had a crystal ball to predict how future will look.
  - jeremyt 14y ago
    Sorry, I was incorrect, it turns out they raised $1 billion, most of which went to the existing investors. Of course, reasonable people can disagree on this, but I think the questionable accounting standards (see: adjusted consolidated segment operating income) that they made up to hide their huge weaknesses before the IPO came straight from the top. I think Mason knew the wheels were coming off even before the Google offer, and he decided to take the guaranteed 1 billion instead of risking not making it through due diligence with Google. Then, push the accelerator to the floor, try to obfuscate the numbers as much as possible, and get away with as much money as possible before the IPO investors were left holding the bag.

unreal37 14y ago

I agree that the founders/early investors of Groupon acted quite suspiciously, cashing out billions of dollars in value before the IPO and at the IPO - which tends to mean they would rather have cash than shares in their own company. But the sad thing is that all investors invested with their eyes open to it. You can't call it a Ponzi scheme because everyone knew of Groupons profit challenges BEFORE the IPO. This is just IPO greed / tech bubble meets reality, if anything. Groupon was never worth what the people who bought the shares thought it was. Speculation is not illegal though. If the shares doubled/tripled post IPO, they would have all made off like bandits, so I feel no sympathy for them.