6 ms·

Calling Zynga and Groupon pump-and-dump schemes is a mark of one's one's understanding of business in much the same way that believing vaccines cause autism is

by pg 14y ago

Calling Zynga and Groupon pump-and-dump schemes is a mark of one's one's understanding of business in much the same way that believing vaccines cause autism is a mark of one's understanding of science. Mark Pincus and Andrew Mason are both still running these companies. Running a public company that's doing badly is extraordinarily painful. No one would bring that on himself.

majani 14y ago
That's a rather off-colour reply, it has to be said, sir. First you resort to an absurd comparison in a poor attempt at snark, then you claim that Mark Pincus and Andrew Mason are severely pained by their lacklustre performance on the public markets, without providing any evidence of that. This deserves downvotes in my opinion.
- knieveltech 14y ago
  Definitely not up to PG's typical standards for a reply.
  - api 14y ago
    I get the impression it pushed a few peoples' buttons because the startup culture likes to think it's morally superior to Wall Street.
ahi 14y ago
Pincus and Mason may still be running them, but they both already cashed out big time.
- staunch 14y ago
  Don't you see how that defies the notion that it was a pump and dump? Why would they (with tens of millions of dollars) stick around? No one can force them to stay. They're already obscenely rich. Think about what their motivations must be.
  - ahi 14y ago
    Not really. There's still money on the table so they are still playing.
  - corford 14y ago
    These guys obviously aren't the sort of people that are happy to lie by the beach reading a book, quietly enjoying their millions. They're alpha dogs in the absolute worst sense of the word. They thrive off ego, winning, power, greed, narcissism and all those other lovely traits most people pulling similar moves seem to have. Think Gordon Geko. Remove the pin stripe suit, fast forward 30 years and change the modus operandi from cynical asset stripping to cynical stock hyping and you get... Edit: a more charitable view, in Pincus' case, is he isn't THAT evil and instead simply made a hugely expensive mistake buying OMGPOP. That wrecked the balance sheet and he's holding in there trying to recover.
    - 9999 14y ago
      That thing that you said there does not describe Andrew Mason in any way shape or form. He used to post on a forum that I spent a lot of time on in the early 00s. He's a clever, funny guy, and he took most of his lessons in ethics from Steve Albini. Before Groupon, he created The Point which was a group funding site for social initiatives that in many ways resembled Kickstarter.
      - ahi 14y ago
        Maybe not Mason, but it seems like a reasonable assessment of Lefkofsky.
        tesseractive 14y ago
        This. You could believe that Mason was acting in a completely earnest fashion, but was too naive to realize he was being manipulated by Lefkofsky. As Excutive Chairman in a non-operational role, Lefkofsky is under only a fraction of the unpleasant pressure Mason is under as CEO. If he were guilty of behaving in this way, that would actually jibe pretty well with pg's assertion about people not wanting to run struggling public companies if they can avoid it. Personally, I am no expert on Groupon. I make no claims that Lefkofsky has behaved in that way, because I don't have any evidence to either validate or invalidate such a hypothesis. It's simply not clear to me that such an accusation is obviously false, as pg claims.
tatsuke95 14y ago
>"Mark Pincus and Andrew Mason are both still running these companies." Because, at least in Pincus' case, he can't be removed. It would be pretty hard to argue that he wouldn't have been canned under different circumstances. "Pump and dump" may be a bit much. But I'm glad that it's coming to light that business shadiness doesn't start and stop with the financial industry; it occurs everywhere there are substantial amounts of money changing hands. The Valley has some pretty serious scum-baggery going on. I hope we hold the people who promoted this stuff accountable in the court of public opinion.
- drumdance 14y ago
  Yes, but he can cash in and quit. Why hasn't he? I've never run a public company but I know some who did during the first dot-com crash and it was not pleasant.
  - ahi 14y ago
    It's not easy to liquidate a majority stake in a large public company into cash. At least, not quickly.
  - rms 14y ago
    Because that signal might destroy the company?
    - drumdance 14y ago
      So what? If he's the sociopath everyone makes him out to be, who already has more money than God, what's the big deal? My point is that "good vs. evil" style commentary is useless. It automatically lowers the commenters' mean IQ by 15 points. This, of course, is the reason discussing politics (as opposed to policy) is generally a waste of time.
tptacek 14y ago
I am with you on how misplaced the enmity towards --- well, at least Groupon. But there have been well-known public companies that did badly that were essentially scams, such as during the channel stuffing scandals of the late 1990's. So while I sympathize with your irritation at the "Groupon is a Ponzi scheme" meme, the last sentence of your comment is simply wrong; it's wrong directly (a counterexample would be Sanjay Kumar) and it's wrong in what it implies.
- pg 14y ago
  If anything that supposed counterexample supports my point that the accusations these people casually make in HN comment threads are so much more drastic than they realize that they're their own reductio ad absurdum. Running a public company that's a scam tends to entail criminal behavior. Especially nowadays.
  - tptacek 14y ago
    CA didn't start out as a deliberate scam, and continues to run today despite being essentially a scam for many years. The companies we're talking about today --- Groupon, Zynga --- don't have long enough track records as publicly traded entities for us to presume they're run in good faith; variants of the things that got Kumar sentenced probably aren't even crimes when they happen during mezzanine funding, when the people being "scammed" are sophisticated investors. You implied, Zynga isn't a pump-and-dump scheme because Mark Pincus still runs it, and nobody would inflict the management of a poorly-performing public company on themselves. Well, that's just not true. There are better arguments against the assertion that Groupon is a pump-and-dump scheme than "it must suck to be Andrew Mason these days" (it does not suck to be Andrew Mason, by the way). For instance, Groupon was open about its liabilities and the enormous risks it faced, and its whole industry sector was very carefully scrutinized. I'm done arguing this point. My nerdly brain just couldn't handle the idea that being Andrew Mason in Q4'12 is so painful that simply holding his job imputes him credibility.
    - wslh 14y ago
      so, adding a painfulness metric is not a right when the incentives are huge.
lwat 14y ago
> Running a public company that's doing badly is extraordinarily painful. No one would bring that on himself. I would openly run a company into the ground if I got hundreds of millions of dollars in the process like they Zynga or Groupon guys did.
deleted 14y ago
[deleted]

by pg 14y ago

majani 14y ago

That's a rather off-colour reply, it has to be said, sir. First you resort to an absurd comparison in a poor attempt at snark, then you claim that Mark Pincus and Andrew Mason are severely pained by their lacklustre performance on the public markets, without providing any evidence of that. This deserves downvotes in my opinion.

knieveltech 14y ago
Definitely not up to PG's typical standards for a reply.
- api 14y ago
  I get the impression it pushed a few peoples' buttons because the startup culture likes to think it's morally superior to Wall Street.

ahi 14y ago

Pincus and Mason may still be running them, but they both already cashed out big time.

staunch 14y ago
Don't you see how that defies the notion that it was a pump and dump? Why would they (with tens of millions of dollars) stick around? No one can force them to stay. They're already obscenely rich. Think about what their motivations must be.
- ahi 14y ago
  Not really. There's still money on the table so they are still playing.
- corford 14y ago
  These guys obviously aren't the sort of people that are happy to lie by the beach reading a book, quietly enjoying their millions. They're alpha dogs in the absolute worst sense of the word. They thrive off ego, winning, power, greed, narcissism and all those other lovely traits most people pulling similar moves seem to have. Think Gordon Geko. Remove the pin stripe suit, fast forward 30 years and change the modus operandi from cynical asset stripping to cynical stock hyping and you get... Edit: a more charitable view, in Pincus' case, is he isn't THAT evil and instead simply made a hugely expensive mistake buying OMGPOP. That wrecked the balance sheet and he's holding in there trying to recover.
  - 9999 14y ago
    That thing that you said there does not describe Andrew Mason in any way shape or form. He used to post on a forum that I spent a lot of time on in the early 00s. He's a clever, funny guy, and he took most of his lessons in ethics from Steve Albini. Before Groupon, he created The Point which was a group funding site for social initiatives that in many ways resembled Kickstarter.
    - ahi 14y ago
      Maybe not Mason, but it seems like a reasonable assessment of Lefkofsky.
      - tesseractive 14y ago
        This. You could believe that Mason was acting in a completely earnest fashion, but was too naive to realize he was being manipulated by Lefkofsky. As Excutive Chairman in a non-operational role, Lefkofsky is under only a fraction of the unpleasant pressure Mason is under as CEO. If he were guilty of behaving in this way, that would actually jibe pretty well with pg's assertion about people not wanting to run struggling public companies if they can avoid it. Personally, I am no expert on Groupon. I make no claims that Lefkofsky has behaved in that way, because I don't have any evidence to either validate or invalidate such a hypothesis. It's simply not clear to me that such an accusation is obviously false, as pg claims.

tatsuke95 14y ago

>"Mark Pincus and Andrew Mason are both still running these companies." Because, at least in Pincus' case, he can't be removed. It would be pretty hard to argue that he wouldn't have been canned under different circumstances. "Pump and dump" may be a bit much. But I'm glad that it's coming to light that business shadiness doesn't start and stop with the financial industry; it occurs everywhere there are substantial amounts of money changing hands. The Valley has some pretty serious scum-baggery going on. I hope we hold the people who promoted this stuff accountable in the court of public opinion.

drumdance 14y ago
Yes, but he can cash in and quit. Why hasn't he? I've never run a public company but I know some who did during the first dot-com crash and it was not pleasant.
- ahi 14y ago
  It's not easy to liquidate a majority stake in a large public company into cash. At least, not quickly.
- rms 14y ago
  Because that signal might destroy the company?
  - drumdance 14y ago
    So what? If he's the sociopath everyone makes him out to be, who already has more money than God, what's the big deal? My point is that "good vs. evil" style commentary is useless. It automatically lowers the commenters' mean IQ by 15 points. This, of course, is the reason discussing politics (as opposed to policy) is generally a waste of time.

tptacek 14y ago

I am with you on how misplaced the enmity towards --- well, at least Groupon. But there have been well-known public companies that did badly that were essentially scams, such as during the channel stuffing scandals of the late 1990's. So while I sympathize with your irritation at the "Groupon is a Ponzi scheme" meme, the last sentence of your comment is simply wrong; it's wrong directly (a counterexample would be Sanjay Kumar) and it's wrong in what it implies.

pg 14y ago
If anything that supposed counterexample supports my point that the accusations these people casually make in HN comment threads are so much more drastic than they realize that they're their own reductio ad absurdum. Running a public company that's a scam tends to entail criminal behavior. Especially nowadays.
- tptacek 14y ago
  CA didn't start out as a deliberate scam, and continues to run today despite being essentially a scam for many years. The companies we're talking about today --- Groupon, Zynga --- don't have long enough track records as publicly traded entities for us to presume they're run in good faith; variants of the things that got Kumar sentenced probably aren't even crimes when they happen during mezzanine funding, when the people being "scammed" are sophisticated investors. You implied, Zynga isn't a pump-and-dump scheme because Mark Pincus still runs it, and nobody would inflict the management of a poorly-performing public company on themselves. Well, that's just not true. There are better arguments against the assertion that Groupon is a pump-and-dump scheme than "it must suck to be Andrew Mason these days" (it does not suck to be Andrew Mason, by the way). For instance, Groupon was open about its liabilities and the enormous risks it faced, and its whole industry sector was very carefully scrutinized. I'm done arguing this point. My nerdly brain just couldn't handle the idea that being Andrew Mason in Q4'12 is so painful that simply holding his job imputes him credibility.
  - wslh 14y ago
    so, adding a painfulness metric is not a right when the incentives are huge.

lwat 14y ago

> Running a public company that's doing badly is extraordinarily painful. No one would bring that on himself. I would openly run a company into the ground if I got hundreds of millions of dollars in the process like they Zynga or Groupon guys did.

deleted 14y ago

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