8 ms·

Let's stop laughing at Groupon

103 points by jasondc 12y ago

api 12y ago
I'm not laughing. I'm just perpetually a tad depressed that stuff like this is apparently more valuable than defeating aging, fixing our economy in fundamental ways, or making life mulitplanetary. Hell, it's usually more more valuable and profitable than even minor and mid tier innovations in the IT sector.
- serve_yay 12y ago
  The point isn't really Groupon, the point is that VCs and other investors are commonly thought of as chasing shiny, stupid things. But in the case of Groupon, public-market investors overvalued Groupon and in that way acted like our caricature of dumb, credulous, bubble-agitating VCs.
  - notahacker 12y ago
    Few of the people that called Groupon a pump and dump before it happened ever had much regard for the institutional[1] and retail investors they dumped the stock on. Interestingly enough, one of the founders disagrees with all those listed "buy" ratings to the extent of selling >90% of his shareholding on the open market at well below their price targets at the back end of last week. http://sleekmoney.com/bradley-a-keywell-sells-500000-shares-of-groupon-stock-grpn/115584/ http://sleekmoney.com/bradley-a-keywell-sells-500000-shares-... [1]although some of the mutual fund investors the article sniggers at for rushing to buying secondary market shares in the private market probably made out before the post-IPO bubble burst too... Edit: I stand corrected on the founder share sale, which appears to be part of a more orderly divestment than my source claimed.
    - adambratt 12y ago
      He's been selling 500,000 shares every month since they've IPO'd. That link totally misquoted how much he has remaining. He has over 30 million shares still. I have no idea where the author pulled out that 40,000 share remark. http://www.nasdaq.com/symbol/grpn/insider-trades http://www.nasdaq.com/symbol/grpn/insider-trades
- gibybo 12y ago
  >stuff like this is apparently more valuable than defeating aging, fixing our economy in fundamental ways, or making life mulitplanetary. It's not. Groupon is worth $5 billion. Any of those things would be worth trillions.
  - Kalium 12y ago
    The difference is that Groupon is many times easier to execute than any of those.
  - api 12y ago
    "Any of those things would be worth trillions." So where's the investment capital for them then? They're all chronically underfunded. The difference, I think, is risk. Any one of those would be worth trillions if it worked, but the risk of any approach failing is very high.
    - ianferrel 12y ago
      The other difference is capturing the surplus. Fixing the economy would be worth trillions, but how do you get your piece of it? It's much easier to capture the surplus if you can insert yourself into the payment process for an already existing product.
      - api 12y ago
        That's why IMHO only governments can do those kinds of things right now. Only governments can make high-risk-high-payoff extremely broad and long-duration investments and then capture the upside through overall economy-wide growth (via taxation and other means). Nobody else can both afford the risk and capture some of the upside. It's possible that in the future someone will invent financial vehicles to make it possible to make those kinds of investments in the private sector, but it hasn't happened yet. Edit: in a sense there is already something, namely government bonds, ETFs, and long-term positions in currency markets. But those are too coarse-grained. What we need is some way for private investors to make private investments in things that are all of: high risk, high payoff, and broad payoff.
- savanaly 12y ago
  Marginal value versus total value, my friend. While those endeavors you mentioned would probably have enormous benefit once achieved, they are so lofty that the marginal usefulness of a dollar put towards them is much less than the marginal usefulness of a dollar put towards a more modest goal. And it's worth noting that Groupon seems to have a social purpose that I'm not sure most people who aren't economists would be able to articulate: abetting price discrimination, and presumably eeking us closer to the efficiency in those markets that use it.
  - lurcio 12y ago
    Beautifully put. Marginal innovations are like a greedy algo, & its not like the lofty goals are devoid of funding. Progress there feels so slow because the search space is so complex/expansive and there are so many local minima to flounder in.
- mikeash 12y ago
  Defeating aging? I'd never be able to afford that even if it happened. Fixing our economy? The guys at the top will always find a way to screw me regardless. Making life multiplanetary? I won't be able to go, nor my kids, so what's the point? Oh, save 50% on a meal at a restaurant I never went to before? Hell yes, sign me up! This will distract me from the depressing reality of life for a good ninety minutes at least. (This is a parody of the average Joe, not actually my own thoughts.)
  - lurcio 12y ago
    They seem quite rational to me.
    - mikeash 12y ago
      I'm not passing judgment. I disagree with those statements but I have a pretty hard time giving any actual reasons for why.
- ta75757 12y ago
  It's not more valuable, it's just possible, unlike most (all?) of the things you listed. (Not trying to be a jerk, those things are just virtually impossible with today's technology.)
- imgabe 12y ago
  Google and Fidelity just invested $1 billion [1] for 10% of SpaceX, putting its valuation at $10 billion, or twice that of Groupon, so I'm not sure where you're getting information that things like space exploration are less valued. It would probably be much higher, but at this point space travel is still very risky, so there's a high chance it won't pay off at all, compared to something technologically much easier to accomplish, like emailing people coupons. Any one pharmaceutical company would be valued a couple of orders of magnitude higher than Groupon, let alone one that actually "defeated aging". Billions and billions are already invested in that. Pfizer for example, has a market cap over $200B. [2] [1] http://www.nytimes.com/2015/01/21/technology/google-makes-1-billion-investment-in-spacex.htm http://www.nytimes.com/2015/01/21/technology/google-makes-1-... [2] https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#safe=off&q=pfizer+market+cap https://www.google.com/webhp?sourceid=chrome-instant&ion=1&e...
  - api 12y ago
    Well with SpaceX I was thinking more of the WhatsApp comparison. WhatsApp sold for $19 billion.
    - kkhire 12y ago
      The 2nd piratebay dude had the same argument, and there is definitely some value to that notion -- convincing all these bright engineers to go join the so/lo/mo products instead of helping to build upon the BIG ideas.
- dominotw 12y ago
  http://en.wikipedia.org/wiki/Fallacy_of_relative_privation http://en.wikipedia.org/wiki/Fallacy_of_relative_privation Why is increasing population indefinitely such a priority. Isn't there enough of us already?
  - juliangregorian 12y ago
    http://en.wikipedia.org/wiki/Terror_management_theory http://en.wikipedia.org/wiki/Terror_management_theory
vernie 12y ago
Never.
silencio 12y ago
Groupon has been growing some non-deals services in the past few years, I wonder if that's what's finally paying off? My restaurant uses their POS+payments platform moderately successfully (for certain values of success, the POS world is awful). It's a side of Groupon that most people don't know exists, that I think makes sense.
- wallyhs 12y ago
  Our restaurant also uses Groupon's POS and payments system. "Moderately successful" is how I would put it, although version 2 has improved things considerably. There is pressure to find a better POS, but I have yet to see one that I like. Most other point-of-sale systems that I've seen either fall short on everyday things like splitting checks, or they're technologically terrifying. The last demo I saw was of a cloud-based system with online reservations, and it looked alright up until I realized that the terminal was running Windows XP. This was last fall.
josefresco 12y ago
The Jury is still out. Groupon is still actively pushing growth strategies which can backfire in big ways. http://www.fool.com/investing/general/2014/10/06/why-groupon-stock-has-crashed-43-in-2014.aspx http://www.fool.com/investing/general/2014/10/06/why-groupon...
danteembermage 12y ago
Groupon has lots of debt, just not the long-term kind. Why is having debt due sooner somehow better? For reference check out this http://www.sec.gov/cgi-bin/viewer?action=view&cik=1490281&accession_number=0001490281-14-000064&xbrl_type=v# http://www.sec.gov/cgi-bin/viewer?action=view&cik=1490281&ac... their current assets and current liabilities are about the same, with cash and what they owe their merchants about the same too. That said, I always teach Groupon as the quintessential example of the power of having a negative payables cycle. They don't deserve any laughter for the growth engine they created; whether the business itself is sustainable is still an open question, but I'd say the same thing about GM so that comment doesn't really count as derision.
- cperciva 12y ago
  I always teach Groupon as the quintessential example of the power of having a negative payables cycle. I thought Amazon was the example everybody always used.
  - dudurocha 12y ago
    I think Amazon is quite the opposite, no? I'm really curious... Groupon receives the money then pays the owners in 30 days. Amazon does not have to pay its suppliers before and sell and receives money after?
    - cperciva 12y ago
      When Amazon launched, the standard contracts between publishers and bookstores had the stores paying 60 days after books were shipped to them. This made sense for conventional bookstores which would often have books on their shelves for months before selling them; but Amazon typically turned over their inventory every 30 days, meaning that -- even after the inevitable delay between charging a credit card and getting the money -- they received payment for books on average 2-3 weeks before they had to pay their suppliers. A lot of Amazon's early growth was funded by this negative working capital requirement. Now that Amazon has expanded from books into CDs and DVDs and electronics and clothing and toys and food and computing services, of course, it's quite possible that their cash flow picture is very different.
blt 12y ago
That page of text with ads took about 10 seconds to load and render on a 50-megabit internet connection with a 3.4 ghz i7 CPU and 16 gb memory. Let's start laughing at Fortune's web development team instead.
- azinman2 12y ago
  Was about 2 seconds on my iPhone and my home cable internet.
  - Killswitch 12y ago
    Also pretty quick on my crappy Comcast connection.
  - acchow 12y ago
    Try again after clearing cookies and cache. Really slow.
- elyrly 12y ago
  10+ javascript files loading. Nice to know i'm being tracked left right up and down.
  - pconner 12y ago
    Use Ghostery (or NoScript if you want the nuclear option)
- r00fus 12y ago
  It's possible you're on a heavily traffic-shaped connection - I've noticed similar at my workplace and to be honest I prefer it that way.
  - bduerst 12y ago
    It's tough to tell. Their LP has a bunch of external dependencies and js scripts to load, but this is on par with most other content-providers.
tehabe 12y ago
I think it is weird that Forbes calls Groupon a "social buying site", even though that just sell coupons online.
- pimlottc 12y ago
  It's always instructive to look at something from a different context, but the value provided by Groupon is not so much in selling coupons but in creating a system to capture and direct a userbase in order to create new coupons that didn't existing already.
- wnissen 12y ago
  That's what it was originally. The idea was that the coupon would only be sold if you got a certain number of people together. So it's sort of like these buying clubs that group a bunch of individuals together and buy from the low bidder. Once Groupon got big there were so many takers for each deal that the buying club aspect fell by the wayside.
  - tehabe 12y ago
    I remember a Dutch company which tried that, if a certain number of people would buy the would be slightly cheaper. But they couldn't really attract a lot of customers despite a huge budget across Europe. So it failed.
    - chkuendig 12y ago
      That was LetsBuyIt.com, see http://news.bbc.co.uk/2/hi/business/1122354.stm http://news.bbc.co.uk/2/hi/business/1122354.stm
  - alasdair_ 12y ago
    Remarkably, Massdrop is managing to continue to do exactly this. I wonder if they can scale past their techie/nerd niche.
mathattack 12y ago
As long as they find a way to stay a public company, they're a success in my book.
arfliw 12y ago
What a fluff job. There was one interesting sentence in the whole article: >Its revenue and EBITDA have consistently climbed in each year since going public, and there is plenty of cash on hand without a single cent of debt. What about their business? I don't even know what they do today, still daily deals? How is that going, how are the growth prospects? Did they pivot, will they need to? Asking the writer more than HN. That was crappy 'journalism'.
- debacle 12y ago
  Their EBITDA is their business.
  - sk5t 12y ago
    That's slightly less than constructive... the parent post well notes that the article should offer some insight into Groupon's actual earnings-producing operations, strategy, and future outlook on same.
Touche 12y ago
I still remember the height of the Groupon hype and a HN commenter saying that they could be bigger than Google.
- antimora 12y ago
  Till Groupon is entirely out of business, you cannot say for sure. Such open end claims should more specific to refute.
  - bdamm 12y ago
    Sure we can. Groupon is Cyber Pennysaver, at best. They can execute well, but it's very competitive. The business is high touch. Google helps to render or find almost every page on the Internet, thereby shaping reality for a huge number of people. Mind control is a lucrative business. Ergo, Groupon is a bit player compared to Google, and they always will be as long as the meaning of the businesses stay where they're at.
voronoff 12y ago
Groupon itself was the one pushing poor metrics for valuation and hiring a bunch of salespeople they never intended to keep more than a year past IPO. They artificially pumped their price, and should be derided for that even if they made money doing so.
- LanceH 12y ago
  It's a good thing IPO's are professionally underwritten and that the only people with access to IPO shares are the sophisticated investors who surely saw through all of this.
  - lmm 12y ago
    It's a public offering; the defining characteristic of an IPO is that it means that the shares are available to be bought by widows, orphans, and general idiots, rather than just accredited investors.
JonFish85 12y ago
To be fair, Groupon did a lot of things right. * They grew insanely fast for several years in a row. * They had crazy usage numbers. * They convinced VCs they would go public at a huge valuation. * They got a huge buyout offer from Google. * They IPOed, giving the company a $12B valuation and bringing in billions in cash while giving investors high multiples of their investment. All of those things are tremendous successes, not worth laughing at. Now from an outside perspective, they're not a traditionally successful company. They're currently worth about 1/4 of their day 2 stock price. They're trying to find a better business model (Groupon Goods?), because their daily deals wasn't cutting it. The company was, in my opinion, a pump-and-dump type of company: not built for the long haul, but for raising the next round of cash. Laughing at Groupon? I'd be more jealous: they were able to complete a sprint, but so far in the marathon, they're not looking like a company built to last. They look like a company that is using the IPO cash to search for something to sustain themselves, while cutting costs to extend their runway. To say that's "successful" is a bit of a stretch, in my mind. Their success was in hitting all the right metric for a large IPO. Since then, it's been a bit of a dud.
- tinkerrr 12y ago
  Funny how every single 'right' thing they did benefits the early owners only and no one who buys the company stock thereafter. Successful companies are seldom built on the principle of maximizing value for yourself while handing lemons down to the next person foolish enough to invest in your company.
  - JonFish85 12y ago
    I completely agree; I think a lot of startups these days are built on the same principles. Uber comes to mind, specifically. I think the name of the game there is to get to an exit before the regulators really start to get involved, because those will only eat away cash/value. The same applies to AirBnB (again, only in my opinion). So in general, these types of startups are really just sprinting to an exit, growing insanely fast to benefit the early people: founders and investors. Once it's public, they've cashed in their stock, so it's up to the new guard to figure out how to turn the growth company into a successful, long-term company.
shittyanalogy 12y ago
23 billion down to 4.9 billion...
tsm 12y ago
Disclaimer: Groupon engineer (but not speaking for company). Groupon's a lot more than daily deals now—that (what we call "Local") is still a big part of the business, but there is also Goods, Getaways, our POS/inventory management system, and Snap! by Groupon (in addition to several other things I'm probably forgetting). And even in Local the emphasis has shifted from daily emails ("push") to various "pull" strategies. It's always tough when you fire your founder and CEO, but the company's been recovering steadily and I have faith in upper management's ability to continue increasing revenue and diversifying the product offering.
- brador 12y ago
  > daily emails ("push") to various "pull" strategies. I guess push is notifying the user, but what's pull?
  - alasdair_ 12y ago
    Have a lot of content and "pull" users to the site to experience it. Part of that is having Yelp-style merchant pages with reviews on them, part is having a lot more editorial and blogger content and part is building in search so you can find, say, "things to do in San Francisco" or whatever more easily.
- mooreds 12y ago
  I'm a happy Groupon user. Not sure if it is working for the companies that I buy Groupons for, but as a consumer I certainly review those emails.
justboxing 12y ago
Andrew Mason is having the last laugh, all the way to the Bank. Last time I checked, despite being fired from the Company he created out of a Wordpress Blog, his nett worth was $200 MILLION. Source: http://www.cnbc.com/id/100512677 http://www.cnbc.com/id/100512677
- staunch 12y ago
  Most people who create something worth $5 billion end up with a lot more than $200M. He earned it.
- puranjay 12y ago
  And just in case you forget that he is, indeed, laughing all the way to the bank, he made an album of 'business rock' to help you remember. http://mashable.com/2013/07/02/andrew-masons-hardly-workin/ http://mashable.com/2013/07/02/andrew-masons-hardly-workin/ I feel nothing but jealousy about his story. In my world, we don't laugh at billion dollar businesses
marjuk 12y ago
One thing I don't understand that how is firing founding CEO serves to be keeping the company growing and finding new revenue sources? isn't just a terrifying signal to the market that the board has lost faith in the long-term viability of the company by making such big decisions as firing a founder CEO?
dennisbest 12y ago
Fine. But I reserve to laugh at Fortune. This line in the article stands out: "If you want to criticize someone for overvaluing Groupon, take a good long look at public market investors." Aren't they doing THAT in this article?
Eleutheria 12y ago
Groupon is like Blackberry. They're already dead but nobody has told them.
Dylan16807 12y ago
This is ridiculous. Groupon hired the people that set that valuation. It's completely reasonable to mock Groupon for it.
tw04 12y ago
Failing to take Google's offer is proof they did over value themselves, so his analogy quickly falls on it's face.

103 points by jasondc 12y ago

api 12y ago

I'm not laughing. I'm just perpetually a tad depressed that stuff like this is apparently more valuable than defeating aging, fixing our economy in fundamental ways, or making life mulitplanetary. Hell, it's usually more more valuable and profitable than even minor and mid tier innovations in the IT sector.

serve_yay 12y ago
The point isn't really Groupon, the point is that VCs and other investors are commonly thought of as chasing shiny, stupid things. But in the case of Groupon, public-market investors overvalued Groupon and in that way acted like our caricature of dumb, credulous, bubble-agitating VCs.
- notahacker 12y ago
  Few of the people that called Groupon a pump and dump before it happened ever had much regard for the institutional[1] and retail investors they dumped the stock on. Interestingly enough, one of the founders disagrees with all those listed "buy" ratings to the extent of selling >90% of his shareholding on the open market at well below their price targets at the back end of last week. http://sleekmoney.com/bradley-a-keywell-sells-500000-shares-of-groupon-stock-grpn/115584/ http://sleekmoney.com/bradley-a-keywell-sells-500000-shares-... [1]although some of the mutual fund investors the article sniggers at for rushing to buying secondary market shares in the private market probably made out before the post-IPO bubble burst too... Edit: I stand corrected on the founder share sale, which appears to be part of a more orderly divestment than my source claimed.
  - adambratt 12y ago
    He's been selling 500,000 shares every month since they've IPO'd. That link totally misquoted how much he has remaining. He has over 30 million shares still. I have no idea where the author pulled out that 40,000 share remark. http://www.nasdaq.com/symbol/grpn/insider-trades http://www.nasdaq.com/symbol/grpn/insider-trades
gibybo 12y ago
>stuff like this is apparently more valuable than defeating aging, fixing our economy in fundamental ways, or making life mulitplanetary. It's not. Groupon is worth $5 billion. Any of those things would be worth trillions.
- Kalium 12y ago
  The difference is that Groupon is many times easier to execute than any of those.
- api 12y ago
  "Any of those things would be worth trillions." So where's the investment capital for them then? They're all chronically underfunded. The difference, I think, is risk. Any one of those would be worth trillions if it worked, but the risk of any approach failing is very high.
  - ianferrel 12y ago
    The other difference is capturing the surplus. Fixing the economy would be worth trillions, but how do you get your piece of it? It's much easier to capture the surplus if you can insert yourself into the payment process for an already existing product.
    - api 12y ago
      That's why IMHO only governments can do those kinds of things right now. Only governments can make high-risk-high-payoff extremely broad and long-duration investments and then capture the upside through overall economy-wide growth (via taxation and other means). Nobody else can both afford the risk and capture some of the upside. It's possible that in the future someone will invent financial vehicles to make it possible to make those kinds of investments in the private sector, but it hasn't happened yet. Edit: in a sense there is already something, namely government bonds, ETFs, and long-term positions in currency markets. But those are too coarse-grained. What we need is some way for private investors to make private investments in things that are all of: high risk, high payoff, and broad payoff.
savanaly 12y ago
Marginal value versus total value, my friend. While those endeavors you mentioned would probably have enormous benefit once achieved, they are so lofty that the marginal usefulness of a dollar put towards them is much less than the marginal usefulness of a dollar put towards a more modest goal. And it's worth noting that Groupon seems to have a social purpose that I'm not sure most people who aren't economists would be able to articulate: abetting price discrimination, and presumably eeking us closer to the efficiency in those markets that use it.
- lurcio 12y ago
  Beautifully put. Marginal innovations are like a greedy algo, & its not like the lofty goals are devoid of funding. Progress there feels so slow because the search space is so complex/expansive and there are so many local minima to flounder in.
mikeash 12y ago
Defeating aging? I'd never be able to afford that even if it happened. Fixing our economy? The guys at the top will always find a way to screw me regardless. Making life multiplanetary? I won't be able to go, nor my kids, so what's the point? Oh, save 50% on a meal at a restaurant I never went to before? Hell yes, sign me up! This will distract me from the depressing reality of life for a good ninety minutes at least. (This is a parody of the average Joe, not actually my own thoughts.)
- lurcio 12y ago
  They seem quite rational to me.
  - mikeash 12y ago
    I'm not passing judgment. I disagree with those statements but I have a pretty hard time giving any actual reasons for why.
ta75757 12y ago
It's not more valuable, it's just possible, unlike most (all?) of the things you listed. (Not trying to be a jerk, those things are just virtually impossible with today's technology.)
imgabe 12y ago
Google and Fidelity just invested $1 billion [1] for 10% of SpaceX, putting its valuation at $10 billion, or twice that of Groupon, so I'm not sure where you're getting information that things like space exploration are less valued. It would probably be much higher, but at this point space travel is still very risky, so there's a high chance it won't pay off at all, compared to something technologically much easier to accomplish, like emailing people coupons. Any one pharmaceutical company would be valued a couple of orders of magnitude higher than Groupon, let alone one that actually "defeated aging". Billions and billions are already invested in that. Pfizer for example, has a market cap over $200B. [2] [1] http://www.nytimes.com/2015/01/21/technology/google-makes-1-billion-investment-in-spacex.htm http://www.nytimes.com/2015/01/21/technology/google-makes-1-... [2] https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#safe=off&q=pfizer+market+cap https://www.google.com/webhp?sourceid=chrome-instant&ion=1&e...
- api 12y ago
  Well with SpaceX I was thinking more of the WhatsApp comparison. WhatsApp sold for $19 billion.
  - kkhire 12y ago
    The 2nd piratebay dude had the same argument, and there is definitely some value to that notion -- convincing all these bright engineers to go join the so/lo/mo products instead of helping to build upon the BIG ideas.
dominotw 12y ago
http://en.wikipedia.org/wiki/Fallacy_of_relative_privation http://en.wikipedia.org/wiki/Fallacy_of_relative_privation Why is increasing population indefinitely such a priority. Isn't there enough of us already?
- juliangregorian 12y ago
  http://en.wikipedia.org/wiki/Terror_management_theory http://en.wikipedia.org/wiki/Terror_management_theory

vernie 12y ago

Never.

silencio 12y ago

Groupon has been growing some non-deals services in the past few years, I wonder if that's what's finally paying off? My restaurant uses their POS+payments platform moderately successfully (for certain values of success, the POS world is awful). It's a side of Groupon that most people don't know exists, that I think makes sense.

wallyhs 12y ago
Our restaurant also uses Groupon's POS and payments system. "Moderately successful" is how I would put it, although version 2 has improved things considerably. There is pressure to find a better POS, but I have yet to see one that I like. Most other point-of-sale systems that I've seen either fall short on everyday things like splitting checks, or they're technologically terrifying. The last demo I saw was of a cloud-based system with online reservations, and it looked alright up until I realized that the terminal was running Windows XP. This was last fall.

josefresco 12y ago

The Jury is still out. Groupon is still actively pushing growth strategies which can backfire in big ways. http://www.fool.com/investing/general/2014/10/06/why-groupon-stock-has-crashed-43-in-2014.aspx http://www.fool.com/investing/general/2014/10/06/why-groupon...

danteembermage 12y ago

Groupon has lots of debt, just not the long-term kind. Why is having debt due sooner somehow better? For reference check out this http://www.sec.gov/cgi-bin/viewer?action=view&cik=1490281&accession_number=0001490281-14-000064&xbrl_type=v# http://www.sec.gov/cgi-bin/viewer?action=view&cik=1490281&ac... their current assets and current liabilities are about the same, with cash and what they owe their merchants about the same too. That said, I always teach Groupon as the quintessential example of the power of having a negative payables cycle. They don't deserve any laughter for the growth engine they created; whether the business itself is sustainable is still an open question, but I'd say the same thing about GM so that comment doesn't really count as derision.

cperciva 12y ago
I always teach Groupon as the quintessential example of the power of having a negative payables cycle. I thought Amazon was the example everybody always used.
- dudurocha 12y ago
  I think Amazon is quite the opposite, no? I'm really curious... Groupon receives the money then pays the owners in 30 days. Amazon does not have to pay its suppliers before and sell and receives money after?
  - cperciva 12y ago
    When Amazon launched, the standard contracts between publishers and bookstores had the stores paying 60 days after books were shipped to them. This made sense for conventional bookstores which would often have books on their shelves for months before selling them; but Amazon typically turned over their inventory every 30 days, meaning that -- even after the inevitable delay between charging a credit card and getting the money -- they received payment for books on average 2-3 weeks before they had to pay their suppliers. A lot of Amazon's early growth was funded by this negative working capital requirement. Now that Amazon has expanded from books into CDs and DVDs and electronics and clothing and toys and food and computing services, of course, it's quite possible that their cash flow picture is very different.

blt 12y ago

That page of text with ads took about 10 seconds to load and render on a 50-megabit internet connection with a 3.4 ghz i7 CPU and 16 gb memory. Let's start laughing at Fortune's web development team instead.

azinman2 12y ago
Was about 2 seconds on my iPhone and my home cable internet.
- Killswitch 12y ago
  Also pretty quick on my crappy Comcast connection.
- acchow 12y ago
  Try again after clearing cookies and cache. Really slow.
elyrly 12y ago
10+ javascript files loading. Nice to know i'm being tracked left right up and down.
- pconner 12y ago
  Use Ghostery (or NoScript if you want the nuclear option)
r00fus 12y ago
It's possible you're on a heavily traffic-shaped connection - I've noticed similar at my workplace and to be honest I prefer it that way.
- bduerst 12y ago
  It's tough to tell. Their LP has a bunch of external dependencies and js scripts to load, but this is on par with most other content-providers.

tehabe 12y ago

I think it is weird that Forbes calls Groupon a "social buying site", even though that just sell coupons online.

pimlottc 12y ago
It's always instructive to look at something from a different context, but the value provided by Groupon is not so much in selling coupons but in creating a system to capture and direct a userbase in order to create new coupons that didn't existing already.
wnissen 12y ago
That's what it was originally. The idea was that the coupon would only be sold if you got a certain number of people together. So it's sort of like these buying clubs that group a bunch of individuals together and buy from the low bidder. Once Groupon got big there were so many takers for each deal that the buying club aspect fell by the wayside.
- tehabe 12y ago
  I remember a Dutch company which tried that, if a certain number of people would buy the would be slightly cheaper. But they couldn't really attract a lot of customers despite a huge budget across Europe. So it failed.
  - chkuendig 12y ago
    That was LetsBuyIt.com, see http://news.bbc.co.uk/2/hi/business/1122354.stm http://news.bbc.co.uk/2/hi/business/1122354.stm
- alasdair_ 12y ago
  Remarkably, Massdrop is managing to continue to do exactly this. I wonder if they can scale past their techie/nerd niche.

mathattack 12y ago

As long as they find a way to stay a public company, they're a success in my book.

arfliw 12y ago

What a fluff job. There was one interesting sentence in the whole article: >Its revenue and EBITDA have consistently climbed in each year since going public, and there is plenty of cash on hand without a single cent of debt. What about their business? I don't even know what they do today, still daily deals? How is that going, how are the growth prospects? Did they pivot, will they need to? Asking the writer more than HN. That was crappy 'journalism'.

debacle 12y ago
Their EBITDA is their business.
- sk5t 12y ago
  That's slightly less than constructive... the parent post well notes that the article should offer some insight into Groupon's actual earnings-producing operations, strategy, and future outlook on same.

Touche 12y ago

I still remember the height of the Groupon hype and a HN commenter saying that they could be bigger than Google.

antimora 12y ago
Till Groupon is entirely out of business, you cannot say for sure. Such open end claims should more specific to refute.
- bdamm 12y ago
  Sure we can. Groupon is Cyber Pennysaver, at best. They can execute well, but it's very competitive. The business is high touch. Google helps to render or find almost every page on the Internet, thereby shaping reality for a huge number of people. Mind control is a lucrative business. Ergo, Groupon is a bit player compared to Google, and they always will be as long as the meaning of the businesses stay where they're at.

voronoff 12y ago

Groupon itself was the one pushing poor metrics for valuation and hiring a bunch of salespeople they never intended to keep more than a year past IPO. They artificially pumped their price, and should be derided for that even if they made money doing so.

LanceH 12y ago
It's a good thing IPO's are professionally underwritten and that the only people with access to IPO shares are the sophisticated investors who surely saw through all of this.
- lmm 12y ago
  It's a public offering; the defining characteristic of an IPO is that it means that the shares are available to be bought by widows, orphans, and general idiots, rather than just accredited investors.

JonFish85 12y ago

To be fair, Groupon did a lot of things right. * They grew insanely fast for several years in a row. * They had crazy usage numbers. * They convinced VCs they would go public at a huge valuation. * They got a huge buyout offer from Google. * They IPOed, giving the company a $12B valuation and bringing in billions in cash while giving investors high multiples of their investment. All of those things are tremendous successes, not worth laughing at. Now from an outside perspective, they're not a traditionally successful company. They're currently worth about 1/4 of their day 2 stock price. They're trying to find a better business model (Groupon Goods?), because their daily deals wasn't cutting it. The company was, in my opinion, a pump-and-dump type of company: not built for the long haul, but for raising the next round of cash. Laughing at Groupon? I'd be more jealous: they were able to complete a sprint, but so far in the marathon, they're not looking like a company built to last. They look like a company that is using the IPO cash to search for something to sustain themselves, while cutting costs to extend their runway. To say that's "successful" is a bit of a stretch, in my mind. Their success was in hitting all the right metric for a large IPO. Since then, it's been a bit of a dud.

tinkerrr 12y ago
Funny how every single 'right' thing they did benefits the early owners only and no one who buys the company stock thereafter. Successful companies are seldom built on the principle of maximizing value for yourself while handing lemons down to the next person foolish enough to invest in your company.
- JonFish85 12y ago
  I completely agree; I think a lot of startups these days are built on the same principles. Uber comes to mind, specifically. I think the name of the game there is to get to an exit before the regulators really start to get involved, because those will only eat away cash/value. The same applies to AirBnB (again, only in my opinion). So in general, these types of startups are really just sprinting to an exit, growing insanely fast to benefit the early people: founders and investors. Once it's public, they've cashed in their stock, so it's up to the new guard to figure out how to turn the growth company into a successful, long-term company.

shittyanalogy 12y ago

23 billion down to 4.9 billion...

tsm 12y ago

Disclaimer: Groupon engineer (but not speaking for company). Groupon's a lot more than daily deals now—that (what we call "Local") is still a big part of the business, but there is also Goods, Getaways, our POS/inventory management system, and Snap! by Groupon (in addition to several other things I'm probably forgetting). And even in Local the emphasis has shifted from daily emails ("push") to various "pull" strategies. It's always tough when you fire your founder and CEO, but the company's been recovering steadily and I have faith in upper management's ability to continue increasing revenue and diversifying the product offering.

brador 12y ago
> daily emails ("push") to various "pull" strategies. I guess push is notifying the user, but what's pull?
- alasdair_ 12y ago
  Have a lot of content and "pull" users to the site to experience it. Part of that is having Yelp-style merchant pages with reviews on them, part is having a lot more editorial and blogger content and part is building in search so you can find, say, "things to do in San Francisco" or whatever more easily.
mooreds 12y ago
I'm a happy Groupon user. Not sure if it is working for the companies that I buy Groupons for, but as a consumer I certainly review those emails.

justboxing 12y ago

Andrew Mason is having the last laugh, all the way to the Bank. Last time I checked, despite being fired from the Company he created out of a Wordpress Blog, his nett worth was $200 MILLION. Source: http://www.cnbc.com/id/100512677 http://www.cnbc.com/id/100512677

staunch 12y ago
Most people who create something worth $5 billion end up with a lot more than $200M. He earned it.
puranjay 12y ago
And just in case you forget that he is, indeed, laughing all the way to the bank, he made an album of 'business rock' to help you remember. http://mashable.com/2013/07/02/andrew-masons-hardly-workin/ http://mashable.com/2013/07/02/andrew-masons-hardly-workin/ I feel nothing but jealousy about his story. In my world, we don't laugh at billion dollar businesses

marjuk 12y ago

One thing I don't understand that how is firing founding CEO serves to be keeping the company growing and finding new revenue sources? isn't just a terrifying signal to the market that the board has lost faith in the long-term viability of the company by making such big decisions as firing a founder CEO?

dennisbest 12y ago

Fine. But I reserve to laugh at Fortune. This line in the article stands out: "If you want to criticize someone for overvaluing Groupon, take a good long look at public market investors." Aren't they doing THAT in this article?

Eleutheria 12y ago

Groupon is like Blackberry. They're already dead but nobody has told them.

Dylan16807 12y ago

This is ridiculous. Groupon hired the people that set that valuation. It's completely reasonable to mock Groupon for it.

tw04 12y ago

Failing to take Google's offer is proof they did over value themselves, so his analogy quickly falls on it's face.