Groupon Could Challenge Google's Record IPO

jbrodkin writes "Months after spurning Google's $6 billion takeover bid, Groupon may topple Google's IPO record with an initial public offering worth $25 billion. Google went public in 2004 with a $24.6 billion valuation and Groupon seems to be on the verge of an IPO worth even more, Dow Jones VentureSource says. Even if Groupon doesn't break Google's record, it seems likely to become only the fifth venture-backed company to achieve a $10 billion valuation at the time of its IPO."

Comments

Groupon

[viablos]

Groupon has a great business idea, AND it's mainly targeted to girls and women who also spend a lot for beauty things. They make shitloads of money as well as does the partner companies and their users. Win-win-win.

Re:Groupon

[MetalliQaZ]

Actually users SPEND money. When advertisers say that you "save" money by taking advantage of a deal, they are altering reality. Saving money is the opposite of buying.

Still, when used responsibly, it IS a win-win-win. I have used it to great effect.

-d

Re:Groupon

[Anonymous Coward]

According to the site, Groupon users have saved about $1.5 billion. With many offers being half price, Groupon's total turnover ever would also be about $1.5 billion. How is a company with a $1.5 billion all-time turnover worth $25 billion? Count me out.

Re:Groupon

[nicholas22]

It's a fail waiting to happen.

Re:Groupon

[MikeDirnt69]

Same thing happens on fast food. People end up paying more with the illusion of saving money buying big combos.

Re:Groupon

[garcia]

I see them as targeting restaurants mainly and generally screwing those businesses over when they "advertise" for them.

Groupon exists to advertise for itself. Its userbase is loyal to Groupon, not the businesses advertised. When that userbase is exhausted (and it will be) it will become junk.

Re:Groupon

[Anonymous Coward]

What is their moat? or sustainable competative advantage?

I use kijiji.ca (local classified site like craigslist) a lot, they now have daily deals.

They already have local traffic, and people searching for deals.
Since you specify which area they even know where you're looking for deals.
What does groupon offer that they or someone else can't or doesn't offer?

Re:Groupon

[aardwolf64]

Obligatory XKCD:

http://xkcd.com/870/

Re:Groupon

[larry bagina]

Users don't actually save unless it's something they were otherwise going to pay full price for.

Partners lose money. Example: $100 gift certificate sells for $50, groupon gets $25, they get $25.

Re:Groupon

[Cyberllama]

I concur. I don't get this at all. I thought groupon was nuts not to take Google's offer, but this -- this is madness. They have a larger user base for sure, but their current business model does not support this valuation.

Re:Groupon

[cpu6502]

>>>When advertisers say that you "save" money by taking advantage of a deal, they are altering reality.

If you are buying something you need, like money, and the advertiser gives you 50% off, then you are indeed saving money. Unfortunately most people buy things they don't need (shoes, that "cute dress", games, and other crap). Which is why the average American household is $120,000 in debt.

Plus another ~$140,000 national debt on top of it. The US is arguably the poorest first-world country - unable to repay what it owes.

Re:Groupon

[theBully]

When advertisers say that you "save" money by taking advantage of a deal, they are altering reality. Do you mean to say advertisers are not honest? I don't really need to spend money to save money? There's no free in "buy 4 get one free"? Well....well...this is...very distressing...I,...I,...need to rethink my whole life. All these years trying to save by taking on all the deals...

NO. It's impossible. Get you're facts straight. Next you'll tell us there's no Santa and no Easter Bunny and that we've evolved from some chemical mixture struck by lightning. Get real, wakeup!

Re:Groupon

[Firehed]

Depends on your intentions. If you were going to buy it anyway at full price, then you are saving money - although obviously more in an opportunity cost sense than a savings account sense. If you wanted to buy it but weren't willing to pay the normal price, then you were just doing the free market thing. If you bought it simply because it was being sold at a discount, then I've got a piece of land in which you might be interested.

Re:Groupon

[h4rr4r]

Screwing them over? How?

The restaurant uses them to sell X $25 off a $50 meal coupon basically. If the restaurant is dumb enough to not have this work out as a profit for them, they are going out of business no matter what groupon does. The groupon user base is not loyal to groupon, if they had a competitor these folks would use them just as much. Welcome to a functioning market. Buyers are rationally attempting to get the best deal they can, and sellers trying to guarantee minimum set of sales.

Re:Groupon

[Cyberllama]

Occasionally they will have deals for things you would have bought anyways, and you end up paying less than you might have. It's still spending, but its a net savings, at least. The problem is, in that case, the business gains nothing. They aren't getting any new exposure or a customer out of it -- they're just basically giving a regular a discount for no real reason. This happens a lot and may be one of the reason why a large number of business that have offered Groupons have low satisfaction ratings with the whole experience. If I had money, I'd be shortselling the hell out of this stock -- but then again I wouldn't have bought Apple stock after they announced the iPod either, so what do I know?

Re:Groupon

[GameboyRMH]

Makes sense you would say that, since Groupon is a Microsoft partner (through Bing deals) and you are a filthy Microsoft shill.

Re:Groupon

[Anonymous Coward]

We regularly find promotions on pampers, but they tend to be short term. We bag as many as we can, because with three toddlers we will use them, sooner or later.

And in the meantime, he boxes serve as toys.

Re:Groupon

[Kral_Blbec]

That brings up rule #1 about deal hunting. It's only a good deal if you were already planning on buying it sooner or later.

Re:Groupon

[Desler]

For the same reason that Facebook and Twitter are claimed to be worth billions of dollars? Because some idiot thinks they are worth that much and are willing to flush their money down the toilet. When the inevitable Web 2.0 crash happens it'll be great to laugh at all the paper "millionaires" who threw money at these businesses that produced nothing of value.

Re:Groupon

[h4rr4r]

You could not be more wrong.

Users save money when they purchase something they would have bought at full price otherwise. Partners get a guaranteed amount of money and they get it now, not later. They also get the opportunity to show their product or service to what may be a new customer. That $100 gift certificate for $50 normally comes as 4 $25 certificate that you can only use one at a time on something costing at least $50. This means if the retailer has more than a 100% markup they can still be making money. Another strategy that is often employed is that only some goods or services are available for the offer. This is common in restaurants, alcohol being what is often excluded.
Which for a fine dining restaurant can easily cost as much or more than the food.

Re:Groupon

[Abstrackt]

Saving money is the opposite of buying.

Um, no? Saving is the opposite of spending. If I was going to buy a product anyway any discount is money I get to keep. It only stops being savings when you buy something only because it's on sale.

Re:Groupon

[Anonymous Coward]

Said before, and worth saying again: Groupon is the wife that comes home with a $400 blouse and says "look how much money I saved".

Re:Groupon

[SomeJoel]

If you are buying something you need, like money, and the advertiser gives you 50% off, then you are indeed saving money.

That's true. I spend at least half my income on money. But I never buy it at a discount store, because the quality just isn't there.

Re:Groupon

[Kral_Blbec]

You're discounting two important factors
1)the value of having new customers come in. Make the first experience positive and they might return, making that gc loss a long term gain.
2)the high number of gcs that never get redeemed.

Re:Groupon

[jcr]

They make shitloads of money

Got any actual figures? A $25B market cap sounds awfully bubbly to me.

-jcr

Re:Groupon

[Zerth]

In 2007, Groupon had 0 revenue. In 2010, they had ~760 million in revenue.

I think you can see where that graph is going.

http://xkcd.com/605/

Re:Groupon

[Surt]

Do you have a source for that 120k in debt stat? I can't believe that could be true unless they are counting a mortgage against you without giving you credit for the value of the house.

Re:Groupon

[Anonymous Coward]

Actually users SPEND money. When advertisers say that you "save" money by taking advantage of a deal, they are altering reality. Saving money is the opposite of buying.

I bet you and the vast majority of nerds reading this site didn't know the difference until you read this strip: http://xkcd.com/870/

Morons.

Re:Groupon

[Anonymous Coward]

If the debt is gone, it means the dollar purchases at least 14% more than it does currently.
You can do your part at this site.
That'd be equivalent of dropping gas prices to $2.83/gal from $3.30.

Until Congress is running a surplus, it's likely throwing good money after bad.
It is possible to open a foreign bank account with direct deposit.

Re:Groupon

[speroni]

True but if there are a number of providers for a single product. The seller who provides a discount through Groupon will win out over the competitors selling the same product.

Re:Groupon

[Anonymous Coward]

No I'm not. You're an idiot.

Re:Groupon

[thedonger]

Still, when used responsibly, it IS a win-win-win.

If Groupon was only used responsibly their IPO would be worth - well, they probably wouldn't be worth an IPO.

I don't see them as a company who will change the internet (like Google or Facebook). I wish them luck, but I wonder why anyone would think they are a good long-term investment.

When someone offers you $6 billion dollars for your company you say 'yes!'

Re:Groupon

[dadioflex]

Tell it like it is, brother. I find that with money it pays to make your own, that way you know EXACTLY what goes into it.

Re:Groupon

[Anonymous Coward]

...I thought groupon was nuts not to take Google's offer, but this -- this is madness....

THIS. IS. GROUPON!!!!!!
-kicks Cyberllama between the legs--

Re:Groupon

[dadioflex]

Um, if you "buy" a house and it costs, say, 200k with 40k down and the rest mortgaged, you have a 200k asset and a 160k to pay off. So you have a 40k asset right? No. Over 25-30 years it'll cost you around 320k to pay off that 160k, or some other multiple of 160k depending on how fast you pay it off, what the terms of the mortgage is and the interest rate etc. etc.

Re:Groupon

[garcia]

Because the restaurant will run into several things:

1. An overload of customers they cannot handle especially right before the coupon is set to expire from it's inflated value.

2. Coupons are generally used to build customer bases. Because the customers are loyal to Groupon, they aren't interested in the restaurant itself, just the deal they got from Groupon. Thus the advertisement does nothing but give them even less money to make and little to no repeat business.

Re:Groupon

[dcollins]

Forbes article 6/24/2010, probably elsewhere, too: http://blogs.forbes.com/moneybuilder/2010/06/24/one-big-difference-between-chinese-and-american-households-debt/

It does include mortgage debt. Perhaps this will suit you better: U.S. household debt is 136% of income, in urban China it's 17%. Meanwhile, more urban Chinese own their own home (85% to 69%), and those who do are far more likely to do so outright (11% with mortgage vs. 70% in U.S.).

Re:Groupon

[MoriaOrc]

I'm not sure if you realize how coupons like that work for the seller. I would be shocked if anyone offering a 50% off special for an item is taking anything but a decent loss on that one sale. The idea for a business like a restaurant offering a one-time 50% off is to entice people who would not have otherwise dined their to do so at a trial price. Then, when some non-trivial percent of those first time buyers become regular customers who pay full price, you make back the money over time.

When a local retailer offers a coupon through Groupon, they have to pay Groupon some amount and then pay more per user as the Groupon users make use of the coupon. If everything were working as intended for the retailer, enough of those Groupon users would then become regulars for the increased sales over time to justify the cost. However, if Groupon users are (for example) more avid deal hunters on average then those of other coupon outlets, and most of them will only have a meal at an expensive restaurant if there is a 50% off deal, the restaurant will not gain very much (if any) new regular business and the cost of running a special through Groupon wasn't worth it. In that case, they would have been better off putting their coupon out in a local mailer, or running an ad in the local paper, or just investing it in a making better product.

Now, Groupon users do have a reputation for having a very low conversion rate from one-time deal shoppers to regular customers. The reason I gave is just one possibility I speculated on, but the stereotype exists. The point the GP is making is that if too many businesses get burned by bad experiences with Groupon, then eventually the quality of the deals offered will drop. Either the percentage discount per deal will drop since the business can't afford to lose so much money per sale for a very low conversion rate, or only coupons that expect to make money on a single sale (like "10% off a tire rotation* at Ed's discount tires. *with the purchase of a full brake service."). When that happens (the GP speculates that it is inevitable), the site will lose much of its apparent value

Re:Groupon

[Anonymous Coward]

Look, I have four corrugated steel walls with a blanket for a door and bamboo for a roof. :rolleyes:

Re:Groupon

[emgeemg]

1. An overload of customers they cannot handle especially right before the coupon is set to expire from it's inflated value.

There isn't a business in this world that has ever (seriously) complained about having too many customers.

2. Coupons are generally used to build customer bases. Because the customers are loyal to Groupon, they aren't interested in the restaurant itself, just the deal they got from Groupon. Thus the advertisement does nothing but give them even less money to make and little to no repeat business.

Anything that gets a customer in the door is a good thing. Every customer that comes through the door is a customer who might become a repeat customer. You could argue over the relative effectiveness of Groupon versus other advertising methods (and advertising is exactly what this is), but to say that Groupon in and of itself has no value (in fact, you imply that it has NEGATIVE value) to a business is ridiculous.

Re:Groupon

[v1]

A common good rule of thumb is to only pay attention to coupons, discounts, and sales for things you were already going to buy. The best use of coupons and sales is to look for them after you already have figured out what you are buying, as a way to lower the cost you were already committing to. If you see a coupon or sale and then think to yourself, "Hmmm, should I buy that? It's such a good deal!" then you're a sucker.

And that's what the companies want you to do, make an impulse buy from the lure of the coupon. Coupons are advertising in disguise, that only provide value to that rare breed of intelligent consumer that knows how best to use them.

Re:Groupon

[Anonymous Coward]

Win-win-win.

Tri-winning!

Re:Groupon

[Anonymous Coward]

You're an idiot.

If you are buying something you need, like money,

Huh?

Unfortunately most people buy things they don't need (shoes

You don't wear shoes?

Re:Groupon

[h4rr4r]

These restaurants already require minimum purchase amounts and exclude things like alcohol. If they can't make money with that nothing will help them. The restaurant needs factor those sorts of things in and the conversion rate as well. Groupon will indeed then offer poorer deals, its apparent value is absurdly high anyway.

Re:Groupon

[russotto]

Um, if you "buy" a house and it costs, say, 200k with 40k down and the rest mortgaged, you have a 200k asset and a 160k to pay off. So you have a 40k asset right? No.

You initially have a 200k asset and a 160k liability.

Over 25-30 years it'll cost you around 320k to pay off that 160k, or some other multiple of 160k depending on how fast you pay it off, what the terms of the mortgage is and the interest rate etc. etc.

Sure, but you don't count future liabilities against current assets.

Re:Groupon

[Simon80]

Mod parent shill.

Re:Groupon

[Anonymous Coward]

I recently made a trip through The southern US and stopped and had lunch at a cafe in Valdosta, GA, had a nice conversation about business in the area. Some stuff about the cost of occupying the building was too much. I asked him about places in ft myers, because I noticed that every restaurant in ft myers is "new!" and "under new management!", figuring it must cost a lot for the property. He said "nope, that's because all those places are doing business during spring break, and when that is over...it's just old people that are left. So the business shuts down."

Groupon is kind of like that. Get a bunch of people to come to your store for the free/cheap stuff. When your special ends, they have moved on to the next free deal. It's more damaging than helpful if you want to run a stable business for things like paying mortgage, raising a family, etc. If you just need to liquidate a lot of crap, groupon is the way...but then again, so is ebay.

The only reason Groupon keeps getting discussed is that investors have pumped its value like crazy. Groupon and facebook are the faces of our new tech bubble. They are the pets.com and "buy groceries from home" of our time.

Re:Groupon

[Anonymous Coward]

It's worth noting that in China the concept of a long-term, mortgage-backed home loan is very recent. Until recently banks in China would typically only finance loans with a term of 1 year -- it might be possible after a year to take out another loan for another year, but that wasn't guaranteed. As such, bank-financed home purchases were virtually non-existant.

So if you want to make a worthwhile comparison you should at least pick a market where the same consumer choices are possible. Or if you're trying to say that China's system is inherently better you should comment on its differences, not just quote some random consumer statistic.

Re:Groupon

[jonbryce]

No, Groupon's turnover is the commission they make from the sale of each voucher, which I believe is about 30% or $450m.

Re:Groupon

[TooMuchToDo]

You're not poor until the debt comes due. And depending on the creditor, you simply walk away. Boom, clean balance sheet, as long as your assets aren't securing the debt.

Re:Groupon

[TooMuchToDo]

I thought groupon was nuts not to take Google's offer, but this -- this is madness. They have a larger user base for sure, but their current business model does not support this valuation.

It'll be interesting to see what investors get burned by this. Facebook at least can keep trying to figure out how to monetize all it's users. Groupon? Anyone can do what they do. Your company only has value if only you can do what you do (copyright, patent, exclusive rights granted by the FDA, etc) or there is a high barrier to entry.

Re:Groupon

[TooMuchToDo]

There isn't a business in this world that has ever (seriously) complained about having too many customers.

Yes, there is. You want *profitable* customers. If you lose money on each customer, what are you going to do? Make it up on volume? (Insert "That's the joke" here)

Re:Groupon

[Starcom8826]

Interesting use of an example. Americans spend much less on clothing as compared to 30 years ago. The things that have increased the most over those decades are mortgages and health insurance, things that can't really be cut. That's the reason why the average American household is in debt. It's not because they're overconsuming.

Re:Groupon

[Anonymous Coward]

"Tri-winning!"

Charlie, is that you?

Re:Groupon

[billstewart]

I don't know - you can go out to Kinko's and have them make some for you, and they'll generally do a pretty good job....

Re:Groupon

[Anonymous Coward]

if you "buy" a house and it costs, say, 200k with 40k down and the rest mortgaged, you have a 200k asset and a 160k to pay off. So you have a 40k asset right? No.

Yes, it means you have $40k equity.

Over 25-30 years it'll cost you around 320k to pay off that 160k, or some other multiple of 160k depending on how fast you pay it off, what the terms of the mortgage is and the interest rate etc. etc.

Not disputed; you end up paying a shocking amount. However (assuming value of house doesn't drop, yadda yada) at any moment in time, you have at least $40k in equity. 25 years later, yes, you paid $320k for the house, but nevertheless you have a $200k asset and $0 debt.

You're complaining that interest is a bad deal. Ok, so maybe it is. That doesn't mean there's any sort of accounting fraud going on. Money misspent in the past may bring a tear of regret to your eye, but it doesn't magically mean your assets don't really exist.

Re:Groupon

[Anonymous Coward]

Given that margins in restaurants are generally less than 10%, there's no way restaurants make money on the people coming in with a 50% off Groupon. The point is that they get a bunch of people in their restaurant to try it out. I'm sure it's expensive, but marketing is expensive. I honestly don't know if restaurants like it or not, but they keep signing up, so it can't be all bad.

Re:Groupon

[Anonymous Coward]

Actually, it's worse than that. I spoke to a restaurant owner about this. This is a very high end establishment that has been suffering of late. Dinner for two normally $175. They are now selling groupons for that meal for $60. The kicker? Groupon takes 60% (or something thereabouts) of the $60. Net take for the restaurant for that $175 meal? $24 + tip (which is arguably large since it's meant to be on the original amount). Also, they end up with ill will from customers who don't understand that tax law requires sales tax be charged on the original amount, and of course they blame the restaurant in their reviews.

I love groupon, I do, but they seem to finish off struggling restaurants rather than saving them.

Re:Groupon

[Anonymous Coward]

There's also the competitive aspect, though. Suppose it's presumed that 2 days this week, neither of us are going to feel like cooking after we get home that night, so we're gonna go out to a restaurant. Somewhere. Some restaurant. Dunno which one.

They all cost roughly the same. Roughly. Yes, I'm cheating a little here. In fact, it's a damn lie, but somehow it works out as true, too.

So I buy the Foo Restaurant coupon. I wasn't really planning on going to Foo Restaurant. But I was gonna end up paying a restaurant bill anyway. That was inevitable; it's Foo that wasn't inevitable because I might have gone to Bar Restaurant.

Am I a sucker?

The argument that I'm a sucker, is that surely Foo isn't losing money on these coupons. If I "saved" $10 then surely they inflated the bill by $10.

But not so fast.. many of the costs of running a business are fixed, or not directly proportional to sales. The lights were going to be on and sucking the same energy whether there was 1 customer or 50 that night. The chef had to come to work and stay for 8 hours, regardless of how hard he ended up working. The rent or property tax every month doesn't vary. Just getting me to show up and spend money, and at Foo instead of going to Bar, was worth something to Foo. Maybe not $10, but more than $0. They don't have to inflate the bill by $10 to break even, so if they inflated it by $8, then I came out $2 ahead.

Re:Groupon

[superdave80]

It's a shame that house won't be worth more at the end of that 30 years. If you are going to factor the time value of money into this equation, you have to do it for the debt AND the asset.

And there is also the fact that I can pay off/refinance that mortgage whenever I feel like, so you can't assume that the 160k mortgage will cost me 320k. It doesn't work that way. Otherwise, you could make up any number for credit card debt, since it can be paid off in just about any time frame that you can imagine.

Re:Groupon

[superdave80]

Debt vs. income isn't a very useful indicator of anything. Net worth is probably a better indicator of how well you are doing financially. I have 'debt' (just my mortgage) that is about 150% of my income. By the metric you show, I'm actually worse than average. However, my total assets are about four times my annual salary, i.e., I have way more money than debt.

Re:Groupon

[superdave80]

They lose money on that customer on that visit. The hope is that by getting them there, they can turn into a regular, full-price-paying customer for many more visits.

Re:Groupon

[TooMuchToDo]

Which is a gamble to say the least. Why waste your margin/advertising budget on Groupon when you can spend it in more productive ways. And before you say "How do you know what is more productive?", I worked at Restaurant.com for a bit, and their business model is very close to GroupOn (but focused just on food service/dining). I've done my research.

Re:Groupon

[MoriaOrc]

I think the issue is that right now, most of the really good deals are from businesses who are taking the mindset I described. If Groupon loses out on those deals because they aren't working for the businesses, the site loses value. So, one way of looking at it is that Groupon has built it's apparent value by "screwing over" the businesses offering the deals it has become known for because it can't deliver on the conversion rate they are expecting.

Re:Groupon

[martin-boundary]

It's only a good deal if you were already planning on buying it sooner or later.

Slight correction: it's only a good deal if you were already planning on buying it now. Time has money value.

If you were planning on buying it next year, that's 12 months during which: there will be other discounts offered by the same or other companies, also the interest you get from keeping the money in your bank account or investing it somewhere else functions as an implied discount as well.

For example, you need a car next year and the dealer offers you 10% if you buy it today. You don't buy the car, but use the money to get your side business off the ground, and after one year you have earned more than the 10% the dealer offered you, when you buy the car at full price.

Re:Groupon

[DerekLyons]

How is a company with a $1.5 billion all-time turnover worth $25 billion?

Because it's standard business practice to value a company at some multiple of it's annual gross income. The multiple varies by industry, with the economy, with the prospects of the company, etc... etc...
 
A multiple of 16 for a young company (basically 2 years and change) with a massive cash flow, low overhead, and lots of headroom to grow doesn't seem excessive to me.

Re:Groupon

[GameboyRMH]

Suuuure. You just have a brand new account used for the sole purpose of making pro-Microsoft, anti-OSS, and most recently, hilariously pro-corporatist comments, often first posts that mysteriously get massive numbers of mod points thrown at them. All just a coincidence I'm sure. And why do you post anon on unofficial business?

Re:Groupon

[PraiseBob]

Why would a high end restaurant want to target bargain seekers? The demographics are a complete mismatch. They won't get repeat business from that crowd, which makes the whole endeavor worthless.

Re:Groupon

[cjnichol]

I usually like xkcd but this one was really really stupid. The first panel presents a valid argument but I've never seen that before in my life and I've worked at both a grocery store and a clothing store. You are far more likely to see "Up to 50% off" and then have everything 10% off except for one item that no one would buy which is 50% off or "$19.99 and up" and have everything more expensive with a few things down at the $19.99 range.

The second panel is quite misleading as well. His argument, while true, is besides the point. Let's say you go to the store to buy a box of cereal and are deciding between two brands, which you both enjoy and cost the same. However, one has a coupon for a "free" movie ticket (with the purchase of a second ticket most likely). Let's also say that you occasionally enjoy going to the movies with your significant other/child/whatever. Now I have two options: 1) I could buy the box without the coupon and stick it to the company using the "mathematically annoying advertising" and buy two movie tickets later, or 2) I could buy the other box and get two movie tickets for the price of one later. While such offers may often be used to encourage the purchase of things you otherwise wouldn't buy, more often than not (in my experience) I do end up getting something for free out of the deal (ie. something that I otherwise would have spent money on).

The third panel tries to uses the word "save" with multiple meanings. While the phrase "the more you spend, the more you save" clearly implies that by spending more right now, you will receive a better price point per unit, the graph uses the word save as in "money not spent ever," which is kind of pointless. For example, I could buy 2 rolls of toilet paper for $4 or 24 rolls for $20. In this case (which is fairly realistic except for the exact numbers), I could resist the "spend more, save more" advertising and only get what I need right now, and then come back every week or two and repeat the process or I could simply buy the 24 rolls and put $28 in my savings account. It's not like toilet paper is going to go bad or out of style anytime soon...

Re:Groupon

[Surt]

Yeah, no surprise then. The average home price is something like 120k, which means ~100K in meaningless house debt plus 20k in unsecured debts for that 120k.

Re:Groupon

[PraiseBob]

1. The business working with groupon can dictate how many are sold. My company has put caps on our deals with groupons. If the deal sells out extremely quickly, then we know there is room to raise the price. It works quite well.

2. Thats a risk you take with any coupon. You want to tempt people into trying out your business, and offer a good enough product that they will return for normal price. Groupons users range across the board, but most are young urban professionals with expendable income, the prime demographic for most businesses.

It is important to note that as a business, you dictate the terms to groupon. They don't force you into a bad deal. If you lose tons of money because of a bad deal, it is your own fault. Now, having worked with groupon directly, multiple times, I think it is laughable to valuate at $25 bil.

Re:Groupon

[Surt]

If I have a house that is salable for 200K, with 40k down, 160 mortgage, I can sell and walk away with 40K. To call that a 160K debt and freak out about how huge that is is ridiculous. Asset backed debts have to be discounted by the equity in any sane accounting system.

Re:Groupon

[EdIII]

I fail to see how it is even an illusion.

Last time I went and checked out fast food on a road trip the average price per PERSON was a hugely ridiculous $8. In fact, looking at the average meal and the upsells they try to get you to buy, you are paying more than some restaurants, or at a bare minimum about 90% of a restaurant.

The savings is only time. That can be rare. I have seen people sit for 15 minutes in a packed drive thru with a diner or suitable restaurant in the same parking lot.

If you compare it to the cost of a home cooked meal you start to realize the fast food is several times higher and the consequences are severe. The amount of time you get back is minimal and the cost against your health very high.

Fast food is a premium luxury and I just don't get how people see it as otherwise.

Re:Groupon

[wondafucka]

Groupon has a great business idea, AND it's mainly targeted to girls and women who also spend a lot for beauty things. They make shitloads of money as well as does the partner companies and their users. Win-win-win.

What are you talking about? All of my Groupons are for Role Playing books and All Terrain Vehicle discounts. Not to mention the lifesize trojan horses and doomsday devices.

Re:Groupon

[icebraining]

you will receive a better price point per unit

You get a better price. It may be price point or not, but that's irrelevant for you as the buyer.

Re:Groupon

[Wulfrunner]

Sure, but you don't count future liabilities against current assets.

Just like Enron...

Re:Groupon

[Anonymous Coward]

I'd add the caveat of "or fulfills the role of what you were planning to buy". For instance, I would have no plan to buy a Cadillac, but if Groupon suddenly made one available for less than a Chevy I was preparing to buy, then it is still a good deal (assuming I view the Cadillac as a superior product). This is an exaggerated example, but is applicable to restaurant groupons - Ruth's Chris/Brazilian steakhouse could offer a groupon that brought the price down to Chili's/Outback/etc. level and could still be a good deal if you were planning to eat at the latter and view the former as a superior product. SImilarly, Chili's/Outback/etc. could offer a groupon that brought the price down to fast food level. In fact this represents the true triple win scenario - user gets better product, business gains sales, groupon gains commission.

Re:Groupon

[rtb61]

Putz, income is not turnover, income is money you earn after deducting costs. You can have all the turnover in the world, just like a bunch of crappy US banks but you end up being worth nothing unless someone foots the bill for your losses.

Groupon has real severe limits in value, it can readily oversupply discount coupons with no guarantee of actually supplying product, enormous limitation of choice, it is nowhere in the supply and demand equation being able to supply what people want to get rid of not necessarily what people what to buy and, it has very little capital assets. All it brings to the IPO table is a bunch of client contacts and a list of customers, with zero long term guarantee of coupon sales, whilst being very vulnerable to cheaper coupon commissions.

By the way, is Goldman Sachs going to be involved in the IPO or has the stink of that particular financial firms track record, especially after it's foul odour had a pretty negative affect on any Facebook IPO.

Re:Groupon

[smellotron]

If you lose money on each customer, what are you going to do? Make it up on volume?

That's the joke.

Re:Groupon

[Anonymous Coward]

I disagree.
As long as you put what you buy to use, then you are not wasting your money. Now, if you are spending money that you can't afford to spend just for a good deal... that's another problem and it is called "self control".

Re:Groupon

[DerekLyons]

Putz, income is not turnover

Had I said it was, you'd have a point. As it is, you're just an ignorant shithead.

Re:Groupon

[CycleMan]

Foo Restaurant doesn't even have to inflate their bill at all under most circumstances. Their pricing already includes the variable cost of the food, plus some to go toward the overhead. If the average restaurant tab contributes at least $10 to the overhead, Foo doesn't lose anything by offering a $10 coupon. I see three major risks with the coupon: 1) they need to hire more help to serve all the coupon-users, thus changing their variable costs. 2) the crowd of hoi polloi coupon-users drives away better-paying customers (longer wait time, no available tables, changed atmosphere). 3) the spike in volume due to the coupon offer overwhelms the restaurant's abilities to serve folks, and its reputation suffers -- this has happened with other Groupon offers, and a couple Denny's/IHOP/KFC offers that were widely advertised, but is not normally a risk with printed newspaper coupons. 4) In the long run, everyone associates Foo with coupons, and refuses to pay full price, so nobody is covering the overhead anymore. In these four cases, Foo loses money or has to inflate their prices to keep up. In other cases, no problem.

Re:Groupon

[cjnichol]

You get a better price. It may be price point or not, but that's irrelevant for you as the buyer.

Good point. It seems I didn't actually know what the definition of "price point" was!

Re:Groupon

[Anonymous Coward]

Holy shit, Americans miss the whole point of SAVINGS once again.

"...they will have deals for things you would have bought anyways...." You can't save money if you are going to buy things one way or another.

Re:Groupon

[Anonymous Coward]

Dirty little secret, if any country tried to call in any other country's debt, the world economy would come crunching to a halt. the world economy is built on top of imaginary numbers.

thats keynsian economics. don't worry about debt because everybody else is just as much in debt.
it would be easier if we had a world credit system based on a single currency. That way one nation wouldn't be able to start a world depression by printing currency and borrowing itself into the ground.

lets give up the charade and admit that the world is one giant economy and having different currencies is just a shell game that benefits only money traders and countries that artificially keep their currency depreciated

Re:Groupon

[rtb61]

The point is one has an impact on valuation and the other does not and, it is very deceitful to imply that revenue does.

Welcome to 1999

[Anonymous Coward]

I bet the stock is at 5 bucks in 3 years.

Re:Welcome to 1999

[viablos]

I bet the stock is at 5 bucks in 3 years.

Well do! You know you can also sell stocks that you do not really own, in case you're predicting the stock will fall. Make your millions if you really believe in that.

Re:Welcome to 1999

[MetalliQaZ]

I wouldn't write Groupon off as a bubble stock. They actually make money, which means they can be legitimately valued. The hysteria in 1999 was in companies that had no proven revenue stream whatsoever.

Re:Welcome to 1999

[The Clockwork Troll]

There were at least two hysterias in 1999.

1) Companies with no proven revenue stream.

2) More insidiously, companies that were going to make tons of money from advertising, and sold banner ads at huge CPMs, because there was no accountability for conversion performance.

This feels a lot like #2, except it's not just bullshit conversion performance (which here could be interpreted as repeat visits), it's also pre-inflation of retail price to give the appearance of "value" where really there is none. Groupon's sales reps themselves advise merchants to "temporarily" double the retail price of their goods so they can offer 50% "discounts".

In short, bubble.

Re:Welcome to 1999

[Desler]

They actually make money, which means they can be legitimately valued.

They may have revenue at something like $700 million in revenue but according to reports about the company they make very little profit. Nothing that seems to warrant a $25 billion IPO.

Re:Welcome to 1999

[Surt]

The pricing is bubble, though. They're getting valued at 20X gross. That's a factor of 5 off normal.

Re:Welcome to 1999

[shoptroll]

So.... Facebook?

Re:Welcome to 1999

[satuon]

Groupon's sales reps themselves advise merchants to "temporarily" double the retail price of their goods so they can offer 50% "discounts".

That trick is done a lot in my country. But my country is also likely the only one where there are holiday price *hikes*.

Re:Welcome to 1999

[jonbryce]

Companies like Amazon, ARM Holdings, Microsoft and so on made money and could be legitimately valued. They are all very solid companies that are still around but none of them have got back to their 1999 valuations because those valuations were just way too high.

As far as I'm aware, the only tech company that is worth more now than back then is Apple, which was on its knees at the time, and has since recovered.

Re:Welcome to 1999

[Anonymous Coward]

Maybe, but if enough people come together to buy this stock at the same time they can get a rather good deal on it right now.

Wait

[Even on Slashdot FOE]

How is this company even worth $12 billion? Seriously, even first post at half off coupons aren't worth that.

Re:Wait

[dunezone]

Because its the latest big buzz company to come around.

Re:Wait

[WrongSizeGlass]

How is this company even worth $12 billion? Seriously, even first post at half off coupons aren't worth that.

It's not worth the money. We'll just have to wait for a Groupon link to the 'IPO Deal' where we can get 10 shares for the price of 4 if we buy them the day after tomorrow.

Re:Wait

[Anonymous Coward]

how is this company even worth $25 million? Seriously!

Trying to Blow Up a New Bubble

[MarkvW]

Wall St. can't keep itself from trying to blow up investment bubbles.
There's a sucker born every minute (and then the taxpayers bail the investment banks out).

Re:Trying to Blow Up a New Bubble

[cpu6502]

>>>then the taxpayers bail the investment banks out

Guess you should have listened to Ron Paul and his Republican "liberty" caucus. They all voted "nay" to the $700 billion banker bailout bill, and it went down in flames. Mr. Paul said the banks, especially the investment ones like AIG, should be allowed to fail so we could rebuild the economy on their broken bones.

But then the Democrats revived the Banker Bailout Bill, bribed the republicans with pork for their districts, and it passed ~10 days later. :-( Frickin' fraggin' mumble.... grrrr! I tried to vote-out my representative for that idiocy, but alas he's still there.

Ron Paul for President in 2016.

Re:Trying to Blow Up a New Bubble

[MarkvW]

I've listened to Rand Paul. He actually believes that the marketplace should be completely left alone. Leaving Wall Street alone is a terrifying idea.

Re:Trying to Blow Up a New Bubble

[demonbug]

>>>then the taxpayers bail the investment banks out

Guess you should have listened to Ron Paul and his Republican "liberty" caucus. They all voted "nay" to the $700 billion banker bailout bill, and it went down in flames. Mr. Paul said the banks, especially the investment ones like AIG, should be allowed to fail so we could rebuild the economy on their broken bones.

But then the Democrats revived the Banker Bailout Bill, bribed the republicans with pork for their districts, and it passed ~10 days later. :-( Frickin' fraggin' mumble.... grrrr! I tried to vote-out my representative for that idiocy, but alas he's still there.

Ron Paul for President in 2016.

The problem here is that the bubble was already blown up. Refusing to bail out those companies, as undeserving as they were, would have lead to much bigger problems. The solution isn't to cut your own neck just to punish the wrongdoers, it is to prevent the situation from arising in the first place. Once you are in that situation, there are no good options.

Re:Trying to Blow Up a New Bubble

[Surt]

If only I could get those people without any of the associated crazy that goes with them. Gold standard. Good god.

Re:Trying to Blow Up a New Bubble

[coastwalker]

Strikes me that either money has devalued much more than we thought or the next new bubble has arrived. There are huge numbers of transaction discounters on line looking for the advertising campaigns that they can suck discounts from. This Groupon thing is a joke, where can I find someone taking a bet against their share price?, I will make a killing if I invest in them. The only thing that ought to make serious money is a product that does something better for less money - everything else is a short term con that the market ought to be morally ashamed of. Conclusion - Groupon shares will destroy more peoples pensions than real crooks like Enron. If you invest in crap like this you deserve to miss the boat and lose your life savings when its unique selling point dies - which wont be long. Mind you if you all insist in buying Apple products with their walled gardens then there will always be a place for operations like Groupon who will find a way of getting round the criminal apple tax

Re:Trying to Blow Up a New Bubble

[Vaphell]

and now the undeserving companies have the government by the balls in perpetuity - thanks for setting up the precedent that incentivizes even more privatization of profits and socialization of losses. Expect rerun of the show every few years down the road, but with even better special effects - now in true 3d!

Re:Trying to Blow Up a New Bubble

[Anonymous Coward]

At some point it'll occur to you that when you regulate a marketplace, all you do is move the game to a different field.

Rule #1 is you can't stop the game.

Re:Trying to Blow Up a New Bubble

[Anonymous Coward]

It is the stated intention of the Treasury Secretary and Fed Chairman to create a "wealth effect." I encourage you to do some research.

While Wall Street is full of criminals (who should have gone to jail as a part of the settlement agreement when their companies were being bailed out), the government is every bit as invested in this.

Politicians just love to have some economic nicety to campaign on.

Can someone explain the appeal here?

[gad_zuki!]

I see a lot of useless coupons and services when I visit. Some "coupons" require me to buy in. Compared to deal sites like Woot or dealcatcher, I'm not seeing the allure. Typically, most of the "deals" are things like salons and jewerly/makeup which makes me think this is mostly a service for women.

Re:Can someone explain the appeal here?

[oh-dark-thirty]

There are also a good number of restaurant coupons, at least in my area. I've used a couple and have been very pleased. If I like the place I'll be back, otherwise I'm not out the full boat for trying it.

Re:Can someone explain the appeal here?

[Anonymous Coward]

Media hype. They want another dot bomb. This is it.

Re:Can someone explain the appeal here?

[Anonymous Coward]

You really don't understand it then.

All of the coupons require you to buy in. They aren't coupons at all but rather reduced price gift certificates (with short expiration dates).

They probably make good money on non-redemptions too.

Re:Can someone explain the appeal here?

[Anonymous Coward]

As someone who paid $15 for a $30 gift certificate to a liquor store... I'm happy.

Re:Can someone explain the appeal here?

[Anonymous Coward]

"which makes me think this is mostly a service for women."

Which makes ME think this really doesn't belong on slashdot!

Re:Can someone explain the appeal here?

[cpu6502]

The best deals are on amazon and ebay:

AMAZON:
- Put the item in your shopping cart. Visit the site every few days, and you'll see it say, "This item's price has dropped". If it's a good deal, buy it.

Example: I got SG1 Complete for only $110.... about half what it would normally cost. Orville Redenbacher popcorn for $15/case or ~40 cents per bag. Nature Valley Granola Bars for 16 cents each. Sony HD Radio for $75.

EBAY, Amazon's Private Market
- Most of the sellers advertise stuff as "new" when it's actually damaged/used goods. You can take advantage of that fact by asking for a 50% refund (item not as described). I rarely spend more than $5. Of course if the seller is honest and the game actually IS new, you still get a good deal.

Re:Can someone explain the appeal here?

[Anonymous Coward]

For Amazon, you can use www.camelcamelcamel.com to email you when a specific Amazon product has reached your targeted price.

Re:Can someone explain the appeal here?

[eln]

- Put the item in your shopping cart. Visit the site every few days, and you'll see it say, "This item's price has dropped". If it's a good deal, buy it.

True, but this technique is not without risk. Prices can rise as well as drop. For example, I put a printer into my shopping cart and decided to wait to buy it. Two weeks later, the price of the printer had increased by $250. Now, a month after that, it's dropped by $100, but is still $150 more than it was when I first put it in the cart.

Re:Can someone explain the appeal here?

[JeffSh]

The attraction is not to people who can figure out why it's not a deal. The attraction is to people who can't.

havent used a single coupon from groupon ever !

[Anonymous Coward]

Havent used a single coupon from groupon ever and not anyone I know ! How the hell do they manage to IPO this ???????

Re:havent used a single coupon from groupon ever !

[SnowHog]

Count me amongst those who don't know a single person who has ever used Groupon.

Re:havent used a single coupon from groupon ever !

[BlueWaterBaboonFarm]

This is surprising to me.
I would guess that more than half of my friends have heard of groupon and at least 10% have used it. At least a few of my friends check it everyday.

Re:havent used a single coupon from groupon ever !

[mbourgon]

Because you are not everyone. Everyone, conversely, does not act in exact concordance with your behavior.

See: Apple, Microsoft, Linux.

Definitely a buy

[Anonymous Coward]

I purchased my VA Linux shares for $239 a piece and haven't regretted it since. Who needs money, anyway!

How is it worth anything?

[Anonymous Coward]

Groupon makes a lot of money. Groupon also has a massive amount of debt. They secured about a billion dollars in funding during a recent 'investment round'.

We are talking about a billion dollars in funding to run a website that requires no novel technology, has no valuable intellectual property, and doesn't have much of a competitive advantage. There isn't anything stopping other companies and people from creating more Groupon clones (as is obviously evidenced by competitors like LivingSocial and Google's upcoming daily deals site).

The VCs must be really desperate for a success story, considering all the 'most innovative companies' coming out of silicon valley have no business model. They want to make money off of one of the pseudo-profitable organizations while they can. Welcome to doctom bubble 2.0.

Re:How is it worth anything?

[Yvan256]

Wasn't Bubble 2.0 in 2005? I thought this one was supposed to be called Cloud Bubble!

Re:How is it worth anything?

[Anonymous Coward]

It's not that -- you must remember two things:

1) Money is cheap right now. Stupidly cheap. As an institutional investor, such as those who buy large tracks of stock at IPOs, it's seen as foolish to not take advantage of that situation. This leads to the second point.

2) There's no real risk involved. Between tax write offs for failed business ventures and bailouts funded by major government debt there's no reason to the market. The people putting forth the numbers here don't care that'll never produce anything like that of actual value to anyone. Nothing will come back to haunt them in the short, medium, or long term.

Re:How is it worth anything?

[Anonymous Coward]

There isn't anything stopping other companies and people from creating more Groupon clones (as is obviously evidenced by competitors like LivingSocial and Google's upcoming daily deals site).

That's been said of Twitter, Facebook, PayPal as well.
Google's been eying to -buy- Twitter, rather than try it themselves. Their social networking test failed. I have no idea how Google Checkout is doing, but seeing as I almost never see a button for paying through Google Checkout, it's far from thrusting PayPal off its throne.

Let alone that other companies are doing well in launching alternatives, despite that it's technologically not very difficult to duplicate them.

In part this is because the aforementioned sites already have mass and momentum working for them.

Even in NL where Hyves - a Dutch service - has reigned over Facebook, its decline in favor of Facebook is palpable. Why? Because that's where all their friends from the U.S., Canada, etc. are who are far less likely to sign up for a Hyves account.

Re:How is it worth anything?

[jcr]

requires no novel technology, has no valuable intellectual property, and doesn't have much of a competitive advantage.

They do have quite a mindshare advantage, though. Your description above would apply just as well to e-bay, wouldn't it?

-jcr

Re:How is it worth anything?

[Anonymous Coward]

We are talking about a billion dollars in funding to run a website

I love how people simplify things on Slashdot. It's not JUST about the technology. What about all the Groupon sales and marketing people? This is a site which provides a marketing service to different consumer industries across the nation. And, they apparently have been quite effective at it. Sure, anyone can reproduce the technology they are implementing, but there is so much more to their success than the technology.

Re:How is it worth anything?

[sycorob]

Just because you have examples of several companies that are being valued for ridiculous amounts of money, doesn't mean they're not over-valued. Twitter is a great example - a company that has no revenue stream whatsoever, and no real plans to create one, and is valued in the billions. Maybe they'll get lucky and stumble accross a business plan and I'll look stupid, but right now I don't see it.

Groupon at least generates revenue, but the fact that they have to keep raising money is strange to me. I hope they're just trying to grow faster than they would organically. At least what Google does is really hard - a nuanced algorithm that they have to constantly tweak to fight the spammers, indexing millions of websites pretty much constantly, running on home-built software on thousands of servers accross the world. It's hard to duplicate that. Groupon has a website with a deal on it, and an email list. When the deal is done they email a spreadsheet of customers to the company. When they first did a national deal (GAP Clothing) their servers went down in flames. How long would it take 10 smart guys to recreate 90% of that business? What's the $25B for? The name?

Overall, it just feels like a bubble. The rest of the economy kind of sucks, and the investors are flush with cash that they don't know what to do with, and think Groupon is the "next big thing." I guess we'll have to wait and see how it plays out in the long term.

Re:How is it worth anything?

[sycorob]

Auctions need an economy of scale to work at all, though. If there aren't people selling there, there's no point going there to buy. If nobody's buying anything, there's no point listing it for sale there. GrouponClone needs enough people to sell, say, 100 coupons to start, and then you can grow from there. You could just run it a little leaner, and charge the restaurant slight less. It's really easy to copy. In some areas of the country, like New York, LivingSocial has way more mindshare than Groupon does, and they started later.

There are probably hundreds of developers and business people out there that just heard about this potential IPO and said "how hard can it be to make that?" Groupon should cash in now, before they get their lunch eaten by 1000 me-too competitors.

Re:How is it worth anything?

[sznupi]

Fog. Fog computing.

(that said, Groupon seems to have quite a momentum; it might be able to direct lots of people where to buy maybe even "better" (as far as profiteers are concerned) than Adsense)

Re:How is it worth anything?

[Gordo_1]

Yeah I don't know. "Sales and Marketing people" is their competitive advantage? Are they much higher quality than the Sales and Marketing folks anywhere else or did they just recycle an old business idea and merry it to the web at an opportune time? I would grant them first mover advantage for sure, but the question is whether they can sustain it in the face of stiffer competition and with the prospect of small business eventually realizing that the quality of the Groupon customer base sucks.

Re:How is it worth anything?

[Anonymous Coward]

They probably want to go public because the current investors want to cash out. Since you can't just start selling your shares on the stock market without raising a ton of money in an IPO, they probably see this as the best way to easily get out of the business.

Re:How is it worth anything?

[Anonymous Coward]

Groupon makes a lot of money. Groupon also has a massive amount of debt. They secured about a billion dollars in funding during a recent 'investment round'.

Taking funding is not the same as taking on debt. It's almost the opposite. They don't owe the billion dollars back to anyone; those people paid a billion dollars to own a percentage of the company.

Re:How is it worth anything?

[jonbryce]

Twitter and Facebook benefit from the network effect. People use them because everyone else uses them, and there is no point in using another site because it is the other users that make the site so valuable. I'm not sure that Groupon can benefit from the same network effect. Certainly advertisers will use it because they have lots of readers, but there is nothing stopping me from using other coupon sites as well. I mostly look at moneysavingexpert (UK based site).

Re:How is it worth anything?

[Anonymous Coward]

"Taking funding is not the same as taking on debt. It's almost the opposite. They don't owe the billion dollars back to anyone; those people paid a billion dollars to own a percentage of the company."

Yep. If you can't get a loan you have to sell the farm. There's nothing to brag about.

Re:How is it worth anything?

[penguinbrat]

Those VC's certainly do much due diligence.. When you go and sign up, it's broken - you don't even have to agree to the terms of use or privacy policy, let alone fill anything else in after giving them your email. Considering they deal in advertising, and with all the other sneaky/underhanded advertising going on around the net - with out having to agree to the terms and all, I would think that is scary grounds for all kinds of law suits if they give out information, spam you, etc..

Re:How is it worth anything?

[Anonymous Coward]

I'd never heard of them before the little controversy about their Super Bowl ads. No such thing as bad publicity, I guess

Re:How is it worth anything?

[TheoMurpse]

Groupon also has a massive amount of debt. They secured about a billion dollars in funding...

I don't think you understand the difference between "debt" and "equity." Groupon secured about a billion in equity financing, not debt financing.

Re:How is it worth anything?

[Anonymous Coward]

I don't think you understand the difference between "debt" and "equity." Groupon secured about a billion in equity financing, not debt financing.

That and it wasn't funding the company. There's a difference between selling primary shares and selling secondary shares, and the billion dollar investment was secondary shares. That means that people who already own shares were cashing out. The money was going to shareholders, not the company. It was a way for new people to get in, and old people to take some chips off the table.

Re:How is it worth anything?

[wamatt]

Agreed. They have no economic moat. Buffet would not touch them.

Off topic-ish

[Anrego]

Am I the only one, or do all the groupon advertisements put anyone else off?

I love the concept of groupon it’s really quite brilliant but for some reason all their ads and even their name totally puts me off. They feature food I like, but it doesn’t look appetising for some reason I can’t put my finger on. Also phrasing like “hot dang” appears to have a negative effect on me.

This isn’t meant to be a troll or anything, I’m legitimately curious. I know I'm not the coupon type, but it seems weird that they put me off so completely.

Re:Off topic-ish

[Anonymous Coward]

Things the name Groupon reminds me of:
Groping, Goopy, Gross tampon, Group strap-on, Grey Scrotum.

I've never even heard of the service, but you're right, the name is psychologically off-putting.

Re:Off topic-ish

[smelch]

I'm also in the same boat. I don't use many coupons to begin with but I am kind of starting to hate the website. I think its because it stinks of Facebook. Way overvalued, way too easy to implement, and when there is a small shift in the internet or culture (which happens only constantly) they will find themselves unable to pay back their investors. So I try to pretend the website and the bubble aren't happening, but when they stuff ads in your face its kind of hard.

At least Facebook has something unique in their critical mass and have done a good job integrating themselves with everything else. They're still way overvalued and people seem to think it will always be here.

Re:Off topic-ish

[retchdog]

their schtick is annoying but totally ignorable. i get their emails into a designated folder and daily just scan it (by eye) for businesses i would have gone to anyway (the business names are always in the subject line without any of their "clever" flavor text); if so, click and print. i make a groupon transaction maybe once every three months. i guess i'm not saving very much, but it is fun to get clothes or good food for half-off.

Re:Off topic-ish

[Anonymous Coward]

your answer?
because they're actually peddling shit. sure, i love spa treatment, and I'm not even a girl (girlyman, at best).
do you know the treatment you get, when you walk into a spa, and show them a coupon that claims "i'm here paying half price"?
i've used groupon a few times, and i never will again. restaurant deals i've purchased have had fine-print preventing any real value, and the spa deals i've gotten have been the worst service imaginable.
companies desperate for ANY money during this slump economy will begrudgingly accept 25% from Groupon, up-front, but then are loathe to pony-up when the buyer shows up to claim his/her 100% service.

f* this company. i hope it IPOs bigger than google's wildest wet dreams.
i'm shorting every share i can afford, and waiting until their NEW client base is exhausted, and people realize there ARE NO repeat clients.
POP.

love,
-benny

Re:Off topic-ish

[Anonymous Coward]

Groupon is the Wal-Mart trailer-trash equivalent in online deal sites. Apparently targeted mostly at women.

Re:Off topic-ish

[TheoMurpse]

they will find themselves unable to pay back their investors

They don't have to pay back their investors, as their fundraising has been through equity financing rather than debt financing. They don't borrow money against collateral (this is debt financing); they issue ownership shares to investors (this is equity financing).

There is no "paying back investors" in equity financing.

This is what we value in this country

[cosm]

This is what we value in this country. Companies that spam coupons for the masses to buy more shit they don't need. So Wall St. intends on pumping 25 billion into a company that doesn't actually even manufacturer anything. A company whose only value is that it offers discounts to other companies! So in ten years, is their going to be a gang-groupon.com, that groupon pays to send out links to its own coupon links? The service based slave wage economy of the future is going to be quite sad indeed.

Re:This is what we value in this country

[neoform]

>So Wall St. intends on pumping 25 billion into a company that doesn't actually even manufacturer anything.

I'm not in any way suggesting that Groupon is worth $25B, but Google doesn't manufacture anything and it's worth a lot of money.

Re:This is what we value in this country

[Anonymous Coward]

Yes. they do. They manufacture software.

Re:This is what we value in this country

[Anonymous Coward]

I can't touch bits, so they must not be worth anything...

Seriously, Google pounds out almost as much software as Microsoft. Who doesn't manufacture anything either, apparently.

Re:This is what we value in this country

[Anonymous Coward]

So... what exactly is your point?

Re:This is what we value in this country

[homer_s]

From an article at the BBC:

“The value of a dollar’s worth of cloth is exactly the same as a dollar’s worth of web design. One dollar.”

Or in this case: “The value of a dollar’s worth of coupon marketing is exactly the same as a dollar’s worth of widget manufacturing. One dollar.”

Re:This is what we value in this country

[Anonymous Coward]

>So Wall St. intends on pumping 25 billion into a company that doesn't actually even manufacturer anything.

I'm not in any way suggesting that Groupon is worth $25B, but Google doesn't manufacture anything and it's worth a lot of money.

Wrong.
Google offers you a service extremely valuable: the information you want.
How much companies in the world saved by letting their employees use google?
If you work in any tech job like me google helps you every day, it's impossible to say how much gazillion dolars everyone saved by using google.
I can barely remember how hard my life as a programmer was before it.

Re:This is what we value in this country

[FooAtWFU]

While manufactured goods and services are all nice and everything, you'd think that a site full of geeks would have a little more appreciation for the value of information. For instance: without a coupon for Groupon, I'd never have even known to stop by the cute little tea shop in downtown San Jose.

I'm not saying it's $25 billion valuable, or that it's an unmitigated boon to society, but have a little respect for the real positive effects you can get from advertising (like reduced costs of search) before you tear into them. More fair that way. :)

The other thing coupons enable is a form of price discrimination. A store like Safeway can charge rich software engineers one price, and poor Hispanic day laborers (and their families) another price, just by publishing coupons which the latter group is willing to track down, cut out, and bring into the store. That's the big deal behind coupons. You can look forward to more of this price discrimination in the future.

Re:This is what we value in this country

[iMadeGhostzilla]

Thank you! I thought I was going crazy seeing how so many people even *here* think it's cool, and these are people who are used to creating value. If I ever wanted to see a concept fail, it's this one.

Re:This is what we value in this country

[LordLucless]

I see. You'd rather see bulk-buying restricted to large companies, who add their own markup and then hock it off to consumers. Groupon et al do nothing more than cut out the middle-man, a concept that the internet has applied succesfully to everything from music production to news reporting.

Re:This is what we value in this country

[TheoMurpse]

Well that PHP running on Groupon's servers probably was created by Groupon. So it looks like they manufacture software, too.

Re:This is what we value in this country

[TheoMurpse]

Google offers you a service extremely valuable: the information you want.

And Groupon offers you a service extremely valuable: the things you want, cheaper.

And just like some people use Google stupidly by searching for child pornography, some people use Groupon stupidly by buying stuff they wouldn't otherwise want.

Re:This is what we value in this country

[Anonymous Coward]

So Wall St. intends on pumping 25 billion into a company that doesn't actually even manufacturer anything.

considering wall st is the epitome of not manufacturing anything and making (up) money, i'd say it's a perfect fit

Re:This is what we value in this country

[Anonymous Coward]

Well, "manufacture" is used loosely, they do write code that ends up being legitimately useful for a lot of people who *do* build things. But Groupon?

SOUNDS GAY-ISH !!

[Anonymous Coward]

Hey boys, let's go get a GROUPON !!

Tags

[somaTh]

I wish I could mod tags. That "bubble" needs a +5 Insightful.

Is there a groupon for this?

[shadowrat]

I bet we could get a good deal! Anyone want to go in on a groupon to buy groupon stock?

$25 Billion for a Mailing List??

[bit trollent]

Now matter how much the people on this mailing list spend, there is no way that it's worth $25 billion. It's just a spamish mailing list...

I guess the tech bubble is back. Good news for programmers, bad news for dumb investors.

Re:$25 Billion for a Mailing List??

[haruchai]

I don't think the bubble ever really went away; it just jumped to the next new, hot, sure thing. It'll only ever go away when people stop being stupid.

Re:$25 Billion for a Mailing List??

[GameboyRMH]

I'm just sad that I missed out on the Social Media bubble :-(

I just want a decent bit of cash like the web boomers! At this rate if I have a rusty '91 Supra for a midlife-crisis-mobile, I'll be lucky...

Re:$25 Billion for a Mailing List??

[Mad Merlin]

I don't think the bubble ever really went away; it just jumped to the next new, hot, sure thing. It'll only ever go away when people stop being stupid.

So what you're saying is that it'll never go away?

Re:$25 Billion for a Mailing List??

[Surt]

The bubble is back for sure. Programmer salaries jumped 20% this year, almost universally.

Re:$25 Billion for a Mailing List??

[bit trollent]

I was actually working on a social media application similar to LinkedIn back when facebook wasn't even available in my college.

I got alot more experience than money out of that bubble.. I got to see paychecks bounce and a company crash and burn, in a pretty spectacular fashion.

It was sad to see, but most of the employees ended up landing on their feet.

Re:$25 Billion for a Mailing List??

[haruchai]

After all the financial disasters dating back to the Savings & Loan crises, junk bonds, Black Tuesday, etc, let's say that I'm not hopeful unless STRONG oversight and regulation is put in place.

Re:$25 Billion for a Mailing List??

[hey!]

Well, to be fair it's a bit more than a mailing list. It's a business that actually makes money, what's more it makes it in a straightforward way that doesn't require you to give much credence to any novel, non-negatable theories about the nature of "business value".

That said, the simplicity of the business is also its drawback. They're basically brokering information between buyers and sellers then taking a cut. Anybody with a little money could reproduce that business model in a couple of months ... maybe less. Furthermore the "no risk" nature of the transaction means that there's no reason for the parties on either end of the transaction not to negotiate that transaction through a different provider. Of course you could say that about search, and even Google has its Bing, but search is really difficult to do adequately, much less well, and last time I checked Bing was having an uphill slog, despite having Microsoft's financial might and desktop monopoly behind it.

So I don't think I see what the investors are supposed to be getting for their money, unless this outfit is going end up with so much cash its marketing will drown out any potential competitors before they gain any mind-share. Or perhaps they'll be able to scale their business up so that they can cut their margins on each transaction so low that competitors won't even bother. But I have my doubts.

Bubble, bubble...

[poorbot]

This doesn't make social media seem like an economic bubble at ALL... I'm waiting for the book titled "Why the Social Media Bubble Will Never Burst" which will backed up by profound reasonings like: "It won't burst because there's so many people out there!"

Re:Bubble, bubble...

[smelch]

This reminds me of when a friend of mine got involved in a pyramid scheme and was trying to recruit underlings to push him up. I decided I wanted to try to talk some sense in to him so I "set up a meeting". He literally tried to tell me that the money he was making wasn't coming from screwing over people at the bottom because more people are born all the time, so everybody could keep moving up. "But you don't make anything, all you do is try to get people to stop making stuff and buy stuff." "But only the stuff you would buy otherwise, just buy it from here and make money doing it!" "But don't you see that isn't sustainable? People need to make that stuff and they're the ones paying you. They're never going to pay out more than they're taking in, and they have to pay for the manufacturing of the products and all the people who get a cut of your sales!".... Anyway the point is, that guy had a hot wife.

Second bubble

[Anonymous Coward]

Early signs of second IT bubble?

Not trying to play down the significance but...

[wizeman]

... according to one inflation calculator, the $24.6 billion of Google's IPO in 2004 is worth $28.82 billion in 2011 dollars.

Re:Not trying to play down the significance but...

[Anonymous Coward]

Seriously. Wolphram|Alpha says that USD inflation has been 19.5% since 2004.

http://www.wolframalpha.com/input/?i=inflation+in+the+united+states+since+2004

Re:Not trying to play down the significance but...

[Anonymous Coward]

Welcome to Stagflation. Would you like for me to take your coat, Mr Carter?

Today's Groupon

[snsh]

Receive $25 billion worth of Groupon.com valuation for $5 billion.* (* groupon must be redeemed on or before March 10, 2000)

Groupon stock will be sold on Groupon

[Anonymous Coward]

"Buy today, and get 5 shares for the price of 1!"

They have some really stellar deals

[Sycraft-fu]

Now if it is on stuff that doesn't interest you, well then don't bother. Can't say I use it much myself. However the point is that if you see a deal you like, you buy in. You then get a large reduction in the cost, often 50%. That can be very worth it.

Re:They have some really stellar deals

[Anonymous Coward]

Seems to me reductions to on absolutely repellent services and products, I will stay well clear.

Actual valuation

[tekrat]

Ever read the fine print on coupons? It says "Cash value 1/20 of a cent" So... Anyone care to do the math on how many Groupons need to be cashed in before the company is actually worth 25 Billion Dollars?

I think that's 2 Trillion Groupons. Which means that every person on earth would have to cash in 333 Groupons each.

Gee if I had money

[Anonymous Coward]

I'd short the stock 3 weeks after the IPO. This looks like a Wall street 'pump it up then dump it' classic.

fake weather industry losing support

[Anonymous Coward]

although it 'looks' ok once in a while. the babys, grownups & animals are having reactions to those chemicals too. flimsy? discounts probably won't help now as the product, & the co. remain largely invisible to us. maybe a coupon campaign? ipo? some recognition?

Opt in spam!

[lazn]

can't wait till people realize this is just opt in spam and go ahead an start opting out of it.

I tried it for a bit, it was the most annoying thing imaginable.

Re:Opt in spam!

[Rary]

I tried it for a bit, it was the most annoying thing imaginable.

Really? One email a day is "the most annoying thing imaginable"? You must not have much of an imagination.

Inflation adjusted value

[dave562]

Inflation has been going crazy. Google IPO'd before the market crashed and the government printed hundreds of billions of dollars. How much is Groupon's IPO worth in Google IPO era dollars?

This article reminds me of the dumb metric that comes out every holiday seasons. "Shoppers spent more this season than they did last season." No shit Sherlock?! Everything was more expensive this season than last season. They might as well say, "Shoppers spent more money on gas getting to the mall this holiday season than they did last year."

Re:Inflation adjusted value

[i_b_don]

Inflation has NOT been going crazy. We've just come out of the first year in the past 50 where we had deflation! And from 2000 to present our inflation numbers have not been high by any means (averaging about 3%).

Opinions are fine, but try to ground them in reality.

http://inflationdata.com/inflation/Inflation_Rate/HistoricalInflation.aspx?dsInflation_currentPage=0

d

Hello, next internet bubble.

[Anonymous Coward]

We've been waiting impatiently for you.

Discounts and the economy

[Anonymous Coward]

Rock-Bottom Prices! How our new lowball culture is hurting the recovery.
http://www.newsweek.com/2010/09/13/how-our-quest-for-bargains-could-hurt-the-economy.html

The searing experience of the 2008–09 recession has also conditioned consumers at large to seek discounts. Americans have always loved bargains, but today they require them. Coupons have morphed from a hobby of retirees to a technologically enabled form of social media. Since its launch in November 2008, Chicago-based Groupon has become a phenomenon. It sends out a daily e-mail blast to people in specific cities, offering a huge discount on teeth-whitening, or pizza, or jeans from a specific vendor—but only if a certain number of your peers commit to buying at the low price. “This is a way of introducing e-commerce to local and small businesses,” says Andrew Mason, founder and CEO of Groupon. Mason notes that local businesses had traditionally looked down on coupons and discounting because they didn’t attract the upscale, repeat customers they desired. But Groupon has tapped into the new lowballing tendencies of yuppies. “The demographic we attract is one businesses want to reach: 21 to 35 years old, 70 percent female, making good money,” says Mason. (Groupon splits the revenues from sales with vendors who sign up.)

Whether you’re an executive at Mott’s or a fashionista in Chicago seeking a deal on jeans, lowballing makes economic sense. It’s good for balance sheets, and the fact that people are being more cautious about what they pay for goods and services is a welcome reaction. But systematic lowballing has broad implications. The economist John Maynard Keynes identified the “paradox of thrift”—if everybody saves, everybody gets poorer, since a rise in savings tends to dry up demand. By the same token, there may be a paradox of lowballing. If everybody lowballs and steadfastly refuses to pay existing prices as part of an effort to improve their financial standing, then everybody will suffer.

Hello dear friend

[shoptroll]

Welcome back Tech Bubble. How ya been?

Why the tipping point?

[nlawalker]

Why does Groupon retain the "tipping point" for all their deals? My understanding is that Groupon is the second or third iteration in a series that was based on this idea, and I suppose it was interesting when they were still a startup, no one had heard of them and businesses wanted a little insurance on their investment. But now that they're big, I don't see how it's still relevant. Since they started getting big press, has there been a single Groupon in any market that has failed to hit the tipping point?

Today's deal in Seattle tipped at 100 before 7AM and there are currently over 3000 purchases, with about 50 taking place just within the span of me writing this post. If anything, it seems like the right move now would be to emphasize purchasing before selling out, a la woot.

Part of Groupon's value is that they help businesses plan deals and write excellent and differentiating copy to sell them, and they do a good job of it, so I don't see why they still have the tipping point mechanic. Does anyone even look at it when they evaluate a deal?

Hype bubble to draw in suckers

[or_is_it]

this will be the 2nd biggest stock flop after facebook. the business model is too easily duplicated and requires the co-operation of retailers to get those really good deals. those retailers will pull from groupon when livingsocial, twitdeals or facebargains gives them a better cut.

anyone else find most groupon offers kinda scammy?

[grapeape]

It seems all the local offers I get are places that are advertising a % off of a price that is a % higher than their normal price...the 30% or so savings tends to vary from 5-10% to sometimes actually paying more. I'm hoping it just my area where this happens but if thats the norm I really dont see why in the world it has gotten so popular, either people are really gullible or the investors age.

Groupon is for cheap people

[sdguero]

I have several friends in the service industry and I just want to share something with the /. crowd that probably takes advantage of groupon offers more than the average Joe.

When you present a groupon, the person serving you automatically thinks a few things about you:

1. You are cheap, and therefore will not tip as much.
2. You are going to receive a service or food at a discounted rate than normal, and therefore will not tip as much.
3. You are more likely to be active on yelp, and therefore will not tip as much. (There is a correlation between tipping and yelping according to my friends)

These friends, who have worked places that did groupon deals, absolutely detested them. In one case, literally to the point of quitting their job. I suspect that some do all kinds of unseemly things to the services and food they provide to the groupon masses.

In closing, I tried it once. Never again. Especially now that I know how much they are detested by the people actually serving you. The last thing you wanna do is fuck with your server. I know because I was one. And believe it or not, there is a disconnect between the owners that make the deals with groupon, and the server who actually brings your food to the table or helps strap on your seat belt.

Re:Groupon is for cheap people

[or_is_it]

Ever consider that maybe your friends are terrible at their jobs?

Re:Groupon is for cheap people

[sdguero]

I'd say they are above average, I was pretty terrible. Service industry people make a significant portion of their income via tips. Because of this, they are VERY attuned to which customers tip more or less than average. Generally people with coupons don't tip at the non-coupon rates, as they should (and is usually stated somewhere on the coupon).

If someone comes in and asks "hey, is this coupon cool?" before they sit down and the place has a decent operating procedure, they are pretty much guaranteed the server at the bottom of the totem pole. At the place I worked, minorities, old people, and under 21 year olds were all avoided like the plague by the experienced servers.

Re:Groupon is for cheap people

[danlip]

At the place I worked, minorities, old people, and under 21 year olds were all avoided like the plague by the experienced servers.

I remember when I was in college and would go out with my friends I would get treated like shit by the servers. Maybe they assumed I would tip badly because I was 20 and looked like a hippie. Guess what? Treat me like shit and I'll tip you badly - self fulfilling prophecy. When we got good service we tipped really well.

Re:Groupon is for cheap people

[Brannoncyll]

This wouldn't be a problem if your restaurants paid their workers a decent wage rather than relying on tips.

Re:Groupon is for cheap people

[sdguero]

I agree. It is a downward spiral. And the next young hippy looking person that came in probably got even worse service than you. Karmic eh?

Now imagine a scenario where you are judged by something you can't change as easily as your hair style or clothing... As a consumer in that scenario, the only way to stop the cycle is to tip well no matter how bad the service. I think this might keep minorities from trying food outside their comfort zone as they often receive shitty service at new places.

Re:Groupon is for cheap people

[user no. 590291]

Can you say "Self-fulfilling prophecy"? I tip on amount of the bill before the coupon for good service -- but if I get shitty service because the waiter thinks I'm not going to tip well, guess what: he's right.

Re:Groupon is for cheap people

[user no. 590291]

As a consumer in that scenario, the only way to stop the cycle is to tip well no matter how bad the service.

Oh, hell no.

Re:Groupon is for cheap people

[Anonymous Coward]

Some people quit their service jobs because they made hasty assumptions about their customers? Good.

Tips are a reward for good service. You are not entitled to a tip. If you were, it would be legally included either in your salary or as a percentage automatically added onto the bill. I've seen both approaches, the second being kind of a false advertising thing. If you're not getting good tips, look at yourself.

And before you start whining about how poorly paid service staff are, I spent the last ten years doing research and getting paid (far) less than minimum wage so I could spend the next forty years doing research and getting paid far less than most of the high school dropouts I grew up with. Maybe next time I eat out the wait staff should tip me?

ORLY?

[Ungrounded Lightning]

Groupon has a great business idea ...

Really?

To support a $25 BILLion valuation you need to make something like $2.5 BILLioin profit annually.

If you can negotiate deep discounts on group purchases and have that much left over after the stuff is sold at deeply cut rates, it sends a message to the sellers AND other, existing, discount stores that they're WAY overpriced and can make more by going after fast nickles rather than slow dimes.

(Of course it DOES, like discount stores, give the manufacturers a handy way to dispose of their "seconds" in boxcar lots. But enough to support an ADDITIONAL $2.5 B?)

Green Stamps.

[John Hasler]

n/t

Meet the web bubble 2.0

[bobjr94]

In 2016 we will be reading a story on slashdot about why this company failed so fast and investors lost so much money.

Speechless

[Anonymous Coward]

So Google, the company which actually revolutionized internet search, was initially worth less than this piece of crap.

Interesting...

[hackus]

Considering the dollar is lost about 55% of its value since google did its IPO.

Wonder why it is so costly just to _live_???

You have the criminal banking cartels to thank for that such as JP Morgan, the Bank of England.

May they all rot in hell.

-Hack

Re:Interesting...

[kramerd]

Not even close.

Google did its IPO in 2004. It is now 2011. CPI has moved about 11.7% in that time, not over 100.

in my experience

[BitterAndDrunk]

Groupon is a death knell for a restaurant. Bourdain mentioned it in Kitchen Confidential - the death spiral of a rest. begins with coupons and the like.

Perhaps with a new restaurant to get the word out it works, but every Groupon rest. we've been to in the last year failed.

I don't think that's Groupon's fault, however. I think a Groupon deal is a very good indicator if a restaurant is struggling.

Re:in my experience

[modecx]

The real bad thing about groupon is their rate. 50% of the take. What advertiser (let's not mince words, that's what they are) takes 50% of your profit? I guess they also pay you in installments. Not only is it bad enough that they take an absurd amount of the profit for the amount of work put in, but they will not pay you up front? And these guys sell billions of dollars of stuff?

A friend of mine runs an already popular breakfast/lunch cafe, and got in with Groupon. Said it was the worst thing he ever did. Among the expected problems of having hundreds of customers swamp him before the coupon expires, there were unexpected problems: the waitstaff was fed up because the dumb bastard customers tended to tip at the discounted (in his case 50%) rate of the check. So, hello 25% profit. Ouch. I guess if your business model fit this sort of scenario, or you jack your prices up, Groupon could work well for a business.

To add insult to injury, many of the people who bought in never came back, while most of his regulars didn't even know of the coupon, and they still frequent the place. I fully expect that when more and more business owners learn about the caveats, Groupon will be forced to change their practices, or go down in flames.

Re:anyone else find most groupon offers kinda scam

[or_is_it]

Yup. I had something like a 40% off coupon at The Gap but it was 40% regular retail price only. All their pants were already discounted so I only ended up saving about 5% had I not used the "coupon", but it got me through the door. Coincidentally, I'm wearing those pants right now and the seams are coming undone. Thanks Groupon!

Ignorant European

[binkzz]

I'm a European ignorant of Groupon. Looking at the site, it seems to be a site that catalogs or shows discount coupons for stores and items. Is that what it is? I understand it can make money, but how could it become so successful?

Re:Ignorant European

[danlip]

I'm an American and I am wondering the same thing. Before their distasteful Super Bowl ad I had never even heard of them. And that ad certainly didn't make me want to start using their service. I can't imagine how they could be valued anywhere near what Google is worth.

Re:Ignorant European

[Anonymous Coward]

Metoo here, I haven't dug deeper but it sounds like they are familiar to dotcomboom-varieties of the same kind, the most famous in Europe being letsbuyit.com which crashed and burned brightly (google for it's investor relations, that's a part of the story). Equivelant services also exist, but I can't even name the ones operating in my country, just that sometimes friends send a link to a "2 lunches for a price of one" offer from such a site. Never used them thought (because they require registrations and that results in lots of junk mail). What are they doing so brilliantly they are worth this much?

Re:Ignorant European

[zyzko]

(Posting again, accidently did the last one as AC, apperantly I was not logged in and didn't notice that because comments still appeared according to my sort settings)

Metoo here, I haven't dug deeper but it sounds like they are familiar to dotcomboom-varieties of the same kind, the most famous in Europe being letsbuyit.com which crashed and burned brightly (google for it's investor relations, that's a part of the story). Equivelant services also exist, but I can't even name the ones operating in my country, just that sometimes friends send a link to a "2 lunches for a price of one" offer from such a site. Never used them thought (because they require registrations and that results in lots of junk mail). What are they doing so brilliantly they are worth this much?

Re: Count Me Out

[billstewart]

My reaction to Groupon has been "It's like a coupon, only much harder to use!"

I don't know what fraction of the coupon value Groupon gets to keep. If it's 100%, $1.5B on $25B, that would be 6%, not a bad deal these days. But if they're only getting 10%, and spend half of it on advertising, that's 0.3% of a $25B valuation, or 1.25% of a $6B valuation, so that says that Google would have to be expecting significant growth to make their bid worthwhile, and the VCs must be hoping the IPO-buying public are real suckers.

Losing money and making it up in volume

[billstewart]

If the customer shows up once, and buys a $50 dinner for $25, of which the restaurant gets $15 and Groupon gets $10, and never comes back, maybe they lose. (Their direct costs are the cost of materials, plus the marginal costs of labor for the cooks and waiters, and maybe they don't make any extra to contribute to rent or fixed costs, but as long as they don't alienate customers with bad service from overworked staff, they're not actually losing marginal cost.)

On the other hand, if half the customers who show up for the coupon deal start coming back later, without coupons, then they're getting actual profits from the deal.

Groupon sounds like something that might make more sense for a retail product, where it doesn't matter if lots of people show up at once, than for a restaurant that has a capacity limit. On the other hand, if the deal is for Tuesday nights during the rainy season, and Groupon tells you how many customers took the deal so you know how many extra cooks and waiters to schedule, you could win.

Looks like a load of crap

[Anonymous Coward]

This really looks like the "people spending lots of money is good for the economy" argument, which is crap. People spending money is good for government because we fund our governments incorrectly (taxes as percentages). And because of that, savings can have various consequence (some good, some bad, and the bad ones are very touchy). Other than that, though, spending money is always at least a little bit destructive; you're always paying for some kind of overhead drag, somewhere. It's not so destructive that we don't do it -- it's usually worth it .. except when it's not. ;-) If demand for something is low, that just means the wrong thing is being produced.

As usual, I like to use the totally unrealistic Star Trek: The Next Generation economy as the the extreme example,
the very best things can possibly be. Everybody is filthy rich such that the lowliest ST:TNG bum makes Dubai Kings look like pitiful paupers. But nobody's spending a damn thing, and unemployment is 99%. Why does it work? Because
the replicator has destroyed the premise of current economic systems: resources are scarce. People have what they need and
everything they want.

All tech offers this, to a tiny and imperfect degree. When someone loses their job because a robot does it now,
the economy becomes stronger, not weaker. If people lowball luxuries so that they have more to spend on other things,
the economy is stronger.

The thing you have to worry about with Groupon, is that it's very hard to believe they are really making the market more efficient; that whatever they're extracting from the transactions (Groupon's profit) might outweigh the benefits of lowballing. Maybe they're good and maybe they're not, but the thriftiness itself is good.

Value is generated in transactions, but it's only as good as what each party is gaining; the transaction itself is worthless and shouldn't be encouraged. But government wants their tax, so they're going to go right on encouraging you to do it, and that's where these assholes like Keynes come in.

Is it just me?

[SnowHog]

Or does using coupons seem "low rent"? I've always been too embarrassed to use them, even when I was a broke student. Foolish perhaps but even a fool has his pride.

So is this a buy?

[Sark666]

Just curious what people think. You might be skeptical of the business model but I'm thinking more in the short-term. For ex, google hit their peak stock wise in about a year & 1/2 and it's just been up and down since. I noticed this with a lot of them, that you want to get in early, and leave when the timing is right. Yeah I know, easier said that done.

So I'm just wondering what people think of the business as an investment. I wonder what price an average joe will be able to buy in at. I believe google used a dutch ipo model that actually made it possible for an average person to buy in at the ipo price and not some inflated after-market price.

Re:So is this a buy?

[Anonymous Coward]

No, and I'll tell you why.

Because they are actually selling *gift certificates*, not *coupons*. Those are two completely different things. And they are totally ignoring all the existing laws regarding gift certificates. Especially the laws about expiration dates. They are making up their own rules! But this is totally illegal and will come back to bite them in the ass.

Also, they will be quickly running out of desperate businesses to sign up. And then it all collapses.

repeat of the "bubble" cries

[dAzED1]

"GroupOn" barely has a name. It doesn't have a patent lock on the concept. It is easily repeatable, and others are already doing so. That the market allowed them to reject $6B for such a thing is...confusing. But, eh, whatever.

GroupOn isn't worth the nothing it's made of.

[Anonymous Coward]

All we have to do is figure out how to short their stock before they go public and WE will be able to get rich.

Just how many bubbles are left?

[Titan1080]

One last gimmick before the complete end of this system of economy? Too bad the whole alternative energy thing didn't work out. Would be nice to see an economic bubble that actually did some good.

Re:Just how many bubbles are left?

[MtHuurne]

The first recorded bubble was almost 400 years ago, so I doubt this will be the last bubble.

Hey

[Anonymous Coward]

Come on now, guys. Surely Groupon may suck a little cock, but it must be at least as valuable as Facebook.

Headroom to grow?

[Anonymous Coward]

They are actually running out of businesses to sign up for their *vastly overpriced advertising scheme*.

Your product sells for $100, they demand you put it on sale for $50, and they take $25 of that.

So instead of $100 in your cash register, you have $25.

And the "customers" it pulls in are mostly short attention span cheapskates.

Businesses try it once, and then say "Never again".

You don't get their business model

[melted]

They don't sell "shit". They can't. Don't ever expect them to sell LCD TVs.

They sell _services_, which can be deeply discounted and still make money to the business dealing with Groupon.

25 billion for what?

[Ant P.]

Seriously, what? What is it? I've never even heard of this "group on" until this article, how can it possibly be worth $25bn?

Re:25 billion for what?

[RockDoctor]

I have heard of "groupon", in a very vague way.

They used to produce images and frames on my web browsing. Then I taught Adblock "groupon-content.net^" and I've not heard anything from them since.

I doubt that my life is significantly worse for it.

Sounds to me like Google has saved themselves G$6.

Re:anyone else find most groupon offers kinda scam

[Anonymous Coward]

> I really dont see why in the world it has gotten so popular

become so popular.

Remember: when you use "gotten" you're saying "I'm too lazy to think of a verb".

Re:Things that can't be cut

[CycleMan]

It's interesting to say that mortgages and health insurance can't be cut. If you mean, we can't entirely cut out spending on housing and health, then I absolutely agree with you. If on the other hand, you consider how our expectations for houses and for health care have changed from 30 years ago (or 50, 75, 100), then we see ways we could cut. You may not like linoleum floors and Formica countertops; you may prefer hardwood and granite. Only one bathroom and 60 amp electric service may seem terribly limited to you. But you could live with it; people did. That goes double for health care, where costs have risen in some cases because we've developed new methods that work somewhat better but are significantly more expensive. Many people expect to take pills and have elective surgery rather than make lifestyle changes, get bed rest,and recover slowly. This costs much more, and we see it in insurance costs, since the tab has to be paid somehow. Is it overconsuming? I think so.

I don't even know what groupon is!

[Gunstick]

How can you give so many billions if the market share is so small that I don't know about groupon.
It's maybe only USA centric? Well google is a worldwide company. Did people know google before the IPO?

Is Groupon evil?

[Anonymous Coward]

I have seen a good documentary here in France and if half of what was showed is true, I would stay away from them (and I did).

Basically when a poor business signs in, it has to endorse a contract including:
- 1 year validity for the coupons, with no limit in number
- 2 years duration (1 year + 1 year automatic renewal) preventing use of another advertiser
- 50% commission (yeah you read that right)

So basically a small shop selling a service for 100$ is stronged armed to lower the price to say 60$, then Groupon takes a 50% cut thus 30$, leaving only 30$ to the business. Some of the businesses found that in the end they were loosing lots of money, and that it may not be very effective adverstising.

Add to that that payments are actually made to Groupon and not the business. Groupon will, upon coupon redeem only, pay the business.

So yay no wonder they are profitable. To me they are on the evil side of things and win-win-win is more win-WIN-loose (user, Groupon, business).

Re:anyone else find most groupon offers kinda scam

[Yvan256]

I guess he was too lazy to gotten a verb.

$25 Billion for an opt-in Spam Company

[Anonymous Coward]

Yay for Wall Street. They are obviously as intellectually and creatively bankrupt as they are financially bankrupt.