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(Bloomberg)   Groupon CFO says there will be no change to their business model after CEO exit. Translation: They'll keep bleeding money like a severed artery   (bloomberg.com) divider line 35
    More: Fail, Groupon Inc., Groupon CFO, chief financial officers, CEO, Ted Leonsis, Deutsche Bank AG, money-making  
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635 clicks; posted to Business » on 07 Mar 2013 at 9:53 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-03-07 09:42:07 AM
Groupon have a business model?
 
2013-03-07 09:57:34 AM
I keep getting offers for laser hair removal and massage therapy from Groupon. The only offer I ever took them up on was a Cisco training voucher. I don't understand the connection.
 
2013-03-07 10:04:05 AM
If you're not going to change the course, why throw the captain overboard?
 
2013-03-07 10:06:22 AM

skozlaw: I keep getting offers for laser hair removal and massage therapy from Groupon. The only offer I ever took them up on was a Cisco training voucher. I don't understand the connection.


Maybe they thought you meant Sisqo?

i.imgur.com
 
2013-03-07 10:06:28 AM

Flint Ironstag: Groupon have a business model?


Last I checked, their business model was to take money from the investors and pay it out directly to the CEO.
 
2013-03-07 10:07:48 AM
Even without the flaws in the business model, the fact that it was easily replicated and had low barriers to entry told you that investing in any singular daily deal entity was a bad idea.  This is pretty basic business theory.

I can't believe that Google offered $6B for it.  Is there some Silicon Valley mania that causes rational people to think that any new thing is the next big thing?
 
2013-03-07 10:19:24 AM

BizarreMan: If you're not going to change the course, why throw the captain overboard?


Because he ninja'd all the loot
 
2013-03-07 10:20:03 AM

Arkanaut: Flint Ironstag: Groupon have a business model?

Last I checked, their business model was to take money from the investors and pay it out directly to the CEO.


I take it back. That's genius.
 
2013-03-07 10:20:43 AM
If severed arteries bled money then the whole country would turn into a real-life version of "Hostel".
 
2013-03-07 10:28:25 AM

dragonchild: If severed arteries bled money then the whole country would turn into a real-life version of "Hostel".


complete with sadistic germans and hot slovak chicks?
 
2013-03-07 10:31:30 AM
groupon... great idea. why the CEO didnt cash in for his 3 billion and run i'll never understand.

google offered me that much money noone would ever see me again.
 
2013-03-07 11:11:57 AM
Translation: The Chairman is about to use the company as his personal ATM.
 
2013-03-07 11:12:58 AM

Father_Jack: groupon... great idea. why the CEO didnt cash in for his 3 billion and run i'll never understand.

google offered me that much money noone would ever see me again.


Their books were so very cooked they never would have survived a review by Goog. The truth came out anyway...
 
2013-03-07 11:14:08 AM
I know a guy that works there.  A big group of us went to the beach for vacation last year, and he offered to bring a bunch of Groupon stock to build a bonfire.
 
2013-03-07 11:25:56 AM
There are some very bright people working at Groupon...this I know for a fact. I don't understand how their operations are so hamfisted. Granted, the business model sucks, but even taking that into account it's like they aren't even trying.
 
2013-03-07 12:13:33 PM

Rapmaster2000: I can't believe that Google offered $6B for it.  Is there some Silicon Valley mania that causes rational people to think that any new thing is the next big thing?


Google wanted to see their books before they made an offer.  Of course, their books read like the funny pages in the Sunday newspaper, so that was simply never going to happen.
 
2013-03-07 12:49:32 PM

Rapmaster2000: Even without the flaws in the business model, the fact that it was easily replicated and had low barriers to entry told you that investing in any singular daily deal entity was a bad idea.  This is pretty basic business theory.

I can't believe that Google offered $6B for it.  Is there some Silicon Valley mania that causes rational people to think that any new thing is the next big thing?


Google's offer was contingent on Groupon opening theirs books.  Which Groupon declined, since they weren't really using a real accounting system.
 
2013-03-07 01:39:51 PM

SacriliciousBeerSwiller: There are some very bright people working at Groupon...this I know for a fact. I don't understand how their operations are so hamfisted. Granted, the business model sucks, but even taking that into account it's like they aren't even trying.


Every position below the executive level is staffed by people that are absolutely incapable of working for a big boy company.

Jerry Westerby: I know a guy that works there.  A big group of us went to the beach for vacation last year, and he offered to bring a bunch of Groupon stock to build a bonfire.


If he bought Groupon stock he was obviously not one of the very bright people mentioned above.
 
2013-03-07 01:50:31 PM

Weigard: Jerry Westerby: I know a guy that works there.  A big group of us went to the beach for vacation last year, and he offered to bring a bunch of Groupon stock to build a bonfire.

If he bought Groupon stock he was obviously not one of the very bright people mentioned above.


Options were part of his benefits.
 
2013-03-07 02:01:40 PM

Rapmaster2000: Even without the flaws in the business model, the fact that it was easily replicated and had low barriers to entry told you that investing in any singular daily deal entity was a bad idea. This is pretty basic business theory.

I can't believe that Google offered $6B for it. Is there some Silicon Valley mania that causes rational people to think that any new thing is the next big thing?


1. They were first to market and they were/are the biggest name. There are kids in highschool who could write the code for facebook, but they don't have a billion users. Heck, look at Coca-Cola; flavored sugar water that can be perfectly copied around the world...and they are still #1.

2. I suspect google wanted the data and wanted to integrate groupon into google plus, gmail, searches, etc.

3. Groupon could be a viable business model, but they need to stop (or reduce) groupons to sushi places and coffee houses. It's been proven time after time that most grouponers are simply using the coupons for a cheap meal. The restaurants get screwed and groupon loses potential for repeat business.

They should focus on groupons for tickets to things (where costs are large fixed) so like: Museums, ski mountains, concerts (probably not going to happen with ticketmaster existing), sporting events, etc. Whether there are 10 people or 10,000 it costs the same to run these places. However, if you get a bunch of people (who other wise wouldn't have gone to said event) to go you earn a little money of their tickets, but they are pay full price for parking, food, souvenirs, and whatever they spend.
 
2013-03-07 02:50:51 PM

Rapmaster2000: Even without the flaws in the business model, the fact that it was easily replicated and had low barriers to entry told you that investing in any singular daily deal entity was a bad idea.  This is pretty basic business theory.

I can't believe that Google offered $6B for it.  Is there some Silicon Valley mania that causes rational people to think that any new thing is the next big thing?


Yeah I never got that either, Google could have replicated it for probably $10-20 million, it's not like Google would have a hard time getting people to go to a Google run daily deal site.  Trying to buy what they could have sunk for a fraction of the price.
 
2013-03-07 02:53:38 PM
KFBR392:

Groupon could be a viable business model, but they need to stop (or reduce) groupons to sushi places and coffee houses. It's been proven time after time that most grouponers are simply using the coupons for a cheap meal. The restaurants get screwed and groupon loses potential for repeat business.

They should focus on groupons for tickets to things (where costs are large fixed) so like: Museums, ski mountains, concerts (probably not going to happen with ticketmaster existing), sporting events, etc. Whether there are 10 people or 10,000 it costs the same to run these places. However, if you get a bunch of people (who other wise wouldn't have gone to said event) to go you earn a little money of their tickets, but they are pay full price for parking, food, souvenirs, and whatever they spend.


The groupons are based on whatever they can get and what will make money. Sushi restaurants and dermabrasion turn a profit.

Groupon actually has a partnership with LiveNation to sell concert and event tickets that are nearing the show date and haven't sold out.

The most profitable part of the company is Groupon Goods, which basically comes about from people calling Groupon and saying "Hey, I got a warehouse full of crap I gotta sell right this minute, can you move it?"
 
2013-03-07 03:39:26 PM

KFBR392: Rapmaster2000: Even without the flaws in the business model, the fact that it was easily replicated and had low barriers to entry told you that investing in any singular daily deal entity was a bad idea. This is pretty basic business theory.

I can't believe that Google offered $6B for it. Is there some Silicon Valley mania that causes rational people to think that any new thing is the next big thing?

1. They were first to market and they were/are the biggest name. There are kids in highschool who could write the code for facebook, but they don't have a billion users. Heck, look at Coca-Cola; flavored sugar water that can be perfectly copied around the world...and they are still #1.


This is wrong on a few counts.

1.  FB wasn't first to market.  It was third.  That's why I don't see the value in first-mover advantage when your model is easily replicated.  It doesn't look like MySpace's mover advantage over FB did it any favors.

2.  Coca-Cola doesn't sell "sugar water".  It sells 100+ years of brand equity.  You're confusing the physical product with what that physical product truly delivers.  It would take billions of dollars and a hundred years for Sam's Choice Cola to sell what Coca Cola sells.

The point is, Groupon is easily replicated... which is why it has been easily replicated.
 
2013-03-07 04:00:07 PM

DoBeDoBeDo: Rapmaster2000: Even without the flaws in the business model, the fact that it was easily replicated and had low barriers to entry told you that investing in any singular daily deal entity was a bad idea.  This is pretty basic business theory.

I can't believe that Google offered $6B for it.  Is there some Silicon Valley mania that causes rational people to think that any new thing is the next big thing?

Yeah I never got that either, Google could have replicated it for probably $10-20 million, it's not like Google would have a hard time getting people to go to a Google run daily deal site.  Trying to buy what they could have sunk for a fraction of the price.


Google already has Offers. Which is doing so well no one has heard of it.

Amazon hasn't been able to get Living Social to work right, $1.3 billion in losses the last two years.

for all of its problems, Groupon at least generates an operating profit.
 
2013-03-07 04:23:44 PM

BizarreMan: If you're not going to change the course, why throw the captain overboard?


To keep the angry passengers from turning on the other crew members.
 
2013-03-07 05:29:32 PM

Weigard: The most profitable part of the company is Groupon Goods, which basically comes about from people calling Groupon and saying "Hey, I got a warehouse full of crap I gotta sell right this minute, can you move it?"


And it's usually total shiat merchandise.
 
2013-03-07 05:34:48 PM
It is so easy to replicate the business model of groupon all I need to so is throw together some code and hire some salesman I will be a millionaire in no time.


I hope i did that right
 
2013-03-07 05:45:18 PM

jigger: Weigard: The most profitable part of the company is Groupon Goods, which basically comes about from people calling Groupon and saying "Hey, I got a warehouse full of crap I gotta sell right this minute, can you move it?"

And it's usually total shiat merchandise.


Even worse, it's usually a redemption code for another total shiat company that sells total shiat merchandise through its total shiat Web site.
 
2013-03-07 06:02:37 PM

man metaphysical: It is so easy to replicate the business model of groupon all I need to so is throw together some code and hire some salesman I will be a millionaire in no time.


I hope i did that right


You oversimplified it like a simpleton, but as for replication - Living Social, Scoutmob, and numerous other sites did it.  The code is the easy part.  Hire a team of monkeys to do it.  The salesman part isn't that hard either.  They're not any more advanced than knife salesman.

The hard part is convincing the retailers burned by Groupon to give you another chance, convincing consumers with inboxes crammed with daily deals to see the signal in the noise, and convincing VC investors who've seen the results give you a dime.

And after all of that you still won't be a millionaire because it isn't 2006 anymore.
 
2013-03-07 11:52:09 PM

Rapmaster2000: Even without the flaws in the business model, the fact that it was easily replicated and had low barriers to entry told you that investing in any singular daily deal entity was a bad idea.  This is pretty basic business theory.

I can't believe that Google offered $6B for it.  Is there some Silicon Valley mania that causes rational people to think that any new thing is the next big thing?


I believe Google wanted them to open their books first for that offer, which is probably why Groupon turned down such a high offer.
 
2013-03-08 12:47:06 AM
I was really expecting "stuck pig" at the end of the headline. It's one of those nice pat phrases that I enjoy.
 
2013-03-08 08:13:40 AM

Rapmaster2000: You oversimplified it like a simpleton, but as for replication - Living Social, Scoutmob, and numerous other sites did it.  The code is the easy part.  Hire a team of monkeys to do it.  The salesman part isn't that hard either.  They're not any more advanced than knife salesman.

The hard part is convincing the retailers burned by Groupon to give you another chance, convincing consumers with inboxes crammed with daily deals to see the signal in the noise, and convincing VC investors who've seen the results give you a dime.


There probably is a serious model that could be done in a similar way, but using the fact that certain types of organisations have peaks and troughs. You own a hotel, you're already paying for the building, heating, staffing and so forth. A room that makes you $50 is close to $50 in the bank, compared to an empty room. Now, there's already companies like laterooms doing hotel rooms, but no-one does it for spas, hairdressers and restaurants.

And it would work, because these organisation would see an immediate benefit. They'd make at least something for their time rather than nothing.
 
2013-03-08 11:01:45 AM
Groupon seems way too focused on giving away free shiat to consumers.  They don't understand that their revenue source is the folks SELLING things - and Groupon treats them like shiat.

The endless horde of consumers who want deep discounts will never dry up - but the limited field of goods/service providers who want to make promotional offers through Groupon will turn into a desert real fast if they don't turn things around.
 
2013-03-08 02:22:00 PM

Weigard: KFBR392:

Groupon could be a viable business model, but they need to stop (or reduce) groupons to sushi places and coffee houses. It's been proven time after time that most grouponers are simply using the coupons for a cheap meal. The restaurants get screwed and groupon loses potential for repeat business.

They should focus on groupons for tickets to things (where costs are large fixed) so like: Museums, ski mountains, concerts (probably not going to happen with ticketmaster existing), sporting events, etc. Whether there are 10 people or 10,000 it costs the same to run these places. However, if you get a bunch of people (who other wise wouldn't have gone to said event) to go you earn a little money of their tickets, but they are pay full price for parking, food, souvenirs, and whatever they spend.

The groupons are based on whatever they can get and what will make money. Sushi restaurants and dermabrasion turn a profit.

Groupon actually has a partnership with LiveNation to sell concert and event tickets that are nearing the show date and haven't sold out.

The most profitable part of the company is Groupon Goods, which basically comes about from people calling Groupon and saying "Hey, I got a warehouse full of crap I gotta sell right this minute, can you move it?"


The problem is that these restaurants are doing groupons thinking they're going to get long term customers....But they don't. What is being discovered is that most grouponers are just cheap people who wants $20 worth of sushi for $10. They get their food, then move on to the next place. Whereas a museum, can hold (say 1,000 people)...and whether there are 50 people or 500 people...the cost to run doesn't change (or very little). But in additional to getting more people (who wouldn't have otherwise gone to the museum, these people will buy food, parking, and maybe some gifts).
 
2013-03-09 10:53:34 PM

farkeruk: Rapmaster2000: You oversimplified it like a simpleton, but as for replication - Living Social, Scoutmob, and numerous other sites did it.  The code is the easy part.  Hire a team of monkeys to do it.  The salesman part isn't that hard either.  They're not any more advanced than knife salesman.

The hard part is convincing the retailers burned by Groupon to give you another chance, convincing consumers with inboxes crammed with daily deals to see the signal in the noise, and convincing VC investors who've seen the results give you a dime.

There probably is a serious model that could be done in a similar way, but using the fact that certain types of organisations have peaks and troughs. You own a hotel, you're already paying for the building, heating, staffing and so forth. A room that makes you $50 is close to $50 in the bank, compared to an empty room. Now, there's already companies like laterooms doing hotel rooms, but no-one does it for spas, hairdressers and restaurants.

And it would work, because these organisation would see an immediate benefit. They'd make at least something for their time rather than nothing.




That's how Priceline and Hotwire operate. To a hotel operator, airline or a car rental company, their products are perishable commodities. A empty hotel room doesn't make money, an empty airline seat doesn't make money, a car sitting on the rental lot doesn't make money (in fact, they lose money, after costs are calculated), so they figure its better to make something over nothing.
 
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