
Groupon Shares Tumble to Record Low - hkmurakami
http://www.bloomberg.com/news/2012-07-12/groupon-trades-at-record-low-on-profit-concerns-chicago-mover.html
======
staunch
I'm not sure what the right price is for Groupon, but I still believe it's got
massive potential. It could serve the same purpose that AdWords does online
but in the physical world, which is a far larger market.

The thing that seems to be holding them back is that they're simply not
executing at a super high level yet.

It seems like they scaled the business by doing everything the same way but at
higher volumes. They need to move to a self-serve model so they can get rid of
the overhead of having 10,000 sales/writer employees. They need to simplify
their product down to the primary use case. They have at least four products
currently: Featured Deal, Now!, Goods, and Rewards.

Unfortunately I do predict doom and gloom for them. It would be so hard for
them to make the changes required that it's most likely they will not be able
to do it. Andrew Mason isn't in the kind of position Zuckerberg is in from a
control perspective, which means he'd probably get fired for trying to do this
stuff.

~~~
vladd
Most of their small business owner clients lack decent knowledge in computers
in order to be self-served by Groupon, otherwise they would have used AdWords
or Drupal by now and would have had their own coupons. But in a couple of
years from now, with voice recognition and voice synthesis, I can see e.g.
Google having phone bots that are good enough to automate the process (and
have human operators just for 10% of the cases where things go bad).

Part of the flow is not really automate-able: it involves hearing from the
owner the products they have and writing a pitch on Groupon.com that fits the
overall theme and style of the site. But it can still be done faster probably
if owners were to leave that info with clever phone bots rather then being
hand-hold while walked though every stage of the process.

~~~
staunch
I think the future of Groupon is something closer to what Google Local wants
to be. A place people can turn to when they want to get lunch, a massage, or
get their oil changed.

I think the daily deal thing, which started Groupon, is not nearly as
interesting as this. They could drop it entirely.

I believe business owners could absolutely handle it themselves, if you made
it really simple. The primary interface could be a smart phone, so it would
work for any business. Made it dead simple. It shouldn't take more than 5
minutes to put up your daily ad.

------
xanadohnt
Groupon needs to fail. The faster the better. Often the small business owners
that are attracted to Groupon's service are not technologically savvy. They
become starry eyed with the promise of new customers, business (and -
ultimately - money), and don't grasp what's at risk. It's typical for a
business owner to have a wholly negative experience with a Groupon sale.
"Grouponers" have a certain DNA. And that DNA is at odds with what Groupon
promises. "Attract new customers" - NO, most only go to the merchant for that
single, highly discounted, offering, never to return. "Attract collateral
business" - NO, studies show grouponers rarely purchase beyond the sale item.
"Make lots of money during the sale because you'll get a guarantee number of X
buyers" - NO, Groupon keeps such a large percentage of the sale (50%) that
most sales operate at a loss to the merchant.

But there are more systemic issues with Gropoun, merchant, and employee
relationships. Again, the DNA of a grouponer - being that of a deal thrift -
often leads to a strained relationship between employees and grouponers. No
use in fostering good rapport with the customer; you'll never see 'em again.
Tips will be small (again, deal thrift), upselling is improbable, etc., all
leading to employees often becoming resentful toward grouponers. All this
leads to a large net negative to the small business owner.

Groupon is a well disguised parasite.

[http://www.msnbc.msn.com/id/45398235/ns/world_news-
europe/#....](http://www.msnbc.msn.com/id/45398235/ns/world_news-
europe/#.TsuORXNcKfZ)

[http://www.riverfronttimes.com/2011-10-13/news/groupon-
fail-...](http://www.riverfronttimes.com/2011-10-13/news/groupon-fail-st-
louis-local-harvest-yelp/)

[http://crosscut.com/2012/04/11/business/22198/Groupon-
When-w...](http://crosscut.com/2012/04/11/business/22198/Groupon-When-will-
misery-stop-for-everyone/)

~~~
maratd
> "Grouponers" have a certain DNA. And that DNA is at odds with what Groupon
> promises.

> Again, the DNA of a grouponer - being that of a deal thrift - often leads to
> a strained relationship between employees and grouponers.

This is insulting and frankly, just bullshit. The overwhelming majority of the
businesses on Groupon are _failing_. Of course I'm not going to be back. They
won't be there!

Out of the businesses that aren't failing, you can put them in these
categories: new location for an established business, new business,
experiences (like tours, hot air balloons, etc.), confused business.

I have experience with all of these.

1\. New location. There was a restaurant that I like that opened a new
location. They had a groupon. I already knew they had great service and
excellent food. I went on a groupon, had the experience I expected. Did I
return to that location? No, I prefer the other one because it's closer. But
now I _know_ about it and if I'm in that neighborhood, I know I can go to that
location and have the same excellent experience I expect.

2\. New business. These mostly suck. Because they're new and don't know what
they're doing. Out of all the ones I went to (and I went to many), I would
only go back to one. It was a chain, so they had fewer variables to juggle.

3\. Experiences. These are flip of the coin. Some are excellent, some suck,
but regardless ... once I had an experience, I'm not going to have it again.
That's boring. They know that. Most of the groupons for these are structured
so that they make their money on the first round.

4\. Confused business. There's only been one like this. A fantastic
restaurant. I bought 2 groupons and went there twice. I have no idea why they
did it. The place was packed, service great, food amazing. It was voted
Groupon of the year in my area (NYC) and they had it again ... so I bought 2
more and went there 2 more times. Will definitely come back many, many times.

Groupon _is_ going down the toilet. That's because there are fewer and fewer
of the above businesses on it. Now it's 99% failing businesses. Unless I
already know the business or I'm traveling, I'm not going to touch Groupon.
That's after almost 50 groupons purchased.

~~~
ironchef
"The overwhelming majority of the businesses on Groupon are failing."

To use your own words: "This is insulting and frankly, just bullshit." I would
love for you to find a non-anecdotal study which shows that most (>50%) of
businesses on Groupon are failing.

"Now it's 99% failing businesses." Ahh...now I know you're just being
hyperbolic.

~~~
maratd
Obviously it was hyperbole, but in the restaurant category, the few gems that
popped up here and there, have been largely replaced by restaurants which
aren't going to be around much longer.

My use and excitement for Groupon is almost on the same trajectory as their
stock and frankly, I don't think I'm alone.

------
danko
If there's any joy to take from this (beyond pure, uncut schadenfreude), it's
that news articles like this have permanently stemmed the tide of Groupon
imitators that saturated every conduit of the tech media in 2011.

I do fully believe that Groupon (and Living Social) will survive -- albeit as
much more modestly sized companies -- but the sea of imitators should
evaporate except for a very select few in well-entrenched niches. And that's
fine, they serve their purpose, and they do have a legitimate market in which
they can make money and deliver value. The rest of us can treat their product
as an established commodity and move on.

------
bluedevil2k
Everyone pointed to the ponzi scheme nature of the Facebook IPO, but Groupon's
IPO really should be the standard of the ponzi scheme IPO. The investors and
owners of the company knew the entire revenue model would collapse in on
itself, and the only way to make money on the whole thing before it all
disappeared was to IPO - sell this worthless POS to someone else and let them
hold all the shares when the bubble pops. The nature of the ponzi scheme is
that the last people in get hurt the most - sounds remarkably like this IPO.

The very nature of the IPO itself should have raised red flags to everyone
(just as Facebook's did). Early investors are all dumping shares, founders are
dumping shares - in lieu of insider trading laws, it's the surest sign that
something is amiss. You really think if the company was expecting the same
massive growth that the only people with the insider knowledge of that
happening would be _selling_ shares? You think John Rockefeller was selling
shares of Standard Oil?

~~~
jessedhillon
_The investors and owners of the company knew the entire revenue model would
collapse in on itself,_

Is it me, or has the standard of proof on HN dropped to immeasurable levels?

What's that? Hmm?

Oh no, I didn't say anything, not me. Just doing my part in the two minutes
hate against anyone who isn't an engineer. We all know engineers are the
unappreciated man-gods oppressed by the investor class.

Boo investors! Hiss!

~~~
heretohelp
I take it you didn't follow the investment rounds that preceded the IPO.

We're talking about leadership that took 90% of a nearly $950 million
investment round right off the table into their pockets.

If you don't know the subject matter, GTFO.

~~~
jessedhillon
You take it incorrectly. Now what?

~~~
heretohelp
If you see nothing wrong with what they did, I have some really hot stocks to
tell you about.

~~~
jessedhillon
I'm sorry, perhaps you are unaware of this fact: the term "Ponzi scheme" has a
specific meaning, which an activity either conforms to or it does not. If it
does conform to that definition, then you should be able to present _material
facts_ about the activity which would cause a reasonable person to reach that
conclusion.

Likewise, when a person makes statements about the mental states of another,
such as what those people did or did not know, that is a statement of fact. If
you assert those facts, then you should have _evidence_ to demonstrate that
such things are true.

Unfortunately, all you have are poorly formed, emotionally charged opinions
informed by a couple of articles you read on TechCrunch. Or maybe the WSJ if
you're a little more rigorous. What you don't have are sufficient facts to
warrant the conclusions you're defending, unless -- and this is my point --
you have such a low standard for truth that practically any statement can be
considered substantiated, so long as it agrees with your prejudices about who
deserves wealth and what constitutes success.

~~~
heretohelp
Where did I say ponzi scheme?

~~~
jessedhillon
Oh jeez, seriously? STFU dude. I was responding to the inane comment which
called Groupon and Facebook a Ponzi scheme. I don't know why you're responding
if it's not to defend/agree with that comment.

Do you actually have anything to say, or are you compelled to react whenever
you see someone not rabidly and mindlessly denouncing Groupon?

------
ZanderEarth32
Not sure why this is getting up voted. Hasn't Groupon taken a hit every day
this week, and pretty regularly for the entire year?

~~~
tatsuke95
Remember, this was the _fastest growing company of all time_ , gone from a
billion dollar+ IPO price of over $30, down to $7 in a matter of months. Sheer
evaporation of capital. Promoted by many of the usual suspects of the tech
scene. I find it to be an incredibly interesting business case study.

~~~
unreal37
Serious question. Does capital really "evaporate"?

I mean, the value of the entire company has gone down when measured by the
stock price, but the stock price is just a report of the latest trade.

If you and I trade 1 Share of Groupon for $1, we didn't just wipe billions of
dollars in capital away.

Maybe I lost money selling you that 1 share, but Groupon still has the cash in
the bank from it's IPO, all other investors still own the same percentage of
the company, revenue remains the same, profits remain the same --- so the
stock transfer between you and I didn't really change anything fundamental
about the company did it?

~~~
_delirium
It's a difficult question, as with any "on paper" value and what that really
means. If you and I trade one share for $1, it probably doesn't affect the
paper value. But if a year ago a stock was regularly trading at $30, and now
it's regularly trading at $7, that does substantially change the paper value
of the stock, and therefore impacts anything that depends on that paper value.
What it comes down is "stock price" as a reasonable estimate of what you could
sell the stock for if you wanted to. You and I exchanging a share for $1
doesn't really make it reasonable to assume $1 is now the going rate; but many
shares changing hands at a lower price than they regularly did last year is a
good indication that the price you could fetch for the stock today is less
than it used to be.

Of course, if you don't want to sell, you could just ignore the stock price,
and pretend the stock doesn't have a price even. Although even then that
assumes you're not using the "paper value" of the stock in any way. For
example, if you want to use the stock as payment for something (e.g. in a
stock+cash transaction), or as collateral for another transaction, then its
paper value matters.

------
tlrobinson
ZNGA is also at their all time low.

------
steveplace
Nobody has yet mentioned the absolute drubbing that tech/semi stocks in
general have taken. Sure there's some company issues but don't forget market
correlations that occur when an entire sector takes a hit.

------
kno
These guys should have taken the 4 billion from Google. Their unfair advantage
is pretty much inexistent that leave them extremely vulnerable to any
competition.

~~~
incongruity
I think it actually says more that Google was willing to pay that much... for
_what_ , exactly?

As for the merits of not taking the deal, I think we should be clear – the
early investors and many early employees have done alright and most likely
won't be losing their shirt like any of the recent investors:

[http://allthingsd.com/20110602/where-did-groupons-billion-
do...](http://allthingsd.com/20110602/where-did-groupons-billion-dollars-go/)

Also, fwiw, this post seems to be fairly well thought out and it is clearly
from before the IPO, so it's worth looking back on with fresh eyes:
[http://shortlogic.com/post/6142108636/groupon-ipo-pass-on-
th...](http://shortlogic.com/post/6142108636/groupon-ipo-pass-on-this-deal)

~~~
BlackNapoleon
I was thinking the SAME thing. That says a lot about google.

~~~
incongruity
Indeed. Where's the IP? It's not like there's anything of value in Groupon –
customers? no lock in/low switching costs. Vendors? Every small business
person I've heard talk about their experience with Groupon has said they'd
never use it again.

