
The checkered past of Groupon's chairman - bjonathan
http://tech.fortune.cnn.com/2011/06/10/groupon-eric-lefkofsky/
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antidaily
Sidenote: Anyone else catch (Groupon director) Brad Keywell's talk at
MidVentures Chicago last year? All that Ayn Rand stuff?? Bizarre.

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Create
the Ayn Rand stuff doesn't work ... it didn't, not even for her.

<http://www.youtube.com/watch?v=Uz2j3BhL47c>

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Tycho
That is one of the most ridiculous and tenuous pieces of television I've ever
seen from the BBC. It's almost like Curtis plays random association games then
tries to impose a historical narrative on it.

~~~
Create
do you think Ann was happy? are others whom have to live with stuff she was
used to justify? btw Curtis is aware of random association games and their
abuse (see Century of the Self). He is also aware of history (see blog entry
about Eden/China, Libya, Iraq, Kosovo etc. -- he always puts it in context)

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Tycho
If Curtis' latest documentary series was a courtcase, the defense would be
going blue in the face shouting 'objection!' after virtually every line and
the judge would likely just make a sign saying 'sustained' to hold up. Almost
every assertion/connection he makes or insinuates is logically untenable.
Consider the whole leap from 'some' Silicon Valley entrepreneurs following
Rand, to the NY/London financial industry putting too much faith in computers.
Or the supposed direness westernisation has brought about in south-east Asia -
focussing on a single crisis and ignoring the broader picture. Or statements
he makes about things so long passed that they somehow shouldn't need
evidence, eg. the great depression 'was caused by greed.'

Basically he picks a bunch of ideas or voices, arbitrarily decides they had
utmost influence on history, giving no evidence for this, then connects them
to cherry-picked historical events, omitting any events that would contradict
the narrative he wants to present, and also any counterpoints within the
ideologies he's 'debunking.' If anyone seriously finishes watching those shows
and takes it all at face value, they have some serious epistemological issues.

Was Rand happy? Think how ridiculous this is: all the stuff she accomplished
in her life time, and the documentary focuses on one spell of unhappiness
stemming from a personal betrayal, to paint her as a 'failed invidividual.'
Think of all the difficulties other philosophers/writers ran into - yet we let
their ideas stand on their own merit. Of course Rand was not happy every
single day, and there's nothing about her philosophy that suggests she ought
to have been, but she was (rightly) satisfied with her life.

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ashbrahma
Article on Techcrunch today about a retailers view point on Groupon:
[http://techcrunch.com/2011/06/09/groupon-single-worst-
decisi...](http://techcrunch.com/2011/06/09/groupon-single-worst-decision/)

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louislouis
Truthed. My friends company struck a deal with groupon in a strategic attempt
to get more exposure, even though they sold their products at a loss. Yes
their website got a large traffic spike on the day it hit groupons front page,
but no, none of the traffic stuck. Just FYI.

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justin_vanw
Lefkofsky's only talent seems to be pumping valuation and exiting on top.

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saeidm
Makes you wonder why he didn't exit when he had a chance at $6 billion. I
doubt groupon will ever see that type of valuation again considering how
terrible their coupons have become and how natural competitors in the space
like local papers and yelp are beginning to gain traction.

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WinstonW
nh posted a video below which states that based on a $25B valuation, Lefkofsky
will grab $5.3B, as he owns 22 percent of Groupon. That's a hell of a lot more
than he'd have made in the Google deal.

Courtesy of nh: <http://www.youtube.com/watch?v=D_UYtYAChi8>

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ubercore
Isn't it only _potentially_ a hell of a lot more, if Groupon stock holds its
value, as opposed to cash/GOOG?

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nostrademons
Groupon stock only has to hold its value long enough for his lockout (usually
6 months) to end. It's usually not hard to do that - when things come crashing
down, it's usually a few years in the future, not months.

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CoffeeDregs
Not really. Unloading 20% of a company without telling anyone is both hard
and, I think, illegal (as an exec). This is one of the reasons Bill Gates'
stock sales are so consistent is to keep the market from freaking out when he
sells stock. (Ohmigod, Bill sold stock! Oh wait, he's done that every month
for 10 years... nevermind.)

Lefkofsky might be able to hedge against the decline of the stock, but hedging
20% of a big company (especially because it'd be difficult to build a
portfolio which replicated Groupon's situation and risks) is a pretty tall
order.

All that said, I tend to agree with your sentiment...

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MediaBehavior
How much skepticism will need to be raised before investors are deterred from
funding "a _possible_ bonanza"?

I also wonder how much Groupon is riding high based on the reasoning, "Well,
if _Google_ thought highly enough of it..."

(forgetting that Google was willing to bet on it _on_condition_ that Google
had control/oversight of the operation)

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cte
Here's a piece of the S1 that I haven't yet seen cited:

"To demonstrate the economics of our business model, we have compared the
revenue and gross profit generated from the North American subscribers we
acquired in the second quarter of 2010, which we refer to as our Q2 2010
cohort, to the online marketing expenses incurred to acquire such subscribers.
The Q2 2010 cohort is illustrative of trends we have seen among our North
American subscriber base. The Q2 2010 cohort included 3.7 million subscribers
that we initially spent $18.0 million in online marketing to acquire in the
second quarter of 2010. In that quarter, we generated $29.8 million in revenue
and $12.8 million in gross profit from the sale of approximately 1.2 million
Groupons to these subscribers. Through March 31, 2011, we generated an
aggregate of $145.3 million in revenue and $61.7 million in gross profit from
the sale of approximately 6.3 million Groupons to the Q2 2010 cohort. In
summary, we spent $18.0 million in online marketing expense to acquire
subscribers in the Q2 2010 cohort and generated $61.7 million in gross profit
from this group of subscribers over four quarters."

A typical cohort that returned >3x what it cost? Sounds like a good business
to me.

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shareme
You are missing some things:

1\. Costs to gain subscribers goes up each quarter 2\. Costs to retain
subscribers goes up each quarter 3\. Marketing costs to get deals for
subscribers goes up each quarter

Costs to retain subscribers is missing..what part of loss is that? Do not know
have not finished reviewing the S1..

and other difference compared to Amazon..Amazon founders did not attempt a
cash out during the loss years...

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breck
This article digs up some interesting events from the past, but it has a
negative spin so definitely also read Lefkofsky's own words:

<http://www.lefkofsky.com/blog/when-you-dont-know-what-to-say>

He seems both honest and it's evident he's determined and learns a lot from
experience.

He's clearly the type of entrepreneur that VCs always ask for: the "go big or
go home" type. Seems like his early investors didn't grasp that.

I wonder if he'll distribute any of his Groupon proceeds to some of the
investors who backed him early. The ones who didn't turn on him when things
went south, anyway.

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dsplittgerber
There is a clear difference between "go big or go home" and "pump it & dump
it". I am astonished people don't seem to see the difference.

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ChuckMcM
There is a saying that when you scheme to make yourself and the company
successful its called 'leadership' and when you scheme to make only yourself
successful its called 'politics.' (some cynics add that if you make the
company successful but not yourself its called 'stupidity' :-)

The exhortation 'go big or go home' is clearly a challenge to 'win' at all
costs. How people internalize that challenge reflects on their character and
their moral compass. Its all about what someone considers and 'acceptable
cost' at that point.

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nh
Here's a 2 minute video about Lefkofsky by Bloomberg

<http://www.youtube.com/watch?v=D_UYtYAChi8>

~~~
Luyt
Heh, I wish I had this prowess to make millions of dollars ;-)

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louislouis
It's a joke that stocks can be diluted afterwards by insider offerings. Thats
almost a license to print money. Surely theres a law for this scam?

~~~
lurker19
Thing is, share dilution is not much different from giving an employee or
vendor a huge pile of money in exchange for labor that turns out not to
generate much revenue. It is bad for business (and will be reflected in a
share value drop), but how can you prove it is fraud?

~~~
louislouis
Hmmm... It's rather convincing when you put it that way.

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dr_
Fine, but before the negativity surrounding Groupon, he's considered someone
with an "impressive entrepreneurial track record"

<http://www.nytimes.com/2010/11/18/business/18sbiz.html>

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imjustatechguy
You mean before people started to look into him more closely? I also was very
impressed with Groupon before they released their numbers and the amount of
shares sold by insiders prior to IPO.

More information led me to change my mind.

My hope is that Groupon files an new disclosure in a couple months that has
better numbers. That is the real solution that everyone is waiting on now.

Our minds can be changed again, just like they were changed with the first IPO
filing. From my perspective, this would be a very mature and robust solution
to the problem at hand.

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suking
I don't know if this info is limited to tech communities or what... Is the
general consensus that this IPO seems very scammy outside of the tech world?

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bcrescimanno
I think it's mostly the general consensus--period. This has boiler-room style
"pump and dump" written all over it; yet the big investment banks have been
getting away with running IPOs this way for years.

Groupon just happens to be the latest example.

~~~
ookblah
Do you think that us living in this time period would help mitigate that?

I mean back in 2000 I was too young to understand all that, but was the bubble
partly due to misinformation by of the public? I feel like with all these
stories about the IPO being cast in a negative light, and how connected we are
now w/ information, the average person would be much more careful.

Hm.

~~~
ssmoot
I remember the dot-coms. I wouldn't say I was all that savvy then (or now),
but my take is it feels very similar now.

It really didn't seem like there was a lot of out-right deception then, or
even misinformation. Companies will always say they're great. There's enough
_information_ out there to inspire some skepticism if you're open to it.

I'm no professional at this, but my uneducated observation is that, then and
now, there's a lot of money to be made, and people are willing to risk riding
the wave as long as they think they can get out before the crash. It's just
simple greed. Nobody really believes these companies are actually worth what
they're being pitched at; but "if I can quickly double or quadruple my
investment, then get out clean, why should I miss out? After all, I'm smarter
than everyone else..."

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rickmode
You've described the very definition of the "greater fool theory" [1]. This is
investing based on momentum rather than value (such as the price to earnings
ratio). The intent is to sell to another "fool" after mading a profit. Of
course it all comes tumbling down when the market runs out of fools [2].

[1] <http://en.wikipedia.org/wiki/Greater_fool_theory>

[2] <http://en.wikipedia.org/wiki/Tulip_mania>

~~~
chopsueyar
More to the point...

<http://en.wikipedia.org/wiki/Exit_strategy>

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rokhayakebe
I wish people stopped talking dirt about these guys and their IPO. Investors
aren't being forced to buy the stock, consumers aren't being forced to buy
groupons and merchants aren't certainly being forced to participate in their
program.

While Lefkofsky is selling his stock at will, you should note that the CEO is
holding on to most of his portion of the company.

Everybody and their cousin worries about their expenses, and that is totally
understandable, but let us not forget how many acquisitions they have made in
the past. If most of the money they have raised went into founders' pockets,
then most of the income they have made went into buying other sizeable
companies and paying some 7000 employees.

There are 15M small businesses in the US. Groupon made nearly $3B last year
servicing only less than half a percent of those. For better or for worse,
Groupon could be bigger than Google and turn a solid profit.

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imjustatechguy
I think that investors should be informed about Groupon and its founders. It
is especially important if there are issues with Groupon and its founders.

I was actually quite impressed with Groupon initially until I saw its numbers
and that its major stockholders were cashing out hundreds of millions of
dollars in stock pre-IPO. That raised with me huge alarm bells and it changed
my opinion drastically.

My extreme leariness of Groupon is based on facts that I've learned as I used
to be a fan, although a relatively uninformed one.

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truthout
Every comment this account has made had been related to groupon. I think the
tech giants are out bastetdize its IPO. The company is a top line revenue
behemoth, unlike LinkedIn. Seems to have a lot of potential if they increase
profit margins. A lot.

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imjustatechguy
It appears that you are strongly implying that I am part of a conspiracy. Can
you outline in more detail this conspiracy that you believe I am involved in?

