
Why Groupon is poised for collapse - zoowar
http://venturebeat.com/2012/03/31/why-groupon-is-poised-for-collapse
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dia80
The insiders lock in period ends May 2nd, that's 30 days to keep it together
before they can start cashing out. If they last that long they have 12 days
before Q1 results. It's going to be tricky to unload meaningful quantities of
stock before the earnings since daily volume averages 0.4% of market cap and
95% of the stock is held by pre IPO investors.

The pressure to manipulate earnings and create more time for the insiders to
salvage value must be unbearable. GroupOn may be remembered as the first big
fraud of "Bubble 2.0"

Pets.com lasted 268 days from IPO to liquidation, it could be close.

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knowsnothing613
Groupon is a ponzi. They need money from new groupons to pay out past
groupons. This is why they are constantly buying out smaller companies for new
markets, and getting into higher end groupons. If the new money coming in is
less than the money payed out to previous groupon, the companies collapses,
just like a ponzi.

As long as they can make the company look healthy in the near term (accounting
tricks), they hope investors won't notice the medium-long term liabilities, or
the flow of funds necessary to keep the company afloat, but by then insiders
would have sold out the bulk of their positions, and someone else is holding
the bag.

Groupon will signal the bursting of web bubble 2.0, and will drag down the
Facebook IPO. And if the Facebook IPO falters, silicon valley hits the skids,
because everyone in Silicon Valley is in that play. Everyone.

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wpietri
I think that a) Groupon will take longer to blow up than that, and b) people
will be happy to write off the daily deals sector as something pretty much
unrelated to Silicon Valley. Groupon is in Chicago, Living Social is in DC.
They are marketing companies, not technology companies.

Now if something else fails big, I'm sure people will see a trend. But I don't
think Groupon will be enough.

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antr
Groupon is VERY Silicon Valley, investors include NEA, Andreessen Horowitz and
Kleiner Perkins.

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uptown
In recent weeks/months they've acquired Hyperpublic, Kima Labs (Barcode Hero),
Adku, Pelago (Whrrl), and Fee Fighters. What's their strategy? Move away from
email deals, and get into the location-based check-ins space?

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FelixP
Mobile, location-aware deals is their main hope of driving large amounts of
new revenue since most of their current audience is already suffering from
email daily-deal fatigue.

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uptown
While I don't feel any one company has really nailed the location-aware deals
space, when somebody finally does I think it'll be very closely tied to the
payment. In my opinion, companies like Square and Dwolla have a distinct
advantage that companies like Foursquare and Groupon (if they go this
direction) lack.

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FelixP
I think the combination of payments, deals/coupons, and loyalty programs is
what will really nail this space- but I agree with you, it's mostly the
payments that will make or break this.

There are also some interesting opportunities with online advertising
integration/tracking, but that's really just icing on the cake.

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nextstep
Some of these claims about the danger of Groupon refunds are exaggerated. For
many deals, Groupon simply does not grant refunds, so customers need to be
sure they can use the deals they buy.

But, I still think that Groupon will fail, maybe when they run out of enough
new vendors to partner with.

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gojomo
I can confirm the 'Groupon Promise' isn't what it seems to be. Even after
Mason blogged that there was no need to sue Groupon for violating state
expiring-gift-card laws, because people with expired groupons could always
just use 'the Groupon Promise' for a refund, Groupon refuses to give refunds
on expired groupons.

That may save them a bit on refunds, but it creates pissed-off customers who
won't be fooled again. I'd bought 4 groupons before I discovered the Groupon
Promise was a lie, and none since.

(And I don't mind companies having tough return policies if that's what's
required in their particular business. But I mind a company pretending it's
got a liberal return policy – touting it front-and-center, getting free
publicity from it, using it to spin coverage of legal problems – when it
really doesn't.)

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ahi
A glance at the options pricing suggests to me the market agrees. Not a whole
lot of volume, but betting against groupon will cost quite a premium.

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Radzell
It seems like groupon goose is cooked the model was flawed. I don't think it
started out as a ponzi scheme, but now it seems like what it will be known
for. The bubble 2.0 will live on groupon may even live on as different
startups which learn from it's mistake. Unless they learn and change this is
bound to fail. They went to IPO to fast anyway for my taste.

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jaequery
I felt the same.

