
Groupon Is Laying Off 1,100, Shutters Operations in 7 Countries - kp25
http://techcrunch.com/2015/09/22/groupon-is-laying-off-1100-at-a-cost-of-35m-shutters-operations-in-7-countries/
======
bane
I'll be honest, I know Groupon and its ilk are terrible business, but as a
user of the service I've had lots of fun exploring activities and restaurants
that I literally would never have bothered with or known about. In the last
few weeks I've taken a Scuba lesson, a Horse Riding lesson, an intro to art
class, found a couple new amazing sandwich shops. I took an amazing trip to
Ireland for something like 50% off the lowest rate we could find, and it
forced us to explore virtually the entire country since the package had us in
different castles every couple nights. I've visited some oddball museums I
hadn't bothered with before.

I would have probably not done almost any of these things, or been more
judicious in what I went to. I've found some new things that I'll be returning
to, and some things that I won't.

As a customer, these kinds of services are amazing. And really all they're
doing is centralizing good deals. A less "grow fast and explode like a
Unicorn" business model would probably make it work better for participating
businesses.

~~~
hnal943
I stopped using groupon because of the near-universal resentment I felt from
the employees of the stores selling the groupons. Clearly, these businesses
weren't getting the value they thought they would get, but I wonder how much
of that was the way they treated the new customers that the groupon generated.

~~~
deepanchor
My experiences with Groupon mirror your own. Whenever my friends and I would
show up to a business with a Groupon, we would be treated with bad attitudes,
worse service and just general reluctance when the exact opposite should have
been true. I mean, that is the entire point of Groupon right? To promote a
business -to spread the word on the street about how great your
restaurant/bowling alley/pub is.

Sadly, it has been my experience that a lot of the businesses that sign up for
Groupon don't know what they are getting themselves into and as a result, take
out their frustrations on customers when they can't break even for the
month... which is, I think, a fatal flaw in the human psychology aspect of the
business model. I'd rather just pay the sticker price and enjoy better service
than have to deal with all that.

~~~
sirtastic
My experience has been different. I used a Cheesecake Factory Groupon once and
was given a special meal that reflected the "value" of my Groupon. It felt
like a complete rip-off on top of a restaurant that was already overpriced.
$30 for Cheese, bread, and a few grapes and strawberries? I stopped using
Groupon after that.

It reminds me of Massdrop. You expect to get a deal by purchasing something in
"mass" with others but it turns out you are paying at best Amazon retail price
but most likely MORE than you would pay buying from Amazon not to mention
shipping costs.

~~~
davnicwil
Off topic, but this reminds me very much of being put up in a hotel by the
airline Avianca when they oversold a flight I was checking in for, meaning I
had to take a different flight the next morning.

We were told that dinner would be provided, and given a coupon for the hotel's
restaurant. Upon presenting said coupon prior to being seated, we were greeted
with a look that I can only describe as 'oh, I see' \- promptly seated at the
absolutely worst table in the place, and given a 'special menu' with one or
two very plain options (think, chicken with vegetables and a plain sauce) in
an otherwise very nice-looking restaurant. We were summarily ignored for a
very long time before our order was collected, and when the food was served it
was sort of plonked down with no ceremony or pleasantries.

It's an awful experience to be treated this way, as a second class customer.
As though you've broken a social contract by being allowed in through some
hack, and the staff will 'serve' you to the absolute letter of the definition
and no further. Almost pointedly so as though to emphasise how unhappy they
are with your presence.

I never used groupon for a restaurant, but I can completely see that something
like this might happen and understand why you never went back!

~~~
Al-Khwarizmi
I had a similar experience in Stockholm, and the restaurant wouldn't even
serve us a standard beer, only low-alcohol beer. I'd rather had paid the
difference for the real stuff, but they didn't even give us the option.

------
ceejayoz
Anyone getting their emails has known it was coming for a long time. They used
up all the good places pretty quickly - they got the return customers and
didn't need to re-run coupons. Now it's all weight loss scams, online courses
"worth" $2k but sold for $20, and even sex toys lately.

~~~
violentvinyl
Exactly this. It stopped being a good way to discover local places you may not
have heard of and instead became a way to shove cheaply mass produced junk or
freely mass produced digital junk in to eveyone's mailbox.

~~~
taevis
With that in mind, what services are good at finding local places? I figure
services like Yelp and Groupon had this in mind, but generally attract the
people who have negative experiences or opinions to share them.

~~~
ceejayoz
I discount any Yelp review that's 1 or 5 stars. Tends to have good results.

------
kardos
Looks like businesses have collectively realised that groupon is a miserable
deal and it's finally caught up with them, after having been running on fumes
[1] for a couple years now.

[1] [http://blog.bodellconsulting.com/2013/03/01/groupon-a-bad-
de...](http://blog.bodellconsulting.com/2013/03/01/groupon-a-bad-deal-for-
restaurants-and-everyone-else-including-groupon/)

~~~
mooreds
My brother in law runs a restaurant back east, and he said that Groupon has
been a great channel for driving business. Anecdata, I know.

I think there's a business opportunity to help people running groupons capture
the most value out of the leads (at the least, sign them up for an email
newsletter).

~~~
bpicolo
I think it depends on the business. Someone up top mentioned it was a great
way for them to try scuba, sky diving, etc. That's not the sort of thing you
necessarily see a lot of repeat traffic for. Not sure.

~~~
PeterisP
Scuba and skydiving are the exact type of hobbies where _if_ you make people
interested, then you can get a lot of very expensive follow-up business. You
won't get most of them hooked up; and if you make the first experience a lousy
one because of Groupon pricing issues, then you won't get any of them hooked
up, but in general if your business current weak point is excess capacity and
a need to bring in new people to the hobby (since your current customers are
doing it as much as they can and won't do more), then a deeply discounted
first trial is pretty much the main way to do that.

------
eloff
This article doesn't tell the whole story. As a user of Groupon Panama, I can
tell you that they face stiff competition here from a Groupon clone,
ofertasimple. I think they're exiting because it was a small market to begin
with and they haven't been able to win it. Many people, including myself, find
the competing service superior.

------
swang
> "We believe that in order for our geographic footprint to be an even bigger
> advantage, we need to focus our energy and dollars on fewer countries."

Did this company spokesperson just pass first year business writing? It's like
the writing prompt was, "Your company is downsizing, what is the most absurd
way you can describe it?" I couldn't help but laugh at the sentence.

~~~
fredkbloggs
Glad someone else noticed this. I kinda glossed over it at first, then read it
again and broke it down thusly:

1\. Our footprint is a big advantage today (presumably this means more reach).

2\. We want to make that advantage bigger.

3\. Therefore we are reducing our footprint.

At first it sounds like an outright contradiction. But it does make sense, in
a very convoluted sort of way. The advantage of having broad reach will be
increased by exiting those markets that are losers for them, because the
(still presumably fairly broad) range of markets they're staying in will be
more profitable overall. But it would have been much simpler to just say
"We're exiting a handful of smaller markets where we aren't leading or
growing, focusing our efforts where they're doing the most good." But I guess
you can't say that these days.

------
mef
Interesting when taken in the context of yesterday's Unit Economics post.

[http://blog.samaltman.com/unit-economics](http://blog.samaltman.com/unit-
economics)

 _I have never seen Silicon Valley so willing to invest in companies that have
well-understood financials showing they will probably always lose money._

~~~
seiji
Groupon was a deliberately calculated scam once it started getting huge
investment though. Investors are always willing to burn the long term (the
public) if they can pop the short term (themselves).

~~~
rhino369
If it was a scam they would have cashed out at the top.

~~~
nck4222
Well, they basically did.

"Altogether, $946.8 million, or roughly 86% of the funds raised across the
three investments, was paid out to Groupon directors, officers and
stockholders. Just $151.4 million was retained by the company to use as
working capital and for general corporate purposes."

June 2011 - [http://mashable.com/2011/06/02/groupon-cash-
out/#AoBOlTTNEqk...](http://mashable.com/2011/06/02/groupon-cash-
out/#AoBOlTTNEqk8)

~~~
joezydeco
That was an amazingly effective scam, and nobody putting into those F and G
rounds said boo. Just mind-blowing.

~~~
fredkbloggs
It's mind-blowing that anyone would subscribe to an F or G round in the first
place. That they would do so despite the obvious scammy nature of the whole
thing is probably criminal, at least if they were managing OPM.

~~~
jbooth
Greater fool theory, they're thinking they'll make money on the IPO. They
might have, actually, or they were very close to doing so -- a couple more
weeks before the bad press Groupon started getting around the IPO and they'd
have been sitting pretty.

------
teachrdan
Anyone else notice they refer to Puerto Rico as "international"? Fun Fact 1:
It's a US territory, where residents are US citizens but can't vote for
president. Fun Fact 2: Journalists these days ain't what they used to be.

[https://en.wikipedia.org/wiki/Puerto_Rico](https://en.wikipedia.org/wiki/Puerto_Rico)

~~~
tsotha
Puerto Rico is a US territory, but technically it's not part of the US. They
refer to it as "international" because it is.

------
k__
The deals I saw, felt rather crazy to me.

A friend of mine paid 100€ for 100 pizzas, one every day. Also 100€ for 100
pasta dishes.

The idea seemed to be, that the service could plan ahead, because he knew
months before how much ingredients to buy.

The delivery service who offered this deals closed down after a month, so in
the end every meal did cost my friend about ~3€, which isn't bad.

------
mikeyouse
I feel very similar to this blog post I read a few years ago, calling the
Groupon era "The Locust Economy".. It wasn't good for businesses, consumers
logically just abused the mechanism until these companies were ruined..

[http://www.ribbonfarm.com/2013/04/03/the-locust-
economy/](http://www.ribbonfarm.com/2013/04/03/the-locust-economy/)

    
    
        Thinking about locusts and the behavior of 
        customers around services like Groupon, I’ve 
        become convinced that the phrase “sharing 
        economy” is mostly a case of putting lipstick on a 
        pig. What we have here is a locust economy.

------
sidcool
Sad for a startup that showed great promise. How's LivingSocial doing?

~~~
rosege
going pretty strong i gather from someone who works there - they did get
acquired though a while ago

------
Laaw
I've never heard of this negative reaction to Groupon like you folks are
describing. What was the negative side? Was it not a good advertising
investment for companies? Were expectations not being set correctly by
Groupon? Do they take too much of a cut? Are they just jerks to the companies?

Is there room in this space to not be a shitty actor?

~~~
lotharbot
I think some of this is inherent to the model, and part of the problem is that
businesses aren't building the right expectation in to their budget. They're
thinking in terms of getting a bunch of ordinary customers in by giving them
50% off of an entree, and given their metrics on ordinary customers, that
seems like a good deal -- a coupon of the same sort, sent out in one of those
mailers, would pay for itself easily. But Groupon is bringing in a different
set of customers -- _low-value_ customers who don't provide much repeat
business and often pick a fight over trying to get an even steeper discount.

Wait staff often complain of Groupon'ers either not tipping at all, or tipping
a low percentage and basing their low percentage off of the discounted bill
(such that the net tip is like 1/4 to 1/3 of what it would normally be for the
same meal.) Some places complain about Groupon'ers overstaying their welcome
-- they come in for half price entrees, don't order appetizers or drinks or
dessert, and stay at the table for 3 hours eating wave after wave of
complimentary breadsticks. They're the ones still at the water park when the
staff locked the gates ten minutes ago. They come in multiple times in the
next week trying to return something for full price or otherwise scam the
store. Many places report an excess of complaints of the "I'd like to speak to
your manager, you're doing a terrible job" variety directed at their best
employees, because people are unhappy paying 50% when they think they can
somehow get it down to 45%, or they're unhappy paying 50% for 100% of the
experience when they think they can stretch it to 105% of the experience.

This doesn't happen to every company, but it does happen to some companies and
leaves them feeling pretty burned.

------
jimhefferon
Even if it was a good deal, who has room in their life for the 1046-th
marketing gimmick?

Please, interweb geniuses, think of something better.

~~~
cableshaft
Yeah, is there a medical condition called "Marginally Useful Apps Used as a
Trojan Horse for Marketing Crap You Don't Need" Fatigue? Because I'm pretty
sure I've got that.

------
bryanlarsen
Have any of the groupon competitors reached critical mass? I realize that a
large number of "me-too" competitors were started when Groupon exploded, but
it seems to me a "groupon that doesn't suck" could be a pretty good business.

~~~
kawsper
In Denmark we have [http://downtown.dk](http://downtown.dk), they managed to
get traction here before Groupon, so they have had most of the market, however
it seems like Groupon have been eating parts of their business recently.

As an aside Groupon seems to be 100% https, where downtown is only partly
https :(

~~~
wodenokoto
We have a lot of Groupon alternatives in Denmark, from online sites to
discount boxes you buy physically in stores, most of them taking considerably
less than 50%.

------
confluence
That's a long fall from Google practically begging them to take fat stacks of
cash.

~~~
rprospero
I remember, back during their heyday, listening to pundits discuss how Groupon
was going to run Google out of business if Google couldn't find a better way
to offer daily deals. I regularly saw people mentioning Groupon in the same
breath as Amazon and Apple when speaking of tech giants.

~~~
nasalgoat
All I remember what thinking that they were insane to not take the buyout.
Seems I was right.

~~~
TheGrassyKnoll
Couldn't agree more. Creation of a Google-Groupon axis would've been powerful.

------
hcrisp
Will Groupon founder Brad Keywell's newer venture, Uptake, face a similar
outcome? A recent Forbes article suggests he's better at starting a company
than running it.

~~~
sync
Is this it? Looks ridiculous.

[http://uptake.com](http://uptake.com)

~~~
noelsusman
That's a crowded space to get into these days. You're competing directly with
the big boys at Microsoft, Google, IBM, etc. as well as countless other
startups. This seems especially difficult to do when you don't even have a
product to sell.

Also that website is horrendous.

~~~
pavornyoh
I agree. That uptake website needs a lot of work. What the heck is that?

------
therealmarv
1,100 ? On what did they all work?

~~~
waterside81
Outbound sales I'd imagine. It takes a lot of people to make calls to
businesses to convince them to sign up for Groupon, how to structure their
deals etc.

~~~
tootie
Wasn't that a scene in Silicon Valley? Their competitor had like 3 developers
and 100 salesmen.

~~~
mason240
That sounds about right though. The developers are really just building a CMS
that should be able to in theory handle an infinite amount of cities, while
securing a new sale for one city every day could be a full time job (and
probably done best by someone actually in that city).

------
jhou2
At first I thought this was bad news for Groupon, but after reading about it,
it seems like a logical strategy. Groupon recently exited Turkey and Greece,
which makes a lot of sense considering the economic turmoil in those countries
and in the region in general. The 7 countries that were affected in this news
were fairly small markets. Since when was Uruguay a major player in the global
economy? The layoffs of 1100 mostly in sales and customer service seems
reasonable when operations in 7 countries are shut down. Groupon has over
10,000 employees. A 10% reduction in staff trims some of the low performers.
Microsoft and Amazon probably cut more staff each year with their stack
rankings. (I know MS supposedly killed off their stack rankings, but I have a
feeling it still exists albeit in a less visible capacity.) Overall, I think
these moves make Groupon stronger, more competitive, more focused and more
capable in a cutthroat market.

------
theworstshill
Half of Groupon's failure is the email spam model, another half is the
business partners. If you signed up for a service where you give discounts and
got any less than a shining smiling face when I come in with one, guess what -
I'm not coming back to you. Groupon should have screened businesses the same
way Apple screens apps, very carefully.

------
michaelbuddy
I feel like the small business man or woman was hurt the most by groupon,
whether it be the mom pop shop or the family owned franchise. And when you
exploit them, you hurt America basically. And that isn't a biz model that
people can get behind. Had groupon done things differently, we'd be reading a
very different article today.

------
somberi
A good article to read and reflect on - From 5 years ago.

[http://www.newyorker.com/magazine/2010/12/20/groupon-
clippin...](http://www.newyorker.com/magazine/2010/12/20/groupon-clipping)

Some points that caught my attention (edited by me)

...Groupon’s got a healthy business. Almost forty million people, in more than
a hundred and fifty cities around the world, have signed up for its
e-mails,...Groupon isn’t going away. Unlike many Web companies, it’s been
profitable from the start. (It takes fifty per cent of the revenue in every
deal.) This year, it had half a billion dollars in sales, and estimates are
that, before long, it could have as much as two billion dollars in revenue."
End of my edits.

India, where groupon is hugely popular, has behaved like a spin-off. It
recently independently raised 20MM from Sequoia.

------
InfiniteEntropy
Good.

I got on their mailing list through a permutation generator on names/emails
and it took me months to get off that craplist.

------
Rambition
I've had in a hand in a few Groupon/daily deal campaigns for some clients and
their experiences all seemed to depend on the quality of the product/service
they could provide. An established restaurant I would find it hard to believe
they would extract value out of this type of discount. However, a new product
to market that believes a customer can have a good enough experience and can
deliver on that the first time they try it out, may be more apt to succeed on
daily deal type of sites. It follows the "free trial" model of direct response
(without the shady autobilling on the backend), just get the product in their
hands and let it do the talking for you.

As a consumer, I love the model. As a business owner/marketer, the results
have been so/so.

------
brightball
Wondered when that was going to happen. Don't get me wrong, I liked the
concept but when you don't get repeat business because the structure is so bad
it's just not a good sign.

At least they sold high...wait...

------
emiranda
What is the significance of this line? "taking a pre-tax charge of $35 million
in the process" It cost them 35 million to lay off 1,100 folks? They are
getting a tax cut?

------
pearjuice
So on what contract were these 1100 people employed? 0 hours guaranteed, get
in and get paid for the hours you work and your contract can be terminated any
day? It always baffles me to see a thousand(s) of people getting laid of with
the flick of a finger. That's like an equal amount of people added to the
economy unemployed, right now.

~~~
jgroszko
Illinois is an at-will state, so like any other employee in the state they can
be let go at any time for any reason, with the exception of a few protected
classes, since we also have a state Employment Non-Discrimination law.

------
w4f7z
With this announcement coming shortly after the OrderUp acquisition I wonder
if this is signaling a larger shift at Groupon.

------
arjn
I'm not terribly surprised. I stopped using Groupon 3-4 years ago after a
couple of bad experiences, watching the CEO in an interview on TV and also
learning about how some small businesses were negatively affected.

I think there is a class of business ideas that may seem good in the beginning
but eventually fail for various reasons.

------
chx
Much to my surprise, I've found Groupon to feature killer deals for discounted
refurbished phones, tablets, etc. I've gotten a 32GB Nexus 7 (2nd gen) LTE for
$200 , they have a Samsung S5 right now for $270 (but check reviews, caveat
emptor etc).

------
peter303
Sometimes you dont see the flaws in a business idea until it is practiced for
a while. In Groupons case it was an idea to easy to copy and businesses who
though they were get a short deal. I thought it was worthwhile to try out.

------
geyang
It is just a badly ran business. The Chinese version of Groupon is ran by the
very competent Xing WANG, who was a physics graduate student. And last time I
looked at it Meituan was worth $15B.

~~~
rev_bird
Not really sure why "was a physics graduate student" means anything about his
business acumen here. Eric Lefkofsky has a law degree, Brad Keywell has a JD
_and_ an MBA, we could do this all day. Having a graduate degree in a hard
science could certainly suggest a person has a different way of approaching
business, but Wang dropped out so he could unapologetically clone other
people's ideas.

~~~
edgyswingset
I think the OP is stating the opposite, that being a physics grad student
would imply he probably couldn't run the business as well as the Groupon
founders.

~~~
code_duck
However, in the same sentence he's described as 'very competent'.

------
jgalt212
some quotes from the snake oil salesman

Groupon May Be Fastest-Growing Company Ever

[http://www.cnbc.com/id/40454493](http://www.cnbc.com/id/40454493)

Groupon is going to be wildly profitable.

-Eric Lefkofsky

[http://www.bloomberg.com/news/articles/2011-06-05/groupon-
ch...](http://www.bloomberg.com/news/articles/2011-06-05/groupon-chairman-
lefkofsky-says-coupon-company-will-be-wildly-profitable-)

Is Andrew Mason still a YC part-time partner?

------
andyleclair
Good.

