

BuyWithMe Lays off More Than Half of its Employees - monirz77
http://www.betabeat.com/2011/10/19/buywithme-lays-off-more-than-half-its-employees/

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bproper
The reckoning is clearly coming on this industry (daily deals / group buying).
Just look at Groupon cutting their IPO in half today.

But the way this happened is really terrible. They laid of tons of people with
no warning and no severance.

They did not have to try and raise more money at a ridiculous valuation. They
could have taken a flat to down round, stopped buying other little companies,
and tried to make it work.

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jprobert
Groupon cut their IPO by more than half to $10-11b from $25-30b. If you think
its bad that they laid off 75% of their employees wait until Groupon has to
lay off a good portion of their 10k +- sales force. Through being in the
business, understanding Groupons financials and the market I have a hard time
believing they are worth more than a few billion. The market requires a large
on the ground sales force (expensive) and huge marketing expenditures to keep
and gain new customers who are not loyal. Groupon may be better off pivoting
into some sort of social network as they do have >100mm subs. What about
Living Social? Their recent valuation was in the billions but not hearing much
about them.

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0x12
A Groupon IPO is one of the worst things that could happen to the industry, at
any price.

It's reminiscent of the .com crash and it gives me serious doubts about the
rationality of the current tech market.

Let's sell stuff at a discount so large that the merchants lose money but we
make money is not a sustainable business model, it's a predatory strategy. How
on earth could you offer stock in a venture like that to the public with a
clean conscience?

Sooner or later you run out of merchants, it only works for goods that have
such a huge profit margin that you can actually afford that. And I rarely see
Groupon deals that suggest that they're still profitable for the merchants.
Why merchants do Groupon deals is a mystery to me, maybe someone that has done
a Groupon deal as a merchant can shed some light on the economic returns for
them.

Maybe they're out-of-band in recurring visitors or something like that but I
simply don't get it. Or maybe there is something crucial about how Groupon
operates that I'm missing, in that case enlighten me please.

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typicalrunt
_At this time BuyWithMe is laying off 75% of their workforce_

Technically yes, that's more than half, but maybe they should have said 75%.
That's quite a chop and it certainly tells us something about (a) the finances
of the company, and (b) the state of the group-buying industry.

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mathattack
6 purchases in 6 months, then asking for more money... Sounds like a VC/PE
firm, not a deal site. If you're out of cash, I understand letting people go
in a hurry but that management team will struggle to get employees in their
next venture.

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abbasmehdi
I don't get why startups go into acquisition binges, trying to buy their way
to the top rather than out-innovating the competition. It is really sad for
the poor folks laid off, and this seems like it was run purely on greed rather
than any kind of desire to do something awesome. (Sorry, do I sound like a
hippie?).

~~~
jprobert
It's the Eric Lefkowsky model.. Grow as fast as possible at an unsustainable
rate in an unproven market and take be money and run.

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radiant1
Great companies focus on their products and understand that their employees
are a key part of the team. Passionate employees will work their tails off for
something they believe in. Too bad the CEO wasnt passionate about the
employees or actual products.

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nradov
So what, it was just a lame MLM scheme anyway. They weren't doing anything
even remotely interesting or innovative.

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oacgnol
It just doesn't seem like there's any room in the market for Groupon and all
of the me-too startups. The business model for most of these companies don't
seem to add up in the long run either.

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wiradikusuma
i'm curious, how is it that this business model not sustainable? isn't that
being "broker" is always profitable? basically they're just middlemen between
merchant and customers right?

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agotterer
Not if you raise $21M, acquire 6 companies and have over 100 employees.

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sshillo
If there are any buywitme employees out there check out adaptly.com send me an
email at sean@adaptly.com. We're highly profitable, and have the kind of
people who make big things happen

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suking
Groupon can't get it to work with unlimited $ - how can a 3rd rate clone make
it work?

