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Why Groupon Not As Rosy As It Appears

Soulskill posted more than 2 years ago | from the double-edged-sword dept.

Businesses 190

Rambo Tribble writes "CNN is running an article detailing the dubious history of Eric Lefkofsky, Groupon's chairman and largest shareholder. It would seem Mr. Lefkofsky has an extensive history of taking investors' money for himself, then bankrupting the businesses invested in." Another article posted today at TechCrunch explores one businesswoman's story of how working with Groupon was the single worst business decision she ever made.

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190 comments

Funny... (1, Interesting)

joaommp (685612) | more than 2 years ago | (#36408132)

... as I read this article with a "groupon" ad on the side...

Re:Funny... (0)

Anonymous Coward | more than 2 years ago | (#36408224)

the only thing funny about it is that you still see adds. 1995 called.

Re:Funny... (1)

joaommp (685612) | more than 2 years ago | (#36408280)

I didn't used to need any type of ad blocker since I had that little checkbox available on slashdot to disable ads because of my contributions. it's gone. and slashdot is the only thing I use a browser for, anyway.

Re:Funny... (0)

Anonymous Coward | more than 2 years ago | (#36408412)

There is more on the internet than just slashdot.org. Just saying...

Re:Funny... (4, Funny)

joaommp (685612) | more than 2 years ago | (#36408564)

It's possible, I'll take your word for it, but with so much new, interesting, relevant and non-duplicate stuff on slashdot everyday, I never get the chance to visit other websites...

Re:Funny... (0, Funny)

Anonymous Coward | more than 2 years ago | (#36408644)

'I didn't used to need any type of ad blocker...' ...nor spellchecker....

Re:Funny... (1)

joaommp (685612) | more than 2 years ago | (#36408682)

If you'd like to measure Portuguese writing skills with me, be free to do so. Until then, don't mess with me because of a stupid typo.

Re:Funny... (1)

Anonymous Coward | more than 2 years ago | (#36409080)

When are you going to get a job and give me my money back, you tuna-munching twat?

Signed,
    A German

Re:Funny... (0)

Anonymous Coward | more than 2 years ago | (#36408782)

1995 internet had ads? You must be new here.

And I don't see any "adds" either. You must be born in 1995.

Re:Funny... (1)

NotQuiteReal (608241) | more than 2 years ago | (#36408874)

Heh.

I don't think I have the gene to see ads. Blacked out of my consciousness like crying kids on a cross-country flight.

Oddly, I tend to avoid buying anything with a label, and remove the ones I do notice. Maybe I have an anti-ad gene?

If you took off the labels can you still name the brand? if so, why label? If not, why pay a premium?

Thanks capitalism . . . (0)

Anonymous Coward | more than 2 years ago | (#36408136)

hey, that's the world we live in. Suck it up.

Re:Thanks capitalism . . . (0)

Anonymous Coward | more than 2 years ago | (#36408278)

Or tear it down.

Toolbars & Viruses (2)

jimmerz28 (1928616) | more than 2 years ago | (#36408146)

Damn I was hoping this was going to be about how coupon sites attract women to install toolbars and download viruses.

I already assumed large consumer-whore businesses had crooked chairmen...

Re:Toolbars & Viruses (1)

Rendrago (776670) | more than 2 years ago | (#36408186)

Or how the Internet Pyramid Schemes for Youths lobby is doing.

Re:Toolbars & Viruses (0)

Anonymous Coward | more than 2 years ago | (#36408302)

dude check out my lockerz..

Re:Toolbars & Viruses (0)

Anonymous Coward | more than 2 years ago | (#36408380)

Damn straight. Groupon investors are just doofuses who don't know how lucky they were for missing out on valinux.

Re:Toolbars & Viruses (-1)

Anonymous Coward | more than 2 years ago | (#36408548)

Damn I was hoping this was going to be about how coupon sites attract women to install toolbars and download viruses.

I bet that'd make you feel all smug and superior.

I already assumed large consumer-whore businesses had crooked chairmen...

Nice karma whoring there. You'll make a fine addition to the high-UID whiny wannabe nerd crowd here.

I took a quick jaunt through your posting history to date - not impressive. Your posts are poorly written, uninformed, emotion-laden and, while thankfully short because of their lack of content, indicate that not only do you not have much to say, you can't seem to say it in any coherent manner at all.

The bulk of your posts are to non-technical articles, and the few technical articles you've responded to don't contain any personal insight or commentary, only cites from third parties.

In any event, welcome to Slashdot! You'll fit in very well here these days.

Re:Toolbars & Viruses (0)

Anonymous Coward | more than 2 years ago | (#36409270)

Write that again, but in a Rowan Atkinson voice.

Irony of Groupon (1)

MrEricSir (398214) | more than 2 years ago | (#36408158)

The 2011 tech bubble could very well help Groupon raise money.

But remember the last tech bubble? During the dotcom days nobody would have bothered saving $10 at a restaurant. If this current bubble has any staying power, it could put Groupon out of business.

Re:Irony of Groupon (0)

Anonymous Coward | more than 2 years ago | (#36408226)

During the dotcom days nobody would have bothered saving $10 at a restaurant.

Have you seen the economy lately?

This isn't the dotcom era.

*forehead smack* (1)

MrEricSir (398214) | more than 2 years ago | (#36408244)

Miss the point of my comment entirely, why don't you.

Re:*forehead smack* (1)

ColdWetDog (752185) | more than 2 years ago | (#36408322)

Miss the point of my comment entirely, why don't you.

Sure, this is Slashdot. Not a problem.

(Oh, BTW, you forgot the question mark at the end....)

Re:*forehead smack* (0)

Anonymous Coward | more than 2 years ago | (#36408524)

Happy to oblige; your point was non-obvious.

The current tech "bubble" could have the staying power of irradiated soil; it's having no real effect on the economy as a whole. Furthermore, Groupon's customers are average, everyday people, not Silicon Valley chumps. They're quite happy to save $10 on meals, believe me. How, then, would 'staying power' of this purported tech 'bubble" put Groupon 'out of business'?

Was that sarcasm? If so, I see what I missed - otherwise, watchootalkinbout, Willis?

FWIW, I'm pretty sure Groupon's going down hard regardless. The media is having a field day, after all, pointing out their insolvency, lack of a solid business plan, scheister CEO and general ponzi scheme method of operation.

Re:Irony of Groupon (3, Insightful)

Dahamma (304068) | more than 2 years ago | (#36408462)

I wouldn't worry too much about consumers throughout the US not caring about saving (the current "bubble" is NOT in a general boom economy like last time!) What I'd worry about is the companies offering the deals realizing that selling hundreds of discounts that after a 1/2 off rebate and Groupon's cut give them about 30% of their normal revenue. That's a pretty steep discount for a bit of advertising, and I can't see Groupon continuing to find that many suckers, er businesses at that margin...

"Single worst decision" (0)

Anonymous Coward | more than 2 years ago | (#36408160)

I got this far in that story before I facepalmed and stopped reading:

Tracking and infrastructure was a really difficult problem. At the time, she didn’t have a computer, so she was reliant on a binder with 900 names in it. It was an inefficient way to track the deal. This also resulted in a lot of fraud as people redeemed coupons multiple times.

Re:"Single worst decision" (1)

Anonymous Coward | more than 2 years ago | (#36408184)

Yea, it was hard to feel too sorry for the lady in the story. It doesn't even really sound like Groupon tried to confuse her, they just weren't very helpful. If she didn't understand the agreement, she shouldn't have signed it, and if you're a business owner and don't understand that simple concept then it's just a matter of time before you get screwed. However, I do think that Groupon is a shitty investment and a company with a lot of hype and very little future.

Re:"Single worst decision" (2)

TaoPhoenix (980487) | more than 2 years ago | (#36408328)

This is what doesn't add up.

"At the time, she didnâ(TM)t have a computer"

Her online presence, including a blog, Facebook and Twitter is well above average for a local business.

Who has those presences and can't get a $10 total laughingstock computer to run a text file to search the coupon numbers?

Re:"Single worst decision" (4, Informative)

mrchaotica (681592) | more than 2 years ago | (#36408514)

What they meant was, "at the time, she didn't have a computer[ized cash register]". (Or "computer in the coffee shop," at least.)Lots of small businesses don't have that.

So what is the point here? (5, Insightful)

fermat1313 (927331) | more than 2 years ago | (#36408196)

It seems that the point of this story is you shouldn't get into marketing plans if you don't know what you're doing. She didn't have a computer, she doesn't understand how statistics works, she didn't know what to do with expired coupons (nicely say "no" and offer some other type of discount to make them feel like they are still getting,) she admittedly didn't do anything to convert Groupon customers to regular customers.

The world is full of companies have failed because they didn't understand the market. It's not the fault of Groupon that she allowed herself to be talked into something that she clearly didn't understand. We're all adults here.

Re:So what is the point here? (3, Interesting)

moderatorrater (1095745) | more than 2 years ago | (#36408212)

Yeah, she made almost every mistake she could (including offering a groupon worth 8x what a normal customer paid), and then they make it sound like groupon is terrible. Yes, offering a large discount and sharing 50% of the revenue on top of that has huge potential to lose you money. If you mishandle it, perhaps you should look at yourself first.

Re:So what is the point here? (0)

Anonymous Coward | more than 2 years ago | (#36408666)

It clearly states in the article that her average customer spends $5 a visit. The Groupon was for $13. Your assertion that she was, "offering a groupon worth 8x what a normal customer paid" is full of shit.

Re:So what is the point here? (2)

MarkvW (1037596) | more than 2 years ago | (#36409050)

If you're looking at it like a priest, then I agree with you.
If you're looking at it like a potential investor, then Groupon looks like it is gouging the very customers that it needs to sustain its business.

Re:So what is the point here? (5, Insightful)

larry bagina (561269) | more than 2 years ago | (#36408260)

I think she deserves some blame, but I've heard many other groupon merchants complain of the same problems. The douchebag salespitch where groupon tries to keep 100% of the revenue is new, though.

Why doesn't groupon offer advice on what to expect, how to manage the sudden influx of customers, how to convert them to regulars, how to deal with expired coupons, etc? Ultimately it's in their best interest for the merchant to be successful.

Re:So what is the point here? (2)

Americium (1343605) | more than 2 years ago | (#36408318)

I don't understand the problem, it seemed like a huge success, lots of people purchased her groupon and came. If you offer a coupon that results in you making a loss, that's insane. That's like taking out ads, knowing that even if people see the ads and purchase your product, you'll still lose money because the ads cost so much.

Re:So what is the point here? (3, Insightful)

meta-monkey (321000) | more than 2 years ago | (#36408722)

But there's pretty much no such thing as a groupon that doesn't result in a huge loss for the company. Groupon generally won't sponsor your ad unless you offer a really huge deal, like 50% off. Something like "spend $50 and get a $100 gift card." And then they take half the money, so now you're providing $100 worth of service and only getting $25. What kind of business has that kind of profit margin where they can give hundreds or thousands of customers a 75% discount and still be profitable?

Groupons are fantastic deals for consumers, and terrible deals for businesses. As more businesses realize this, Groupon will eventually crumble.

Re:So what is the point here? (2)

rudy_wayne (414635) | more than 2 years ago | (#36408750)

What kind of business has that kind of profit margin where they can give hundreds or thousands of customers a 75% discount and still be profitable?

The kind that are always advertising 75% off sales?

Re:So what is the point here? (3, Interesting)

Machtyn (759119) | more than 2 years ago | (#36408886)

Perhaps. I have a friend who runs a massage business. At the time her sale finished on Groupon for our area, she had amassed the most number of sales of anybody. The only reason she didn't have the highest margin is because there was an optometrist that had a higher price and sales even after the 50+% discount. She was booked up for months and, in her line of business, it is easy to have repeat customers (do a good job with the massage) and offer fair prices after.

I tried to advertise my computer repair shop, but they refused me saying they didn't see how there would be a mutual benefit. It was a cop-out, I think they just didn't want to deal with it (have any of you seen any tech related or repair related deals go up?) or they felt that my desire to have a limited number of coupons was not beneficial - they're probably correct.

In any case, I knew what I was getting in to. But all I was losing was my time - no resources or capital (no employees). But I can easily see how this may be a serious detriment to a normal small business.

Re:So what is the point here? (0)

Anonymous Coward | more than 2 years ago | (#36408352)

Ultimately it's in their long term best interest for the merchant to be successful.

Fixed that for ya.

If they don't care about the long term, then it's cheaper to screw over their clients... and sales douchebags only care about their commissions, never the long term.

Re:So what is the point here? (1)

moderatorrater (1095745) | more than 2 years ago | (#36408416)

Sorry to be nit picky, but ultimately mean in the end or eventually (http://www.merriam-webster.com/dictionary/ultimately), so all you did was add redundancy to his statement.

Re:So what is the point here? (5, Informative)

Anonymous Coward | more than 2 years ago | (#36408590)

Social coupons like Groupon are businesses that feed off of other businesses. If you are lucky, you can make the relationship symbiotic instead of parasitic.

We negotiated a groupon a little over a year ago. Our classes usually sell for $150 a month. When I talked to the groupon rep, they initially wanted me to offer a 50% deal ($75 gross revenue), and then give them %50 of the gross ($37.50), with no upper limit on the number sold and a year to redeem. I got a fair amount of pressure to sign the deal that day. I told him I needed a few days to run numbers on it.

Long story short, when I ran my numbers I figured out that if I spend 2 months worth of our advertising budget on this, limit it to 200 groupons and restrict it to new customers only, keep classes at 60-100% capacity, then I need to take in $65.08 per student for the month to break even, and then I would have 200 new people that have tried my classes. Even if we only keep 10% of these students, we would come out in a much better position.

I said no to Groupon's initial offer, and sent a counter proposal - a %50 deal for $75. We keep $65, groupon gets $10 per groupon, minimum of 50, max of 200. We also added some additional conditions:
- 1 per person plus 1 as a gift
- Groupon students must pre-register for a class (they can't just show up)
- Groupon students will be admitted on a space available basis
- Groupon would only be valid for a specific 3 month period, to coincide with our slow season and the start of a semester.
- Our standard class cancellation policy would be in effect (class canceled if fewer than X students sign up for it). Rainchecks would be offered to students canceled on under this policy - essentially we extend the expiration date for these specific folks
- We would add a number of beginner classes to our schedule for the 3 months after the groupon.
- Groupon not valid for product purchases.

They accepted the deal, and we sign the contract.

Then I get a call from a supervisor, who wants me to change back to the %50 @ 50% deal, with no upper limit. I said no.

Our groupon never ran - despite having a signed contract.

Living Social did run the deal, and we did very well with it. We sold 133. Of that, 86 were used within the time frame (15 people tried to use them outside of the time frame, which we said no to. 3 more were used outside of the time frame, but that's another story having to do with a pair of social workers, 3 foster kids and Christmas). We converted 33 into additional sales, with 18 of those converting into long-term students, most of whom take several classes with us.

Will I do it again? Yes, I think I will.

Re:So what is the point here? (2)

Machtyn (759119) | more than 2 years ago | (#36408916)

Ahh, it's too bad you didn't sign your name to the post. It is very insightful. I tried to run with Groupon after a friend had very positive results (at least with initial sales - she had more sales than any Groupon sale before hers in our area), but I'm not sure what the aftermath of it was. I'll see her soon and ask.

I tried to advertise my computer repair shop, but they refused me saying they didn't see how there would be a mutual benefit. It was a cop-out, I think they just didn't want to deal with it or they felt that my desire to have a maximum number of coupons was not beneficial - they're probably correct. In any case, I knew what I was getting in to. But all I was losing was my time - no resources or capital (no employees). But I can easily see how this may be a serious detriment to a normal small business. I've used Groupon as a customer a few times. In one case, I will be a repeat customer... but I don't often need a nice picture frame. The other one is a one time fix for service - a service I will likely not ever need again (and definitely not at the normal price).

Re:So what is the point here? (0)

Anonymous Coward | more than 2 years ago | (#36408300)

Sales reps can be intuitively helpful. And sales reps can be intentionally damaging.

Re:So what is the point here? (1)

Mitreya (579078) | more than 2 years ago | (#36408888)

she didn't know what to do with expired coupons

I have talked to someone who ran a groupon promotion and she seemed to know how to handle expired coupons quite well. Ingenious, really. A groupon bought for $X and worth $2X of services reverts to the original paid value of $X after it expires. Seemed like a perfectly fair solution to me.

Re:So what is the point here? (1)

gstoddart (321705) | more than 2 years ago | (#36409048)

A groupon bought for $X and worth $2X of services reverts to the original paid value of $X after it expires. Seemed like a perfectly fair solution to me.

Really? Because if Groupon took half of $X, you're getting $X/2, and if you'd let them have it at the original $2X, you'd be earning $X/4. Unless your markup is obscene, and you sell a boatload and generate repeat business, I don't see how vendors make any money at this.

Reading the article, I can see why certain business just aren't suited to this. In the case of the pizza shop, that might have gotten more people to try them ... but reading the article, it sounds like you generally give stuff away, and split the revenue with Groupon.

I remember seeing a story (possibly even on Slashdot) about some photographer in the UK who had more or less signed up to do an impossible amount of work for next to nothing ... it worked out to be almost a year of professional time or something obscene.

um duh (2, Insightful)

Anonymous Coward | more than 2 years ago | (#36408208)

Take a look at how Groupon works. It cannot possibly be truly beneficial to any business. For every "groupon" purchased for a business, the business takes a loss and the people looking for a deal rarely come back. So you're paying a lot for "advertising" that you'll never possibly see a return on investment from because you're never going to get new, repeat, life-long customers from it.

It's a shame and a scam. I pity the businesses that use Groupon, LivingSocial, and the ilk, they'll never survive the long haul.

Re:um duh (0)

Anonymous Coward | more than 2 years ago | (#36408258)

I think the point is to attract customer to build a customer base, but on the other hand you only get people looking for a great deal. Oh well.

Re:um duh (1)

Sarten-X (1102295) | more than 2 years ago | (#36408526)

So, it's just like every other form of advertising?

Coupons lower the barrier to entry for trying new things. If you have a really good product, but relatively few people know about it, offering a good deal is a reasonable way to get exposure. The coupon reduces the risk to the customer, because they don't lose as much if the product is bad. No, the business won't profit much from the initial coupon run, but it shows people that their product is worth the higher normal price. Ideally, at least.

Re:um duh (1)

RussR42 (779993) | more than 2 years ago | (#36409212)

If you have a really good product, I would think that part of that is that it is already offering a good deal. Perhaps you could reduce the risk to the consumer by standing behind your product instead of offering a coupon....

Re:um duh (1)

LordLucless (582312) | more than 2 years ago | (#36408566)

You could say that about any sale. And yet, successful businesses run sales all the time. They pay out for advertisements that are unlikely to directly recoup their costs, and they promote loss leaders that lose them money every time they're bought. The objective isn't to make lots of money in the short term, it's to increase the long-term prospects of the business.

Re:um duh (1)

phantomfive (622387) | more than 2 years ago | (#36408664)

From the article, it sounded really bad, this person had a rough time of it. She lost $10,000 in the deal. But as the article also mentions, the pizza parlor across the street had much better results, and decided to do it again.

Re:um duh (1)

Anonymous Coward | more than 2 years ago | (#36409166)

The theory is the same as a loss-leader. Heavy below-cost discounting works only when the marginal cost of providing it to an addtional person isn't that much and there is some kind of hook that encourages a repeat.

For example, a groupon-like site here had swing dancing classes; something like 10 classes for a beginner at 50% or less of the normal price. The catch is that this exposes them further; gets people in the door. The marginal cost of the extras in a class that's happening anyway isn't all *that* much (it's roughly speaking, nothing), given that most of the cost is locked in once they decide to run a class. (Critically, there's very little to no opportunity cost; having extras in a class usually does not displace other, full-paying, customers assuming the facility is large enough). And, of course, the business is hoping you'll get hooked on it and want to continue classes (but, you'll want to do classes more advanced than the basic intro, of course.)

HOWEVER, if your business doesn't have easy conversion from one-off to repeat customers, and the freeloaders impose a significant cost, then yes, you'll have issues.

Re:um duh (0)

Anonymous Coward | more than 2 years ago | (#36409226)

How is this hard? I work at a niche sport center which generates most of its leads through word of mouth, and is mostly group classes (with private lessons available). Our programs are dialed in, and I don't care if I have 10 or 30 in a recreational or youth setting; I can always recruit a high-level athlete as an "assistant coach".

In this case, there's no overhead to each sale, and I'm just increasing the number of people who see my sport as a viable activity. Granted, retention is hell, because plenty will try it once and then decide it's not their thing, they bought the coupon in a pique of "Oh, that's neat!" But I'd pay to get in front of that many eyeballs - the fact that LivingSocial cut me a check for a few grand is gravy!

Some of us are doing quite well - no need to pity us.

Value... (0)

Anonymous Coward | more than 2 years ago | (#36408218)

Exactly what value does Groupon add to the economy (assuming here marketing !=economic value)

Re:Value... (2)

fermat1313 (927331) | more than 2 years ago | (#36408390)

Exactly what value does Groupon add to the economy (assuming here marketing !=economic value)

Well, your core assumption is simply crap. Marketing adds tremendous economic value. Marketing allows companies to get their product before people who otherwise wouldn't know about it. Marketing is a key driver to economic growth. If customers can't find business, business don't survive.

Money down the drain (0)

Anonymous Coward | more than 2 years ago | (#36408220)

Just yesterday I read a great article in the German Zeit about the 3 Samwer brothers who helpes Groupon take of in other places of the world and the shady ways their doing business. 500 Million debt, facebook and google chasing, then their founder said they'll be "wildly profitable", which is not allowed, they might have to reaply for an IPO.

If he was looking for a quick buck... (5, Insightful)

olsmeister (1488789) | more than 2 years ago | (#36408272)

He would have taken the $6,000,000,000 that Google offered him for Groupon.

+1 (1)

artor3 (1344997) | more than 2 years ago | (#36408288)

Came to post exactly this. You don't turn down a multi-billion dollar offer if your goal is to get rich quick. I think some people in the media just want Groupon to turn out to be a big scam, because that's a more exciting story than "tech company makes money".

Re:+1 (1)

mrvis (462390) | more than 2 years ago | (#36408394)

You might turn down 22% of 6mil if you think you can get 22% of 30mil.

Groupon just doesn't smell right. They need a lot more people than your normal start-up. They can't scale as well.

Re:+1 (0)

Anonymous Coward | more than 2 years ago | (#36408422)

But would you turn down 22% of 6bil?

Re:+1 (1)

timeOday (582209) | more than 2 years ago | (#36408480)

So which is it? Is groupon any good (for customers, as opposed to business owners)? I haven't used it yet and would like to hear what people in here think.

Re:+1 (5, Insightful)

meta-monkey (321000) | more than 2 years ago | (#36408762)

Oh it's great for consumers. I use it all the time (and Living Social) to get great deals at places I either already go to or will go to once. But I own a couple of small businesses and would never in a million years sign up with these people. It is a sure-fired money loser, because you lose money on every coupon, and the kind of people who buy and redeem these things are deal hunters who will most likely not make good long-term customers.

Re:If he was looking for a quick buck... (2, Insightful)

Anonymous Coward | more than 2 years ago | (#36408370)

Except if that would expose your business as the giant worthless scam it is, and make a company that thinks you owe it $6 billion chase your sorry ass around the world. ^^

You may scam some idiots. But Google is a bit too big of a enemy.
It's like being in the forest, meeting Rambo asking for food in exchange for money, and selling him your shit in a bag.
BAAAD IDEA [youtube.com]. ^^

Re:If he was looking for a quick buck... (1)

tibman (623933) | more than 2 years ago | (#36409122)

It's like being in the forest, meeting Rambo asking for food in exchange for money, and selling him your shit in a bag.
Oh god, that was great.. thanks.

Re:If he was looking for a quick buck... (2)

TooMuchToDo (882796) | more than 2 years ago | (#36408406)

Wrong. He'll make more selling to the public via the IPO vs what he would've made selling to google. Google is a more diligent purchaser than Joe six-pack and his brokerage account.

Re:If he was looking for a quick buck... (1)

artor3 (1344997) | more than 2 years ago | (#36408716)

If he can keep even 1% of $6 billion, he's set for life. Why risk a sure thing? Does greed really make people that stupid?

Re:If he was looking for a quick buck... (3, Informative)

Anonymous Coward | more than 2 years ago | (#36408852)

1% of 6 billion would be... 60 million. Which, as you say, is enough to be set for life.

But... they've already walked off with... 930 million... in cash.

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

Re:If he was looking for a quick buck... (1)

geekoid (135745) | more than 2 years ago | (#36409068)

Depends. If at the moment most of the money will go to investors then it's not worth it. If there is a period where they get a percentage, then wait for the period, payout the investors, then look for the multi-billion score.

Re:If he was looking for a quick buck... (4, Insightful)

Paradise Pete (33184) | more than 2 years ago | (#36409242)

He would have taken the $6,000,000,000 that Google offered him for Groupon.

Unless he knew that it wouldn't stand up to the Due Diligence. Taking the deal would have meant Google doing an in-depth inspection of the business and the books before cutting the check. I'm not saying that it's necessarily the case here, but in the go-go 90's I saw a company turn down a buyout offer that was insane. I later came to realize it was because they couldn't have stood up to the pre-closing scrutiny.

I have no special knowledge of the Groupon situation, and the deal may well have been turned down for legitimate reasons. But that's not the only possibility.

History repeats... (0)

Anonymous Coward | more than 2 years ago | (#36408360)

>> It would seem Mr. Lefkofsky has an extensive history of taking investors' money for himself, then bankrupting the businesses invested in."

History repeats itself - but now he's found a good way to take money from other businesses while bankrupting them instead.

Groupon Is Inconvenient For Real Customers (0)

Anonymous Coward | more than 2 years ago | (#36408402)

I looked into Groupon to see what offers are available and most of the time the daily deal ads are run on business that are very inconvenient to get to, are ordinary plain restaurants or coffee shops, or some type of weird massage parlor, sky-diving/scuba lessons, etc. After a few weeks of looking into the Groupon ads I found one or two interesting places but it also turned out that I've already been there and am a regular customer or an occasional customer.

I think that for regular people and customers Groupon is not very useful and I scratch my head thinking how does this obviously inflated dot-comesque online business valuate so much? It just makes no sense, unless of course we're now climbing out of the housing bubble and heading into the Dot-Com Bubble 2.0.

Now, if you're one of those insane deal hunting individuals that will eat a box of chocolate covered cockroaches just because you got a 70% discount on them online along with free-shipping then by all means go right ahead to Groupon, drive across town to the next hot start-up local business, take your groupon coupons, buy only what is in the discount, argue with the people, do not pay any tip, and never return again! Enjoy, Business Stalking 2.0.

Re:Groupon Is Inconvenient For Real Customers (1, Funny)

geminidomino (614729) | more than 2 years ago | (#36408474)

Now, if you're one of those insane deal hunting individuals that will eat a box of chocolate covered cockroaches just because you got a 70% discount on them online along with free-shipping

That seems like an awful lot of words to use when you could have just said "woman," and we all know there aren't any of those on slashdot!

Re:Groupon Is Inconvenient For Real Customers (1)

mrchaotica (681592) | more than 2 years ago | (#36408638)

...most of the time the daily deal ads are run on business that are very inconvenient to get to...

I've used Groupon (and similar) a few times now, and I've learned to pay close attention to where the places are (and whether they require reservations, have valet parking, etc.)

...it also turned out that I've already been there and am a regular customer or an occasional customer...

But isn't that where Groupon is good (for you, the customer)? You do what you'd normally do anyway, but it costs less?

Of course, that's before I saw this article and found out how bad a deal for the business it was... I just bought a Groupon for a restaurant in my neighborhood yesterday, and now I feel bad about it.

A winner in some situations (4, Interesting)

lucm (889690) | more than 2 years ago | (#36408504)

The only winning scenario for retail on Groupon is when you have excess inventory which will end up spoiled or heavily discounted anyways. In this case Groupon is awesome because not only do you make a few dollars on lousy stuff, you also take a shot at hooking a repeat customer or two. Just look at the Dell deals or at the bargain table outside your local bookstore... they've done it for years!

Using Groupon to give away your good stuff does not make sense.

Re:A winner in some situations (0)

Anonymous Coward | more than 2 years ago | (#36408670)

There's another winning scenario, one that most of the stories about Groupon seem to hint about, but no one comes out and directly says: the hyper-marked-up product or service. Another poster mentioned "some type of weird massage parlor, sky-diving/scuba lessons, etc." Massage and lessons have little cost besides labor, so offering a round of free ones doesn't incur a heavy loss. Plus, lessons presuppose continuation of sales: the first one isn't worth much without the rest of the course, so offering one free is likely to make repeat customers out of people interested enough in the subject to take the first, free lesson. Those who have the surplus wealth and time for massage are also likely to become repeat customers. Others on other sites have mentioned similar procedural services that require multiple visits for full efficacy, like laser hair removal. This sort of service is likely to be drawn to Groupon, since it's a valid and useful marketing strategy for such businesses. Your local cupcake store, on the other hand, is probably running a thin profit margin, since costs of manufacture and labor are high, and thus won't be able to use Groupon sustainably.

So here's the long-term problem: Groupon will end up (if it hasn't already) as a marketing tool for services people don't really want and inventory that's excess precisely because no one wants it; that will decrease consumer interest in Groupon's offerings. After all, if all Groupon has to offer you is laser hair removal and scuba lessons and overstocked books or Dell deals, you'll get tired of Groupon and stop looking at their marketing. Lack of relevance will kill Groupon, if mismanagement (or Ponzism) doesn't first.

Re:A winner in some situations (1)

lucm (889690) | more than 2 years ago | (#36409168)

> Massage and lessons have little cost besides labor, so offering a round of free ones doesn't incur a heavy loss

I don't agree at all. Services are time-consuming, and time cannot be duplicated, there is a limited amount available.

The real business where you don't get a heavy loss for discount is stuff like writing books or software, where the initial effort is followed by a continuous stream of revenue while you work on something else.

Re:A winner in some situations (0)

Anonymous Coward | more than 2 years ago | (#36408828)

Plus you really don't repeat customers who are just that cheap. This is a deal for the skinflints.

Re:A winner in some situations (1)

geekoid (135745) | more than 2 years ago | (#36409062)

naw. I use Groupon. It has gotten me to try new places. Some I go back to, and some that weren't my cup of tea.

I am hesitant to drop 10 - 15 bucks fo lunch at some hole in the wall; especially when there are several other good lunch places I got to regularly.

But a groupon for 10 dollar lunch for 5 dollars. I'll try it. If it's worth the normal price, it will go into me normal 'rotation' of lunch selections.

If I do some place and it's crap I won't go back. putting out you bad stuff for new customers never works.

If it walks like a duck... (5, Interesting)

gklinger (571901) | more than 2 years ago | (#36408520)

I highly recommend reading an article titled Groupon is Effectively Insolvent [minyanville.com] in which the author draws a compelling parallel between Groupon and a Ponzi scheme.

Groupon: Flashback to 1999 (2, Interesting)

Anonymous Coward | more than 2 years ago | (#36408528)

    The whole Groupon thing reminds me of all the sites giving away stuff in the fall of '99.

    Like $25 off a purchase of $25 or more with free shipping.

    Not very many of those sites survived that Christmas.

Re:Groupon: Flashback to 1999 (3, Interesting)

mrchaotica (681592) | more than 2 years ago | (#36408766)

JC Penney's has been giving out "$10 of a $10 purchase" flyers recently. The catch, of course, is that you won't be able to find any combination of things you want for more than $9.99 and less than $13 or so.

Re:Groupon: Flashback to 1999 (2)

Jafafa Hots (580169) | more than 2 years ago | (#36409218)

Thank you, MotherNature.com circa 1999, for the many, many, many boxes of free snacks and expensive chocolates shipped to me free I received.

The beauty of transfer of wealth - filthy-rich "angel investors" giving me shitloads of free stuff. Those were the days.

The problem with Groupon of course is that the transfer of wealth is not going from billionaires to cheap-ass fucks like me, but from small (and I mean small in the true sense) business owners to cheap-ass fucks like me. Not cool.

That Interview. (0)

Anonymous Coward | more than 2 years ago | (#36408602)

Holy crap, I thought it was 8 mins long so I watched, then it ends and I find out it's 5 x 8 min long segments. This cannot be that interesting.

How groupon can work... (1)

Anonymous Coward | more than 2 years ago | (#36408712)

Here is where I think Groupon works:

Yoga/Dance classes:
- I have friends who teach yoga and dance classes. They pay a fixed amount to rent a studio space to teach a class ($15 per hour). Class is normally $15 per student. As long as 1 non-groupon person comes they break even on the space. They normally have 10 people in class, but with groupons it's up to 15 or 17. It's found money if ANYONE comes from Groupon. Once the person comes they try to get them to buy a 5 or 10 class card (@ $10 per class= $50) They are using Square to charge credit cards... people take 4 classes and not the 5th sometimes... this is how you do it.

Pizza Places:
I have a relative who owns 3 pizza places. It's costs him about $1.80 to make a regular size pizza. Slices are $2 each. If he sells a pizza normally at $10 groupon = $5..... he gets paid $2.50. He makes his 50 cents. And people always buy soda (where restaurants make their money anyway).

Buffets:
Unless wildly successful, 10 to 20% more people at a buffet won't make a big difference... again the money is made on drinks to go with it.

I think the coffee shop requires too much individual attention per person.

Webvan 2.0 (2)

rudy_wayne (414635) | more than 2 years ago | (#36408736)

Eric Lefkofsky may have a 'dubious history', but how is this any different from what's been going on for the past 15 years? From Pixelon to Webvan it's been one fraud after another.

please (1)

geekoid (135745) | more than 2 years ago | (#36409040)

Business owner didn't understand her business and made several mistakes.

Every groupon I have used I have asked the owner or manager how they liked it, all of them where very happy.

OTOH, they all new it was a customer grab, so they took steps to bring them back.

I would imagine if they didn't asked fo he deal the was appropriate for the business it would have been a mistake.

You're a business owner; may people make a living selling business owners services/goods. If you can't bother to understand those goods/services and just take them oat face value without analyzing them and using them in accordance with your needs you will be eaten alive.
If you want something, and the person providing it won't gve you exactly what you want, you walk away. it's business.

Groupon = parasite, pure and simple (0)

Anonymous Coward | more than 2 years ago | (#36409082)

I am amazed at how few people see what's really going on here.

Groupon is a con job.

It won't last, and lots of people will get burned.

Just wait and see.

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