I dont use groupon, prefer to find my own bargains for the limited amount of shit that I really NEED. Aren't most of groupons scams for grossly overpriced services and eateries? I mean the stuff thats worth next to nothing , like tanning salons, yoga halls, beauty parlors, crap like that.
And the concept itself has problems - like another poster says, using groupon to get new customer as part of an advertising campaign works fine because you get those leads at a lower cost comparing to say direct mail or expensive local advertising. Once you get the leads (i.e. email id and names of those tried out your products or services) you can send direct email to them offering deals bypassing groupon. I do see from the eyes of the later investors that with the ponzi like actions where the early investors light up on their speculations point to potential problems, but you cannot blame the early investors because it is no difference from a trade we take and taking some money off the table first. VCs are no longer that stupid any more. =P It is very similar to venture capitals buying into new projects from well known founders who have track records of pulling off past projects - the founders are paid good money in exchange for ownerships into their new ventures. The founders effectively light up their positions right from the start.
Oh, I don't blame them, I would do the same. After all they risked their money when there was no history/feedback for this business form. I blame the new money, because now they have 3 years of data to go by, and if they still think it is a good business, they will pay the price. Although there is one approach when the early investors can be blamed. Sometimes businesses fail because of the lack of sufficient capital. Pulling out money when it is needed for the business can be fatal...
The second round funding guys are the ones with connection to boost the name for IPO. And then there is GS, JPM, etc. promoter to promote the IPO to the public, pension funds, etc. So the one who is going to pay the price are likely those who chase the stock after it is listed. i.e. when the music stops
The thesis makes sense: Groupon relies on a constant flow of new merchants from new areas/cities to replace the initial waves who try Groupon, and find that it's not a worthwhile expenditure. Something does strike me as "off" about the business model, but who knows. Depends on how competitive Groupon proves to be at generating repeat business compared with other forms of advertising; it's really better conceived as a pay-to-play advertising medium rather than a way to offer discounts, since in most cases the Groupon customers will cost the merchant money. It could work but I suspect it is, and will be greatly over-hyped relative to the level of success the company actually achieves - both due to limitations of the concept and the low barriers to entry for competitors.
You dont need a thesis to know groupon is the short of the century. What a bullshit company. The ideal situation is to have this pig ipo to a much higher open day price like lnkd, then let all the lemmings jump on and continue to push it higher for a few days while you build a short position. Unlike netflix and even lnkd to some extent, groupon is pure vaporware.
The buzz is slowly making its way into mainstream media. The front page on google news features: Why Groupon Is Poised For Collapse
Google's own groupon is in beta already: http://www.google.com/offers damn when is this pig going to ipo, i hope it launches first before the crash, no money to be made otherwise