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back to article Inside the 'funky' history of Groupon's biggest shareholder

A decade before he helped found Groupon – the online daily-deals site that turned so many heads last week when it filed for an IPO valuing itself at $30bn – Eric Lefkofsky ran a startup called Starbelly.com. In the lingo of the day, the Chicago-based Starbelly was billed as a "B2B" outfit, offering a marketplace where …

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Alert

Groupon is a joke

it's losing money, has 100s of new competitors, some of which are well established *local* search portals, the deals suck, are luxuries that can be gotten for the *discount* price, usually at a closer location

as the article says, it's business customers aren't generally seeing the ROI they've been hyped to expect, and I suspect many, like me, subscribed to Groupon emails just to see what the hype was about, then unsubscribed a couple of weeks later after not seeing one *deal* of remote interest

beware when a business and it's venture capital is being spent mostly on sales staff and advertising-marketing .. it is not a business model .. just clever hype that will wear off

it's not like offering coupons for local business on the internet is a new concept, or that it is quite effective to do so on your own local business website .. on your Google Places page .. or offer discounts for services on Craigslist ( to name 3 common methods )

if you need Groupon for promotion, you are doing your internet marketing poorly otherwise

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FAIL

the way capitalism works

Capitalism as a system is remarkably efficient of taking care of those with more money than brains. Human greed is endless so there will always be bubbles for worthless shit.

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WTF?

Meh

Teeth whitening, spa days, little fish nibbling on my feet.....

These seem to be the majority of stunning deals I receive.

$30Bn valuation ? LOLcats

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The biggest scandal is..

.. that legitimate, going-for-operating-profit type businesses get hit by this sort of, well, I think "investor scamming" isn't far off the mark. Because of these sorts of scam artists, investors pull back from anything that says "there may be a small risk" (which there always is) and become banks which need proof that you don't need money before they give you a loan..

As far as I can tell from the article, these people seem to have extracted the operating capital from the business pre-IPO - money that was meant to make it operate, betting on the IPO to fill the gap they made (and let's face it, that will probably succeed - plenty of suckers out there). I give it a year at most before it's another failure - but guess who already has the money in the bank?

Yes, this is not a "wildly positive" comment - I personally hate scam artists.

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What puzzles me is that they found a licensed outfit

to value them where they wanted to be valued. I would think the licensed outfits should have exposure to the lawsuits as well. I've seen their ads and agree it's not sustainable. Their collapse should be about as spectacular as Enron or AOL.

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FAIL

I despair

Reading things like this makes me want to become communist. If groupon is worth 30bn my local pound stretcher is worth 100bn.

The company seems controlled by people with a history of getting a quick buck and with no care for building shareholder value and very little concept of corporate governance.

What really galls is them and their VC buddies will walk away with piles of cash and lots of small investors who are using it for their 401k take the hit.

When this can happen the Market is broken.

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Alert

Flawed financial model

This link goes somewhat further - it reckons the financial model is similar to a Ponzi scheme

http://j.mp/jIne7x

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Gimp

I'd hesitate to use the term "<REDACTED>"

I'd hesitate to use the term "<REDACTED>"

But that massive rise / sudden crash scenario does look to be a bit <REDACTED>.

No doubt he can explain it due to the difficult trading conditions of the market post merger.

Note that while *individual* investors might avoid him no doubt he'll find a bunch of investment funds, pension schemes and others will look at him ("He turned down *Google" for Mannon's sake" the question might be why) and say "I'm in"

He reminds me of one or two of my former employers.

Icon reflects my feeling of what will happen to <REDACTED>.

Looks like the era of the <REDACTED> is back.

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Holmes

Re: I'd hesitate to use the term "<REDACTED>"

"He reminds me of one or two of my former employers."

You are quite probably far from alone on this.

From the article: "Many, particularly in the tech press, have been strangely positive about Groupon's prospects."

Everybody loves a fad. That's the simple explanation. For the more complicated explanation, maybe people have to follow the money.

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Bronze badge

I'm not sure I understand.

I think there's room in the world for a company that is good at discounts, special offers, and coupons. Given the number of cases where businesses have got their couponing DISASTROUSLY wrong, you should consider outsourcing it. Hoover UK giving away plane flights with appliances, with the appliances costing less than the flights, comes to mind.

But this company surely isn't good enough at it to be worth THAT much?

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Flame

Bernie Madoff or Jeff Skilling by any other name...

This is why officers and executive management of publically traded companies should be required to put up what I like to call "pain collateral". If they do something stupid, destroy the corporation and lose millions or billions of other peoples money, they are held personally responsible and they simply lose ALL of their assets.

Personally, I don't mind the big wigs making the big bucks. Whether we all like it or not, that shit makes the world go around. But, with big bucks comes big responsibility and big risk. And if these chuckleheads do something illegal or stupid and risk the solvency of the company or defraud the investors, by illegally or unsuccessfully risking their money on something that was technically legal, then they should be held personally responsible, and therefore crucified.

Also, throwing their asses in maximum security prisons, instead of the minimum security "country clubs", might be a good deturrent, too. I'll take this one step further, Let's include politicians, those appointed to government office AND union officials and apply the same standards. Maybe, just maybe they'll get the hint that they are not above the law and the end doesn't justify the means.

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Thumb Up

Bang On

Make it so

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FAIL

Groupon are spammers

I'm weeding out so much of their crap from my inbox I simply assumed this bunch were spamming scammers a la viagra, etc, and customers of mine - having tried a few coupon offers - are similarly inundated. I'd laugh my knob off if they imploded, as they deserve.

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Don't fancy it myself...

So let's see - they are making a big loss - they have loads of BIG competitors entering the market (or are already here) and most of the offers appear to be cr@p... they have no real USP - can't see them lasting that long - basically until they have burned through all the IPO cash.

Thumbs down.

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Pirate

Short them.

Possibly even naked short.

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FAIL

30bn my ar$e.

It' s just a flight of fancy - a company making a loss gets a 30bn valuation when new competitors are entering the market all the time. I recon they will be worth less than the 6bn Google was offering before too long.

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Paris Hilton

6B dollar offer really... really?

How does one perform due diligence and valuation in bubble 2.0 and how is SOX pertinent in a 'tech' (loosely) IPO? Fk'n groupoff groupon!

Something fishy this way comes.

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Silver badge

You perform due diligence and SOX in Bubble 2.0

the same way you do in Dot Com Bust 1.0.

At least, if you don't want to go to lose your shirt and/or go to jail.

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Groupon is doomed

Groupon seems hugely overvalued and the CEO's history should suggest the thing is virtually doomed from the outset.

It's not hard to find horror stories from businesses who got stiffed by Groupon. Businesses who were swarmed with freeloaders and doubly stiffed because Groupon kept much of the money for bringing this plague down on them. Groupon is getting a bad reputation from the people who should be its revenue stream.

There may come a point where Facebook, Craigslist, Google or someone will produce a far more palatable equivalent where the terms are at least fair or transparent to business. Failing that businesses will just do what they can already do - set up a website, advertise promotions, print some leaflets / vouchers, and shape their message to attract paying repeat customers.

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Pirate

Ruins of Halo

The previous ruin left behind by this looter was Halo, head quartered in Niles,Illinois. From some very non-descript industrial park buildings, they custom-built a 14 story building on Toughy Ave. The building was completed just before the collapse, and included a tubular sculpture that sang in the wind, annoying the neighbours no end. The building is now ? was ? occupied by Shure corporation, an audio manufacturer. It is down the street from another legacy from a corporate looter named Ilg, a 1/2 scale copy of the Leaning Tower of Pisa.

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Stop

Pick a card, any card...

And let's play dotcom-two, Texas Hold 'Em style...

As somebody said earlier, if this pile o'shite is worth $30bn, then my local Poundland is worth $100bn... we're certainly seeing the new wave of massive launches, inflated figures with the busts to come. My money (and equivalent of a 401k) is running away as fast as possible from things like GroupOn, which for me is a nailed on boo.com.

On the other hand, find the next Google and you've got a ten-bagger... this ain't it. Despite my reservations, I feel Facebook may be the ten-bagger, purely because of Graph. Worth bearing in mind was my extreme scepticism that FB would take off, in the same way that I was sceptical Google was heading for world domination... back to the original point, history is merely rhyming (and if it didn't run off with my cash before it most certainly isn't doing it now, Sarbanes-Oxley be damned...).

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Paris Hilton

What could possibly go wrong?

Buy low, sell high. I'm in!

/Paris

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