I twt'd this on Friday:
"the Groupon biz model is to use Other People's Money to grab eyeballs, then IPO the f*cker before it comes crashing down - Dotcom II"
And then worse came out the woodwork with their filing. Seems they are
technically insolvent and the bigger they get, the more they lose, along with the fact that later investors were paying for earlier investors' exits, and the IPO will
no doubt pay for the current investors' exits.
Greater Fool Theory in full technicolour! (In fact some have been more direct,
calling it a Ponzi scheme)
We can only apologise to the readers of our Bubblewatch series, in that we never predicted an attempt to IPO a Greater Fool Theory dotcom business
before the big one had gone out. Move the notch up one (see chart above). DotCom II is nearly here now....
But a whole bunch of dumb pension funds will invest - with your money. And This Time It Is Different, as everyone seemed to arguing at D9.
Of course it is...........
Update - Don Dodge, (who I have a lot of time for by the way),
takes a mildly contrarian view, but even he concludes that sustainability is uncertain but they won't be the first business with a seemingly unsustainable buisenss model that finds a way to thrive:
Is Groupon sustainable? No one knows for sure. Time will tell. Competitors are sprouting up everywhere. Margins are likely to tighten. Competitors will offer the merchants better deals with lower discounts. Will consumers become loyal repeat customers after using a Groupon? If not, the whole concept doesn't work. On the other hand, as we have seen with Facebook, Twitter, YouTube, Amazon, Google, Skype, and many other iconic brands, once a huge customer base is established, it is very difficult for a competitor to lure them away.
To be fair, Don is conceptually right - if they can keep ahead of their cash burn, they can succeed - in theory - but the probability, given all those ifs, is very low.
Four Stages of the Bubble Quite a good article in the Economist debating whether there is a Tech Bubble or not - ad they offer this interesting chart (above) as an alternative to my "10 stages of a bubble". Key points for a bubble from the article
Tracked: Jun 15, 13:51
Yes, we told you it would crash, in June 2011. I twt'd this on Friday: "the Groupon biz model is to use Other People's Money to grab eyeballs, then IPO the f*cker before it comes crashing down - Dotcom II" And then worse came out the woo
Tracked: Aug 14, 23:21
On Friday the Grauniad/Observer asked us what we thought of the current Groupon brouhaha, what can we say except our story hasn't changed since 2010, when I summarise this post, jousting at the boosters with: ...its a nice, viable business - but not th
Tracked: Dec 03, 00:26