Is Groupon the new Jesus Startup? | Hacker News Reader

Is Groupon the new Jesus Startup?

davetroy.com

20 pointsasanwal13 comments

I believe Groupon doesn't have a solid foundation. They have a brand of course, but they don't have a product. They're playing the role of the middle man, in my opinion. A long time ago, more like 30 years ago, there were these companies called Blue Chip Stamp, & S&H Green Stamps , it's very similar to Groupon. These stamp companies allowed customers to get stamps instead of change, and with stamps they could collect and get deals on products. Of course the concept is not the same, but everyone at the time thought those trading stamp companies were invincible, and they've got a monopoly going on and hypergrowth. It seemed everyone was using it. When's the last time you heard about S&H Green Stamps on the news?

I think ultimately the profit cut they take - a practically usurious 50% - is too large to be an equilibrium price for what they do. There is a long-term sustainable biz model in what they're doing, but it involves taking a much smaller cut, just because they're not adding enough value to justify a huge cut (they're not exactly investment banking). I expect that in the near future market competition (particularly Google deals) will drive the middle-man profits down to something pedestrian.

i'd point out that its actually still a thing i'm from the southeast and distinctly recall collecting stamps as a kid in the 80's. still exists, too, but has transitioned into the digital era.: http://www.greenbax.net/

Good comparison. Forgot about those. Worth remembering that there is no company that has experienced hyper-growth forever. Sure, they could go the way of S&H Green Stamps but the phenomena of being displaced by the new, better model happens in every industry.

Just an additional point, Groupon's China strategy is very ambitious. There are monopolies like Tencent, a company that is basically Zynga + Facebook + AIM/Skype + Blogosphere + Twitter, you name it , they have it. As matter of fact, Zynga got Farmville from Tencent. They're basically an internet monopoly in China with deep government connections. Every new idea that seems promising in the American market, they would take it and implement it. They got deep pockets.

They recently introduced group buy as well. I'm quite certain Groupon is aware of this type of competition. If Google is even getting dominated in the Chinese market by Baidu and the government, I doubt Groupon is going to accomplish much success in China. It's too young and too ambitious, and I think throwing money into the Chinese market is like falling into an abyss. That's what I firmly believe because I know the Chinese market quite well.

Prove me wrong Groupon =) (I actually really respect Andrew Mason as a CEO)

They're playing the role of the middle man, in my opinion

Much of the world is middlemen, and it is often a fairly profitable place to be for companies. (A large multinational advertising firm with 35% margins that employs quite a few PhDs comes to mind.)

> When's the last time you heard about S&H Green Stamps on the news?

There also be used to be companies who specialised in running small grocery shops in large US cities. They're gone, because the car made it possible to go to a larger, cheaper store instead.

But the concept of a grocery store hasn't gone away.

Groupon is one of those stories, when in a year or two or five, one side or the other is going to be going "I told you so!"

I agree with a lot of the author's points... especially about customer fatigue.

I believe there’s a really nice, long term, but ultimately very boring business in there that should pay a nice dividend.

This sounds about right. In the end, I suspect Groupon will be just one of a zillion different companies offering the same business model with varying levels of success in local markets all over the world.

Is Groupon the new Kristen Stewart startup?

creative license for a catchy title doesn't mean the title ought to be a bit of a muddle. does Jesus mean Groupon died but will come back? does it mean Groupon has divine authority? does it mean it'll be betrayed? "Jesus startup" is not a coherent term and aids little in the pretty sensible analysis that followed.

[although now that I think about it, I'd read an article that went way too far with it. "Is Groupon the new 'Lindsey Lohan after the alcohol but before the cocaine' startup?" -- that could only go well.]

I thought he was talking about Groupon's imminent focus on the burgeoning Hispanic market...

Gap, eBay, Home Depot: all companies that still deliver rather consistent value to customers (if not to investors looking for a quick flip). A startup doesn't have to be new and shiny to turn a profit.

Sometimes I wonder if I'm living in a different universe when it comes to determining what success is.

Yeah I found that jarring too. I thought for sure that his counter examples supporting his would be, you know, actual failures.

It doesn't sound like he's really arguing that Groupon isn't here to stay or is not going to be successful, he just is saying its going to lose its sex appeal and have to temper its aggressive discounting. Did anyone think otherwise?

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