6/7/11
Good morning, All,
Yes, we were having an Alice in Wonderland moment, and we’re not the only ones, it seems. IPO fever seems to be on again, and now all eyes are on Groupon, but a moment, please, and eyes on the bottom line: Groupon is no Linkedin – which happens to have a very profitable bottom line and has had for some time now. Groupon, on the other hand, is shelling out $1.43 cost-per-acquisition for every $1 it makes. Did we mention that it’s a 2-1/2 year old company with 7,000 employees? Yes, we do remember Web 1.0 and the New Economy. The math didn’t work then; doesn’t work now. Want a great read on the topic? Groupon IPO: Pass on this Deal: http://bit.ly/j1ONlH From the yipit blog Groupon S-1 Reveals Business Model Deteriorating in Oldest Markets: http://bit.ly/migJUl. And for those of us who remember way back to the end of 2010: Groupon Turns Down Google’s $6 Billion Offer: http://on.mash.to/f4iCQd. Hmmm. Someone will make money in the groupon IPO, no doubt, and between this and the MSFT purchase of Skype, well, it’s all just so much fodder for the doom-and-gloomers. But as witnessed in the articles above, not everyone’s jumping on the bandwagon, as happened back in the days of Web 1.0. Been there; done that – burned the tee shirt. We are admittedly a cockeyed optimist and see this as a blip, rather than a trend. Eye on the prize: some of us are here to build an industry and won’t be led lemming-like over the precipice again. Hopefully, cooler heads rather than greed will prevail this time around and we’re not looking at another bubble but rather another proliferation of bubbleheads. As Vivek Wadhwa tweeted – “Problem: after Groupon crashes, it will wreck chances of more worthy companies going public. Wreck innovation system again like dot coms did.” Our sentiments exactly and let us not be led down the rabbit hole again. Onward and forward.
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