Is this the end of Groupon? It's hard to say, but look like daily deals bubble busted for the fastest growing company in the World.
After number of childish moves Groupon and their CEO Andrew Mason may gone too far. As one of the biggest IPOs news Groupon was valuated at as much as $25B, but number of step may make them cry for Google's $6B - how much reportedly they were offered few months ago.
Just recently CEO Andrew Mason filled papers in the preparation for the IPO claimed that company is profitable, but far from that. using old-fashionable Wall Street technique they didn't include marketing cost, what - hey - is the most important part of the Groupon deal. Make a quick and aggressive claims to cause quick sale of - maybe not so good deal int he first place. But as there is restriction of time and push to our senses of urgency and wish to get a lot for almost nothing - technique worked for millions of customers. Now, the same won't work with IPO and Wall Street. Look like Mason and Groupon don't know how to wrap this deal. Maybe they should spend more on marketing, but in this case to help companies valuations. And that was an intention behind the latest road-show that... got cancelled. Another marketing problem? Or running out of cash?
Cash flow is the topic that made Mason send email to company employees with claims how they should defend company and revealing details that should not be in the time of quiet period before IPO. That may be another problem. Maybe not big, but it is another proof that Mason is not grown up to lead Groupon into stellar performance.
What would be future for Groupon? As there is number of competitors such as Living Social, Google Offer and others - Groupon have to keep competitive edge and be innovative. But we didn't see a lot of innovation from their side. Google (as usual) continue to advance with latest acquisition of The Deal Map. There are other players like Gilt Group that took the whole concept of daily deals and flush sales to more acceptable level. Their concept look more sustainable and company made quick move into other niches, such as travel. Both cases make me feel that Google and Gilt are more aggressive and innovative than Groupon. Does Mason and Groupon perform the same show? Costly and loud showoff without substance. Another case of wasting marketing dollars?
Consumers are another 'trouble' for Groupon. They started realizing that not all deals are the real deals and started cooling off. This maybe move them more toward Gilt Group concept and leaving Groupon with costly operations and lot of complains. Daily deals complains are not news - our whole website is built to support this issue. Consumer cooling will mean less customers for merchants too - so we can expect that there will be less of small business to take on this challenge and organize daily deal. Truth is that lot of them didn't actually lost money and not really made a great deal for themselves.
So - childish moves from Mason and Groupon; cash-flow issue in not-yet-profitable company; innovative and fast competition; consumers cooling off and merchants in decline. Those this sounds like a company you want to invest in? I think bubble is gone and unless Groupon refresh their thinking and rapidly start innovating - the deals is over. Question is - was it a good one?
