Prediction: Groupon is/will be the biggest pump-and-dump scheme of all time (or in recent memory)

Founders and prior-round investors are very shrewdly taking MOST of the money off the table … this year (or next), when they go public, “joe consumer” will be left holding the bag when Groupon’s shares implode on the public market.  Just sayin’…

Here’s why:

– nothing proprietary or even protectable

– big competitors like Google and Walmart, established competitors like Yelp and OpenTable, and startups like Scoutmob (email based Groupon) have already copied their offering in various forms

– large percentages of the funds raised are used to cash out prior-round investors (never a good sign)

– the remaining funds that are put towards operations are spent on “feet on the street” which is manual labor in an age of digital and movement away from manual and offline.

Some more related data for your consideration:

From BusinessWeek

Groupon, Bankers Said Discussing 2011 IPO

From TechCrunch

Groupon Raises, Like, A Billion Dollars

They closed on roughly half of it then, fromDSTFidelity and Morgan Stanley. We then learnedthat Kleiner Perkins was also in the round.

Now we have the rest of the details, and the company will issue a press release today on the round. True to their never be totally serious attitude, the press release will be titled Groupon Raises, Like, A Billion Dollars.

A whole slew of new and existing investors are participating in the round, which values Groupon at a whopping $4.75 billion. Investors in this round include Andreessen Horowitz,Battery VenturesGreylock Partners, Kleiner Perkins Caufield & Byers, Digital Sky Technologies, Maverick CapitalSilver Lake Partners, and Technology Crossover Ventures. As we previously reported, Allen & Company LLC acted as financial advisor.

BIG, well-established competitors already offering the same exact discounting mechanism — including Google and Walmart.

Groupon, Enter Walmart

When many of the web 1.0 and even web 2.0 group buying services started, users were not in the habit of sharing.  Now they are and they have the places to share, such as Facebook. Walmart is now crowdsourcing deals.

When NOT to use Groupon as an Advertiser

And this was the last straw — this is where Groupon frickin’ lost me …  $2,500 off liposuction!!!

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Friday, January 21st, 2011 marketing 1 Comment

Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.

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