All these attacks rest on the assumption that Groupon aren't going to change their business model at all. It's seems a near certainty that they're going to move into the dynamic yield management business which is likely to be highly profitable.
For a lot of businesses their excess capacity is a lost cost anyway. They have to pay their staff regardless or not they do work. A customer might cost $X to service, but that completely ignores the fact that the company would have to pay $X even if that customer wasn't there.
Sure Groupon might not be matching that spare inventory to it's deals with great precision at the moment, but it's only going to be a matter of time.
Look for example at GrouponLive, their partnership with Livenation who are the largest entertainment ticketing company in the world. Does anyone seriously think Livenation are having wool pulled over their eyes ? - they know that yield management is important and Groupon are probably going to become the leaders in that space.
I'm sorry, but justifying a $15 Billion (with a B) valuation on a business that Groupon isn't even in yet is pointless. It smacks of Enron, to be honest.
What percentage of Amazon's income comes from Book sales ?
A large amount of Amazon's valuation came from the fact that they'd be able to extend and become the dominant online retailer in a huge number of product categories.
Are people really down-voting a comment made in good faith purely because they disagree with it, or is there somethingly fundamentally wrong with my statement which I'm just completely missing ?
I can't speak for others, but I downvoted because the time to figure out your business model is long before IPO. So a claim that an "attack" isn't valid because it ignores the possibility of radical business model changes isn't worth discussing.
From the beginning Groupon has been about Yield Management, most of the business who use Groupon are doing so because they've got excess capacity which they're not using rather than to grow their business.
Even Agrawal (who wrote this series of anti-groupon articles) refers to Groupon as a yield management play.
Extending this to be more dynamic isn't a radical shift, but rather an obvious one. And their partnership with Livenation to compete against ScoreBig is a clear sign they're moving in that direction.
Competitor LivingSocial has already launched a real-time yield management offering called LivingSocial Instant.
For a lot of businesses their excess capacity is a lost cost anyway. They have to pay their staff regardless or not they do work. A customer might cost $X to service, but that completely ignores the fact that the company would have to pay $X even if that customer wasn't there.
Sure Groupon might not be matching that spare inventory to it's deals with great precision at the moment, but it's only going to be a matter of time.
Look for example at GrouponLive, their partnership with Livenation who are the largest entertainment ticketing company in the world. Does anyone seriously think Livenation are having wool pulled over their eyes ? - they know that yield management is important and Groupon are probably going to become the leaders in that space.