Groupons fall from the mountain top

Andrew Mason, the Groupon CEO, was let go this week due to continued poor performances for the company as well as a stock price that remains in the tank. How things change. One has to wonder, and obviously hind site is 20/20, how different things would be for Mason had he accepted the $6billion offer from Google. Rebuffing the search giant just stirred that hornet’s nest.

What is interesting to me is the following – Groupon never truly defined what they were. A technology company? A glorified email list? A social networking firm? A big coupon? Even Mason seemed to agree that they were not clear as to what they were. At the core, every company needs to understand what they are. Google is a search company, Amazon is eCommerce, ATT a communications player, GM a car company, Apple a consumer technology firm and so on. Define who you are and what you want to be when you grow up. Otherwise you are going to pull yourself in directions you do not and cannot afford to head in…A difficult discipline, no doubt, but one that has to be adhered to.

Of course it does not help that Groupon created and was competing in a space that had very low barriers to entry – creating by some accounts 500 copy cat companies. However that is not the only reason for where Groupon has fallen to.

Mason will join a long list of entrepreneur/CEOs who watched their idea start from nothing, rise to outrageous heights and then crash when expectations (or the public market) could not be satisfied.

Again easy to say now, but sometimes as Steve Miller would say – Go on take the money and run.

Linkedin IPOs: the floodgates for Internet 2.0 bubble?

So that other social networking site, the one for adults…I jest. The other networking site that is more geared towards professionals – Linkedin – went public this morning making many share holders wealthy. Unfortunately I am not on of them even thought I am one of the first 150,000 users, I was hoping when I got the nice email thanking me for being a long time LinkedIn user that it would accompanied with some equity. Wishful thinking. No surprise but Linkedin did very well the first day on the open market: opening at $81, hitting a high over $120 and closing at $93.10. Not a bad first day. Chart below:

With the like of Facebook and Groupon preparing for IPOs next year, does this indicate another tech run? A run that gave us the irrational exuberance of the late 1990s? I do not think so. The original Internet bubble was the wild west. Companies were getting ridiculous valuations for basically have a .com name. We all chased Kozmo.com and Pets.com thinking they were the next GE or USSteel. While there were some companies that emerged from that time – Amazon anyone – there was also a lot of burned investors and liquidation parties. So what is different this time? Well the fact we went through this during the first bubble. Companies such as Linkedin, Facebook and Groupon are under greater scrutiny. Yes we like seeing lots of eyeballs, but now we need to understand and more importantly SEE how you will make money. Having taken time to build their businesses, gaining visitors/clients and focused on the financial statements has placed firms like Linkedin, in a much better position than Webvan. I am sure that when Facebook and Groupon IPO there will be a wave of excitement, but there will not follow up with irrational investments in “dot coms” who are not grounded in business.

I think that is also why the likes of Twitter are not talking about going public. While Twitter speaks about being profitable and while the usage of Twitter continues to grow, there remains questions such as “what is Twitter really for?” Back in 1999 that would have been a good question for a tech company looking to go public. Today, you better have some cash flow  and real income statements if you want to IPO. That is better for both the companies and the investors. Irrational exuberance was fun, but do not need another ride on that merry go round.

If you can’t buy them for $6b…try to beat them!

On the heels of the new Google social bonus structure, it appears that Latitude (Google’s answer to Foursquare and Groupon) will integrate local deals with the check in options. The fact that Google was slow to game with this feature – Foursquare bolstered their deal function earlier this year – reinforces the reality that Google is playing a bit of a catch up game in the social space.

Maybe Google should add some coupon type functions to the web location as well…you search for the latest Adidas Predator boots for your weekend soccer team, Google brings you to a few vendors…give the user a discount for “checking in” on those web sites. Play to your strength of search both for physical locations as well as web locations.

Foursquare – getting their mojo on

Ah I guess my prediction of the demise of 4Square was slightly premature…based on a recent graphic from Silicon Alley Insider, 4Square is doing just fine thank you very much.

Granted 4Square is still very far behind when it comes to users – under 8million – compared to the likes of Twitter (190 million) or Facebook (over 500 million). However, the ability of 4Square to weather the “places” storm and actually grow at a rapid pace bodes well for the NYC based firm. They recently announced adding more Groupon type features – allowing for their merchants to offer more deals to users as well as promote and drive traffic through group coupons…like Groupon.

This could prove to be a very interesting space as Groupon and 4Square get ready to battle for the localized social media. I am sure that the likes of Google and Facebook will be watching this intently, could 4Square be an acquisition alternative to Groupon for Google? We shall see…for now just remember to check in for those deals!

Groupon to IPO…for Billions!!!

According to Mashable – Goldman Sachs has approached Groupon to take the social coupon company public for a whopping  $15 to $20 billion valuation…WOW. I guess the offer from Google was a drop in the bucket according to this story…seems like we are back in the world of go-go day valuations. With the rumors of Facebook being valued at $50billion, now another social media company with irrational exuberant valuations it does feel like 1999 all over again.

Let us hope that NASDAQ 10,000 and free sushi for employees also comes with this latest insanity.