The Fiscal Horrors of the Groupon IPO
The Groupon IPO filing is delightful! It's an enormous, amazing business.
We increased our subscriber base from 152,203 as of June 30, 2009 to 83.1 million as of March 31, 2011.
We sold 116,231 Groupons in the second quarter of 2009 compared to 28.1 million Groupons in the first quarter of 2011.
We grew from 37 employees as of June 30, 2009 to 7,107 employees as of March 31, 2011.
That's incredible! Also? Net loss, before taxes, for all of 2010? $456 million. They lost $146 million last quarter. So yes, last year they lost more than half the value of this year's planned $750 million IPO. Sure, some of that was acquisition, but… what??? (Also: $750 million equals just about one year's worth of operating expenses there.)
This is a company that already sold shares to third-party investors for $946 million in cash. (Where did that go? "Almost all of it went right back out the door, to employees and early investors."
(Also? The outgoing CEO's pay? "At his own recommendation to the compensation committee, Mr. Mason's base salary for 2011 was reduced to $575, effective January 1, 2011." Eh, he also has $10 million in common stock, don't worry about him.)
$575.00 is an odd number.
"A year later, I started Groupon to get Eric to stop bugging me to find a business model."
How are they losing money selling pieces of paper?
@GailPink – Last year they brought in $279 million selling groupons (after paying vendors their cut). They spent $263 million on online marketing (to woo new subscribers), $203 million to purchase companies doing similar things and $233 million on overhead (salaries, cost of sales, etc).
In the filing, they try to make the argument that the acquisition costs and marketing costs are more like 'one-time' expenses so if you back those out they actually made a profit last year of $60 million.
@GailPink: They must be modeled on the Stock Exchange.
@Tuna Surprise – Ok got it, thanks!
@Tuna Surprise That is an excellent summary!
Yes, they talk about "aggressive" growth at "any cost" basically.
Too… Much… Math…
@FuriousNewYork Extreme Grouponing
You missed this gem:
"…a marketing campaign such as Grouspawn(1),
(1) Grouspawn is a foundation we created that awards college scholarships to babies whose parents used a Groupon on their first date."
At first, I was shocked to think that a guy (or lady) who used a Groupon on a first date actually convinced the other person to have sex. But then I had sympathy on any child that is the spawn of such a cheap bastard – they're gonna need all the help paying for college they can get.
@Tuna Surprise Does the baby have to have been conceived on this cheap first date?
@Tuna Surprise
The name alone… Grouspawn.
They should have killed that particular darling.
And to think, people laughed at pets.com once.
But if you think about it, that's only seventy-five cents per adverb.
@pepper "As of March 31, 2011, we employed 925 editorial staff."
Also the word "voice" appears in the filing exactly once. So much for editorial leading the way!
that word will never not sound like a move you pull off during an orgy.
It's not a tech bubble, it's a tech blister.
@riotnrrd goiter?
@riotnrrd @HiredGoons Tech MRSA abscess?
@HiredGoons Lost my life savings on the Goitr IPO.
Wait, so can I save $10 from Old Navy or not?
What I want to know is how on earth it takes 7,107 employees to run Groupon.
@KathrynforAD Nearly all of that is local salespeople. If you look at their jobs page, it's a giant list of account executives posted all over the country. This is why Groupon needs an army while Google skates by with around 2000 employees.
One of our former clerks just stopped by our office. He's now writing for Groupon here in Chicago. He says they have about 125 full-time writers, on salary, and a total editorial department here of >500. His compensation is–his words, "Not yet"–tied to the performance of the ad copy he writes.
They have a "Humor Editor" who looks at his ads, after the Fact Checker. And the Editor Editor.