[nickgeiger]

For what it's worth, I talked to a yoga studio owner who had a horrible experience (with Living Social, not Groupon). It turns out that people looking for a cheap deal on yoga classes aren't good long-term customers so the loss never paid off. I agree that we've only heard horror stories, but I'd be curious if there are small business success stories or is the service only good for big companies who can take the loss?

[pchristensen]

Despite being super-hot right now, deal sites are still just a customer acquisition tool. Best Buy could flood their stores tomorrow by advertising 90% off plasma TVs. Small businesses don't have the same level of experience and sophistication around customer lifetime value, so they're more likely to make mistakes like that. One of the services that Groupon provides (no idea about LS or other deal sites) is deal shaping/sizing, to help merchants offer deals that will not be super-costly or overwhelming to the merchant while still be appealing to customers. The Japanese new year incident (http://news.ycombinator.com/item?id=2111609) describes this in more detail. I think even the anecdotes will become more and more infrequent as merchants and deal sites get better at this.