[knowsnothing613]

Groupon is a ponzi. They need money from new groupons to pay out past groupons. This is why they are constantly buying out smaller companies for new markets, and getting into higher end groupons. If the new money coming in is less than the money payed out to previous groupon, the companies collapses, just like a ponzi.

As long as they can make the company look healthy in the near term (accounting tricks), they hope investors won't notice the medium-long term liabilities, or the flow of funds necessary to keep the company afloat, but by then insiders would have sold out the bulk of their positions, and someone else is holding the bag.

Groupon will signal the bursting of web bubble 2.0, and will drag down the Facebook IPO. And if the Facebook IPO falters, silicon valley hits the skids, because everyone in Silicon Valley is in that play. Everyone.

[wpietri]

I think that a) Groupon will take longer to blow up than that, and b) people will be happy to write off the daily deals sector as something pretty much unrelated to Silicon Valley. Groupon is in Chicago, Living Social is in DC. They are marketing companies, not technology companies.

Now if something else fails big, I'm sure people will see a trend. But I don't think Groupon will be enough.

[antr]

Groupon is VERY Silicon Valley, investors include NEA, Andreessen Horowitz and Kleiner Perkins.

[pbreit]

Mostly tripe in this post. You do realize that Groupon only pays out 40% or so what it brings in making ponzi activity unnecessary.

[dantheman]

If anything groupon is a pump and dump. Groupon is not a ponzi scheme.

[wisty]

If Groupon sacks most of its sales staff, it might do OK.

Groupon is doing an Amazon-style land grab. They want a fat book of customers (both businesses and clients - it's an open question which are the real customers). They are willing to blow a huge amount of investor capital doing this.

Some businesses will lose big doing Groupon campaigns. Groupon doesn't care, as long as a certain percent of businesses figure out how to do well with them. For now, they are willing to burn a few customers.

[matwood]

As long as they can make the company look healthy in the near term

They are not doing a very good job given the lead articles in the WSJ talking about Groupons financial issues.