Turns out there's something to be said for being capitalist, and a rather large downside to being a profiteer. Unfortunately, Groupon is just finding this out.
The Groupon IPO is in trouble after the SEC (Securities and Exchange Commission) informed them their revenue reporting is out of whack.
Apparently, Groupon has been reporting the full value of a Groupon sale as revenue - in spite of having to give at least half that value back to the store owner. The result is that they've had to change their revenue claims from $1.52 billion for the first six months of 2011 all the way down to $688 million.
That has to be the world's quickest way to lose a billion dollars!
If you've been listening to the show over the last few weeks (SocialMediaCheapAndEasy.com), you know I've been driving home the difference between Profiteering and Capitalism. One of the targets of this point has been ALL the daily deal sites.
It's common to hear marketing and internet gurus talk about having the "tollbooth position." This is where you control access to the traffic - just like a tollbooth controls access to a roadway. People have to go to you if they want access to a particular audience.
The daily deal sites have taken this idea and exploited it to Continue reading