reDesign

June 8, 2012

Would Rocky Agrawal ever work for Groupon?

Filed under: daily deals, groupon — Rakesh Agrawal @ 1:00 pm

This post is an excerpt from a forthcoming book on Groupon.

It’s a question I’m asked quite often by friends, family, journalists and once by a Groupon employee.

Apparently, it’s plausible that I would. When I posted on April Fool’s Day that I was joining Groupon (a day after a scathing analysis of Groupon’s earnings restatement), quite a few people believed it. I had several reporters contact me to ask me for interviews on my new job.

What made it believable is that most of the post was actually true. Aside from the part about, um, actually joining Groupon:

  • I’ve spent my entire career in product management and business development. It’s my true passion.
  • I’ve also spent much of my career on local products.

My initial and ongoing motivation for writing about Groupon and LivingSocial (and increasingly, Yelp), is to help small businesses make better decisions. By analyzing these business models, I hoped that SMBs who do even the most basic due diligence could find resources that would help them make a better informed decision on how to spend their hard-earned dollars.

I was chatting with a VC the other day about how wave after wave of local sites have raped small businesses, promising internet magic but delivering dubious value.

As I’ve said repeatedly, Groupon is not always a terrible thing for merchants. There are some cases when it makes sense. (Yelp, on the other hand, is always a bad buy.) Some of Groupon’s newer products actually make sense for small businesses.

One thing that I’ve heard from several sources is that Andrew Mason actually cares about small businesses. When he hears that a deal has gone bad or that a business lost a lot of money on a Groupon, he pulls out the checkbook and tries to make it right. Not in the “please don’t sue us and run to the press” way, but because he genuinely wants to make it right. Even Jessie Burke of Posie’s Cafe told me this. (To date, the company has not allowed me to speak with Andrew Mason, so I can’t offer a personal assessment.)

Over the last year, I’ve been approached by a number of companies that are looking to tackle the local space, from startups to the giant internet companies, about joining their teams to help small businesses. If I thought a company had a credible plan for helping small businesses really use the power and efficiency of the Internet, I would consider joining them.

Even if that company were Groupon. I look toward the future, not the past.

But I would have to believe that Groupon genuinely wanted my input and I would have a role where I could drive products in a way that would work for small businesses. If it was just about silencing a vocal critic, that wouldn’t be interesting.

Joining Groupon would obviously carry a lot of brand risk for me. Based on my April Fool’s Day joke, I know how a lot of people would feel about it. Many were puzzled, some called me a traitor and many offered their congratulations.

My friend Dave wrote on my Facebook wall:

Congratulations but I have to say I’m a bit disappointed. Here’s why, businesses that build their empires based on questionable/unethical business practices that ruin other businesses (especially small and local) should not be rewarded later for changing their practices after they’ve been exposed. I’d rather they go belly up but short of that, I hope you can help them stop ruining SMBs.

My friend Walt wrote:

Wow! Rocky life is full of surprises – this is a big one! The are very fortunate to have you!

And J.T. wrote:

I recall a lot of us thinking that their best move would be to hire you when last we met.

About these ads

June 1, 2012

Groupon investors race for the exits as lockup ends

Filed under: daily deals, groupon — Rakesh Agrawal @ 2:12 pm

Groupon shares dropped to a new all-time low today as its lockup ended, releasing a torrent of new shares on to the market. Thirty minutes into the trading session, Groupon had already traded 75% of its average daily trading volume. This was Groupon’s third highest volume trading day. (Disclosure: I have various puts against Groupon.)

Groupon filed to go public a year ago tomorrow. Back then the New York Times estimated a $30 billion valuation for the company; today’s closing value was $6.3 billion. That’s about 80% off. It’s just barely higher than the $6 billion that Google reportedly offered for the company last year.

Public market investors have lost a Groupton on the stock, which is down 52% from its offering price and 63% from its first-day close.

Early insiders are still fine, of course. Groupon co-founder Eric Lefkofsky and his affiliated entities took nearly $400 million off the table well before the IPO. Even those who got in the last round of financing, such as Fidelity, T. Rowe Price and Andreesen Horowitz are up, at least for now. Those shares were purchased for approximately $7.90, split adjusted. At today’s close, that’s a 23% return.

For locked up shareholders, the timing of the lockup’s end couldn’t have been worse. It came shortly after Facebook’s IPO and on a day with bad macroeconomic news.

What’s ahead for Groupon

I have been following the company closely since the S-1 was filed; I’ve predicted that without substantial changes to its core business model, Groupon stock is going to zero.

The company is trying hard to diversify beyond its core daily deals business with forays into loyalty, travel, liquidation of unwanted merchandise, instant deals and, most recently, payments.

Groupon Now, once touted at what Groupon would have been from the beginning, has been an unmitigated failure. Although the company likes to say that Groupon Now sold 1.5 million Groupon vouchers, that’s roughly 1% of Groupons sold last year and likely a smaller portion of revenue. “In just one year Groupon Now! has hit a milestone that took the original Groupon deal platform 15 months to accomplish,” Dan Roarty, VP of Groupon Now! said in a press release. But once you reach a certain notability and are a multibillion dollar company, your success has to come much, much faster.  Tom Cruise took 18 years to make his first movie. If it took him another 16 years to make the second one, that would be a failure.

To be fair, Groupon’s other businesses don’t have the structural problems that Groupon’s daily deals product has. They aren’t toxic for merchants. But they also aren’t gigantic profitable businesses. Here is my quick handicapping of the new product lines:

  • Getaways – Highly competitive business, with margins in the 20-30% range (vs. 40-60% in the daily deals business). The quality of Groupon’s offerings have been lackluster. I had my own terrible experience with Groupon Getaways.
  • Goods – Margin competitive business. Groupon doesn’t have the logistics capabilities of Amazon or the ad distribution power of Google.
  • Now! – Low volume, forces a change in consumer and merchant behavior. LivingSocial abandoned its product in the space.
  • Rewards – Trying to change consumer and merchant behavior too much. Structural flaws in the product.
  • Payments – This is a potential opportunity for Groupon, but is incredibly competitive. Not only is Groupon comepting with Square, PayPal and Verifone, there are hundreds of independent sales organizations that target this space. Groupon would have to tremendous volume to succeed in this space at the prices they’ve put forth.

With the exception of Goods, I don’t see any of these businesses being material to Groupon’s revenues in the next 12 to 18 months.

At a town hall meeting with employees, Groupon’s Andrew Mason reportedly said, “We’re still this toddler in a grown man’s body in many ways.”

And like a toddler, Groupon is sticking its hands everywhere; it has no idea what it wants to be when it grows up. Here’s a partial list of the companies and brands that Groupon is trying to compete with: LivingSocial, Amazon, Google, Expedia, Priceline, Hotwire, PayPal, Square, Verifone, American Express, Visa, MasterCard, Fab, Woot, Facebook, OpenTable, Mindbody Online, Envision Salon, First Data, Costco, every newspaper, every Yellow Pages.

Groupon’s investors were counting on the kind of stratospheric growth that the company was experiencing before its IPO to propel its stock price. So far, the trajectory has all been downward.

May 6, 2012

Weekly reader: GrubHub, Yelp, Groupon, computer science

Filed under: groupon, yelp — Rakesh Agrawal @ 8:23 pm

I was in New Orleans for Jazz Fest this week, but managed to get more writing in than I expected.

For the first time this week, we saw Groupon drop below 50% of its initial IPO price of $20, closing the week just below $10. Anyone who invested at the IPO and help (are there any of these people?) would have lost half their money.

This coming week, I’ll be in San Francisco. To make up for my lack of Groupon writing the last two weeks, I’ll be doing one Groupon post each day.

My work

GrubHub is bringing restaurant ordering into the 21st century — GrubHub is giving restaurants converted Kindle Fires to confirm orders. This is making it easier for restaurants while at the same time reducing customer service costs. It’s the kind of smart thinking I like to see in local.

Why Yelp is the Digg of local — Yelp has essentially failed to innovate in the last three years. It’s using an old publishing model that doesn’t make sense. But for consumers, it’s delivering one-size-fits-all results that really fit no one.

Top sales talent leaving Groupon as its woes mount — Many Groupon deals these days are seeing really low volumes. This breaks the overall Groupon model, which was predicated on selling thousands of units to cover the extremely high cost of sales. As volumes drop, salespeople can’t earn enough money on commissions and the best ones are leaving for greener pastures.

Silicon Valley needs to end its snobbery about computer science degrees — In the wake of Yahoo CEO Scott Thompson’s resume scandal, I take a look at Silicon Valley’s snobbery around computer science degrees. I want to be clear that I’m in no way defending Thompson. He lied and there should be serious repercussions, both from Yahoo! and the SEC. (Otherwise, what’s the point of having CEOs certify statements to the SEC?) But I think that Silicon Valley ends up getting tunnel vision because of the focus on C.S. degrees for roles that don’t need them.

Me quoted elsewhere

When Yelp advertisers yelp at rates — CBS MoneyWatch takes a look at Yelp advertising. I continue to believe that Yelp local advertising is a terrible deal and no advertiser should ever run ads at the rates Yelp charges. (I’m rarely this absolute — even with Groupon, I can think of cases where running a Groupon makes sense. I can’t think of a case where I’d recommend Yelp to a business.) I found more examples this week that I’ll write about soon.

April 29, 2012

Weekly Reader: Groupon, Sonos, why air travel sucks

Filed under: groupon, sonos, weekly reader — Rakesh Agrawal @ 7:18 am

I didn’t write any posts this week!

I spent the first part of the week in Chicago chatting with current and former Groupon employees and with the folks at edo Interactive, Braintree and GrubHub. GrubHub has a very interesting product that will be announced on Tuesday; I think it’s an important step in the market. I spent the second part of the week in New Orleans for Jazz Fest.

I will have plenty to say about Groupon based on my Chicago conversations in the next few weeks.

Although I didn’t write, I was quoted elsewhere.

Me quoted elsewhere

3 On Your Side: Daily Deal Fatigue — I talk to CBS Philadelphia about the consumer side of Groupon and how consumers can protect themselves. Actually, I didn’t talk to anyone in Philly; they just recycled video from an interview I did with CBS San Francisco. (I don’t think SF has aired it yet.)

Sonos at 10: Speakers command attention — I talk to USA Today about Sonos, a company I really like.

Surviving The Road Wars Of Economy Travel — I talk to Forbes about why air travel sucks. It’s mostly because vast majority of consumers aren’t willing to pay for it. If people were consistently willing to pay more, we’d have higher quality.

Other interesting nuggets

May 20th has been set as the date for my monthly wine and cheese event. DM me for details.

April 22, 2012

Weekly Reader: Facebook virality, Twitter patents and Groupon’s Lefkofsky

Filed under: daily deals, facebook, groupon, twitter — Rakesh Agrawal @ 8:46 am

This contains a summary of my work this week. I had two very important non-Groupon stories this week, on Facebook and Twitter.

My work

Secrets of Facebook’s success: Virality — Facebook’s photo tagging feature was an important driver of its growth. Traditional marketing approaches aren’t as effective as products that are designed to take advantage of the social nature of people. Google+ misses the basics. While Google spends millions running beautiful Oscar ads, they ignore very basics of product design necessary for social interaction.

Can Twitter and Yammer fix our broken patent system? — Twitter announced a new agreement with its employees that Twitter will only use patents for defensive purposes and will not become a patent troll. Employees who invent for Twitter will have a say in how Twitter can use the patents. As an inventor, this has a lot of appeal. Could this be a sign of more sanity in patent battles?

Chicago Tribune talks to Groupon chairman Lefkofsky; asks the wrong questions — A Chicago Tribune business columnist sat down for an extended interview with Groupon chairman Eric Lefkofsky and failed to ask the hard questions, such as: Why did you take so much money off the table pre-IPO? How is it that you made so much money on previous companies and investors were left holding the bag.

“It just works” rules — I’m launch a new feature on VentureBeat where I’ll be taking a look at brilliantly designed products. My goal is not to traditional product reviews, but to help product people learn from great design. Do you have a product that fits my criteria? Shoot me an email.

Staying connected with friends for frequent travelers — For someone who travels as much as I do, staying in touch with friends can be a challenge. Here’s a strategy I came up with.

Other interesting nuggets

The Perils of the Daily Deal Customer — A first person account from a merchant on her daily deal experience. The merchant’s experience is exactly the result I expect from the economic model of the daily deal. At their core, daily deals create unserviceable demand from untargeted customers at massive discounts.

I just finished the final hellish weeks of a Groupon deal I ran a year ago. I’ll probably never do one again. If enough merchants grow to feel the way I do — and many already do — Groupon and its countless imitators will wither and die because they will not be able to get enough businesses to participate in the deals you so enjoy.

Why aren’t we going back for more? Because daily deal customers are worse than normal customers in every way imaginable.

April 11, 2012

Another open letter to Andrew Mason

Filed under: daily deals, groupon — Rakesh Agrawal @ 4:35 pm

Dear Andrew:

As you may have heard, I am coming back to Chicago in the next couple of weeks for another round of Groupon research. Although you didn’t take me up on my invitation the last time I visited Chicago, I’d like to encourage you to re-consider this time.

Since I started writing about Groupon last June, I’ve been right about most things. Here are some of my predictions that have come true:

  • Groupon would have to abandon ACSOI.
  • Groupon would have to use net accounting instead of gross accounting.
  • Groupon Getaways wouldn’t be meaningful.
  • Groupon Now wouldn’t be meaningful.
  • Consumers would fatigue of daily deals.
  • The deal quality would go down as better merchants figured out that running Groupons is a  bad idea.
  • The Groupon Promise would turn out to be too expensive. During my last visit, I very explicitly told your PR team that they were underestimating the refund rate. This, as we know, was the cause of your restatement that has sent the stock into freefall.

I’m happy to chat with you about the current state of Groupon and the steps that management is taking to fix these problems.

There are a few other reasons you should consider meeting with me:

  • I will be meeting with current and former Groupon employees during my trip. I can only spend so much time in Chicago, so any time I spend with you is time that I’m not talking to employees.
  • I talk to most reporters who cover Groupon. Because I have spent more time than nearly anyone studying the space, I give background information to many others who are looking to learn and write about it.
  • I talk to money managers about Groupon and the local space. Before the IPO, I talked to many money managers about the offering. Most everyone I talked to listened to what I had to say and didn’t buy at the offering. (And they’re now very thankful — considering that the stock is down 35% in less than 6 months.) If there’s a better story to tell for the future, I’m sure they’d love to know.

And, who knows, after meeting, we may decide that my April Fool’s joke isn’t such a bad idea.

April 7, 2012

Look at the logo Google News puts next to Groupon

Filed under: daily deals, groupon — Rakesh Agrawal @ 9:49 am

From this morning, a search on Groupon returned these results:

Google News algorithms put the Enron logo next to a story about Groupon

Google News algorithms put the Enron logo next to a story about Groupon

I think I’ve made the Groupon and Enron comparison myself. In both cases, you had high-flying companies that focused on short-term growth while ignoring the underlying risks of what they were creating.

One of the challenges of negative press like this is that Groupon is dependent on cash flow from selling new deals to pay off merchants from old deals.

The right way to think about Groupon is as a currency. Such constant bad press could create a confidence crisis in the Groupon currency. Small businesses who do the most basic due diligence (Google “Groupon”) will see the negative news and refuse to run new deals. It will exacerbate Groupon’s adverse selection problem, meaning only shakier and shakier businesses will run Groupons, increasing Groupon’s refund liabilities. (If you were on the bubble about running a Groupon, the bad press will sway you toward not running one.)

Consumers will also stop buying deals. It could also lead payment processors like Chase Paymentech and American Express to terminate their merchant relationships, which would also lead to cash-flow issues for Groupon.

If the Groupon currency market were as efficient as bond markets, this news would cause Groupon to collapse overnight like Lehman Brothers. Fortunately for Groupon, the market is not that efficient.

Groupon customers outside of the United States and Canada will also be hurt because Groupon generally holds on to their money until a Groupon is redeemed.

When Groupon collapses, it will cause some serious pain for Chase Paymentech and possibly American Express. I estimate that Chase has at least $500 million in chargeback liabilities if Groupon goes under. But because Groupon doesn’t accurately track which Groupons were redeemed, this liability could be much higher. Any consumer who had purchased a Groupon could claim they didn’t get what they paid for. I called on credit card companies to take a look at their exposure from Groupon months ago in a Bloomberg West appearance.

The biggest losers in a Groupon collapse would be the small businesses who run Groupons. As of the end of the 4th quarter, Groupon owed small businesses $520 million. This number is likely at least $100 million higher. These are people who can hardly afford to take a hit of several thousand dollars.

The other potential loser is Ernst & Young, the auditor that signed off on revision after revision of Groupon’s bogus financial statements. (Though I don’t expect Groupon to take down Ernst & Young like Enron took down Arthur Andersen.) I’m not ordinarily one to call for Congressional hearings, but E&Y deserves to be raked over the coals for sanctioning Groupon’s financials.

Oh, and a note to the Los Angeles Times: I fully expected this.

See my worst-case scenario of what happens if Groupon collapses. Also see my collection of Groupon stories following the restatement.

Disclosure: I have investments and several ongoing bets related to Groupon.

April 4, 2012

Are LivingSocial, Google Offers and the rest as bad as Groupon?

Filed under: daily deals, google, groupon, livingsocial — Rakesh Agrawal @ 6:27 am

IMPORTANT: Please see this page to see my current interests in Groupon.

Whenever I get into Groupon mode, people ask me about how LivingSocial and Google Offers are different from Groupon.

In many ways, they are the same. Any model that gives businesses cash early on in exchange for a promise of service to be delivered later is a financing business, not a marketing business. I use the analogy of receivables factoring or payday lending to describe the core U.S. Groupon business model. That also applies to LivingSocial’s and Google Offers’ daily deals product. Whenever you do that, you have a risk management issue. And I believe that no one in the space is handling the risk appropriately.

As a point of comparison, I tried one of my fraud tests against Square. About $11 in transactions that fit a pattern of potential fraud were enough to get my account shut down. Yet Groupon and LivingSocial are writing checks for tens of thousands with very little fraud prevention.

But there are some very significant differences among the players in the space:

  • Scale. Groupon has the most scale by far. On a revenue basis, they are roughly 4x as large as LivingSocial, the #2 player.
  • Management team. Groupon co-founder and executive chairman Eric Lefkofsky has a checkered past with his previous companies. The pattern is the same: he gets rich and investors lose. This CNN article is a must read for anyone interested in Groupon. Lefkofsky and his affiliated entities took nearly $400 million out of Groupon before the company went public. I worked with LivingSocial CEO Tim O’Shaughnessy during my time at Aol (although not closely). There was nothing in my interactions with him that suggested anything sketchy. He just struck me as an ambitious and energetic guy. It’s hard for me to believe that a $10 billion public company has a PR team as grossly incompetent as Groupon’s. LivingSocial’s is among the best I’ve ever worked with. (Disclosure: I worked with LivingSocial’s head of PR at Aol. He was the PR lead on one project I worked on. Groupon refuses to talk to me.)
  • Company structure. Groupon is an independent public company, which means its moves are analyzed differently than LivingSocial’s (which is private) and Google Offers (which is too small to be material in Google’s results). This means they have to act very differently. Even if Andrew Mason agreed 100% with everything I’ve written, he might not be able to take corrective action because most of the necessary steps would require short-term revenue declines. LivingSocial, on the other hand, can do away with underperforming products like LivingSocial Instant. Because Offers is a tiny part of Google’s business, they can afford to build for the long term and do the right thing for small businesses as opposed to trying to extract as much money as possible now to satisfy Wall Street.
  • Innovation. Although LivingSocial essentially ripped off Groupon’s business model, it has been much more innovative since. As a smaller company that is not subject to Wall Street pressures yet, it is able to try a lot of new businesses and see what works. This flexibility may be what saves LivingSocial while Groupon has to double down on a stupid business model to show revenue growth.
  • A different focus. Groupon has set its brand to be all about price, which attracts the wrong set of customers for small businesses. Businesses want high-value customers, not cheapskates who will never return at full price. Just the brand names make a difference: Groupon sounds cheap; LivingSocial almost sounds classy. This may sound like a cheap shot, but I believe it makes a meaningful difference.
  • Risk mitigation. LivingSocial has sales people on the ground in most of its markets. They actually visit the businesses and talk with business owners. Groupon has a lot of people in call centers in Chicago. Although LivingSocial has had its share of deals that go bad, having feet on the street is an important risk mitigation function. In theory, LivingSocial sales people can see if a business is shoddy or has gaping flaws that would turn off customers. I’m sure they’re not trained to evaluate risk as someone who knew they were in the receivables financing business would be, but it’s better than nothing. There are also structural differences: by being in market, LivingSocial salespeople don’t have as much incentive to screw over small businesses because they may have to revisit them. Groupon, with its call centers, creates bad incentives because sales people screw over businesses in smaller markets in order to get promoted into bigger markets where they get promoted.
  • Groupon Promise. The Groupon Promise is the proximate cause of Groupon’s earnings re-statement on Friday. (There are others, but I’m simplifying.) LivingSocial and other players have not had anything like it. This creates a lot of overhang for Groupon in that they’re unconditionally backing the performance of small businesses over whom they have little control. It also opens Groupon up to refund abuse by consumers who just take advantage of the promise. As a consumer value proposition, it sounds great. But it creates a lot of risk for the business financially. It also creates legal and regulatory risk if they don’t live up to that promise.

April 2, 2012

Best practices for April Fool’s Day

Filed under: groupon — Rakesh Agrawal @ 4:40 pm

My April Fool’s Day went much better than I expected with a lot of people believing that I joined Groupon. As you probably know by now, I didn’t actually join Groupon. In fact, I was on CNBC this afternoon talking about how I believe it will go to zero without significants changes in its model.

One of the things that struck me was how powerful social media have become. I got a number of inquiries from reporters about the move. Clearly, something like this was material news that might move Groupon’s stock.

Based on my experience, here are some best practices on April Fool’s:

For pranksters

  • Make it believable. Don’t make your jokes so ridiculous that no one would think it was possible. In my post, I criticized Groupon and didn’t talk about what a great company it was because no one would believe those words coming from me. Some people told me that “forward looking statements” footnote made it seem more authentic. I actually cut and pasted that from a Groupon press release. But I also added in a sentence: “The SEC particularly advises investors to be skeptical of announcements posted on April 1 of any year.” (This is why you should read footnotes in financial statements!)
  • Go all in. My prank spanned my blog, Twitter, Facebook, Quora, LinkedIn and foursquare. If you checked out my other presences, you would have seen a consistent story.
  • But know your limits. There are some lines you shouldn’t cross. Even though I could’ve played the prank out on TV or in other media outlets, that would have been wrong. I would not agree to do TV or interviews where I was spreading false information. I also would not have done this on a day that the market was open.
  • Be self-deprecating. Throughout the day, I retweeted tweets that called me a sellout or worse.

For prankees

  • Read the comments. Inevitably, someone will spoil the prank in the comments. I tried to remove some of the most obvious comments throughout the day. (But I was offline a lot of the day, so some slipped through.)
  • Respect the game. It may be tempting to show how smart you are by commenting that it’s a prank. Instead, privately let the person know that you got it. (I had quite a few people IM, SMS and email me.) If you must comment, make it oblique.
  • Spread the joy. Special thanks to Kevin Nakao, Arnie Gullov-Singh and Marc Bodnick for moving the prank forward.

As to whether I would actually join Groupon if they offered me a job… that’s a post for another day!

April 1, 2012

Why I’m joining Groupon

Filed under: groupon — Rakesh Agrawal @ 4:39 am

My life has taken quite a few turns over the last year, but none stranger than yesterday’s.

After taking Groupon to task for the bazillionth time, I got a call from Andrew Mason. This was shocking because Groupon PR has kept me from talking to him for 9 months now. As I’ve said before, I think that’s an idiotic strategy — it’s best to engage with your critics, not ignore them. Especially when they have a platform and can clearly explain your challenges. (I was talking to one senior exec who said that if he’d been in Groupon’s shoes, the first thing he would have done after the quiet period was to put Andrew on stage for a no-holds barred interview with me.)

Andrew finally decided to engage me. During a lengthy conversation, I realized that he actually cares about the success of small businesses as much as I do and that he genuinely wants to do the right thing by them and help them to grow. He sees many of the same problems that I’ve pointed out in my analysis of Groupon since last June and wants to improve the company and create better products for SMBs.

Aside from the last year, I’ve spent my entire career in product management and business development. It’s my true passion. I’ve also spent much of my career on local products. It’s time for me to get back to that. I’m pleased to announce that I will be joining Groupon to help them create better products that truly meet the needs of small businesses.

Most such announcements are filled with flowery language about how great the company is. Obviously that would be fake coming from me, so I won’t make such claims.

I will still be based out of Silicon Valley. As I said yesterday, I think one of Groupon’s strongest chances for success is finding companies they can acquire to create a more sustainable model for Groupon and a better value for merchants. Because I have a knack for finding and analyzing companies, this will be part of my work.

I’m going into this with my eyes wide open:

  • I realize that part of the reason that Andrew extended the offer may be to offset the shellacking that Groupon will likely receive tomorrow in light of the restatement. Being able to announce that their biggest critic is joining the team to help them improve their business might preserve a bit of their market cap.
  • I know that the company faces a number of challenges — I’ve been chronicling them more than anyone. There are many others that I haven’t written about.
  • I will undoubtedly have to deal with a lot of ruffled feathers.

It would be intellectually dishonest (and futile) to try to remove my criticisms of Groupon from the Web. Instead, they’ll serve as a to-do list of things that need to be fixed. But it does mean that I won’t be publicly exposing any more flaws in Groupon’s business; I will work to rectify them from the inside.

I have always believed in tackling hard challenges and I think this will be a tough one, but I’m looking forward to it.

Thank you for all of your support over the last year!

Oh, and Groupon’s lawyers insist that I add this:

Forward-Looking Statements

This announcement contains forward-looking statements that involve risks and uncertainties, and actual results could differ materially from those discussed. Factors that could cause or contribute to such differences include, but are not limited to, the factors included under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations in the company’s registration statement on Form S-1, as amended, filed with the Securities and Exchange Commission on November 1, 2011, copies of which may be obtained by visiting the company’s Investor Relations web site at http://investor.groupon.com or the SEC’s web site at www.sec.gov. Groupon’s actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of future performance. The SEC particularly advises investors to be skeptical of announcements posted on April 1 of any year.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this press release to conform these statements to actual results or to changes in our expectations.

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