Goldman Sachs - for starters. They set up the deal - and let their "muppet" clients get their eyes ripped out. Business as usual for them.
This is not surprising to me - I did say that they were going to "ladder" the price and pocket a huge chunk of money - then watch everyone else get screwed.
Simply stating it is not a ponzi scheme doesn't advance the conversation in a meaningful way in my opinion.
It's really just semantics at this point. There is a lot of evidence here that suggests systematic misleading (if not out-right defrauding) of investors. So you while you are technically correct, I think what Groupon has done is in the spirit of Ponzi even if it is executed differently. What's happened here is more than just a bad business plan executed honestly producing poor results. Just because we don't have the exact word for it doesn't make it any more ethical.
Jason, your gut instinct is correct. Groupon is a Ponzi scheme in every way: last customer in gets no money out. I feel sorry for that Mom & Pop pizza that paid $1,000 to run a Groupon deal, and expecting $300 back in 60 days, only to see Groupon go belly up and get nothing but a letter that says "Please send your creditor claim to the bankruptcy trustee listed below".
Groupon only pays out about 45% of gross bookings. Ponzis generally pay out closer to 100%. Once it brings sales and marketing to a reasonable level it should be wildly profitable.
It is when you need new sales to pay for the cost of maintaining existing client base: 1) client #1 pays you, but you have to give him back half at a future date, 2) while his money sits in your account, you spend it on operating costs, 3) get new client money in order to pay client #1 back.
It is that money sitting in the account that gives Groupon the cash flow it needs to hire more sales people to grow the revenues further, but remember always that a % of that must be returned to the customer at a future date. Where it falls apart is when your new sales can no longer replenish the client account (no it does not sit in a trust or escrow, but in company's general operating account).
So what happens when Groupon declares Bankruptcy? All that money sitting in the account is gone, customers get NOTHING back. Yes, this is indeed a Ponzi scheme because the last customers in get nothing, even though they are owed the %.
Perhaps not, but the only way it's a sound investment is if you exit quickly by finding another sucker that is willing to take a risk it doesn't come crashing down before he can exit. Everyone agrees there is no long term business model there, certainly not at that valuation.
