I should start by admitting I hate Groupon.
Hate might not be the correct strength of word. I despise Groupon. I loathe it. It occupies a place in the Pantheon of Things I Dislike somewhere below Old Ladies Who Forward You E-mails With 800 Cute But Inappropriate Things That Some Sunday School Child Allegedly Said and above kumquats. Once Groupon asked me for a loan and I spat in its face and demanded a pound of its flesh.
Groupon is about to launch an IPO valuing itself at around $20 billion. That is so like Groupon! It is like everyone else you know who overvalues himself — thinks it’s far more exciting than it is and won’t stop sending you e-mails about it. In fact, you worry it doesn’t have any real friends. Why are you e-mailing me at 2 a.m. on a Saturday if you’re so fun and well-liked? Why is there that curious edge of desperation to all your suggestions about fun, boutique cuisine I may like?
There are serious problems with Groupon’s business model — it’s been plausibly argued that the only time companies other than Groupon make money from their arrangements is when they’re about to go out of business. Not to mention that it’s based on the principle that if you bother people enough, they will buy things they don’t need. I find its assumptions a bit unnerving. It’s like someone told Groupon I was fat, ugly and about to die. “How about sky diving?” it asks. “After your facial and haircut, of course.”
“Get up earlier! Do yoga!” What does Groupon think it is, my mother?
All I want to do is use it to buy more movie tickets than I would otherwise. Massage? A massage is an exercise in awkwardness. A massage says, “Are you not relaxed? Here, a stranger will touch you until you are!” Through a combination of logic and my Scandinavian heritage, I have gotten all my massages from the chairs at Brookstone. I don’t need Groupon for those.
But there’s another underlying problem.
Generally, the mistaken assumption that you are worth $20 billion is metaphorical and doesn’t have the potential to disrupt the lives of investors and spark SEC investigations. But by all appearances, Groupon is doing on a large scale what I did as a child with a lemonade stand — forgetting to take a little something I like to call “costs” into account when calculating profits. It costs Groupon roughly $1.43 for every dollar that it earns. Groupon lost more money than it made this quarter, in normal accounting terms. But Groupon would like us to consider only the money it takes in. “If you don’t take into account the money we’re hemorrhaging, we’re making a lot of money!” it exclaims helpfully. “In fact, we’re intensely profitable!”
Funny budgeting is quite “in” these days, anyway. So it’s fine. If the debt-ceiling debate has taught us anything, it is that we have exactly as much money as we want to have!
If there’s one theme that is emerging from the news this week, it is that no one seems to understand how money works. And if you don’t understand how things work, they seem to operate by magic, and anyone who says anything to the contrary about “rules” and “dangerous brinksmanship” can be written off as a malignant wizard.“The debt ceiling is lies and wizardry!” Congress yells.
“Profit? Loss?” says Groupon. “What a limiting, old-fashioned way of approaching business.”
So you’re welcome to your IPO, Groupon! But I’m not buying. Even if it turns out to be 1/2 off.