link Why Groupon Is Poised For Collapse.
Lurking underneath the hype of crazy valuations for ‘social networking’ companies recently are some sobering realities of their business models. Talk abounds now of a $100 billion dollar valuation for Facebook for example. Ahem. Groupon has seen a meteoric rise from only 3 years ago to achieve some real eye popping valuations in advance of their much anticipated IPO. But what are people buying? This article gives a revealing look at the mechanics of the Groupon model.
For those not steeped in finance, it’s essentially a mechanism to give short term loans to small businesses, which, under the right terms, is a good thing. It’s somewhat eerie to consider that the financing model looks strikingly similar to the whole housing mortgage disaster which crippled the American economy just recently. In both cases, money was essentially lent on favorable terms in advance to people on the financial fringe on the expectation that the carrying cost would be offset by rising house prices or by increased sales volumes in the case of the Groupon model. Now that I think about it, that’s the same model used to sell Government treasury bonds. Hmm.
This all works as long as things go as expected. What are the odds of that not happening? I’m sure the flinty eyed MBA’s and actuaries at the big investment firms have done their risk calculations to arrive at a resultant valuation for the IPO. After all, to float a $100 billion market cap company, you’d have to convince a lot of smart people, not just the rubes buying 100 shares for their grandkids. The truth is, many investments are good investments only because everyone else thinks they are, not neccesarily because of fundamental reasons. Stock investing is prone to the dictates of fad just like accesories in the fashion world. Compounding that is the reality that many investment professionals drink from the same cup as far as market wisdom; the Bernie Madoff scam proved that just recently.
Actually, I think the Groupon founders are geniuses for creating such a finance model since it obviously fulfills a need in the marketplace. The reality is that no one gets something for nothing in business. Consumers may get goods at a discount using their services, but definitely not to get their stock. If it were me, I’d wait for the discount.
Earth Hour | Twitter takes Earth Hour viral.
You have to give credit to the clever people who originally orchestrated this “World Event” some years ago. This is the ultimate expression of that social networking phenomenon called a flash mob. Flash mobs can be benign and amusing such as when strangers start spontaneously singing at a mall, or when people decide to go out without pants on New York’s subways. They can have genuine influence such as the credit given to social networking for the uprisings in Egypt and the middle east. It’s always important to catch the attention of a younger group of people, since only youth will do anything for the sole crazy reason of, it seemed like a good idea at the time. If you’re going to try to get a mob going, start it among youth, they love the group experience. Ever notice the green zealots? They all have that same unkempt hair, bearded chops look. Anyone who wants to be taken seriously in that movement, has to have the group green look. We’re not sure why.
At the root of the flash mob phenomenon is the fun, whimsical nature of the happening. The novelty and symbolism of the Earth Day event however has long passed it’s amusement factor and is instead merely kept alive by zealots who still cling to their misguided notions of how things work. Although the hardcore nuts have managed to cajole some ‘mainstream’ groups to sponsor observance of the day, as if not observing it makes you a social pariah, the declining participation year over year shows that like all things that amuse kids, the novelty has worn off. Earth Day is the modern Tickle Me Elmo. The obvious exaggeration and fraud of global warming hasn’t helped the cause either.
Imagine if somebody were able to float the notion that humans were creating too much sewage. On this version of earth day, everyone would be cajoled into not going to the bathroom for an entire day. And to really encourage participation, all public washrooms would have locks placed on them. It could be a finable offense to sell someone a bran muffin. Something tells me this day of observance won’t make it to be annual event, at least not by those over 40 years of age. And therein lies the secret of all crazy movements. Get the kids involved first. Most older people know better and have a firmer grip on reality, or should. It’s no coincidence that the big push for hysterical issues such as global warming occurs in the schools where impressionable kids have no means of assessing validity. “Daddy, don’t you want to save the earth?” is the plea from innocent 6 year olds. So the parents play along the same way they place a plate of cookies and milk in the living room on Christmas eve.
Eventually, the kids grow up and the realization of misguided idealism hits them. They figure out that walking around in the dark with kerosene lamps, a candle, or just glow bugs in a jar really isn’t practical. They’ll figure out that the invention of electricity, flush toilets and central heating are not just capitalist frivolities but real advances in civilization. They’ll figure out that the charm of bicycling to work in a rainstorm loses its charm in only one session. Most significantly, they’ll find that as larger chunks of their paycheques are confiscated for ill conceived and quixotic environmental causes, their support for zealous dictates will wane. Maybe thankfully, they’ll shave off those goofy beards.