If I raised a few hundred million dollars, I could create a website where you went, and gave your credit card number. I would charge your card $1.00 and then credit your card $1.40. I would be Groupon, except I would be slightly more profitable.
Groupon believes they have a reliable fix on the Customer Lifetime Value. Some very smart investors who have done _actual_ analysis of Groupon (including the team that did due diligence for Google when they made the buyout offer earlier this year) clearly have at least some faith in these CLV numbers.
All of the "armchair analysis" you see here -- including your opinion on the subject -- is looking at a snapshot of Groupon from their S1 backward. That's fine but if you want to leave pro forma out of it, but then quit making pro forma statements about the failure and decay of the business!
All businesses are a money-multiplier machine, right? What you're complaining of is that by your analysis, that multiplier for Groupon is 0.72. Not a very good money machine at all really.
Suppose that when you factor in the CLV, that multiplier falls into the range you'd expect from a company that has low variable product costs and a large sales team: 1.21.
If you run that company, once you have enough data to really believe in the efficacy of those numbers, then you're going to do everything you can to purchase as many customers as possible. And if you're an investor, you're going to encourage management to do just that.
I mean, this is the very handbook on non-seed startup investing. Find a profitable CLV model, and scale it out.
But I'll give you this: you did a good job creating some outrageous, tongue-wagging scenarios.
You were saying that I was wrong, just look at their revenue. I replied, revenue doesn't mean anything, it's easy to build a giant revenue machine. Your point was crap. Now you are coming up with all sorts of other facts and analysis, which is certainly much more valuable than your original "just look at all that juicy revenue" argument. Again, I was pointing out how terrible and stupid the 'look at all that revenue' argument was by showing I could create another company with even more revenue that is even more worthless. If you have an issue with this, I would stop using revenue as a basis for anything since it is a shit indicator.
Again, GM has MASSIVE revenue, that has no bearing on how good of an investment it would be.
And that when I pulled out "other facts and analysis" -- like the fact that Groupon must feel they're doing the right thing by spending a ton of money to grow their customer base (duh) -- you've got nothing to say?
And you really think in your post that you were "showing you could create another company with even more revenue?" Because what you're missing is you made up a fantasy example and you're calling it a counterpoint. It had no merit and was nothing but empty calories.
But people are investing a lot of money in Groupon. And their revenue growth that you dismiss is no small part of that, Justin.
Do you have any idea how rare a billion dollar business is?
Look at my comment history. I've got a long history here of reasonable discussion. But you've brought nothing to the table here. You've made no cogent argument.
