10 Reasons Why Groupon IPO is a Bad Deal

Gropon filed paperwork to go public (IPO) on June 2, 2011. That’s 24 hours after Google released ‘Offers’ service in Portland, Oregon. Most likely a coincidence but important to mention because it matters in terms of competition; just one of the reasons Groupon IPO is a bad deal.

Here are the 10 Reasons Why Groupon IPO is a Bad Deal

1. Groupon paid out dividends to its preferred stockholders even though it lost money during the same time from operations. (source)

2. During every round of funding, Groupon paid off employees, owners and investors. (source)

3. Groupon is not profitable and will not be able to turn profit anytime soon. (source)

4. Groupon spent more money marketing than making money from operations. (source)

5. Groupon executives have already cashed out. (source)

6. There are low barriers to entry – thus eroding profit margins. (source)

7. Groupon’s revenue is grossly exaggerated. (source)

8. Groupon is technically insolvent. (source)

9. Groupon is currently being operated as a pyramid/ponzi scheme; they need the influx of cash to pay advertisers who offer deals. (source)

10. Groupon is using too many accounting gimmicks that don’t conform to Generally Accepted Accounting Principles (GAAP). (source)

I avoided numbers in my 10 reasons because they are misleading and sometimes downplay simple facts. The sources I mention do have numbers if you want to see them. As an I accountant, I see a lot of numbers and know for a fact that numbers are sometimes best communicated in the form of direct statements.

Some recommended reading:

Is Groupon’s Business Model Sustainable?
Funny or Die: Groupon’s Fate Hinges on Words
Using Groupon ‘Worst Decision I Have Ever Made,’ Says Merchant

Alif Bay Pay – Yes, There Is An App For That

Alif Bay Pay is fun and interactive Urdu alphabets learning app that will take any toddler on an educational joy ride.

I saw a demo of Alif Bay Pay app few weeks back during lunch with two Qurtaba co-founders, app developer, and thought it was visually very appealing and an excellent way for kids to learn Urdu alphabets.

According to Arjumand Azeemi, co-founder of Qurtaba and developer of the app, “Qurtaba’s vision is to spark the love of learning Urdu in young children” with this iPhone app. “One part of that goal is teaching them to read and write Urdu, not just spoken Urdu. By learning Urdu they not only learn a new language, it opens a whole new culture for them. With languages, comes the culture.” said Azeemi.

Each alphabet is pronounced with the visual of the corresponding animal/thing in a beautiful voice. Alif sey Anaar, Bay sey Bandar, Pay sey Patang etc. After 38 alphabets, you can listen to all the alphabets in the form of a jingle.

Pay sey Patang Bay sey Bandar Alif sey Anaar
Kids born to Pakistani parents in America don’t learn any Urdu formally. Limited Urdu they are exposed to comes in the form of random sentences that start in Urdu and end in English. This problem is very wide-spread, trust me, I have seen it. This app can be an excellent start for kids to get the basic alphabets right. Kids are known to grasp a new language skill if taught earlier in life.

iPiccy – Online Image Editing On The Go

Photoshop is synonymous with image editing and for right reasons; best in its class. Think Photoshop plus the flexibility of editing images online and you will have iPiccy.

iPiccy

iPiccy has bundle of features and gives you one click options to turn your images in to whatever you want it to be. Simply put, iPiccy lets you edit images and apply amazing photo effects that are second to none in terms of quality. The best part is you can do all this online without downloading any editing software – on the go.

It gets better.

You can upload images from PC, web URL and webcam. You can even draw a picture you if that’s how you are used to doing things. Overall, an excellent way to edit images on the go.

Bubble in Theory, Not Reality

I read a somewhat interesting post on Reuters about LinkedIn’s recent IPO. In theory, LinkedIn’s first day price fluctuation and the week following the IPO, depicted a bubble. Three academics, Robert Jarrow, Younes Kchia, and Philip Protter, have created a model which they say proves their theory.

Bubble in Theory, Not Reality

The paper they authored is currently being peer reviewed and will soon be released. What the paper essentially talks about is the volatility of “any other stock” compared to that of LinkedIn stock. The gut feeling out of the LinkedIn IPO compels one to say it is a bubble and the paper proves that point in theory.

I am still not convinced LinkedIn is a bubble stock and here’s why:

[ad#left] LinkedIn has a revenue generating service, can make a profit, is not “run-of-the-mill” startup that went to NYSE to cash in and above all, has an excellent management.

Of course there will be a price correction and the stock will close well under $40 by the end of this year, my speculation, but that doesn’t mean the company is fad. The paper in question does pose another interesting question that assumes that most social media companies to follow will create a dot com era bubble in the stock market.

Personally, I don’t think investors are that stupid. Memory of dot com bubble burst is still fresh in the valley. And yes startups are getting grossly insane evaluations, mostly undeserving, but it’s human nature to be part of the next big thing or bust. On the other hand, people who are trading the stock in the secondary markets are the ones who will lose if those startups fall flat, not the average investor.

Did I mention that Groupon filed for IPO?

How to Add Google +1 Button to your Blog using Sharebar Plugin

+1 Google’s +1 button is now LIVE and you can implement the code on your blog. Instead of just copy pasting the code on your blog, try achieving the functionality of the +1 button by adding the code to a social sharing plugin.

Install and activate Sharebar before you read any further.

Step 1

Assuming you have installed the plugin and activated it, go to Plugins menu and Click on Sharebar.

Step 2

There will be a blue colored button “Add new Button,” click that.

Step 3

Paste the code from Google +1 your Website. If you like what I have, use the tall code:

<!– Place this tag in your head or just before your close body tag –>
<script type=”text/javascript” src=”http://apis.google.com/js/plusone.js”></script>
<!– Place this tag where you want the +1 button to render –>
<g:plusone size=”tall”></g:plusone>

Step 4

Once you add the code, you should have a screen like this:

+1 Button

That’s all you need to do. Please let me know by commenting below if you run in to any problems implementing the +1 Button.