Get this: Sometimes startups actually LEAVE Silicon Valley and move to “everywhere else.”
That’s what Scalpr did. They quickly found that the market for last minute ticket sales wasn’t hot in San Francisco. So, rather than finding an idea that fit the city, they up and moved to where they knew they’re idea was viable.
So, what does the Chicago-based company do? Basically, they make it easy to buy last minute tickets from other fans. For example, let’s say I had tickets to a Memphis Grizzlies game, but then my boss tells me I have to work late (jerk). Rather than letting the tickets go to waste, I can throw them up on Scalpr and let someone else enjoy the game instead.
Comments Off on Steve Case & Ted Leonsis, Can These Two AOL Men, Save Social Local Commerce?0LikeLike 2,008
Steve Case (file photo: NMI)
Two of Washington DC’s powerhouse investors, Founder of AOL Steve Case, and owner of the Washington Capitals and Washington Wizards, Ted Leonsis, work side by side on many deals. Both are heavily involved in Case’s investment company Revolution.
Leonsis has been involved with Revolution Growth since it’s founding, however he has no financial stake in Revolution Growth I investments. Leonsis and Case have worked together since the AOL days, where Leonsis was a member of active management for 13 years, retiring in 2006.
They continue to work together today, although both are invested as individuals and separately in daily deal competitors Groupon and LivingSocial.
While many know that Groupon’s typical strategy, at least pre-ipo, was to quickly buy up competitors across the country, Living Social has always been on it’s own and will most likely stay that way.
We’ve seen the turmoil that both companies have been going through as of late. Groupon fired it’s founding CEO poster boy, Andrew Mason and quickly installed Leonsis and Groupon co-founder Eric Lefkosky as Co-CEO’s until a new CEO can be named.
Back in the DC area Living Social has been going through some problems of their own.A little over week ago, the investors in Living Social basically took back the company with an emergency $100 million dollar investment, which according to many sources, including privco.com, rendered all previous stock, even employee stock, worthless.
(PrivCo EXCLUSIVE): LIVINGSOCIAL Receives Emergency $110M Debt (“Equity” In Name Only) Infusion From Existing Investors With Oppressive Terms, JUST DAYS FROM BANKRUPTCY, Effectively Handing Over Distressed Co. to Today’s Financing Participants…Implied Valuation Incl All Req’d Payments: JUST $330M, DOWN 94% FROM $5.7 BILLION In Dec. 2011 V.C. Round…Pure Equity Was NOT Issued Today (As Has Been Widely Misreported)…Instead, A Desperate LIVINGSOCIAL Accepted A COMPLEX Series of Secured-Convertible-Debt-Like Securities With Onerous Terms (PrivCo Has Confirmed Exclusively) Including: (1) Liquidation Preferences of SEVERAL TIMES the $110M In Debt (2) Mandatory Cash Dividends Due (3) “Super-Warrants” And/Or Large Lump-Sum Cash “Elimination” Payment, (4) Secured Against Co. Assets and Stock, (5) Repayment of the $110M “Loan” in 4 Yrs w Add’l Payments, and (6) Re-Pricing of Participating Investors Earlier Rounds…Employees’ and Founders’ Common Stock Now Worthless. (industry trade publication privco said on their site)
A former LivingSocial employee, on condition of anonymity, told nibletz.com that friends of hers in the sales department hadn’t seen a paycheck in nearly two months, before the most recent cash infusion. A current LivingSocial employee, also speaking on the condition of anonymity, told us that the company was right on the cusp of some big ideas with both technology and sales and that no one wanted to see the company shut down.
Case was rater bullish on LivingSocial when speaking at the TechCocktail event at SXSW on Saturday afternoon. He said that despite what’s going on with the company, LivingSocial does have the potential to become the next AOL.
Many may recall how Case was instrumental in the biggest media merger of all time beween Time Warner and AOL. Although he is held highly responsible for the merger, he agreed to step down as CEO after that merger closed. While the outcome was far from the results they were expecting, AOL is still a big player in online media and is again seeing forward momentum.
Groupon has already pivoted since their value began declining shortly after going public. They now offer Groupon Goods, an almost Amazon competitor, that is the backbone to where the company is headed.
While LivingSocial hasn’t done anything that drastic just yet, they do have some new technologies in the works.
Case has never been one to turn down the long hall. At 54 he has plenty of time to see some of his investments pay off ten fold. ZipCar, a big investment for Revolution, was just recently sold to Hertz with a huge return to investors. The company was in a position where they didn’t necessarily need to take that deal, but it was right.
While four years may seem like an eternity to a startup, from reading all of the language in various stories about the recent LivingSocial bail out, the investors are giving the team four years to turn things around. Which, may be just enough time.
Meanwhile across the hall at Revolution, Leonsis has taken on much more responsibilities for day to day operations at Groupon. “There is a ton of negative sentiment in the press about this company, and I think people don’t separate the signal from the noise,” Leonsis told The Verge, “We have $1.2 billion in the bank. We have basically zero debt. And this last quarter, we had an operating profit. Yes, with one-time write downs, there was a loss. But the fundamentals of this business are sound.”
With Leonsis balancing Lefkosky’s Yang, and Case and company giving Living Social four years more breathing room, two men from AOL may have just saved daily deals.
Watch this video with Case’s remarks, this past Saturday at SXSW, on Living Social:
Comments Off on Andrew Mason’s Farewell Memo Gets Rap Geniused By Marc Andreessen And Ben Horowitz0LikeLike 1,563
Andrew Mason was hot news this week. As you all undoubtedly know by now, the CEO of Groupon is CEO no longer. We didn’t report on Mason’s firing earlier because everyone else did and our good friends at Business Insider wrote so many articles about it we made up a drinking game.
Today though, we found out some epic news. Marc Andreessen and Ben Horowitz, of Andreessen Horowitz fame, have used their own portfolio startup, Rap Genius, to decode Andrew Mason’s epic farewell memo.
Andreessen Horowitz were in Groupon pretty deep, so it’s great that they’ve basically come to the aid and support of Mason via Rap Genius. They are also major investors in the lyric website that decodes rap lyrics.
Andreessen and Horowitz pointed out early on that Rap Genius could be used to annotate lots of things like poetry, stories, news and now farewell memos. What’s even better is that both founding partners worked on the memo together and while some of the entries are funny others are long form and offer great explanations.
For example in the first paragraph of Mason’s letter he says “controversial metrics in our S1,” Andreessen goes on to make this lengthy explanation:
Andrew is referring to the use of non-standard financial metrics in the company’s SEC filings, particularly in the IPO filing (S1).
As someone who was in the room as an observer at the Groupon board when the decision to use these metrics was made, I think Groupon was honestly trying to provide additional information that investors would find useful, which mirrored the way management thought about running the business.
However, no good deed goes unpunished, and widespread media paranoia about business metrics still lingering from the 2000 dot com crash combined with other missteps on Groupon’s part combined to make the use of those non-standard metrics highly controversial and ultimately negative for the company.
Horowitz shows his support of Mason when Mason says “As CEO, I am accountable.” Howoritz writes:
Andrew does the stand up thing and claims accountability. Make no mistake though—although he’s the only one accountable, he’s certainly not the only one responsible for all the things that went wrong. The board decided to take the company public prior to putting all the proper controls in place. The material weakness was nearly guaranteed at that point. Every one on the board plus the CFO and the bankers agreed those were good metrics at the time. But here as in every case, it’s not all the CEO’s doing, but it’s all the CEO’s fault.
On the lighter side, when Mason says “maybe I’ll figure out how to channel this experience into something productive,” a Rap Genius community contributor says that this means:
“FYI World. I’m open to a killer deal if you want to hire me. But I ain’t gonna be cheap!”
Comments Off on Groupon Misses Their Mark Q30LikeLike 581
Groupon’s stock has fallen nearly 16 percent in after hours trading after they released their third quarter earnings earlier today when the market closed.
Groupon took a small loss when higher revenue failed to compensate for stock compensation and other expenses. Groupon’s revenue grew by a third but still failed to meet Wall Street’s expectations.
The net loss for the quarter ending in September 2012 was $3 million dollars, basically a breakeven per share. That’s sharply down from the $54.2 million dollar loss or 18 cents per share the same quarter last year. Adjusted earnings of 3 cents per share matched Wall Street’s expectations.
Total revenue was up at $569 million but fell short of Wall Street’s $591 million expectation. Groupon is forecasting revenue between $625 million and $675 million in the fourth quarter. If they come in at the median point of $650 million they will beat analyst’s expectations of $634.9 million.
Analysts and investors are concerned over the long term viability of Groupon’s business model. Many are concerned about “daily deals” as a whole.
There have been wide spread reports across many websites and technology journals, about mom and pop businesses who’ve taken major losses in trying to use Groupon to gain more customers. The general consensus is that small businesses take a loss on their initial Groupon deal and then the customers never come back.
Other entrepreneurs, startup founders, and investors are looking to the loyalty and rewards space, over the daily deals space to increase revenue and keep customers coming back.
Comments Off on Indianapolis Public Startup Angie’s List Sees Stock Drop 16%0LikeLike 1,010
Publicly traded tech startups haven’t been doing very well lately. Groupon, and Zynga have both dropped more than 70% since their initial public offerings earlier this year. The world has been watching the public story of Facebook as well. The largest social network in the world debuted at $38 dollars a share and has since dropped 46%. Right now is a tricky time for tech startups turned public companies.
For Angie’s list, the story hasn’t been much better. Except for the fact that Angie’s list debuted much lower than Groupon, Zynga or Facebook, they’ve still seen a steady decline since going public. Tuesday, Angie’s list stock closed at $11.17, which was below their IPO price of $13. The 16% drop on Tuesday was the single biggest decline for the Indianapolis based startup since they debuted on the stock market 9 months ago.
Angie’s list is a marketplace for people to vet and find service workers. Carpenters, babysitters, plumbers and more can be found on the site. The Angie’s list community is filled with reviews from every service sector possible. Companies can’t pay to be on the list it’s all referral/review based and there are no anonymous accounts.
Angie’s list also incorporates discounts of up to 70% off from the service providers found on the site. The company was founded in 1995 by Angie Hicks and William Oesterle and has remained in Indianapolis since then.
Angie’s List reported a loss of $37 million on revenues of $68 million during the first half of 2012.
Comments Off on Groupon To Go Head To Head Against Square On Mobile Transactions0LikeLike 838
Groupon the daily deals site is reportedly interested in entering the Mobile Commerce field to compete with the likes of Square and most recently PayPal. The company who is embroiled in controversy in almost anything it does, from how it reports it’s profits to how it stock raises, wants to handle your money.
Business Insider is reporting that it’ll charge 1.8% transaction fee and a $0.15 per transaction charge for payments that they process. Whereas Square charges 2.75% with no per transaction fee and PayPal Here charges 2.7%, also with no transaction fee. In a risky move, Groupon will provide not only the device that retailers can charge customers, but also an iPod Touch to take the payments with. Like Yahoo, which recently made waves by releasing a semi browser for the web, and an iOS application, Groupon which keeps failing and is being mishandled would rather throw as many things against a wall and see what sticks versus fixing what’s wrong and instead is trying to hide from this.
Comments Off on Chicago’s Groupon Acquihires Ditto.Me0LikeLike 488
Lately the news about Groupon hasn’t been the good news we’re used to hearing. First, there is a group of investors that are suing Groupon suggesting that the Chicago based startup had cooked the books. Also over the weekend Groupon disappeared from Apple’s iTunes app store.
That hasn’t stopped them from making acquisitions though. Social check in, recommendation, chat with friends app Ditto.me was just acquired by Groupon. Terms of the deal were not disclosed however a post on Ditto.me’s website clearly indicates that this is a total acquihire.
“We can’t reveal what we’ll be working on at Groupon but we are excited to give it 100% – to enable this, we’ll be winding down Ditto. On April 30th we’ll switch off the service and remove the app from Apple’s and Nokia’s stores*. We think you’ll love what we and Groupon dream up next.”
If Groupon manages to come out of the investor lawsuits unscathed and whatever this issue is with the Apple iTunes app store they have their work cut out for them. As a pioneer in the daily deals space, they are just like FourSquare. FourSquare was a pioneer in the check in space, but then after checking in that was it. The same thing holds true for the original Groupon, you’ve got group deals, and daily deals, everyone has those now.
Groupon may be using this acquihire of Ditto.me to make their daily deals and group buying app more social. Perhaps share deals with friends and then go in together? The technology is definitely there as is the technical know how from Engestrom.
Comments Off on Groupon Goes MIA From iTunes0LikeLike 731
Business Insider is reporting that the consumer version of Groupon has gone MIA on the iTunes store. While checking, the merchant version is still their however, the one users use isn’t. This while doesn’t make sense to some, actually does. Apple wants a cut from everything being used on their ecosystem. They built it, they should. However, Groupon while selling to customers directly on their website, or via the emails they sent out, unless have an understanding with Apple to give a kickback, are breaking the TOS.
For three separate editors on different computers and different networks, a search for “Groupon” brings up one app from Groupon LLC, but it’s the one for merchants, not the consumer-facing Groupon app.
Below is a screen shot of it missing the from iTunes store which Business Insider provided.
Every daily deals site’s worst nightmare recently came true for Seattle-based Tippr, however their handling of the situation saved face and customers.
One of Tippr’s merchants recently ran a deal for a pair of Bose headphones at the low-cost of $49. The merchant had said that the headsets were genuine and that they were authorized to sell them. However as Tippr CEO Martin Tobias told Geekwire they started to have their doubts and then worked with Bose directly to vet the validity of this deal.
“Upon further investigation and in partnership with Bose Corporation, we were unable to verify the merchant’s inventory levels nor the authenticity of the product to our satisfaction,” Tobias tells GeekWire in an email. ”There are apparently quite good fake versions of these headphones in the market and we were concerned that the merchant may have been attempting to ship knock-offs instead of factory authorized product. So out of a preponderance of caution, and looking out for the interest of our Tippr customers, we decided to refund all customer’s money rather than risk them getting a potentially faulty or poor quality product.”
After a bumpy road in IPO land Groupon is back to acquiring companies and expanding the base of their product line. Groupon is far and away the largest group deals site on the net. Groupon started as a local deals buy in site and since then has grown to a user base of 155 million users, 23 million of which are active participants.
Groupon recently launched a new concept called Groupon Goods that sells cameras, electronic and other goods to their user base. Now it looks like they are looking to expand their social presence.
Mertado lets consumers find and buy products through social networks like Facebook.
“Mertado has shown a great level of innovation in the social commerce space — for example, the launch of Mertado TV, combining lifestyle video content and product selection,” a Groupon spokeswoman told the Chicago Tribune. “We’re looking forward to leveraging the team’s expertise.”
“Groupon has been a pioneer in social commerce in many ways, and when we started talking with them, it became extremely clear that they shared the same set of values as us,” Mertado told users and investors on their website.