If the word Redrum still makes you shiver, and these two little girls will make you lose sleep at night, you’ll derive great pleasure from watching the excellent behind-the-scenes documentary Vivian Kubrick (Stanley Kubrick’s 17-years old daughter) shot on set:
Groupon is clearly the poster boy of a new era of commerce and one of the fastest growing companies of all times. As rumors of their $30B IPO hype started spreading around the interwebs, I wanted to spend a couple of paragraphs on the losers.
Wait, are there losers here? Isn’t Groupon a win-win situation? A win for customers who pay 50% less, as well as a win for the local service providers who gain numerous new customers over night?
Groupon is expected to generate revenues of more than $2.5B in 2011, and assuming Groupon did not single-handedly expand the economy, these revenues represent a budget shift and had to come at the expense of someone.
So, who are the losers here?
The biggest loser is the media industry, and specifically, the printed media industry. Historically, local businesses used local print media to advertise their services: ads in a local newspapers and magazines, signage, handouts, direct mail and coupons. Local businesses have also been experimenting with online advertisements, especially within locale-focused websites such as Yelp and craigslist, a trend that will continue to grow. Groupon’s model, however, promises an exciting new model – an inflow of customers at a known variable cost (50% discount + Groupon’s fee), with no fixed costs and literally no risk.
No need anymore to delve into complex mathematics of conversion, especially since most of the advertising opportunities of local businesses are offline and do not allow for easy measurement of effectiveness and ROI. So, once Groupon allows local businesses to enjoy a stream of incoming new customers, they should focus their attention on retention and repeat customers vs. spending hard money on additional media exposure.
(Source: Yipit)
The second loser is small businesses. How can I claim that after the previous paragraph? Well, if you are the only player in the game, Groupon is great for you. But the problem with these deep discount deals is that your competitors use the same mechanism to attract your customers to their businesses. Let’s suppose you are a masseuse, and that a massage in your area costs $80 / hour. Once your service is up at Groupon, you will receive a bunch of new customers who paid $40 for a $80 service. It’s a great value indeed. Groupon will keep their share, and you end up receiving approx. $20 per massage. Not a lot of money, but you would think to yourself, ‘hey, I am getting paid AND I acquired a happy new customer’. The problem is that within some industries, customer loyalty is very price sensitive (Yipit estimates consumer retention at merely 19%). Once your customers see a 50% massage discount for another spa in town – they may feel that paying a full $80 for a massage is too pricey. This lowers the perceived value of your services, and will eventually lead to a price reduction across your industry. [Update 6/10/11: Techcrunch wrote an interesting article titled Groupon Was "The Single Worst Decision I made as a Business Owner"]
The third loser is us. The Groupon experience pushes us often to make purchase of unnecessary goods and services, using the same technique savvy sales people will apply on you at the store: you must buy now! It’s a one-time deal and 50 people already purchased it! Are you really going to miss up on that great opportunity?
So, we succumb to fake social pressure created by a smart user interface, spend money and collect coupons for services we may end up never using (Various sources cite average coupon redemption rate at ~75%; Quore has a good thread with redemption data points).
Finally, the local and global economies are taking a hit as well. The success of local businesses (including local print media) is key for a successful, balanced economy. When revenues shift from a large number of local businesses into a few mega-large market makers (Groupon, Google, etc.), economies lose their equilibrium. Perfect markets are great for economy text books but are horrible for local economies.
Do not get me wrong however: I am really excited (and jealous) of Groupon’s success. It’s exciting to see how companies emerge from an experimental idea to global market makers and shakers. If I only had the chance to invest in their first round of financing, I would have had someone else write this blog post on my behalf while I’m visiting the space station. In the meanwhile, I’ll have to wait for the right coupon. 50% off a $20 Million trip is quite a discount, isn’t it?
Forget safety.
Live where you fear to live.
Destroy your reputation.
Be notorious.- Rumi
This book is cheerfully dedicated to those greatest and most heroic of all human endeavors, WAR and WARFARE; may they never cease to give us the pleasure, excitement and adrenal stimulation that we need, or provide us with the heroes, the presidents and leaders, the monuments and museums which we erect to them in the name of PEACE.
- James Jones, The Thin Red Line
In memory of fellow swimmer Gal Rodovsky, who fell in a 1997 Israeli Navy Commando raid on Hezbollah strongholds
Once again, Google Trends shows what the world really cares about. While Gaddafi is leading the news reference volume with about 42,000 Google News articles in the past week, Charlie Sheen (24,000 Google News mentions) clearly made it clear that distressed celebrities are far more relevant to our every day lives. What is a nation fighting for democracy or the rising prices of oil compared to the faith of the leading actor of the masterpiece “Two and a half men”?
It seems as if only the Germans care more about Gaddafi. So ridiculous, when was his last TV hit anyway? Nothing since Pan Am in 1988 last time I checked.
So, for anyone interested in the important stuff that matters, a must-see Good Morning America exclusive interview can be seen here (4.2M views; unfortunately, embedding was disabled), and the really-important piece “Charlie Sheen Drug Test Results Revealed Live on ‘GMA’” here.
Here’s the dub version (2.5M views):
And I’ll end with a personal note: Even if you OD Charlie or get kidnapped by aliens, I will always remember how you made me laugh in “Hot Shots”, one of the funniest movies EVER!
I watched The Straight Story again today (David Lynch, 1999; starring the unforgettable Richard Farnsworth), and it moved me even more than the previous times I watched it. I think I am getting more sentimental as I get older. Angelo Badalamenti‘s soundtrack is absolutely beautiful, and Iowa has never looked prettier on film.
I’ll turn 34 in a couple of weeks weeks, and it isn’t easy. I only got a couple more years of childhood left…
Although I recommended watching it on a big screen in HD, for some mysterious reason it can also be watched on Youtube here.
Around a hundred years ago, in January 2007, we realized the potential of leveraging your social graph for improving search relevancy. Back then, Twitter was an unknown product called twttr (or as Michael Arrington put it: “How do their shareholders feel about side projects like Twttr when their primary product line is, besides the excellent design, a total snoozer?”), MySpace was the gorilla with a 100M users and Facebook was just starting to gain real momentum with about 20M users.
Indexing the social graph was not an easy task – Myspace users were mainly using nicknames, Facebook was still pretty small (and kept their social graph private), LinkedIn was a good source for implicit networks (their graph was also private) and Flickr was a good source of images but had very poor profile information. In short – it was a tough job finding the content which you and your friends shared online, and we had to use a lot of creative tricks to build our indices.
Fast forward to 2011, Delver is part of the Sears Holdings family, and Google is moving one step closer to Delver’s original social search vision. Their short video below resembles Delver’s pitch so much (they even use similar examples), that I went looking for the slides I presented to Google’s social team back in 2008 in Mountain View. I couldn’t find them, but I did find an old Delver presentation from 2008.
Google’s Social Search Update:
Delver product screenshot (Google’s previous version of Social Search looked pretty much like that. I wonder if it’s a result of a meeting we held with Google’s social search team back in 2008…)
An explanation of why social search is the future:
(I referred to tweets and Facebook updates as ‘micro contributions’)
‘The Problem’ slide (I remember using it because it looks very professional with all the colors and logos):
The Future:
And, finally, market landscape:
Ah, these were the days 
I woke up exhausted today, and it’s not because of yesterday 5-mile run or the pains from my fractured rib (stupid late-night sledging in Austria last week).
I woke up exhausted because I spent the entire night reading Cormac McCarthy’s masterpiece, “The Road“. I simply couldn’t put the book away. Then it became part of my dreams, or rather, I became part of the road.
I was 9 when I first watched The Terminator, and 14 when The Terminator II was released. There is one scene that keeps haunting me until today: Sarah Conor’s Nuclear Nightmare.
“The Road” has instantly become a pillar in the apocalyptical realms of my imagination and fears.
Read it and cherish the bloom of flowers and the sound of your loved ones laughter.
Youtube phenomena and uber-cool kid Keenan Cahil helps David Guetta promote his new mix album.
Video posted three days ago (January 24), got a great initial push by appearing on Youtube’s homepage, is already at 4.3M views and growing at 2M views a day.
It was shared on Facebook already 398,000 times.
In general, I recommend playing a bit with Youtube analytics on videos you like. They embed lots of interesting data that is fun to play around with.
I plan on traveling to Japan next year, and I must get in really good shape. According to Google’s directions, soon after reaching Seattle, I have to Kayak about 6,000 miles before entering Japan.
I hope won’t get stuck in Hawaiian traffic 2,700 miles into my trip. I heard Highway 83 in Honolulu gets busy during rush hour.
Thanks Roey for the link.
