Thursday, April 26, 2012
Groupon Must Avoid Taking 'Stupid Risks,' CEO Says
Groupon was the fastest company ever to get to 1 billion dollars in revenue. Since its founding Groupon had gone through multiple VC rounds of funding and mostly recently had its IPO and now is a publicly traded company. But this rapid climb to become a publicly traded company has had its fair share of trouble. The two biggest missteps was the delaying the IPO because of financial leaks within the company and most recently they needed to restate there earnings, which is a huge blunder for the company. The challenges that Groupon faced in becoming a legitimate public company shows the difficulty of creating a stock market with thousands of publicly traded company all need submit high level financial statements for the system to work. The challenges that Groupon faces reminds me of the Russian plan to make all of the government owned companies, public in a year and a half when the process should have years maybe even a decade.
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5 comments:
Groupon has been roundly criticized for their accounting issues in their attempts to go public, but I wonder if we should look on the bright side and appreciate how quickly misstatements and questionable accounting on the part of Groupon were discovered, causing a restatement. Although not immediate and ideal, we take it for granted that Groupon's mistakes were exposed, and in my view, this incident should encourage our faith in the current system rather than detract from it.
I agree with Emma, it is rare to see a company reveal their own mistakes. Most may find one but pray they don't get caught. They have recognized they slipped up and are taking responsibility for it. They are still a very young company but maybe it would have been best to take it a bit more slow so this never would have occurred. If they would have chosen this route they may never have gained the success they did. It could go either way.
The growth of Groupon is amazing. Although the discovery of the misstatement of Groupon’s financial statements was discouraging in some extent, it is much better to correct the statements now. The consequence/loss of the mistake therefore could be reduced to minimum. From another perspective, I agree that this expose has some positive effect as well; it indirectly gives us more faith in the current system. Put it differently, after the recent financial crisis, the current system is more regulated.
I personally like Groupon a lot. Its business model is attractive. The interactions between Groupon and its cooperation companies could bring it much financial issues. Since the valid period of coupon customs buy from Groupon is sometimes long.
I agree with some of the above posters. I think it is very reassuring that the company admitted to the problem and that they are trying to fix the issue and its consequences. I think that this model of business is certainly a fast growing one that will run into obstacles which is why it is important to be identify potential and actual issues.
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