Groupon throws Zynga a Shovel. Facebook Gets its Affairs in Order

soldiers firing a shovel out of a rocket launcher

In our last post we wrote about how Groupon had managed to wipe off about $6 billion from it’s stock. That loss is now currently at $6.5 billion (On Monday it was $7 billion but Tuesday some small gains were made). Groupon (GRPN) is not the only one in trouble however. It is bookended by two other failing IPO’s – music discovery service Pandora and the lesser known Angie’s List (ANGI). Pandora’s stock closed at $10.52 yesterday, down 47.5% from a high of $20.04 on 1st July. Angie’s List stock closed at $11.80 yesterday, down 28% from a high of $16.26 at close of it’s first day only 8 days ago. Although neither two have bludgeoned the market cap quite like Groupon has, the trend is becoming more apparent.

Now that Groupon is public it is also going to have to be a little bit more open about its losses. It will have to file with the SEC a Form 10-Q quarterly & Form 10-K at the end of the fiscal year. This is going to offer a lot of insight for it’s competitors as well as for traders. Groupon has dug it’s grave quite nicely, but soon it will be time to pass the shovel-shaped baton and make room for the next questionable company eager to go public – Zynga.

Zynga has been in the news a lot lately whether it be for changes at the top or just generally being assholes. However, unlike Groupon they have reported making a profit of $121 million since 2010. But, just like Groupon their costs are huge if you consider that they made $828.9 million in the first 9 months of this year alone. Still, a profit’s a profit and in this modern era of ‘growth before profitability’ it’s a better sign than one could expect. As Zynga heads out on an IPO roadshow they will be fighting a war on both fronts – dispelling investor anxiety caused by Groupon & convincing talent within the company that they should stay after the company has gone public.

Zynga are going to be the ones to watch because the mothership that is Facebook will be looking to go public next year also. With an evaluation of over $100 billion ($10 billion in IPO) and Zynga being a major contributor to Facebook’s revenue there is a lot riding on their performance. Facebook certainly will not want to befall the same fate as IPOs of startup’s past. But you may be thinking, “But it’s Facebook, why wouldn’t i invest?” As compelling an argument as that is Debra Borchardt over at The Street warns of pitfalls belying the rookie traders. In short, if you’re going to buy on the first day then sell on the first day too otherwise you are better off waiting it out until the price drops. There is a clear rise and fall trend.

Facebook could be the company to quash rumours of ‘another bubble’ if it does well. But are the companies really the ones to blame? What on earth could have driven people to buy and hold onto Groupon shares after the 1st day? What if the majority of investors ignored the hype and looked at the facts and simply refused to buy? The price would not have soared so high and the losses would have been much smaller with less fingers burnt. I rarely give Groupon any credit but they did a great job of swindling billions of dollars out of people stupid enough to hand over the money. Something akin to robbing a bank with a banana.

If selling time shares on the Titanic is a real strategy then it’s a good time to own some stock in a startup. For eager beaver traders, maybe they’d be better off sending a million quid the KLF’s way. Lets face it, that would probably offer a better ROI!


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Piracy is the Product of Supply Ignoring Demand

You wouldn't download a bear


  • Piracy is the product of supply ignoring demand whereby people demand an alternative to what is currently being supplied and supply does not react
  • Entertainment industries must learn to iterate more to better match demand
  • People are willing to pay for things they really want provided price is within their parameters of expectation
  • Piracy is inevitable, Piracy is soluble
  • Supply must be cheaper, faster & more secure
  • Piracy is a positive change agent for consumers & new businesses



“Piracy is the Product of Supply Ignoring Demand” is a statement i made on twitter leading up to the SOPA blackouts. The common response was ‘I disagree’. The reason for this response is because most people just see piracy as a bad thing that people are willing to participate in whether there is supply or not. This therefore presumes that most people are inherently dishonest. I find that quite hard to believe. But we are very good at making our own paradigms for what is acceptable whether it be taking stationary from the office or downloading a movie. Here is the paradigm i work within when downloading content for free:

  • Movie: Content is foreign and unavailable to purchase
  • Movie: Content is foreign and the cost to purchase + delivery do not meet my needs
  • Movie: Why would i pay for something if i do not know whether it’s worth buying?* I am not a gambling man
  • Music: I have already purchased the content on another medium (CD, Vinyl, Tape)

I don’t want too dig deep down into the moral, ethical, psychological & legal mines for this post but i am sure many of you out there who are ‘against’ the general idea of piracy have similar ‘rules of thumb’ that help you dictate whether you think something is right/wrong/phone a friend. In fact you definitely will because these ‘rules of thumb’ are commonplace in all aspects of our lives.

Whether they are right or wrong really is irrelevant. They exist and they are common.

So this is what i demand and if you can’t meet it i will find an alternative route much like a river forms by cutting through the weaker parts of terra firma. The obvious response then is to ‘react’ and consider my demands and how best you can appropriately meet them right? Customer is always right?


This is not how the entertainment industry works. When they sense change they walk to the windows of their towers and cast out their winged monkeys to hunt down those who stand against them. Fly my beauties FLY! Muahahaha. It’s this arrogance that gets you killed.

Piracy listens to me, or at least others with similar desires listen to me & we find alternative solutions. The entertainment industry in fact has piracy to thank for a lot of their current business models. PIRACY forced them to reconsider. It was a positive change agent and will continue to be one for the consumer and the industry. Without piracy there will be far less innovation. Just think about the amazing impact the VHS had, think about Napster! Now we also have Spotify & Netflix trying out legitimate versions of pirate models. Without Napster we’d probably still be buying CD’s or flashdrives for £1.50 a track in HMV!

I hope piracy continues

I hope businesses learn

I hope the consumer wins

& thus businesses win


SOPA: Birth of an American Terrorist

Video courtesy of Fight For The Future explaining concerns around PIPA

In Washington politicians have been breast-feeding a pair of monstrosities, becoming more hideous by the day like the picture of Dorian Gray. The cosmetically engineered face of Hollywood has been fooling itself for years that the same old business models aren’t broke and everything else needs to be fixed. But now it has seduced government like the Sirens of ye olde Greece.

Aversion to change is common in established and post-successful businesses but nothing stays the same forever. It’s evolution baby. Well, it would be if Hollywood wasn’t able to just walk up to Capital Hill and ask to relieve the environmental pressures bearing down on them. The beasts they are rearing to be unleashed on the world are SOPA (in the House of Representatives) and PIPA (in the Senate). These bills if passed into law would essentially give control of the internet to the entertainment industry and make all intermediaries liable for the content it’s user post. That’s the same as making car manufacturers liable for all accidents on the road, American Airlines responsible for the twin towers tragedy and who knows, maybe they would finally pin down Marilyn Manson for students walking into schools with guns and killing their classmates. But what that’s just skipping over the problem.

Piracy is a problem. For all nations. But people who want pirated material will get pirated material regardless (like all ‘crimes’). Even if you destroyed all the money in the world people would still figure out a way to do fraud. Not everyone wants to play by the rules. But you can’t change them so change yourself. Boohoo, it might not seem fair but grow up and get on with it. It’s what everyone else has to do to survive and who knows, you may come off all the better for it. To try to change the rules to suit only yourself at the expense of others is nothing short of terrorism. In evolution you need change agents and it’s the same in business whether it’s piracy (bad) or new market opportunities (good).

But if i live in Britain why should i care about what goes on in the States of America?

Well, If you’re British you’re constantly reminded of the Americanisation of the internet. In-browser spell checking tells you to drop ‘u’s after ‘o’s and put zeds (like the rapper Jay – Zed) where ‘s’s should be. Nowhere is life more globalised than on the internet with the majority of services that i use (like this one) being American. Like all the electrons in the universe if you change one thing somewhere it affects everything else everywhere else. No matter where you are in the world you will undoubtedly be affected should SOPA and PIPA go through in their current state. If they do then don’t be surprised when run into your favourite website and blow it up.

But the worst thing of all is that by not being an American citizen i am relatively powerless to do anything. Although there is one thing that i can do:

Affect My Network.

I know there are American people that follow me on twitter (43.8% of my followers to be precise), i have American friends on Facebook and Path and some Americans even read this blog. I may be helpless to do anything directly but i am certainly trying as much as i can indirectly. This is especially important because the US has really exposed itself to be more like China than i first thought in that it is impossible to find very much coverage of SOPA or PIPA on the news networks because they are all in FAVOUR of the bills. So in essence they are censoring that information from the general public in the hope that they will pass and be able to gain more control. And when you’re voting for people like this to run the country you really need all the help you can get:


Scary Isn’t it.

I didn’t want to go into too great a detail about the contents of PIPA and SOPA because there are already so many great articles that have already been created. Instead i have created  a STOP SOPA page on this blog where i can host links to all the relevant articles i have found which i think will be useful. In addition i will also be joining in with the blackout of this blog along with reddit and any other companies that follow. Obviously this is not going to affect many people (our readership is not massive) but it is a gesture to show my support for stopping these bills from going through.

Remember, you might not think it now, but the internet is everyone’s responsibility so this is everyone’s problem.


VC’s in the Front Seat, VC’s in the Back Seat

This video is all kinds of cringe and awesome. There are some real awkward moments in the video and you’re not sure whether you think ‘hahaha’ or you just want to put your fist through your monitor. To Be Honest though, i LOVE crappy annoying internet memes and just look at all the companies in this video! It’s pretty ‘star’ studded.

So yes, this is for real, thank you First Round Capital for your contribution. I kind of don’t want to hear from any other investors or any companies for that matter unless they have an awesome crappy viral.

Sapient Nitro nearly had my respect for their terrible ‘Idea Engineer’ video but they deleted it under growing pressure from the internet on just how bad it was. Luckily the internet always wins and never forgets so here it is:

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