Back in the day when deal sites were all the rage and Andrew Mason was still CEO of Groupon he would talk about "clones" all the time. Clones being competitors. It seemed he used the term in a derogatory manner that always struck me as odd.
In every large fast growing market I have been in, Internet service, email security, social media analytics, and online deals, the market is flooded with competitors. It's flooded with competitors that are pretty much the same sans positioning. It's the execution that wins.
Regardless Groupon is making some interesting moves. Groupon has changed it strategy of sending out daily emails for short-term running offers to building an e-commerce marketplace of longer-running deals that can be searched for on its website. This is a powerful move with great operating leverage. It is actually this exact same model that attracted me to Half Off Depot back in 2011. It was Half Off Depot's model. And it works.
So after my somewhat gushing Groupon earnings call summary, here's the other side of the coin. One of the things that CEO Eric Lefkofsky said during the call, and it has become a major talking point since, is that Groupon wants to become the first place shoppers turn to when they "want to buy anything, anywhere, any time."
They have a long way to go.
The first place I turn is Amazon. The second place is eBay. The third is a speciality store such as Apple, B&H, Nike, Tennis Express and the like. Groupon not so much. The fulfillment experience is lacking.
But this is perhaps more interesting. The place that I check last is Google. And what I do is search on the product name and the word coupon. My daughter told me to do so about three years ago when she was twelve. Seems that all the kids are doing it. An ingrained habit.
And more often than not I end up on RetailMeNot. Nearly every time I buy something on the Internet. Because of this behavior RetailMeNot is hot. They went public about a month ago (SALE) and the stock is up about 20% since then.
Where you end might be more important than where you start. And both of those behaviors seem a little cemented to me.
Disclosure: nCrowd, Inc. has an affiliate relationship with RetailMeNot, Inc.
On Wednesday Groupon (GRPN) announced their second quarter earnings. The stock market reacted quite favorably sending the stock up 22% in a single day. That is quite the dramatic recovery for a company with a pretty solid record of missteps with the financial community. This is why the stock is moving.
Groupon named co-interim chief Eric Lefkofsky as its permanent CEO and named the other interim chief, Ted Leonsis, as chairman. This greatly reduces uncertainty and adds stability.
Mr. Lefkofsky is quite proficient at messaging. He communicates in easy to understand phrases that investors and normal people understand.
In Groupon’s core North American market, sales rose 45% to $377.2 million,
This sales growth is being driven in part by a business model shift away from pushing deals to email subscribers toward becoming a marketplace where users can find deals when they want them. While Groupon has stopped using the word clone, they are in fact copying the nCrowd model (and I am pretty sure they are aware of us and understand the leverage of our model) of having longer term offers in an ecommerce store, which they call Deal Bank. Going from a daily deal to a deal marketplace is a huge change.
Mobile is also driving this growth with nearly 50% of sales coming from mobile. The financial markets are fond of mobile right now.
The company met or beat Wall Street expectations for the second quarter a row after several misses. In the tech world public company misses get punished greatly and exceeding expectations is well rewarded (this BTW is something that a good executive team can manage, indicating to the Street strong management is now in place.)
Groupon's stock is now up 126% YTD and almost 400% since it's low last fall. The company's market capitalization now stands at over $7 billion putting all those "you should have taken the $6 billion from Google" stories to bed for a while.
I expect Groupon to continue to show strong results in the second half of the year. It also seems to me that might be setting up to jettison their EMEA business into which they expanded to quickly.
Groupon is the big battleship in the huge local ecommerce ocean. And a rising tide lifts all boats. What is good for Groupon is good for nCrowd.
Nice article about the latest nCrowd deal. We have purchased substantially all of the assets of Spreebird from Local Corporation. Local, a public company, had to file the transaction with the SEC if anyone wants to see the gory details. At one point the entire asset purchase agreement was up there but someone seems to have taken it down (Edgar, by the way is an old friend of mine and a great competitive research resource).
nCrowd continues to execute on its rollup strategy and at an accelerating pace. Being one of the few buyers sure does help.
The Spreebird transaction comes on top of CrowdSavings and Tippr purchases earlier this year. The value of this deal is in the subscriber relationships. We have already migrated the Spreebird customers/merchants/subscribers onto the nCrowd platform, a process we can do quite rapidly. Like in a few days.
At this point we are the proven market consolidator.
So two of the largest advertising giants, Omnicom and Publicis are getting together to form a company with $23 billion in revenue to fight off the inroads from digital competition. Might be a losing battle, data based marketing is growing fast.
A long time ago I was involved with a merger of equals. EarthLink and MindSpring. A guy named Stan worked for me at MindSpring. He led our retail distribution effort. Shortly after the deal closed Stan got on a plane to meet his EarthLink counterpart. After his meeting he called me from LAX. "Lance, I'm outta here, I resign." Stan then proceeded to tell me this, and I am of course paraphrasing.
"I was involved with the merger of Babbage's Inc. and Software Etc. Never again. One merger of equals is all anyone should go through in their lifetime. What you guys should do is go to a football stadium, get all the EarthLink employees on one side and all the MindSpring employees on the other side, and get your leaders at the center of the field. Flip a coin. Winners stay and run the company, losers go home."
Stan quit. Could not talk him out of it.
As for my experience in a merger of equals I have to say that perhaps Stan and The WSJ are right. Mergers of equals have a unique set of challenges. In my mind it's better when one company acquires the other. At least that way everyone knows who is in charge.
That post the other day about room to grow in the mobile coupon space. From the Groupon Q1 earnings call this is what it looks like today for them, one of the leaders in local couponing. Sales via mobile have risen to 45%. There's gold in them devices.
Not too long ago Wired ran an article on five Google products at risk. One of these at risk products was Google Offers. I think Wired was right. Google seems to be heading in another direction.
That direction is Google Local. Google is moving to a retailer self-service model. Not really surprising. I never really thought that Google liked the high touch sales effort of the deal marketplace model.
Google Local is distributing offers though Google Maps for Android. Within Google Places merchants can set their own promotional offers, set a promotional period, and cap the number of promotions that consumers can use. They have adopted a ScoutMob like "Use Now" button. Currently there is no cost to merchants to place a promotion during the "trial" period, which if it is anything like betas at Google could go on for a long, long time.
It will be interesting to see how this pivot works for them.
All Things D broke the news this morning that nCrowd has purchased the assets of Tippr out of Seattle.
It is the largest acquisition that we have made to date. The purchase includes the Tippr and Groupalicious web properties, a subscriber base of more than one million consumers, and some intellectual property rights.
This is nCrowd's 20th acquisition. It pretty much solidifies our position as the number three participant in the local offers market as we continue to evolve away from the deal space. Our operating footprint is expanding from being focused on the Southern/Plains regions to a national footprint where we will be able to provide merchants online customer acquisition services from New York to Honolulu.
At the moment we are executing well on the rollup strategy that we devised in the fall of 2011.
One of the top five classes I have ever taken was a shortened version of a negotiation course during a Mergers and Acquisitions executive education program at The Wharton School. The class was led by Stuart Diamond. It was darn good.
It has been over ten years since I have taken that class. But there is one thing that I will always remember from it. If you can't seem to get anywhere in a negotiation take an extreme position that any rational person would agree to. Get to that first yes.
An example that Mr. Diamond used was around the Israel-Palestine conflict. Pretty tough nut. Those folks can't seem to agree on anything. In such a situation you have to take an extreme position to get agreement.
"Can we agree that it is wrong to kill babies." Well yeah. From there take incremental steps, "How about toddlers?" "First graders?" "Teenagers?" until you meet a point of resistance. At that point get them to tell you more so you can address the underlying concern. Ask why.
Great tactic that generally works. Take an extreme position, it will often times lead to a deal.
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