Groupon’s Q2 Earnings Notes

Posted on August 9, 2013

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.

August 9, 2013 | Comments | Tweet | Posted in Deals, E-Commerce, nCrowd, Stocks

Access To Capital Atlanta

Posted on August 8, 2013

On Wednesday August 14 I am going to be participating at Access to Capital put on by my friends over at Dun & Bradstreet Credibility Corp.

It’s a much broader than your typical technology startup funding event. It will explore alternative and traditional lending options, angel investments, crowdfunding, private equity and more.

I have the honor of being on a panel, Startups Start Here, moderated by Daryn Kagan of CNN fame. I will be joined by a great group including Daryl Dollinger, Co-Founder of Raving Brands and President of Big Game Brands; Andrew Linder, Partner at Frontier Capital; Sig Mosley of Flashpoint Ventures/Imlay Investments/Mosely Ventures; David Rudolph, Founder and CEO at PlayOn! Sports; Michael Tavani, Co-Founder & Head of Product at Scoutmob; and Mark Wilson, President & CEO at e-Verifile.

Quite the panel.

If you are seeking startup, working, or growth capital this will be a nice event to learn about various local sources of captial and find out which are right for your business. It is a bargin at $30 and friends of FoG can get a $10 discount (the discount code is ATCLW).

I hope to see you there.

August 8, 2013 | Comments | Tweet | Posted in Angels, Networking, Presentations, Startups, Venture Capital

Leading With Values

Posted on August 5, 2013

Not too long ago I was searching around the Internet for the text of MindSpring’s Core Values and Beliefs. If you do that and include the guy, Charles Brewer, who wrote them in the search string you are sure to come across an article by Kyle Porter. Charles Brewer & the CV&B’s, which to be frank I found somewhat shocking. Some guy, whom I happen to know, who was most likely in elementary school when Charles wrote the CV&B’s, extolling their virtues and asking everyone to read a speech cause it was so enlightening it gave him chills.

And I am sharing the text of the speech as Kyle requested.

Charles Brewer Southern Institute Speech – Leading with Values

If you take the time to read the speech you may find it worthwhile. As someone who was there and heard this stuff and preached this stuff I have a unique perspective. An insider view. And I am going to tell you the most important sentence in the entire doc is on page four. It is a single word.

Authenticity!

That is really it.

To quote from the original MindSpring business plan:

One other factor we need to mention is not exactly a core value or belief, but is a necessary ingredient for our leadership philosophy to be effective. That final all important ingredient is authenticity. If the leaders of the company do not practice what they preach, and if they do not truly in their hearts believe those things which they profess to be important, they will be ineffective. The Core Values and Beliefs will ring hollow, and will become an object of ridicule rather than a source of guidance and motivation. People have incredibly accurate bullshit meters. A false attempt at values based leadership is doomed to horrible failure.

Implementing a core values approach to business requires three things. Communicating the values, selecting people who share the values, and building the values into the structure of the organization. This requires authentic managment commitment. And that comes from the CEO.

And implementing a core values management approach starts at the beginning of a venture. And that comes from the CEO as well. Charles actually came up with the CV&B’s before he started MindSpring. He just happened to stumble across the concept of offering Internet service when he had an issue getting online to research business concepts to apply the CV&B’s.

To lead with values you have to start early and and you have to be authentic. You can build a nice company without those things. You just can’t expect it to be purposefully values based and the end result most likely is a culture that was not intended.

August 5, 2013 | Comments | Tweet | Posted in Entrepreneurship, Management

The Best Advisor You Can Have

Posted on August 2, 2013

As a guy that spent five years getting paid to dole out advice to startup companies I know good advice when I see it. And Fred nails it again.

All too often during my time at ATDC I would see entrepreneurs go from advisors, fellow entrepreneurs, mentors, pitch practices, potential investors, and VCs (more often than not not potential investors) and outline their businesses. And getting a lot of feedback. And that feedback was often conflicting based on the listener's personal experience and what they would do if they were you. Entrepreneurs would often come to me with this conflicting advice and a pretty simple question. Something along the lines of "what should I do?" or "what do you think?"

My answer was also a question. "What are you hearing from your customers and prospects?" That is what really matters.

The footnotes version of Fred's advice.

Keep a list of feedback and look at it over time to identify emergent themes that you might want to act on.
Give all feedback a bias discount.
Listen to the market, not advisors/mentors/investors.

Mr. Market is the best advisor. It's a great quote from a VC.

August 2, 2013 | Comments | Tweet | Posted in Entrepreneurship

nCrowd Captures Spreebird

Posted on July 31, 2013

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.

July 31, 2013 | Comments | Tweet | Posted in Deals, nCrowd

Mergers of Equals

Posted on July 29, 2013

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.

But beyond that the deal is being billed as a "merger of equals" for a variety of reasons. The Wall Street Journal has a nice take on how merger of equals are a tough balancing act. True that.

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.

July 29, 2013 | Comments | Tweet | Posted in Business, Current Affairs, Deals, Management

Immersion

Posted on July 23, 2013

Interesting little non dust up highlighting the Valley's fish bowl superiority complex and the South's beaten in a big war a long time ago inferiority complex.

My take. At the end of the day costs do matter. Well not really the end of the day, but around the time you get married, have a kid or two, and enter middle adulthood. Quality of life issues. That is the argument of all places non SV.

Costs aside, I have a long held belief that immersion is critically important. This is based on my full-time two year business school experience. If you take a moment and suspend the thought that MBA's are the scourge of startup society, and some with good reason, my point is being fully immersed was part of the learning. A big, big part. At the end of the day this is the argument the pro SV camp is making. And it is valid. To achieve immersion you have to have density and no where is the startup density greater than Northern California.

So the question becomes is it possible to create a dense immersive startup community this side of the Heyward Fault?

Maybe. The jury is still out. Austin, Boulder, and NYC all seem to be making great strides. And going back to my B-School experience, is there really a big difference between Columbia and Indiana other than one program costs twice as much as the other? I don't think so. The same holds true for startup markets. If it is at least partially about ROI then the best may not be that when you take costs into consideration.

July 23, 2013 | Comments | Tweet | Posted in Entrepreneurship, Startups

Don’t Cheat On Your Name

Posted on July 22, 2013

So the other day I got into a little conversation on Twitter with Johnson Cook and a few others about the branding of the Atlanta Tech Village. Here is
part of the exchange.

It was somewhat joking banter but there is also an important underlying marketing principle that is worth further discussion.

One of the most important things a small company can do is be consistent with their marketing message. A core element of messaging is your company’s brand name.

While Knox is a smart guy for the people that work at Atlanta Tech Village to refer to it as ATV is just not a very good practice. And to be frank they are actually pretty good about not doing so though if you roam the halls you will see some signs with ATV this or ATV that. ATV, is it a vehicle or a venture firm or an accelerator? No one should invite the confusion.

I am so adamant matter about about I refuse to use the term HOD to refer to Half Off Depot even in internal communications. Those internal communications become a habit and make their way into the outside world. Every time I refer to Half Off Depot I type those nine extra characters.

Don’t cheat on your name. Find a good one and say it and type it the same way every time. If it is too long to completely say or type and you find yourself wanting to shorten it to acronym in your communications you have the wrong name.

July 22, 2013 | Comments | Tweet | Posted in Marketing

Atlanta GigaOm Mobility Meetup

Posted on July 18, 2013

Last night I braved the weather and traffic to attend the GigaOm Mobility Meetup at Opera (partially owned by tech entreprenuer Dave Williams). Maybe about a third or so of the 600 registered attendees managed to make the event and those that decided to stay dry missed a good one.

While the show started late and I had to jet early for a rendezvous with my SO, there was some good networking and high quality discussion from the stage.

The thing about the event that stood out to me is that there were three tech startup accelerators supporting the event and in the crowd. ATDC, Atlanta Tech Village and Hypepotamus. That is about two more then you would have seen two years ago. Progress.

Atlanta has a strong mobile technology cluster and GigaOm a big focus on the sector. Despite the weather the event was a winner and I hope to see our friends from SF stay commited to the hosting a series of these events.

July 18, 2013 | Comments | Tweet | Posted in Accelerators, atdc, Mobile, Networking