Groupon filed for IPO - now we know the real deal

Groupon just did file for IPO which helps us to understand how well Groupon does, and unfortunately I see a lot of things which let me believe that Groupon will not exist anymore in 5 years.
Groupon lost in 2010 $413 million and in the first quarter of this year $114 million. These are impressive numbers but of course not positive impressive. Therefore Groupon is talking about Adjusted CSOI (adjusted consolidated segment operating income). In accounting it is called non-GAAP (generally accepted accounting principles).
In 2010 and the first quarter of 2011, Groupon said its Adjusted CSOI was $60.6 million and $81.6 million, respectively. Sounds much better, right?
But we all remember as well that Groupon got $950 million investment in January 2011. In March Groupon had only $209 million in cash. Where did all the money go?

The company’s IPO filing spells that out: most of the money went to previous investors and c-level employees.

The details: Groupon raised a total of $946 million in two funding rounds last winter. It kept $136 million of it help run the money-losing company. The remaining $810 million was paid out, via stock purchases, to CEO Andrew Mason and some of his backers, including Eric Lefkofsky, and, notably, the Samwer brothers, who sold their CityDeal company to Groupon in 2010.

Looking at the filing we can see that Groupon made in 2010 $713 million revenue with a Gross profit of $280 million and did spend $263 million in Marketing. In the first three months of 2011 (not audited) they made a revenue of $644 million and did spend $208 million in marketing. This let us expect that Groupon will make $2.5 billion revenue in 2011 with $800 million spend in marketing and a lost of almost $500 million. The IPO is looking to get $750 million in. Which would be mostly gone for compensating the lost.

Groupon is only three years old and did grow from $30 million in the second year to $713 million in the third year. This is a growth rate of over 2376%.

However Groupon is making big lost each year, because of the aggressive marketing. The marketing helps Groupon to grow so fast and is much bigger than living social or other similar services. Not always the best system wins, but the system which spends the most money.

One thing makes me sad with Groupon and is for me an early indicator that Groupons founders and c-level exit strategy is the IPO. I don't see any of them really interested to run Groupon as a company for 100 years. If you look at the lost the company made but the top level management got millions in stocks which is basically fine for the work they do for the company. But at the same time they got a lot of money from the $950 million in investment even, if the company lost a lot of money. Mr Lefkofsky made alone through the $950 million deal $320 million in cash.









I would have expected that he would not take the cash and instead grows his shares and keep the cash in the company. Taking so much cash by knowing that the company is still losing almost a billion is not a good sign. If you look at his career, then you can see he is a person who invest in a company, help the company to get much more funding and then takes a lot of money out with no feelings how the company will do. The companies will eventual file for bankruptcy but he will be a billionaire.

But we should not forget he is only 40 and has already brought two companies successful public and is net worth $800 million.

Echo Global Logistic, Inc and InnerWorkings



And if I want invest money again, I would follow what he Mr. Lefkofsky is doing, I think he has a good feeling what is going on. A very smart guy.

Here is the complete filing paper for the IPO:
PDF file
page 93ff is very interesting in terms of compensation.

Who is Mr. Lefkofsky?
Wikipedia:
Lefkofsky began his career selling carpet at the University of Michigan. After law school, in 1993, he and a college friend, Brad Keywell, borrowed money from relatives to buy an apparel company in Madison, Wisconsin named Brandon Apparel.
In 1999, Lefkofsky and Keywell created an early Internet company called Starbelly that specialized in promotional products. Starbelly experienced rapid “pre-bubble” Internet growth and was sold to Halo Industries in January, 2000.
After Starbelly, Lefkofsky, along with a core team of investors and entrepreneurs, founded InnerWorkings in the fall of 2001. InnerWorkings provided print procurement services for mid-sized companies and achieved solid year-over-year growth. In August, 2006, InnerWorkings had a successful initial public offering in the U.S. stock market (nasdaq: INWK). Lefkofsky is on the board of directors of InnerWorkings.
In February 2005, Lefkofsky and Keywell created a freight logistics company called Echo Global Logistics. Echo attracted series D financing from New Enterprise Associates (NEA), one of the largest technology investors in the country, in June 2006. Echo Global Logistics went public on the NASDAQ under the symbol 'ECHO' and is now successfully being traded.
In June 2006, Lefkofsky and Keywell founded MediaBank, a media-buying technology company. MediaBank provides advertising buyers with planning, buying, accounting and analysis software. In June, 2007, MediaBank acquired Datatech, one of the leading media planning and procurement platforms in the advertising industry. In July, 2007, New Enterprise Associates invested in MediaBank.
In January 2007, Lefkofsky co-founded and provided $1,000,000 in funding for ThePoint.com, an online collective action website started by Andrew Mason. New Enterprise Associates lead an early stage investment round in ThePoint. In late 2008, The Point changed its name to Groupon.com. In October 2009, Groupon raised $30 million from Accel Partners and New Enterprise Associates. In April 2010, Digital Sky Technology and Battery Ventures invested $135 million in Groupon at a valuation of $1.35 billion. In August 2010, Forbes reported that Groupon is the fastest growing company in history.
In February 2010, Lefkokfsky and Keywell announced a new venture firm called "lightbank" that plans to develop new companies in the Chicago area.

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2012 the year of NFC?

Everybody is talking right now about NFC (near communication frequency) and surely we are going to see more NFC applications. However the question is how useful NFC is. We need to know that optimal NFC radius is 4cm (max 20 cm). NFC requires an initiator and a target. The target can be passive like RFID which gets it's power from the magnet field of the initiator or can be active being an initiator as well. The latter one allows more distance between the devices and better communication in both direction. NFC is many times compared with bluetooth however the data frequency is much lower for NFC and the transmitting radius today much shorter, however NFC needs much less power and there is no need to pair the devices like we need to do with Bluetooth. We might see a combination of Bluetooth and NFC. You take your headset, hold it against the phone. It is then automatically paired.

We already know that in Europe NFC is very common for payments in public transportation or credit card payments.

Most used applications around the world:
Public transportation
Ticketing
Mobile payment
Building entrance
Guided shopping


America is not ready yet but Google and other companies are working hard to get NFC running. The next Google and RIM phone will have NFC embedded. As well it is to expect that Microsoft and Apple phones will have NFC. The question is for what NFC can be good besides payment. Given the short transmit radius there are not many applications for NFC. But NFC can replace car keys, house keys, security cards or computer passwords.

However NFC is easier to hack but of course the attack needs to be done so close to the device that you would literally look the attacker into the eyes.

Because NFC devices usually include ISO/IEC 14443 protocols, the relay attacks described are also feasible on NFC. For this attack the adversary has to forward the request of the reader to the victim and relay back its answer to the reader in real time, in order to carry out a task pretending to be the owner of the victim’s smart card.

If the electronically wallet from Google gets main stream, then pocket thieves will get a new definition. It is not anymore necessary to steal somebodies wallet out of the pocket.

I read a lot things that NFC would be good for museums. You see an art, you touch a smart paper and you would see info to the art on your mobile device. This is not a practical idea. Imagine hundred people want to touch same spot at the same time.

Another approach is Apple testing. They are working on a patent for privacy security via infrared. Interesting is that Apple iPhone does not have infrared. They have been the first not to use it anymore on their devices.
Now the patent they filed talks about infrared sensors and not signal sender which is different. With the patent I can see many interesting apps to build. Imagine you go into the museum and as soon you are in reach of a painting the phone would display information to the painting. Or going into a store will send you info about discounts. However infrared is only one way communication, but it could trigger a software on your phone which then sends data over internet to the store.

NFC has a very short transmitting radius but can connect very fast and can send bidirectional information. Infrared has a very big radius but has only one way communication.

It is like your TV remote. You need to be in view with the TV and the TV can't send you data back to your remote.

if you are looking into ideas with NFC then keep the limit of data transfer speed in mind and that close proximity the devices need. But even with this limitations there are things which would work:
- Phone as car keys and starter
- kids toys. When they come close they react to each other.
- Kids security. Kids wearing an armband and as soon they come to close to the oven or leaving the house the parents will be informed.
- shopping cart in the brick an mortal store. You put your items in the shopping cart and you can instantly see total amount. At checkout the cashier just look at the display of the cart. No need to scan the items again.

Here is the article I found about Apple patent at the escapist:



Piracy is a bad thing. We all know that, right? Right? But I'm also not a big fan of corporations taking away the rights of consumers to use their products in ways the designers might not have intended. Apple is patenting technology which will add the ability for future iterations of the iPhone to automatically detect whether the user is capturing video of a musical performance or a film presentation and disable the camera.

The technology involved is somewhat ingenious. Movie theaters, for example, already use infrared signals broadcasting to individual hearing-aid devices and Apple intends for future iPhones to detect these signals, clueing the device into the fact that its user is watching a film. If you decide to take out your iPhone and perhaps record the X-Men: First Class this weekend, and then possibly upload that file for everyone to see, then you are violating IP law. The proposed technology would prevent you from ever transferring the movie into bits stored on your phone.

The same goes for music concerts, except that performers would have to start blasting infrared signals out into the audience for it to be effective. This I'm actually in favor of, because the amount of schmucks holding up an iPhone at concerts has got to be reduced somehow. What happened to actually enjoying the show? What's with all the freaking pictures, people?

Another, even wierder possibility is for the iPhone to automatically place a watermark over any image taken, instead of disabling photographs altogether. So you might be able to snap a shot at that Lady Gaga show, but the URL to LadyGaga.com will be emblazoned all over it. Ugh.

Now, on the other hand, this tech could be used for good and not for evil, by allowing museums or other landmarks to blast infrared data to the iPhone so that you could get a description of the landscape or historical document you are seeing. Kind of like a digital tour guide without the dirty headset.


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First the floppy disk, then the CD drive - now the mouse?

If we look through the last 30 years, we can see how Apple was driving changes. Besides many changes and progressive ideas the most knowledgeable is the dismissing of the floppy disk.

Apple was the first mass-market computer manufacturer to drop the floppy drive with the release of the iMac in 1998. Five years later Dell removed floppy drives from its best-selling Dell Dimension range.

In 1984 the mouse (as an input device) got a lot of traction when Apple released the Apple Macintosh. This was the start of the mouse to get famous. There were other computers before like Lisa or Xerox Park which had a mouse but did not have such a success like the Macintosh.
26 years later Apple started selling the iPad which does not require a mouse. The iPad has a touchscreen which acts as input device.

Apple is selling magic pads desktop computers which is a multiple touch pad to replace the mouse.
We can clearly see the trend, that Apple wants to go away from the mouse and might in the future include the magic pad with their products instead of the mouse.

Already today, most of the Apple notebooks have a build in multiple touch pad which allows to work on the notebook better and faster than with a mouse. And of course all mobile devices have touch screens which function similar like the magic pad.
Apple were in the US the first one who did build smart phones with just a few buttons and no keyboard. The critics were big, but today there are more smart phones sold without keyboard than with it.

Apple started the trend and now Microsoft is following it like Google with Android did.
The video below demos Windows 8 which reminds very strong to Windows Mobile 7, but the most interesting part is that during the presentation no mouse was used.



All done with gestures. Microsoft is saying the OS will work with and without mouse, but when I look at gestures done to navigate through apps, images etc, then I strongly believe using a mouse will very difficult. On the other hand we would not only want to use touch screens, especially when you have two or three screens in front of you. It is like Steve Jobs said, that it is not a comfortable position to touch all the time a straight up screen.

I am pretty sure Microsoft will come with a similar device like the magic pad for their windows PCs.
Give it 4 more years, and most of the people are not using the classic mouse anymore. Input will be either over touch screen, pen tablets, magic pads or air gestures without touching anything.

I grew up with the mouse, and will miss it, but her end is near. In 12 years my son will find a mouse in our attic and will ask me what this is. Like my father asked me 25 years ago what this thing with the button and cable is. It was ahead of his technology knowledge. And it will be behind of my son's technology knowledge.

Every decade has it's term, like baby boomers etc. Maybe we will be know as the mouse movers.





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Flash on the iPad, there is an app for this - again

I am wondering why I am even writing about flash and iPad. Everybody knows there is no flash for the iPad, and there is no need neither in my opinion. I have the iPad now over a year and seldom thought I need flash. But I have as well to admit that I use my iPad different than my computer. I seldom surf websites, I mostly use my iPad for amazon, eBay, NYTimes (and other newspapers) and games. All these have iPad apps which I use. When I open websites then mostly they are without flash.

However there is one iPad app which claims to allow to play flash games and to surf on flash websites.

The app is iswifter and free for download on the app store (but not really free).

This is what the company says about them:
iSWiFTER is the industry's first cloud-based Flash game streaming service specifically built for mobile devices including smart phones and tablets, spanning mobile platforms such as Apple's iOS and Android. Low-cost servers in the cloud run abstraction software that intelligently converts browser-based Flash games to a form that is optimized for individual mobile devices, complete with multi-touch gesture support for game interaction, and accommodating different screen sizes. A client app connects to the gaming servers in the cloud to download streaming content live to the mobile device.


Here comes the reality. ISwifter is nothing more like a remote browsing through another computer like using LogMeIn to use your iPad to see your computer screen.
The difference is that you don't need to set up any connection you just start iswifter and after a while you see a web browser on your iPad.

ISwifter is free when you download it but only for 7 days after this it costs $2.99 for websites surfing with flash and $4.99 for flash games access.




The results of the browsing is poor. The resolution is just not good.

With iswifter:



With Safari on the iPad:




I could ignore that the image quality is not so good, but the speed and delay are horrible. And you can use the app only in landscape mode which is not my favorite display. I mostly hold it I'm portrait like a book.

I don't think any money is worth to spend on this app. I am not sure but I think the make of this paid app are the people who did before cloud browse which was free but not anymore available in the app store.

I believe the app will be soon not anymore available because the pay upgrade is against the Apple policy. It is not an in app payment which means Apple does not get a share.



It seems that some people still don't get that flash is not needed on the iPad. The consumer who is relying on flash games would either not buy an iPad or would move to games which are offered in the app store.

Moat of the websites have already an iPad friendly version (the big websites) which is flash free. Please save the money and use it for a newspaper or some music to download.

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You have a great idea, but then?

I am writing in this blog about a topic which I got many questions in the last few years.



I met a lot of people with great ideas and many people did email me about their ideas. But most of these people were not rich or have no connection to rich people.

Here is the dilemma. We all have many times good ideas of things the world could need, but we never get our idea to live or in a status which would make us rich.

And if we look at the big start ups or success stories then we can always see that these people are either born rich or have the right connections through school, life or family. We hear more about successful kids from Harvard, Stanford or Princeton than from local Kentucky state college. The reason is obvious, not only that these universities have best resources, the people going to these universities have already connections and some start capital. And another important part are that many alumni are now successful managers. It is almost a given circle of success.

However there are many start ups which have not these connections and start capital. But obviously for them it is harder to be very fast successful.

The question is, how can we get successful without connections and start capital.
I don't have a recipe but I have some tips.

I want to take as an example an idea I had once. When my wife was pregnant I went shopping for a mirror I can mount in the car to see my newborn. I did not find anything which worked well with SUVs. I ended up with an idea. First thing I went online to search the Internet if this product does already exist. I found one person who had an similar idea but was never successful. I took my time and filed for design patent. It was time intensive but did cost only $500, $220 for the filing and $300 for a deeper patent search (high level search is free).
Then I did build a prototype and used it in my car and gave some other prototypes to my friend. Everybody loved it. The next thing was, that I got in contact with big retailers like Walmart. They actually did want to buy a few thousand, but this was my problem. They dictated the price they want to pay. I had to produce the product in China, the only way for me to produce it cheap enough to make money.
However I would need to order at 20.000 units, that the Chinese company could produce it to a price I wanted.
I did not want to go into the risk to invest $700k and did not execute the production. I actually did find investors but they all did want half of the shares. I have been stupid and did not want to give so much shares away. Looking back, I think having 50% of 1 Million is better than having 100% of nothing.
I found somebody who did want to buy my pending patent for $15k. I almost sold it, but did not. At the end I, did not make any money, but I still have the pending patent and a happy child.

This was not the first time I had an idea, did build business plan, and did meet with business angels or investors and banks. I did it couple of times and learned a lot.

Here are my tips, if you have an idea but you don't trust anybody. Especially today with all these new things like NFC, QR, AR etc. There are tons of new things possible, we all could get rich, but at the same time everybody tries to steal from everybody. They all do it, it is almost like a game.

1. Ensure your idea is new
The internet is great, it gives us the possibility to search for everything. We can easily find if our idea already exist on the market and if not what comes close.

2. Believe in your idea
Believe and have no doubt. Spend most of your time for your idea. The idea shall be the center of your universe like a newborn.

3. File for patent
Before you talk with anybody about your idea, you need to have a security. If you have a pending patent, then you can sue people if they are using your patent.
If it is too complicated for you to do it yourself, then hire a patent firm. Costs will be mot likely $4,000 to $10,000 if you hire a firm.

4. Build a business plan
A business plan with executive summery is very important, if you want to talk to investors or business angels or banks.
The plan helps you to have the answers they will ask. Questions like, why is your Idea great, who is your target audience, how is the expected growth factor, what is the exit strategy. Palo Alto Software has the best tool for this: Business Plan Pro
I wrote over 30 business plans in my live, mostly as consultant and I used many times Business Plan Pro.

5. Have a NDA on hand when talking with others about your idea. Make sure the NDA empowers you to get a lot of money if the party will break the agreement.

6. Find capital if needed
I tend to prefer to business angels. They usually don't invest big $$ but they don't want neither high shares. And BA have usually good contacts to other investors when it comes to 2nd or 3rd investment round. For round one (which is mostly under $1 million) find 5 to 10 BA, family or outsiders. There are many websites dedicated to Business Angels. Banks don't take enough risks and ask you to have a lot of security. Big investors want to have too much control from the beginning.
Alternative you could use kickstarter.com or other similar websites to collect money for your idea. But the risk is high you don't get enough together.

7. Live your idea
Don't do anything else if you can afford. See your idea from the beginning as your full-time job.
Many people are successful in the young years because they have no family and can work 24/7. Many older people are successful because they can utilize their connections and their experience.

These tips should help you to get your idea running and maybe soon I will read about you and your success.

Some useful links:
eHow about patent filing
Patent costs
funding help
Kickstarter
Gofundme
startup addict
Iventurers


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Location:Spinning Wheel Ln,Brooksville,United States

Linkedin.com is now public - phishing starts

I am linkedin user since 4 years and I like it. I think it is so far the best professional network I used. I never had issues with linkedin and never got suspicious emails using as cover linkedin. This changed this week. I have a certain email address just for linkedin.
Yesterday I got to another email address (my public email address) an email which seemed to be from linkedin.

Usually when somebody wants to connect to you, you would get an email similar to this:



The email is send to your email address stored in linkedin.

The email I got yesterday looked like this:




If you don't look closer to the email you would not recognize it as a fake. But what made me suspicious was that the email was send to my public address. I first thought somebody did try to connect to me by imputing this email address in linkedin because we never met each other (linkedin ask then to input an email address).
However I looked at the sender email address which was a really weird email.




Linkedin usually does not have unreadable email addresses. Next I went to linkedin to search the person Mark Andronas but did not find any person with this name in linkedin. Another weird part was that the email had two names. Mark Andronas and Neal Collins which I could not find neither on linkedin.com

Clicking on "connect that you know Neal" will bring you to http://salesforceappi.com/loginapi.php?tp=1da14085e243eaf9

A Domain registered in Shanghai
Registrant Contact:
zhang yong
yong zhang xfire2311@hotmail.com
+86.2136854127 fax: +86.2136854127
shanghai
shanghai shanghai 310016

(I am aware by posting the name and phone number of this person will have as result that this person might try to hack my blog)

The page itself is a php page which looks like the linkedin.com log in page which asks for your username and password. You would disclose to the person in Shanghai your linkedin account.

I guess since linkedin got big and public, we will see more such scam.


Please never click on any linkedin email with links on it in your mail program. If it is a real linkedin email then it shows up in your linkedin online account. Please open the emails there. And if it is a case you don't see the email in your online linkedin account and you are not sure the email is real, then contact linkedin fraud department https://help.linkedin.com/app/ask/subject/Possible%20Phishing%20Attempt

They will let you know if it is real or a fake email.

Here some tips from linkedin:
Suspicious emails should always be handled carefully. Please be cautious in opening any attached files or links included in the email as it may contain malware which could be damaging to your system. Note that any links in messages from LinkedIn should only direct you back to LinkedIn.com webpages. If you already opened attachments or clicked on links from within the message, you will want to run a current version of antivirus software to scan your computer for malicious viruses. To learn more about privacy best practices and what you can do to protect your account security, click here.

Your privacy is our top concern. We work hard to earn and keep your trust, so we adhere to the following principles to protect your privacy:

We will never rent or sell your personally identifiable information to third parties for marketing purposes.
We will never share your contact information with another user without your consent.
Any personally identifiable information that you provide will be secured with all industry standard protocols and technology.


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Location:Spinning Wheel Ln,Brooksville,United States

What is going on with Apple?

Today, I went to our Apple store close to my work. I decided to buy an iPad for my wife.

As I wrote in an earlier post, Apple changed the look and feel of the store. There is no cash out register anymore, the genuis bar got bigger and the store has now multiple "personal trainer" tables.
But the most interesting part is that each displayed item has an iPad build into a plastic frame. The last time I counted 32 of these ipads. This time it have been 46.

As usual the store was full and it took a couple of minutes till somebody was ready to help me. I asked for an iPad 16GB wifi only.

Guess what the answer was?
"Sorry, we are sold out of the wifi only models, we have only the 64 GB 3G for Verizon in stock."

When I asked when and how many they expect to come in, I was told that every Tuesday and Thursday a new delivery comes, but they can't tell how many of which model.

Can you imagine Apple has over 9,000 iPads for their stores to use as just a smart display but are not able to have enough in stock for their customers. It is like going to a bakery which has real cakes on display but you can't buy any of them just look at them and getting hungry.

I have to admit I like the new store philosophy in terms of service orientated. That all Apple devices are multiple times presented and all of them are fully functional. I like that Apple has in the store more employees than a football team has players, that they all know the products and that they are very helpful. I like as well that each of them can check you out, instead of the need to stay in the line for the check out. Actually I think Apple reinvented the check out in a great way. You find the employee, he/she consults you and when you are ready to buy, they put the order in their special iPhone and 2 minutes later somebody comes with your merchandise to you. You give the employee your credit card and sign in the iPhone. The receipt will be send to your email address. If you need a print out then they hit a button on the iPhone and the receipt get printed on a hidden printer which is close by at the nearest display table. If you need to have your iPad activated then they hit another button and one of the "personal trainer" will come and help you at the "trainer" table.
Absolutely efficient and totally service orientated. Macy's, BestBuy etc can learn from Apple. Ralph Lauren did invent the store within a store, but Apple did invent the perfect service with checkout. The only bad part: you can't pay cash.

But what I don't like is, that there is one side still a shortage of iPads (1 to 2 weeks when ordering online waiting time) but at the same time up to 100 iPads almost useless laying around in the store. This does not make sense for me. I can see that Apple want to show their iPads off and show that they can be even be used as a smart display. But if they do so, then they have to make sure the customers get what they want.

I personally still don't get why they did not use the iPad 1 for the smart display.

At the end I went frustrated home, and ordered at macmall.com. They at least don't charge tax on the iPad and have same delivery time according to their website.


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Location:Spinning Wheel Ln,Brooksville,United States