My experience with them not taking the coupon has always been from the manager. I run good sometimes, once having dinner with my daughter at The Cactus Club, the manager came over and said we were the bill on the house that night. His only request was to tip the waitress as if there was no discount at all.

I agree on the scam potential if left unchecked. But that is a mangers responsibility anyways.

Very good post Henry.

+1 more or less.

I think groupon could easily be replaced. Just like myspace was replaced (are they still operating even?. At some point, a new facebook will probably get hot, and then we'll wonder whatever happened to them.

Mashable is reporting Groupon is preparing for a Spring 2011 IPO at a $15 - $20 billion valuation.

http://mashable.com/2011/01/13/group...uation-report/

MySpace is trying to sell. They announced it a day after laying off 47% of their workforce.

I remember when Facebook turned down the 1.2B offer or whatever it was 4-5 years ago. News Corp had previously purchased Myspace for $600M in a deal Rupert Murdoch referred to as "pennies on the dollar." I wonder how he feels about that now...

Lol probably not a buy & hold stock, but I'm guessing social coupon sites are going to make a lot of millionaires in the next few years through acquisitions. I've got a decent domain I picked up for a coupon type site a few years ago... maybe I should develop it...

if groupon can emerge as the dominant location-based lead-gen company (like google was for internet search), there's much more than 5bb at stake.

http://www.businessinsider.com/trave...million-2011-1

Will people ever pay full price for a spa day again?

http://www.businessinsider.com/you-w...ley+Insider%29

Not sure how well this model would work as a ServiceMagic / Angie's List type site.

Well I have been buying a lot of these things lately. I eat out a lot, so I mostly just buy the ones for restaurants.

A few observations...
I can see how this could be a good advertising service for a new business. It creates awareness in a hurry. If you're an established business, I don't think this advertising method is too effective. If you're not making it, then losing a bunch of money to hit and run deal hunters isn't likely to help you pick up enough customers to turn it around. If you are making money, then why would you want to have your regular customers get used to the idea of deep discounts? For launching a new product out of an existing business, this could be useful because it plays to Groupon's strength. It can build awareness in a hurry.

Whether I get the deal from Groupon or Livingsocial or Facebook, doesn't matter to me, all it costs me is an email. I think there will be a lot of competition in this space. Margins are going to fall. If Facebook is smart, they will win.

I don't know if I am a typical user, but I am spending less total money than I otherwise would. The restaurants are attractive to me because that is something I already do and I would like to do it cheaper. I am not likely to sign up for a bunch of spa days because they are less expensive.

Also:
http://globaleconomicanalysis.blogsp...-in-japan.html

Google is launching their own best deal service.

http://mashable.com/2011/01/20/google-offers/

Google's payment terms are a lot more appealing to businesses than Groupon's payment terms. IMO, Groupon's net 45 payment term is a huge roadblock. A lot of small/local businesses can't afford to run campaigns with Groupon and not get paid for 45 days. Also, the Offers Fact Sheet posted on mashable says that businesses will also get the added value of getting free exposure across Google's ad networks.

This has to hurt Groupon's upcoming IPO.

I don't see how as it was completely obvious that the other internet giants like Google and Facebook would enter this business and crush Groupon.

Speaking to this, one of my clients who ones a Chicago full service day spa/salon downtown ran a Groupon last year. Her experience was pretty much this. The deal worked in that it got in a ton of new customers that wouldn't have otherwise used her service. But hardly any were repeat customers (she told me 5-10 maybe).

As for the second bolded point - I definitely agree. Groupon-type deals would be great for launching new businesses. The problem is a lot of startups are usually already low on cash so the lag time in recovering the cost would be an issue.

Would she do it again? 5-10 repeats might be worth it.