David Heinemeier Hansson, creator of the popular framework Ruby on Rails has shared his two cents on the impending Groupon IPO:
Groupon had to spend $208M on marketing in the first quarter and another $178M on sales people and the rest. Surprise, surprise — it’s costly to buy enough ads to reach the volume of consumers needed to produce such staggering revenue numbers. Likewise, hiring an army of 7,000-and-counting employees to cold-call every small business owner in the world costs a pretty penny, too.
As I said back in March I think sites like Groupon are trouble. There is no customer loyalty and competitors are popping-up left and right and in places like Facebook and Google where people are already hanging out.
I think the Groupon IPO will cause a whiplash for potential “web 2.0” IPOs. DHH feels the same, apparently.
(via Daring Fireball)