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Edward's Blog: December 2010

Do tech stocks deserve lower multiples?

They might be growing fast but can also fall fast. Kellogg's is not going anywhere. Yahoo! was founded in 1995 and is losing air quickly. Still one of the highest traffic sites, it make money with middle America non-tech savvy people, but those in tech tend to perceive an @yahoo.com email address as indicating ignorance. To the extent than companies grow quickly, can they also shrink quickly? Groupon--boom to bust? Here are MS and Apples revenues. Not a spike like Groupon's.

Under what conditions can a company grow quickly and retain its profits. Ebay, Paypal, Amazon, all yes. Ebay and Paypal have network externalities. Amazon has grown from a retailer to a community also (plus other businesses such as AWS and Mechanical Turk, but these are small time in comparison) I think Groupon has to become stickier by offering more, but I don't know what.

I'm conmused

Lesbians Who Look Like Justin Bieber

My new word, a cross of confused and amused. Don't think it will stick.

Funny site though.

Could be improved by having the girls provide a pair of photos: one a Bieber and one looking conventionally sexy. I am typically surprised by how much difference hair, make-up, cloths, etc. can make.

List of countries by population density

List of countries by population density

US: 29 people/KM^2

Idia: 318

Russia: 8.5

Bangladesh: 926

United Kingdom: 244

What strikes me as amusing is that people in the US often think that our land is overpopulated. Clearly not relative to many other countries and not if you have driven across or even looked down when flying.

Mudslides anyone?

YouTube - Brazil Mudslides, Floods Kill 379 in Rio, Sao Paulo

Not the fun kind.

This is some of the least informed reporting ever. They are looking at flooding in the hills of Rio and she asks if it is affecting Sau Paulo? Um 444 KM away?

Then when responding to a question about the economic impact that they make "stuff", followed by "uh...fruit and textiles". The mudslides are in relatively poor residential neighborhoods. They primarily make shit and babies. I wish reporters actually knew something more of the time rather than just having a nice voice or pretty face.

Bubble alert!!!

Groupon Said To Be Valued At, Like, $15 Billion

Groupon basically offers "deals" to a mailing list and provides an incentive for members of the mailing list to get others on the mailing list.

What are the barriers to entry? Not much, their are many clones. You can get the software out of the box. Then you need a mailing list and merchants. Find a niche, any niche. Couptessa, living social, dealon...

But Groupon is worth 30% of Facebook?

The same as Best Buy, HG Heinz, and Marriot International?

Microsoft in only 16 times the value and Apple 21 times?

Ebay is 2.5 times? Amazon 5.5 times?

The valuation is insane.

More on the business model. Groupon keeps 50% of revenue from the deals, just for sending an email. Might price (meaning %) competition creep in?

If people learn that only half the revenue goes the merchant might they start to wonder how it is such a good deal? Merchants are doubtfully loosing money on the deals, so the pre-deal prices quoted are either inflated or the merchants are very high margins since the typical deal is 50% of regular price. So the merchant is willing to accept 25% of the typical price? I doubt it. And when people realize that the deals are not really deals, then the bubble that is Groupon will collapse toward the profitability of another coupon provider.

I wonder if Valpack has considered a competing service? Seriously. They have the local sales force and relationships with businesses offering discounts. Start building lists and get it on with Groupon.

More curiosities:
$15 000 000 000 value/ 24 000 employees = 625 000/employee 
Not a typical valuation method by indicates how much you could spend building a rival organization.

Mugabe and the White African

Tells of the fight for a white farmer to save his farm by appealing to international law.  He wins the case and his farm is burnt down.  Did the white farmers not know who they were dealing with?  M is willing to starve millions of blacks, but god forbid the could say I shouldn't kick these whites off their farm.  My theory is that the farmer knew the suit would not save the farm but if we can make a movie out of it maybe other post-farm opportunities will be available.  Nothing wrong with that, but funny how things are so often not what the seam.