Online emperor is naked

26 September 2011 - 03:04 By Toby Shapshak
Toby Shapshak. Stuff editor. File photo.
Toby Shapshak. Stuff editor. File photo.
Image: Times LIVE

Groupon, the group-buying website that seemed too good to be true, turns out not to be true.

Groupon, which arrogantly turned down a $6-billion buy-out offer from Google in December, was at one point valued at $20-billion before its much-hyped initial public offering. But then, like all offers that appear to be too good to be true, someone looked at the fine print.

Turns out that, for every $10 offering Groupon was selling, it was claiming all $10 as revenue, as opposed to just the small amount that was its commission.

Groupon's 2010 revenue was $713.4-million but the SEC analysis forced it to restate it as $312.9-million, according to the Wall Street Journal.

Can anyone at Groupon say: "Jerry Yang?"

Remember how Yahoo! so foolishly turned down Microsoft's $44.6-billion offer (at $31 a share, but its co-founder and CEO, Yang, wanted $33 each)? On Friday, Yahoo was valued at $18.6-billion.

The revelation that the latest on-line emperor has no clothes will be painted as an internet failure, sadly, when it is really a failure of human nature. We are blinded by wealth, by the unseemly pursuit of wealth. Greed. That's the reason it's one of the seven deadly sins.

I'm trying to decide whether this all fits the contrasting philosophies espoused this week: "Trust your instincts" and "Don't ever trust them".

Brazilian Ricardo Semler argues for the former and is quite rightly held up as a new-generation business leader for his forward-thinking philosophies of empowering people.

He was speaking at the Discovery Invest Leadership summit, along with a host of other luminaries including Al Gore, Dan Ariely, Taddy Blecher, Maria Ramos and Chris Anderson.

It's the first time I've been to the conference and the quality of the brainfood was as good as at the international gatherings I've been lucky enough to attend.

Semler argues that business has evolved so that "we have no place for intuition".

"We spend 40% of our time on boarding-school issues. How should I dress, how much does he make ..."

He said, quite rightly: "A business plan is an extrapolation of wishful thinking."

But his simple business strategy is: "Ask 'Why?' three times in a row." I love that.

Ariely, a behavioural economist, argues the opposite. His book, Predictably Irrational, is a Bible for those who want to understand modern motivations and decisions.

Using examples such as becoming an organ donor or pain management, hip replacements and alarm clocks, he argues that "we have huge brains that tell us that we are driving decisions, when in reality the environment is driving those decisions. What our brains are actually doing is making up stories to justify our decisions".

His advice: "Doubt your own intuition and try something new."

To paraphrase two wise men who told me about their theories of wealth in the last week (one a big newspaper editor, the other CEO of a big bank): You don't get rich, you grow rich . it doesn't happen overnight, you build it.

As Semler said, and Groupon now knows: "The problem with the rat race is, even if you win, you're still a rat."

Ironically, the most high-profile quote from the conference was a throw-away line by Gore, the former US vice-president who happens to sit on the board of Apple.

Gore confirmed the worst-kept secret in the tech world when he said: "Not to mention the new iPhones coming out next month."

One of my pet hates about the IT industry is that the world is obsessed with Apple product releases. "There's always another one coming," I say when I'm asked about the next iPhone/iPad/iWhatever.

Apple is a business; they sell us these things. It is not without irony that I ended up being the person quoted as quoting Gore.

Meanwhile, Facebook unveiled its own plans to suck up more of our time. In a totally unrelated development, as I was writing this, my 83-year-old mother just sent me her first Facebook message. Hi, Ma!

  • Shapshak is editor of Stuff magazine
X