Groupon According to Forbes and

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According to Forbes and Business Insider, in 2006 Andrew Mason was getting a graduate
degree in public policy at the University of Chicago. On the side, he was an intern building
databases at a company founded and funded by an entrepreneur named Eric Lefkofsky. In
early 2007, with the support of Lefkofsky, Mason started working on a company called
The Point, a do-gooder enterprise founded based on his frustration with trying to cancel a
cell phone contract. The Point was a social media platform designed to get groups of
people together to solve problems and was not intended to be a big moneymaking
enterprise. Mason’s premise was if a large number of people had similar problems,
collectively the group could leverage their power.
The Point launched in June 2007 but went nowhere. Ideas circulated, in Andrew Mason’s
original business plan for The Point there was mention of group buying as a possible way
the startup could eventually make money. But throughout 2008, early executives dismissed
the group buying idea. After new pressures from the market crash in late 2008, Groupon
was born. (Carlson 2011, O'Dell 2011)
Groupon grew quickly from 2008-2011. In just a year and a half the company reached $1
billion and since has expanded to 45 countries and has increased its employees from a
handful to 10,000.The business model allows for profit by taking a commission on every
“Deal of the Day" that gets triggered. A predetermined number of shoppers have to
purchase the deal before any money changes hands. The combination of an increasing
number of daily deals and no physical inventory was the key to Groupon’s quick infinite
growth. Groupon's rapid growth also made it difficult to keep controls on corporate
governance and on internal audits. Over the past 2-3 years Groupon has been scrutinized
for their ungoverned accounting. (Carlson 2011, Chicago Business 2014; O'Dell 2011)
Accusations & Stock Classes
According to Dena Aubin - Reuters, Anthony Catanach Jr., an associate professor at the
Villanova University School of Business, is a longtime critic of Groupon. In August 2011,
Anthony predicted that the SEC would probe Groupon’s numbers, a statement of truth
seven months later. Several problems have been raised after the release of Groupon’s
annual report. More specifically Groupon is awful at estimating the value of companies it
buys, their intangible “goodwill" estimates are flawed, their deferred tax asset estimates
are unstable, and they use a non-GAAP accounting method that is a curious metric known
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