The best way to manage a fledgling business is to be impatient for profit but patient for growth.
Adam Rifkin stashed this in Network Effects
Stashed in: Startups, Risk!, Groupon, Business Advice, Growth Hacks!, Monetization
This HBR article points out that rare is the company like Facebook or Amazon that achieves huge growth BEFORE demonstrating a profitable business model.
In both of those cases -- as well as companies that WERE profitable before scaling like eBay and Google -- the main asset demonstrated significant NETWORK EFFECTS.
Groupon has neither found a profitable business model, nor does it have network effects.
This could be a cautionary tale in the making.
Read more: http://www.businessweek.com/management/why-groupon-lacks-a-viable-business-model-08162011.html
The Bubble IPOs Convo also discusses Groupon and Zynga and questions whether these companies have demonstrated sustainable value: http://pandawhale.com/convo/99/bubble-ipos
Also, don't mean to be alarmist but Groupon might be running out of cash: http://www.businessinsider.com/groupon-low-on-cash-2011-8
8:58 PM Aug 17 2011