Why I'm Not Buying Groupon's IPO

Groupon recently filed to have an Initial Public Offering of their company. Why would you IPO after so much growth? Easy, they're trying to cash out before their company crumbles around them.

I know this is exceptionally doom-and-gloom for me, and I am usually more nuanced, but frankly, I don't see how Groupon can stay competitive as-is. Groupon has depended on first-to-market advantage, and I don't see any additional ways that they can stay competitive.

1. Groupon's Brand is at Risk

Groupon is having issues with vendors. There are reports that vendors are treated poorly by Groupon. Now, this in-and-of-itself isn't a death knell, as OpenTable does very well treating restaurants like crap, and TicketMaster / LiveNation does very well treating both artists and consumers like crap. Cable companies like TimeWarner, Comcast, et al, all have monopolies in their area for broadband service. Consequently, all of these other brands don't need to really make consumers feel very good about their brands, because they all have the monopolistic advantage of being gatekeeper. Groupon has no such claim, because ...

2. Social Media Can Get Replaced Overnight

Everyone's jumping on board. Google, Living Social, Steam, and various travel sites are all examples. If Groupon lacks a unique product or some other competitive edge, what do they have? An Android and iPhone app? How long until everyone has their own? 6 months, tops?

Still have a Friendster account? I mean, MySpace? I mean, Facebook? No, wait, I mean Google Plus? When your product is free to consumers, and there's nothing like a ginormous database (like photo-sharing services or email) to lock someone in, the consumer will be as loyal as your features you offer, minus how poorly you treat them. What's the incentive I have as a consumer to be loyal to Groupon, than say, Living Social or OpenTable or the countless other people jumping on the deal-a-day bandwagon?

3. Groupon Doesn't Have Content To Leverage

Groupon isn't even as fortunate as say, Yahoo search. Yahoo was early to market with a decent search tool in the 1990s. However, unlike Groupon, where deals change every day, Yahoo had accumulated a wealth of content in its search and organization of web metadata. That's a head start that gave Yahoo's search over a decade life-span. Groupon

Ultimately, what Groupon did wasn't create a unique brand, they created an entirely new advertising model. Is it innovative? Absolutely. Is it a good thing for consumers? Absolutely. The web has been facing for years the prospect of people paying less and less attention to advertising, especially with basic AdBlock software available for major browsers. Groupon popularized a new advertising model where vendors essentially paid for advertising to consumers that they had 100% guarantee would either buy their product. (Or not spend the Groupon, which is free money.)

And, I take that back. Groupon didn't really invent it. At the very least, I should mention woot.com, which is a niche geek/gadget deal-a-day site that's been around for years.