Four weeks ago, Martin Tobias, CEO of Groupon competitor Tippr, said Groupon could become insolvent and had fewer than 18 months of capital in the bank.
"If they had to pay their merchants in four days rather than 90 days, they would be insolvent," Martin said [ watch Martin here ].
"The second thing is, if you look at their 80M subscribers, only 15M of them have purchased so they've spent a lot of money on customer acquisition for customers that are never ever going to buy from them. The numbers that they have to acquire to continue to fill the churn is incredibly high."
Even more, the founders of the company have already taken $340M off the table, Martin said, and Groupon burnt roughly $200M in Q1 2011.
"Of the $750M potential IPO proceeds that they have, something like $400M of it is secondary investors selling only $350M going into the company," Martin said. "If they only put $350M of new money on the balance sheet with the IPO, they're only putting two quarters worth of burn on the balance sheet."
Folks have broken down the numbers and said Groupon's business model isn't that compelling. The Yipit blog reported that "despite impressive topline growth Groupon's business model peaked around Q3 2010 and has been deteriorating ever since."
Then Groupon restated its numbers last week, dropping its silly accounting games around customer acquisition.
Google's clone, launched six months after Groupon reportedly turned down Larry Page's list of 6B reasons to assimilate, is stunning, integrated and "economic napalm" to Groupon [ Google Offers in action ].
Pulling from Bill Gates’ playbook, Larry is offering to pay local businesses in approximately four days compared to Groupon's staggered payment system, which in practice means not receiving the total payment until 60 days later.
"Groupon doesn't send you the money after the promotion," writes Bob Phibbs, author of the book Groupon: Why Deep Discounts are Bad for Business. "They send it to you in three installments over the life of your Groupon."
Oh yeah, Google is only asking for 20% compared to Groupon's roughly 50% or more take of each daily-deal coupon. (Groupon's terms of service for its "Stores" and "NOW" products state that it takes a 30% commission.) [ Clarified 3:57pm PT 8/15/2011 ]
Larry is doing the same revenue napalm strategy with casual games, running Facebook's 30% take gaming coins -- the lifeblood of Zynga and Popcap -- down to a minuscule 5% in Google+.
Last week, we overheard a respected investor say he believes Groupon's IPO is in trouble, uttering the scariest words any company that's filed an S1 can hear:
"They might not make it out."
What do you think -- is there a chance Groupon might not get out? Should the company circle back around and sell to Google, which would clearly still have them?
Discuss in the comments.