Among those debating the value of Groupon as it filed for its hotly-awaited initial public offering — which could give it a market capitalization as high as $30 billion — were two startup entrepreneurs who took to Twitter on Thursday night. On the “Groupon is doomed to fail” side of the question was David Heinemeier Hansson, a partner at 37signals and creator of Ruby on Rails, and on the “give Groupon a chance” side of the debate was SimpleGeo co-founder Joe Stump. Who won? You will have to judge for yourself. Their conversation is embedded below.
Hansson started the debate by tearing apart Groupon’s financials, noting that the company had not only lost more than $500 million so far, but that its losses and spending were actually accelerating, and that it was costing the company far more than $1 to make $1 in revenue — a fundamentally unsustainable situation. After a series of tweets on that topic, Stump joined the debate by saying Groupon should get some credit for being able to generate revenues of $600 million or so every quarter, and that this would give the company some breathing room to figure out how to generate a profit.
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Groupon: Doomed to Fail or Worth a Leap?
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