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Dartmouth Tuck School of Business’ Eric Johnson on whether a Groupon IPO is worth the hype for investors.
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Leading the way for the next generation of tech IPOs creating a craze that's for certain but it's -- -- that's really been getting all the buzz.
But many investors wondering if the online Q runner -- -- is even worth all the hype that's out there.
Or the true sign of the next tech bubble.
To burst joining us now is Eric Johnson a director of the -- -- tuck school of business center for digital strategies.
Thanks for joining us today -- Eric.
Thank you.
Are right so I was just checking out an article on techcrunch in the article is just published -- it was titled why groupon is always for collapse.
There is a -- down going on around groupon.
In no way they didn't occur around -- can -- separate fact from fiction for asked.
What stands out about groupon that will make it -- sex acts.
Well there's at least five reasons to be really it's you know excited about groupon -- start thinking about their astonishing growth we all look at that.
But it's really the new model they're bringing you know.
Advertisers were paying firm impressions or clicks here they're getting sales hard cold cash.
When they work with -- they know exactly what they're gonna get.
But beyond that it's an e-commerce strategy in a new way for us small and medium -- businesses to.
-- on the Internet and many businesses we're left behind.
Think about that -- 50% or more of GDP in our country and so -- I can tap into those you know.
Along with all their international and and meet.
Strategy options -- excited about group bond.
Well Eric there -- no question this company is tapping into a new market it created a new market really and it is -- fastest growing.
Company on the -- certainly in recent history.
But many people are concerned about two things one its business model that it's easily duplicated that there are -- low barriers to entry in and cut competitors like Google FaceBook and many others are already in this space.
The other thing is is is really its cash flow right now cash flow positive.
But a fraction of that of its overall subscriber base is actually buying goods I read that out of the sixteen million subscribers or eighty million described as it has only 19% are actually buying goods.
It's got a -- hurdle ahead and -- to actually become a profitable company.
Well certainly there's some issues to work through there and you know there's two things to think about here.
First think -- -- -- you know Amazon the late ninety's loads -- boatloads of money billions.
In a model that wasn't so dependable didn't look so dependable just like groupon doesn't look dependable.
But what do they do they invested invested invested built a big barrier to entry second thing to think of this group bonds far more than just a flash -- -- When you look at the things they're working with now for example group -- now they're mobility strategy.
There's a lot of interesting things and in the pipeline for them and I think that's what investors would really be betting on if they bet on groupon.
What do you think about the overall concept of the tech bubble we had linked and we had -- -- already come in we have a whole slew of other companies Twitter FaceBook is aimed at.
On the docket are we in a bubble or -- Well certainly there's a lot of excitement but maybe it's more of a feeling of getting back to normal I think you know we're -- also jaded by the last few years that we see a few IPO's go well we think it's a bubble.
All right thanks Eric Johnson thanks for being here today.
