Groupon’s problem is not the business model

I’m not buying the argument that Groupon fails because its constituency is bargain hunting deal trolls, so it isn't a customer acquisition tool.

I think people are creatures of habit and that if you can entice people to try a good product then people will come back. But the problem is that there aren’t enough good products on offer in Groupon, and that is because the company is focused on money and not product whether that be its own or the ones in the deals offered.

The problem is a cultural one, Groupon feels cynical, focused on exploiting a money making opportunity rather than an opportunity to make something new and innovative.

This perception is currently shared, rightly or wrongly by Zynga and Demand Media and I believe can only be solved by making something of value, good games or decent content regardless of short term virality or mass appeal.

However, this is difficult, Apple focused on product, but only after going down the cynical route for more than a decade and watching it nearly destroy the company. And this difficulty is particularly acute for public companies who have to answer to shareholders, whose only interest is financial and who cannot see that focus on good products may mean short term investment for longer term benefit.

So, at the risk of saying something that is unfashionable tech heresy: I think the Groupon model is a great one, it just needs to focus on the product. That would be easier if it became a private company and maybe easier for a startup, but would take an uncompromising, product focused leader to pull off in its current guise.