Comment on Skype CEO, not investors, made the key cuts by Skype Insider

To those who say that Skype employees should have sought legal advice - a few comments in response - Skype employees have a stock option agreement and a stock option plan. The stock option plan, in turn, contains a “blink and you missed it” reference to a third document, a Partnership Agreement in the Cayman Islands, the jurisdiction where the stock options are actually held. That means to obtain competent legal advice, a typical employee would need to retain lawyers in both their home state and in the Caymans. Then they would need to retain a lawyer in New York because Skype chose New York state law to apply to many provisions (nb: strangely, Skype has no employees in New York and claims, for regulatory purposes, not to even “do business” there). Q - Do we really expect this kind of massive “lawyering up” from new employees? - These were not negotiated agreements. Employees were induced to join Skype with promises of stock options, and then, after leaving their other jobs behind, were instructed to sign these convoluted agreements - Take it or leave it. - It is very revealing that Skype, unlike every other tech company, chose not to furnish its rank and file employees with a “Q&A;” overview or summary of key provisions of its stock option plan. They knew they were engaged in a deception and decided to keep it dark. - No amount of lawyering should be able to take away the common-sense and "legal" definition of vested. From Black's law dictionary "vested " means "having become a completed, consummated right for present or future enjoyment, not contingent, unconditional, absolute." - Finally Skype/Silver Lake have not successfully cheated anyone out of their vested options yet. This won't be over for a long time....

Comment on Skype CEO, not investors, made the key cuts by Skype Insider

Backlink: http://gigaom.com/2011/06/20/skype-ceo-not-investors-made-the-key-cuts/#comment-634029

Andrew Mason Warns Groupon Investors: "We Are Unusual And We Like It That Way"

Groupon just filed its S1 to go public.

In the filing, Andrew Mason warns investors Groupon is an "unusual" company, and it likes it that way.

If you're going to buy Groupon stock, you're going to be buying into a company that invests aggressively and tries out new ideas.

Here is his full letter:

Dear Potential Stockholders,

On the day of this writing, Groupon's over 7,000 employees offered more than 1,000 daily deals to 83 million subscribers across 43 countries and have sold to date over 70 million Groupons. Reaching this scale in about 30 months required a great deal of operating flexibility, dating back to Groupon's founding.

Before Groupon, there was The Point—a website launched in November 2007 after my former employer and one of my co-founders, Eric Lefkofsky, asked me to leave graduate school so we could start a business. The Point is a social action platform that lets anyone organize a campaign asking others to give money or take action as a group, but only once a "tipping point" of people agree to participate.

I started The Point to empower the little guy and solve the world's unsolvable problems. A year later, I started Groupon to get Eric to stop bugging me to find a business model. Groupon, which started as a side project in November 2008, applied The Point's technology to group buying. By January 2009, its popularity soaring, we had fully shifted our attention to Groupon.

I'm writing this letter to provide some insight into how we run Groupon. While we're looking forward to being a public company, we intend to continue operating according to the long-term focused principles that have gotten us to this point. These include:

We aggressively invest in growth.

We spend a lot of money acquiring new subscribers because we can measure the return and believe in the long-term value of the marketplace we're creating. In the past, we've made investments in growth that turned a healthy forecasted quarterly profit into a sizable loss. When we see opportunities to invest in long-term growth, expect that we will pursue them regardless of certain short-term consequences.

We are always reinventing ourselves.

In our early days, each Groupon market featured only one deal per day. The model was built around our limitations: We had a tiny community of customers and merchants.

As we grew, we ran into the opposite problem. Overwhelming demand from merchants, with nine-month waiting lists in some markets, left merchant demand unfilled and contributed to hundreds of Groupon clones springing up around the world. And our customer base grew so large that many of our merchants had an entirely new problem: Struggling with too many customers instead of too few.

To adapt, we increased our investment in technology and released deal targeting, enabling us to feature different deals for different subscribers in the same market based on their personal preferences. In addition to providing a more relevant customer experience, this helped us to manage the flow of customers and opened the Groupon marketplace to more merchants, in turn diminishing a reason for clones to exist.

Today, we are pursuing models of reinvention that would not be possible without the critical mass of customers and merchants we have achieved. Groupon NOW, for example, allows customers to pull deals on demand for immediate redemption, and helps keep merchants bustling throughout the day.

Expect us to make ambitious bets on our future that distract us from our current business. Some bets we'll get right, and others we'll get wrong, but we think it's the only way to continuously build disruptive products.

We are unusual and we like it that way.

We want the time people spend with Groupon to be memorable. Life is too short to be a boring company. Whether it's with a deal for something unusual, such as fire dancing classes, or a marketing campaign such as Grouspawn(1), we seek to create experiences for our customers that make today different enough from yesterday to justify getting out of bed. While weighted toward the measurable, our decision-making process also considers what we feel in our gut to be great for our customers and merchants, even if it can't be quantified over a short time horizon.

(1) Grouspawn is a foundation we created that awards college scholarships to babies whose parents used a Groupon on their first date.

Our customers and merchants are all we care about.

After selling out on our original mission of saving the world to start hawking coupons, in order to live with ourselves, we vowed to make Groupon a service that people love using. We set out to upturn the stigmas created by traditional discounting services, trusting that nothing would be as crucial to our long-term success as happy customers and merchants. We put our phone number on our printed Groupons and built a huge customer service operation, manned in part with members of Chicago's improv community. We developed a sophisticated, multi-stage process to pick deals from high quality merchants with vigorously fact-checked editorial content. We built a dedicated merchant services team that works with our merchant partners to ensure satisfaction. And we have a completely open return policy, giving customers a refund if they ever feel like Groupon let them down. We do these things to make our customers and merchants happy, knowing that market success would be a side effect.

We believe that when once-great companies fall, they don't lose to competitors, they lose to themselves—and that happens when they stop focusing on making people happy. As such, we do not intend to be reactive to competitors. We will watch them, but we won't distract ourselves with decisions that aren't designed primarily to make our customers and merchants happy.

We don't measure ourselves in conventional ways.

There are three main financial metrics that we track closely. First, we track gross profit, which we believe is the best proxy for the value we're creating. Second, we measure free cash flow—there is no better metric for long-term financial stability. Finally, we use a third metric to measure our financial performance—Adjusted Consolidated Segment Operating Income, or Adjusted CSOI. This metric is our consolidated segment operating income before our new subscriber acquisition costs and certain non-cash charges; we think of it as our operating profitability before marketing costs incurred for long-term growth.

If you're thinking about investing, hopefully it's because, like me, you believe that Groupon is better positioned than any company in history to reshape local commerce. The speed of our growth reflects the enormous opportunity before us to create a more efficient local marketplace. As with any business in a 30-month-old industry, the path to success will have twists and turns, moments of brilliance and other moments of sheer stupidity. Knowing that this will at times be a bumpy ride, we thank you for considering joining us.

For the latest tech news, visit SAI: Silicon Alley Insider. Follow us on Twitter and Facebook.

Join the conversation about this story »

See Also:

• Check Out Andrew Mason's Amazing Headshot And Bio For The WSJ's D9 Conference
• HOLY COW: Groupon Is Losing A LOT Of Money
• THE GOOGLE INVESTOR: Could Google's New Features Bury Groupon?

Andrew Mason Warns Groupon Investors: "We Are Unusual And We Like It That Way"

Backlink: http://feedproxy.google.com/~r/typepad/alleyinsider/silicon_alley_insider/~3/lS5uz1YB2P0/andrew-masons-letter-to-potential-groupon-investors-2011-6

Andrew Mason Warns Groupon Investors: "We Are Unusual And We like It That Way"

Groupon just filed its S1 to go public.

In the filing, Andrew Mason warns investors Groupon is an "unusual" company, and it likes it that way.

If you're going to buy Groupon stock, you're going to be buying into a company that invests aggressively and tries out new ideas.

Here is his full letter:

Dear Potential Stockholders,

On the day of this writing, Groupon's over 7,000 employees offered more than 1,000 daily deals to 83 million subscribers across 43 countries and have sold to date over 70 million Groupons. Reaching this scale in about 30 months required a great deal of operating flexibility, dating back to Groupon's founding.

Before Groupon, there was The Point—a website launched in November 2007 after my former employer and one of my co-founders, Eric Lefkofsky, asked me to leave graduate school so we could start a business. The Point is a social action platform that lets anyone organize a campaign asking others to give money or take action as a group, but only once a "tipping point" of people agree to participate.

I started The Point to empower the little guy and solve the world's unsolvable problems. A year later, I started Groupon to get Eric to stop bugging me to find a business model. Groupon, which started as a side project in November 2008, applied The Point's technology to group buying. By January 2009, its popularity soaring, we had fully shifted our attention to Groupon.

I'm writing this letter to provide some insight into how we run Groupon. While we're looking forward to being a public company, we intend to continue operating according to the long-term focused principles that have gotten us to this point. These include:

We aggressively invest in growth.

We spend a lot of money acquiring new subscribers because we can measure the return and believe in the long-term value of the marketplace we're creating. In the past, we've made investments in growth that turned a healthy forecasted quarterly profit into a sizable loss. When we see opportunities to invest in long-term growth, expect that we will pursue them regardless of certain short-term consequences.

We are always reinventing ourselves.

In our early days, each Groupon market featured only one deal per day. The model was built around our limitations: We had a tiny community of customers and merchants.

As we grew, we ran into the opposite problem. Overwhelming demand from merchants, with nine-month waiting lists in some markets, left merchant demand unfilled and contributed to hundreds of Groupon clones springing up around the world. And our customer base grew so large that many of our merchants had an entirely new problem: Struggling with too many customers instead of too few.

To adapt, we increased our investment in technology and released deal targeting, enabling us to feature different deals for different subscribers in the same market based on their personal preferences. In addition to providing a more relevant customer experience, this helped us to manage the flow of customers and opened the Groupon marketplace to more merchants, in turn diminishing a reason for clones to exist.

Today, we are pursuing models of reinvention that would not be possible without the critical mass of customers and merchants we have achieved. Groupon NOW, for example, allows customers to pull deals on demand for immediate redemption, and helps keep merchants bustling throughout the day.

Expect us to make ambitious bets on our future that distract us from our current business. Some bets we'll get right, and others we'll get wrong, but we think it's the only way to continuously build disruptive products.

We are unusual and we like it that way.

We want the time people spend with Groupon to be memorable. Life is too short to be a boring company. Whether it's with a deal for something unusual, such as fire dancing classes, or a marketing campaign such as Grouspawn(1), we seek to create experiences for our customers that make today different enough from yesterday to justify getting out of bed. While weighted toward the measurable, our decision-making process also considers what we feel in our gut to be great for our customers and merchants, even if it can't be quantified over a short time horizon.

(1) Grouspawn is a foundation we created that awards college scholarships to babies whose parents used a Groupon on their first date.

Our customers and merchants are all we care about.

After selling out on our original mission of saving the world to start hawking coupons, in order to live with ourselves, we vowed to make Groupon a service that people love using. We set out to upturn the stigmas created by traditional discounting services, trusting that nothing would be as crucial to our long-term success as happy customers and merchants. We put our phone number on our printed Groupons and built a huge customer service operation, manned in part with members of Chicago's improv community. We developed a sophisticated, multi-stage process to pick deals from high quality merchants with vigorously fact-checked editorial content. We built a dedicated merchant services team that works with our merchant partners to ensure satisfaction. And we have a completely open return policy, giving customers a refund if they ever feel like Groupon let them down. We do these things to make our customers and merchants happy, knowing that market success would be a side effect.

We believe that when once-great companies fall, they don't lose to competitors, they lose to themselves—and that happens when they stop focusing on making people happy. As such, we do not intend to be reactive to competitors. We will watch them, but we won't distract ourselves with decisions that aren't designed primarily to make our customers and merchants happy.

We don't measure ourselves in conventional ways.

There are three main financial metrics that we track closely. First, we track gross profit, which we believe is the best proxy for the value we're creating. Second, we measure free cash flow—there is no better metric for long-term financial stability. Finally, we use a third metric to measure our financial performance—Adjusted Consolidated Segment Operating Income, or Adjusted CSOI. This metric is our consolidated segment operating income before our new subscriber acquisition costs and certain non-cash charges; we think of it as our operating profitability before marketing costs incurred for long-term growth.

If you're thinking about investing, hopefully it's because, like me, you believe that Groupon is better positioned than any company in history to reshape local commerce. The speed of our growth reflects the enormous opportunity before us to create a more efficient local marketplace. As with any business in a 30-month-old industry, the path to success will have twists and turns, moments of brilliance and other moments of sheer stupidity. Knowing that this will at times be a bumpy ride, we thank you for considering joining us.

For the latest tech news, visit SAI: Silicon Alley Insider. Follow us on Twitter and Facebook.

Join the conversation about this story »

See Also:

• Check Out Andrew Mason's Amazing Headshot And Bio For The WSJ's D9 Conference
• THE GOOGLE INVESTOR: Could Google's New Features Bury Groupon?
• INSIDE GOOGLE: "In The Plex" Author Steven Levy Tells Us Everything

Andrew Mason Warns Groupon Investors: "We Are Unusual And We like It That Way"

Backlink: http://feedproxy.google.com/~r/typepad/alleyinsider/silicon_alley_insider/~3/lS5uz1YB2P0/andrew-masons-letter-to-potential-groupon-investors-2011-6

Three Reasons Investors Hate Apple

Tractors and tacos. What do they have in common? Taco Bell and Caterpillar are both businesses that investors are rewarding with stronger valuations — as a multiple of earnings — than Apple can command right now.Which  is a puzzle, considering how fast sales of iPhones, iPads, and Macintosh computers  are growing.

So what’s the problem? Apple Piper Jaffray analyst Gene Munster offered  three reasons Tuesday why investors are down on Apple — and three reasons why he thinks the stock is a buy.

Click here to continue reading at Forbes....

For the latest tech news, visit SAI: Silicon Alley Insider. Follow us on Twitter and Facebook.

Join the conversation about this story »

See Also:

• HTC Cofounder/Chairwoman Spotted Shopping In Palo Alto Apple Store
• Why Apple Is Releasing The Next iPhone In September -- The SAIcast Discuss
• Apple To Patent Troll: Leave Our Developers Alone!

Three Reasons Investors Hate Apple

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Groupon Launches China Affiliate With Huge Local Investors

Groupon has launched GaoPeng.com, a China affiliate, the company has announced. The company is funded by Groupon, Tencent Collaboration and a fund co-owned by Alibaba founder Jack Ma.

This is potentially absolutely huge. Groupon's international expansion has been the most aggressive of any tech company we can think of, and they've been grasping for a China strategy for a while, from buying up local competitors, which didn't really work, to opening their fully-owned local site, which never works.

And of course, meanwhile, Groupon clones have been exploding all over China -- imagine the heat of Groupon clones plus the heat of China. Groupon have got the best partners in this deal: Tencent is China's largest social network (and one of the world's most valuable companies) and Jack Ma is the founder of Alibaba, the e-commerce leader in China.

Foreign companies never succeed in China without a local partner, and the world's biggest social commerce company found as partners the biggest social network and biggest commerce entrepreneur. Maybe Groupon will crack the code of winning in China.

Don't Miss: 10 Asian Tech Companies That Are Putting American Ones To Shame →

Join the conversation about this story »

Groupon Launches China Affiliate With Huge Local Investors

Backlink: http://feedproxy.google.com/~r/typepad/alleyinsider/silicon_alley_insider/~3/C716gTt_kmw/groupon-china-gaopeng-2011-2