How does the public allow this over and over?
One thing that has always annoyed me in the high level business circles is how money is extracted and large salaries are paid in spite of ZERO value being delivered, at least from the business profit model!
I guess I am just old school and a little more dedicated to building a sustainable business. Business, in my opinion should be proven by first providing value, utilizing revenue from the value delivered to expand. Somewhere, the habit of spending the next 10 years of profits to build a foundation and play catch up has become the preferred method. I guess that would be ok… if the people running the show took minimal pay until they actually produced the results they are there for in the first place.
I am amazed at how many CEO’s and others get paid huge money when they produce nothing but losses! I could understand a profit target and if its met a HUGE bonus is paid, but come on… 10 million paid to one person and they are doing nothing but losing money! Then, it gets hyped up and sold to the public?
Haven’t we seen enough of this already. It was everywhere and came crashing down in late nineties and its all back the same way again. Where are the real businessmen that produce value and get paid accordingly. Rewards in direct proportion to the results produced.
This pattern just deceives the budding Entrepreneur. Business takes hard work, commitment and passion. Today, people seem to be stuck in a microwave, instant gratification mentality. Where have all the real business people gone? So quick to throw in the towel because you couldn’t raise 20 million? Not willing to put your own livelihood on the line? I question how strongly you really believe in what you are doing if you cannot make a 100% no matter what commitment!
Just my thoughts
~ John Milanoski
This was posted on The Daily Beast Nov 4, 2011 12:00 AM EDT ( Groupon’s No Bargain )
Over the course of its history, Groupon has raised $1.1 billion in venture funding, but has paid out $942 million of that to insiders. Earlier this year, when Groupon raised $946 million in a venture round, only $136 million went to the company itself, while a staggering $810 million was used to buy shares from insiders.
In April 2010, Groupon raised $130 million in venture funding, only $10 million went to the company, and $120 million went to insiders.
Big chunks of that money have gone to LLCs run by two early investors—Eric Lefkofsky and Brad Keywell—and their wives.
In June, Lefkofsky was the subject of a less-than-flattering profile in Fortune describing his track record with other companies, marked by “rapid revenue growth accompanied by big losses, a penchant to sell stock early on, and lawsuits filed by investors, lenders or customers who feel they have been wronged.
” So far, Lefkofsky has pulled nearly $400 million out of Groupon. Keywell has pulled out $156 million. Mason, the CEO, has taken $10 million.
In other words, these guys were getting rich on Groupon even as the company itself was losing money and running low on cash, according to a report by Blodget on his site, Business Insider, in August. Blodget reported that Groupon had “negative working capital,” meaning it owed more in bills than it had in cash.