Groupon, Facebook Hit All-Time Lows; Why Groupon Can't Win in Japan; Zynga Implodes!

Even though Facebook met expectations for revenues today, their shares slumped to an all-time low after-hours trading.

Facebook Earnings Hit Target but Worries Persist

Facebook hit Wall Street's bullseye on earnings and revenue was a slight beat but the stock fell below its all-time low of $25.52 a share in after-hours trading as worries about its future growth persist.

During regular-hours trading, Facebook shares fell 8 percent. After the earnings announcement, the company's shares initially rose then pulled back, falling below that all-time low. 

The company posted second-quarter earnings excluding items of 12 cents per share on revenue of $1.18 billion.

Facebook posted a net loss of $157 million, or 8 cents a share in the second quarter, due to hefty stock compensation charges related to its IPO, compared to net income of $240 million, or 11 cents, in the year-ago quarter.

Read more.

July 26, 2012

The fall in Facebook shares might be a bit of a surprise (not really when you understand that the shares were grossly overvalued at its IPO price of $38 a share; they should have been about $9). And, still, today's price at $26.95 is about 300% overvalued; also, let's not forget that recent data shows that 40% of all Facebook users are Spammers.


The one slump that shoudn't be a surprise, but still is, is Groupon. Why? when the Dow skyrockets $211 (1.67%) on flimsy "news" that Mario Draghi, president of the ECB, says he will "Do what's necessary to maintain the Euro".... (Ahem... Where have we heard that before?) Yet still drops 8.7%, now that is a jaw-dropper.


It's only end July and Groupon hit its all-time low at $6.61. At this rate, when I seemed grossly pessimistic and said, "Groupon will hit $5 by December 2012" way back in November 2011 (when the shares were at $23.32) it seems those predictions are grossly over optimistic today.


Will Groupon hit penny stock status soon? I think in the next 12 months, that is highly likely if they don't go bankrupt first. 


Why Groupon in Japan Can't Win


There is another company doing the same business as Groupon in Japan but they make it work.... Well, let's say it works better than Groupon does. That company is Recruit with their Pomparade coupon service. 


Why can Recruit make Pomparade work (or, at least not lose millions of dollars)? Simple. Groupon sells one product: a Spam mail based coupon service. Recruit sales people sell at least a good two dozen services (along with their Spam-based coupon service). 


Groupon cannot afford to place 600 boots on the ground and sell just one service. The costs of running a sales force like that are way too high. Recruit corporation, on the other hand, already has a high and very well respected market profile in Japan. Recruit already has as 30,000 sales people running around selling ads in free magazines (of which Recruit dominates the market) like Hot Pepper, R25 (and a bunch others). Recruit also has Pompare, Keiko and Manabu, ATND and the list goes on and on...


The kicker for Groupon? Recruit has a "subscription" service that only costs business establishments a mere ¥80,000 a month (about $1000) to advertise across the board in several Recruit publications (and that includes coupons, etc.) If you are, say, a restauranteur, you have your hands full trying to make your business work; you haven't time to deal with new people and, especially, new internet "stuff."


The Recruit salesman already has an excuse to see and visit businesses that have the where-with-all and capacity to spend on advertising. The Recuit salesman already has a relationship with the store owners and managers. The Recruit salesman has an arsenal of products and services that he can offer to various businesses... They already have a good name and reputation. 


The name "Recruit" is a door opener.


So when a new sales person comes in on a cold-call and says "Groupon," I'd venture to say that a very many people say, "No thanks!" or, "Recruit handles all my stuff." Or even worse, "Grop-what?!"


That's not to say that Groupon's service can't work or cut out a market share, it can. But not the way it's set up in Japan now.


I mean, think about it: How can Groupon afford to put all those boots on the ground and compete with Recruit when they sell only one product and the Recruit sales people offer two dozen? They can't.


Groupon's only hope is to be bought out by another company in Japan that offers other services. The logical choice is Recruit. But, as  said, Recruit already has Pompare... And, I'm not too sure Pompare is doing great guns either.. Maybe the Korean company G-Market?


Perhaps if Groupon had enough market share to seem a threat to Pompare, Recruit would consider buying it.... But, it seems, that Groupon in Japan has dropped off the map...


Maybe Groupon itself, world wide, is about to do the same.

Zynga, the Facebook game is also doing VERY poorly and this might bode ill for Facebook too: In Play: Virtual Farm-Backstopped Default Delay Securities Launched After Zynga Implodes - UPDATE: ZNGA is down 40% now, trading with a $2 handle:

Be Professional! Working at a Japanese Company - Any Company - Filled With Low Quality, Dysfunctional People and Management - Don't Do That to Yourself!

In one of my jobs, I give advice to major corporations on marketing and promotions. I work with some great folks. Usually, these big companies ask me for advice (or how to get tickets to sold-out concerts - yep. I can even do that!) Sometimes, in order to create new business, I put on my sales hat and approach companies that are in serious need of help. Today's post is about that kind of company; I mean a company in serious need of help. There's lots of companies like that. Here's an example.

The following is a true story. In the last two days, I've had some experiences that are just hilarious and just go to show how dysfunctional the people are who are in the employ of this one particular well known to be hereinafter called, "the Inertia Company" in Tokyo.  Everyone in Japan knows this company but it is not very respected. It used to be. But not today. It once was rich and profitable but, over these last 15 years, due to the Internet and not being able to adapt to the times (think Bronotosaurus), this company has fallen into serious financial troubles and disrepair. After hearing this story as just one microcosm of the whole problem, you'll see why.


It is all I can do to keep from laughing out loud at just how incompetent the employees as well as the upper management are at Inertia. This story would make a funny TV comedy show but, it is so ridiculous that, well, it might be too hard to believe. Here is what happened:


Over the past few months, I have met with the new director of Inertia. The guy before this new director didn't last 3 years. The guy before that one was gone after one year. When companies lose millions of dollars, that tends to create a high turnover rate in manglement... Er, I spelled that wrong, I mean, "management." In spite of the high turnover, like a good trooper, I've been trying to help them all with sales. And why not? Even if I think they are not good management people, if I can help them sell and make money, then I make money. Everyone's happy, right? 


But, with corporations like today's example of Inertia, I think God makes me do this sort of thing as a kind of "purgatory on earth" or, perhaps, to make me a better person and teach me patience. 


The Inertia Company has been losing more than one million dollars a year for the last 3 years. The new director and I met to discuss new ways to create new business revenue streams. In our last meeting, he told me that he, "Totally and completely agreed with my ideas..." and he added that he wanted me to give him "a few months to reorganize the company so that we could move forward with this new way." He also told me to contact him after that time.

Artist's rendition of Inertia Company Tokyo

As an aside, I go to that company sometimes and know that nothing has been reorganized by him since our meeting three months ago. Nevertheless I have been contacting him and trying to arrange a follow up meeting to discuss organization and operational implementation of this new plan.


By the way, I have already sold this new plan that I shared with the new director of Inertia to a few of Japan's most successful and profitable companies. In June of last year I presented it to one of Japan's most respected and profitable corporations and by August 1st, they had fully adopted the plan and now use it to boost sales - which they have done quite successfully - thank you!


Anyhow, over these past few weeks, I have been contacting this gentleman as he asked me to do. I repeatedly sent him very polite and professional business letters discussing items like CRM "Customer Relations Management," and very cost effective digital systems on how to use this new plan to obtain customers. With these notes, I have been asking for follow up meetings.


Finally, I offered him a lunch meeting whereby I could bring one of my top salesmen. This salesman is responsible for bringing this new CRM system to some of Japan's top sports teams whereby they use the system. Actually, using the system to give clients what they want is a no-brainer. I expected the director of this company to set a firm date soon.


That is, until yesterday. Yesterday he sent me a mail that just shocked me. I'd expect a mail like the one he sent me from a junior staff or a newbie or a junior high school student, but from a 50+ year old man who is a director at a company?! Extraordinary!


Here's a flow of the mails so you can get a feeling for the conversation. My mails (a total of four in four weeks) said something like this:


Dear Mr. Director,


How are you today, sir?


As you know, some of the biggest and most influential companies in Japan have just started using the CRM tool I mentioned to you at our first meeting. I'd like to continue that conversation. I know you are terribly busy so perhaps I could meet you over lunch to discuss implementation on how you can use a CRM marketing tool (at no cost) in order to provide your potential clients with the data they need on their users and thereby gain a mutually beneficial business relationship with those potential clients? Won't you please arrange a suitable time so that we can discuss over lunch? I will arrange my schedule to fit yours at any time. Please advise.


Mike Rogers


The director of Inertia dropped my jaw yesterday with his mail. He answered me something along these lines:


Mr. Rojers (sic)


We like you but cannot work with your company. 


We cannot work with you as there is a person at your company who used to work together with us at our parent company. When he worked here, he hurt the feelings of people at that parent company in the past. As you know, people are animals and their feelings do not heal so quickly. Therefore, even though your idea is good, we have no intention of working with your company because of him.


Mr. Director


I was flabbergasted. Here I am writing professional business correspondence, talking about increasing sales for a company that is losing over a million dollars a year, and this guy writes back to me talking about his internal family problems and squabbles! (No big deal, but he even spelled my name wrong!) I mean I talk about money and he starts telling me about his squabbles with brothers who were fighting.


I have no problem with them not working with us. But I'd expect some sort of reply like, "We have decided on another avenue to increase our sales. Thank you for time. Let's stay in touch and perhaps we can work together in the very near future." You know? This is what I'd expect from a professional.... But I am not dealing with professionals. This is like dealing with a room full of kids!


I have never worked at that company and have no idea what he is talking about. I don't really care. The above example is in English, but his original letter was in Japanese. At first I thought I was misreading it. To double check, I showed it to my Japanese wife and she was so surprised too. I mean, really, this is a business letter from the director (president) of a company!? My wife said, "I've never seen anything like that before. Do you think he wrote this letter when he was drunk? He sounds drunk."


I checked the time stamp on the email. I suppose it's possible that he was drunk. I mean, perhaps he was drinking at 11:30 in the morning on a Tuesday. Hell, I could see it. If I were running a company that was losing a million dollars a year, I'd be drinking all the time too!


Like I said, I was so surprised to see this letter. No. "Surprised" is not the word. "Totally and completely dumbfounded and floored" is more like it. I have never seen anything like that before. I'm the kind of guy who doesn't need to like people to work with them. All we need is professionalism and that's fine with me. We don't need to be bosom buddies to make money with them. Isn't that a part of professionalism?


I wrote back and decided that I should ignore his comments about hurt feelings and events that happened years ago. I wrote:


Dear Mr. Director,


Thank you so very much for your honest feelings.


Anyway, in order to implement a CRM system that can help boost your sales (as your competitors are doing and your former sales partners are now doing also) then let me introduce another company that has a similar system to mine. It is not as advanced, but can still do the job better than nothing. This system too, can allow your sales department to sell what the customers need and gain clients.


I am quite sure that there is no one at your company who understands this sort of new system so I can, at anytime, and for absolutely no charge, come down to your company and help tutor your sales folks on how to use this system effectively. Please let me know.


Mike Rogers


And that was that. He didn't answer my mail. I'd imagine that if I had written such a silly letter and then received back a professional "adult" attitude letter, I might be ashamed or embarrassed. But shaming or embarrassing this guy is not my intention at all. My entire intention was to help his company increase sales. I am not interested in his "family affairs" and they are none of my business! I can't believe he'd tell me about them!


Does anyone wonder why the Inertia Company is losing so much money? What a mess! Their president basically said to me, "I don't like you so I don't want to make money with you!" Laughable. How did this guy get to be president? 


Well, maybe I don't like someone like Bill Gates either but I don't have any problem using his stuff to make money for me! (Actually, I am a Apple guy, but you get my point).


And now, after that incredible story, what's the point of all this? How does something like this apply to you? Folks, life is short. If you are in a company like this, get out. After that experience and this absurd correspondence from a company director with the emotional baggage of a 12-year-old I don't want to help them. I hope they don't ask me ever again (they have asked many times!) But fear that they will.

There's lots of companies run by nincompoops like this example above. Companies that are struggling along, barely making ends meet; the yearly sales targets are never met and the mood of the company and the employees goes down. The quality of management sinks and an ever lower standard, and dare I say, IQ? comes in and begins taking the ship to even lower depths. Of course it does. Why? Because the good, talented people see the writing on the wall and get out of these sorts of companies while they can and take better jobs somewhere else. The people who are left over? They are the low quality ones who have no where to go. They have nowhere to go because they are left without gumption, drive, motivation and, sadly, without a clue. They can't go anywhere even if hey wanted to!


When a company is left with low quality people like that where is there to go but down?


People look at a companies like Apple Computer, Softbank or Google and think, "Oh! But they had a good idea and a good product or service!" Sure, that's true. But even more than that, they have good people. They know what it takes to make a good company. After all, what is a good company but a gathering of good people?


A company like Apple is filled with such good high-quality people that even if they didn't sell killer products, even if they sold chopsticks, they could make a profit and a good company. Apple people are like that. Apple could even make ice seem cool! Apple could rebrand ice and sell it to Eskimos!


A bad company like the one above I mentioned? A bad company could take great products like Apple has and they'd soon find some way to turn them into a loser and quickly be bordering on bankruptcy. That's what a bad company is.


Like I said, I work at several different places during the week. I get to see up close and inside of some of the finest companies in Japan and in the world. I've been to Apple Japan, Google Japan, All Nippon Airways, Softbank, Air New Zealand and Recruit, just to name a few, more times than I can count. I've worked with them and organized many promotions with them. I am doing so now.


I've also worked at some of the most dysfunctional and incompetent companies in all of Japan too; like the Inertia Company. I won't bother to mention their real names. Why? It pains me to do so. Why name them? Bashing these poor people is like kicking a mangy disease ridden one legged dog; it's not necessary or desirable at all. I don't even want to touch or get close to them.


That's what this blog post is about; not touching or getting too close to sick companies. Like a diseased animal, you need to stay away from them or you will become like them. For people who are young; for people who want to have a future; for people who want to give their children the best that they can; for people who want to escape and live their life to the fullest, this blog post is for you (and me). Don't take a job with a bad company. If you find that you are with a bad company, then get out as fast as you can.

As a multi-millionaire friend once told me, "Sometimes the jobs you reject are just as important as the jobs you accept."


Of course a job and food on the table is important. But, while you work at that poorly run company, you must make the effort to learn all you can and use your connections to get out and get a better job.


Remember birds of a feather flock together. If you are always working with poor quality and incompetent people you will probably become that way or, at least, be perceived by others as being that way.


So, if you work at a place like the one I described above; get out as quickly as you can. A life is too short having to work in a place where you cannot dream and be your best. Don't do that to yourself.


Find a good company with good people. Have a dream aspire to be the best you can be...


And above all be professional.

The Great Groupon Japan Disappearing Act

Before I go on with this article, let me give full disclosure; I think Groupon is run by a bunch of incompetents and Groupon in Japan is a total disaster. But, hey! Don't believe me, you be the judge.


Recently, Groupon Japan has completely dropped off the map. I never see their online ads anymore at all (sign of over extension) yet you see their competition all over the place.


The biggest two that seem to be kicking Groupon (hereinafter referred to as "Groupoff") in the royal behind is a new-comer called G-Market and Recruit's own Pompare.


You see online banner ads for these two constantly. I haven't seen an online ad for Groupon for 9 weeks in a row now (and trust that I am on the Internet constantly).


The other thing that makes me realize that Groupon Japan is almost as messed up as Groupon in the USA is the fact that, while you see no banner ads for Groupon in Japan on the Internet anymore, if you watch a minor cable TV network (I think it is J-com) you see their ads every once in a while.


Let me ask you a question: What kind of an idiot advertises an Internet business on TV yet doesn't advertise on the Internet at all?


Answer: I don't know. I've never heard of such a scatological strategy.


Groupon has messed up big time in Japan with the New Years fiasco and continues to be run by fools to this day.


Don't expect Groupon Japan to do anything spectacular. It is quickly becoming an "also-ran". Not only is Groupon's business plan unsustainable, it doesn't involve any social media features (e-mail only) hence it is dead in Japan...


Companies like Recruit are grinding Groupon into the ground... Along with foolish mistakes from Groupon mismanagement in Japan spells disaster for that flash in the pan.