Another way of looking at it is to agree with marvin's assessment that tech companies (like Groupon) are inherently volatile and for any individual it makes sense to diversify. The people that cashed out didn't sell all of their holdings, or even a majority. They sold a relatively small portion so that their entire net worth wasn't locked up in an extremely volatile stock. That seems pretty reasonable to me. They'd (at least in my opinion) have been fools to do otherwise.
I definitely agree that it can make a lot of sense for founders and early employees to cash out a portion of their holding so their entire net worth isn't locked up in one company. Other threads on HN have covered how it can better help align founders' incentives with those of investors, likely leading to better long-term results. With co-founders cashing out a partial share, they can focus more on long-term growth rather than worrying about protecting their value in the short-term. That is good for everyone.
From my admittedly superficial knowledge of the Groupon example, it doesn't seem like that is what happened with their previous capital raises. They've distributed about 80% of what they raised from their Series C and D rounds to early investors at a time when the company has serious capital concerns. Lefkofsky took about $400 M from the last pre-IPO round and is reportedly focusing on other ventures now.
I don't blame any of them for taking the money (as you say, they'd be fools to do otherwise), but all of this makes me sure that Groupon is not a company I want to put my money in.
A very interesting point. Can you provide an example with numbers? Company X originally invested Y and since the IPO has sold Z%?
As a totally naive assessment it seems that if Z == 100 then you're shooting yourself in the foot by precipitating a crash, so the line of 'no confidence' would be closer to 50%.
Another way of looking at it is to agree with marvin's assessment that tech companies (like Groupon) are inherently volatile and for any individual it makes sense to diversify. The people that cashed out didn't sell all of their holdings, or even a majority. They sold a relatively small portion so that their entire net worth wasn't locked up in an extremely volatile stock. That seems pretty reasonable to me. They'd (at least in my opinion) have been fools to do otherwise.