Calling Zynga and Groupon pump-and-dump schemes is a mark of one's one's understanding of business in much the same way that believing vaccines cause autism is a mark of one's understanding of science. Mark Pincus and Andrew Mason are both still running these companies. Running a public company that's doing badly is extraordinarily painful. No one would bring that on himself.
I am with you on how misplaced the enmity towards --- well, at least Groupon. But there have been well-known public companies that did badly that were essentially scams, such as during the channel stuffing scandals of the late 1990's. So while I sympathize with your irritation at the "Groupon is a Ponzi scheme" meme, the last sentence of your comment is simply wrong; it's wrong directly (a counterexample would be Sanjay Kumar) and it's wrong in what it implies.
If anything that supposed counterexample supports my point that the accusations these people casually make in HN comment threads are so much more drastic than they realize that they're their own reductio ad absurdum. Running a public company that's a scam tends to entail criminal behavior. Especially nowadays.
CA didn't start out as a deliberate scam, and continues to run today despite being essentially a scam for many years. The companies we're talking about today --- Groupon, Zynga --- don't have long enough track records as publicly traded entities for us to presume they're run in good faith; variants of the things that got Kumar sentenced probably aren't even crimes when they happen during mezzanine funding, when the people being "scammed" are sophisticated investors.
You implied, Zynga isn't a pump-and-dump scheme because Mark Pincus still runs it, and nobody would inflict the management of a poorly-performing public company on themselves. Well, that's just not true.
There are better arguments against the assertion that Groupon is a pump-and-dump scheme than "it must suck to be Andrew Mason these days" (it does not suck to be Andrew Mason, by the way). For instance, Groupon was open about its liabilities and the enormous risks it faced, and its whole industry sector was very carefully scrutinized.
I'm done arguing this point. My nerdly brain just couldn't handle the idea that being Andrew Mason in Q4'12 is so painful that simply holding his job imputes him credibility.
I believe PG's point is that creating a company as successful as Groupon or Zynga from scratch requires an incredible level of psychological and man-hour commitment, in addition to constant creative and iterative idea generation. The idea that they are pump-and-dump schemes is absurd in light of this essential truth.
> My nerdly brain just couldn't handle the idea that being Andrew Mason in Q4'12 is so painful that simply holding his job imputes him credibility.
Agreed. If Pincus and Mason are having a hard time now, I'm sure they can have a good cry in their mansion or on their yacht, weekends in Aspen, luge lessons in Zurich, private Zoroastrian monk mentoring, perhaps a custom birthday song written by the Rolling Stones -- you know, the typical way of handling such hard times as these.
I wasn't suggesting that it was conscious con-artistry (though I don't completely rule it out either).
I worked in business consulting for a bit. Part of what I learned is that at least some emperors have no clothes. There were really two main types I encountered:
(1) Extremely competent, hard-working executives who try their best to build real value.
(2) Fast talking dominance machines. Sociopaths, really. They make big promises, send a lot of primate dominance gestures, and generally build vapid unsustainable businesses that eventually fail. Yet the failure never sticks to them, and it often never sticks to their initial investors. Usually it's handed off to someone down the line (later investors, the public, employees, etc.).
When I see a resume that consists of a series of a series of unsustainable businesses where the early investors and executives made out well by handing a bag of flaming poo to later investors, I tend to suspect that we're dealing with category (2) players.
I also suspect that when I hear of extremely magnetic reality-distortion-field personality types. There is a certain kind of charisma that I take as a contrarian indicator.
It's interesting to me that api's vague attack on the leadership of certain companies is pushing your buttons - going so far as to call his comment 'drastic' and 'absurd'.
The key point here, I think, is to be very careful to distinguish between a failure to build sustainability, and willful maneuvering for maximum personal gain at the expense of sustainability. The former is a noble failure, the later is deeply unethical (if not illegal) and ne'er the twain shall meet!
Sure, but these accusations shouldn't be taken as personal attacks against specific companies, but, rather, as a sense people get of "silicon valley" and the startup economy. It could just be jealosy or schadenfreude (which shouldn't be entirely discounted :)), but I take it as a political statement. Even if the facts in some particular case can be refuted, these statements express a true and valid sentiment about the state of affairs.
>"Mark Pincus and Andrew Mason are both still running these companies."
Because, at least in Pincus' case, he can't be removed. It would be pretty hard to argue that he wouldn't have been canned under different circumstances.
"Pump and dump" may be a bit much. But I'm glad that it's coming to light that business shadiness doesn't start and stop with the financial industry; it occurs everywhere there are substantial amounts of money changing hands. The Valley has some pretty serious scum-baggery going on. I hope we hold the people who promoted this stuff accountable in the court of public opinion.
Yes, but he can cash in and quit. Why hasn't he? I've never run a public company but I know some who did during the first dot-com crash and it was not pleasant.
That's a rather off-colour reply, it has to be said, sir. First you resort to an absurd comparison in a poor attempt at snark, then you claim that Mark Pincus and Andrew Mason are severely pained by their lacklustre performance on the public markets, without providing any evidence of that. This deserves downvotes in my opinion.
As I noted above, this isn't really an argument. Sanjay Kumar made hundreds of millions of dollars from CA and could have left long before he was indicted having already ensured that none of his grandchildren would ever have to work a day in their lives.
If you think they're sticking around to make more money, then they must be trying to repair the company's stock price. Or you think they're still there out of a sense of pride or guilt.
Either way it's not a pump and dump, and their goal is to turn the company around.
The only thing their continued presence at their respective companies tells us is that they think they can do better by staying than leaving. Mark Pincus might be staying at Zynga because he thinks he can turn around the stock price and make it a sustainable company, or he might be staying because he thinks there is plenty of profit to squeeze out of the company as it dies. There are reasons to stick around besides goodwill towards the company.
He's got $200M and no one can take his massive equity away. I just think you have to be very cynical to think his primary motivation is money, at this point.
I think you have to be pretty silly to think that people, in general, stop being motivated by money once they get a lot of money. The only two high net worth individuals I can think of who obviously stopped being motivated by money are Warren Buffett and Bill Gates.
These guys obviously aren't the sort of people that are happy to lie by the beach reading a book, quietly enjoying their millions.
They're alpha dogs in the absolute worst sense of the word. They thrive off ego, winning, power, greed, narcissism and all those other lovely traits most people pulling similar moves seem to have.
Think Gordon Geko. Remove the pin stripe suit, fast forward 30 years and change the modus operandi from cynical asset stripping to cynical stock hyping and you get...
Edit: a more charitable view, in Pincus' case, is he isn't THAT evil and instead simply made a hugely expensive mistake buying OMGPOP. That wrecked the balance sheet and he's holding in there trying to recover.
That thing that you said there does not describe Andrew Mason in any way shape or form. He used to post on a forum that I spent a lot of time on in the early 00s. He's a clever, funny guy, and he took most of his lessons in ethics from Steve Albini. Before Groupon, he created The Point which was a group funding site for social initiatives that in many ways resembled Kickstarter.
This. You could believe that Mason was acting in a completely earnest fashion, but was too naive to realize he was being manipulated by Lefkofsky.
As Excutive Chairman in a non-operational role, Lefkofsky is under only a fraction of the unpleasant pressure Mason is under as CEO. If he were guilty of behaving in this way, that would actually jibe pretty well with pg's assertion about people not wanting to run struggling public companies if they can avoid it.
Personally, I am no expert on Groupon. I make no claims that Lefkofsky has behaved in that way, because I don't have any evidence to either validate or invalidate such a hypothesis. It's simply not clear to me that such an accusation is obviously false, as pg claims.
I'm happy to stand corrected on Andrew Mason since I don't know an awful lot about him. But as others have said, Lefkofsky definitely appears to fit the profile.
