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How Can Sellouts Ruin a Business?

On May 4, 2011, Felix Salmon, the finance blogger for Reuters.com, put up a post with the intriguing title of “Grouponomics,” which probably marked the premiere of this word. His first sentence was:

 

Eighteen months ago, Groupon didn’t exist. Today, it has over 70 million users in 500-odd different markets, is making more than a billion dollars a year, has dozens if not hundreds of copycat rivals, and is said to be worth as much as $25 billion.

Six months later, on November 4th, Groupon raised over $700 million in its initial public offering (IPO), implying an enterprise value of about $16 billion. While not ...

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