The May Report: 9/26/2011: First Rob Solomon, now Margo Georgiadis. Groupon has lost two COOs in roughly six months! And the killer is that Margo left with 300,000 options sitting on the table theoretically worth about $60MM. I mean, I know that Google pays well but not that well. On top of that the founders and other shareholders are plundering the $950MM VC money and getting out as much cash as they can while the Groupon ship has taken on a lot of water. I have to ask two questions: 1. Where are the folks at Goldman, Credit Suisse, Morgan Stanley, DLA Piper, and Winston & Strawn on the repeatedly goofy and incompetent accounting? –don’t even think about suing boys because you’ll have to prove that you are competent and I’ll love that suit ; 2. If Margo saw any chance of an IPO which she could cash out on, why on earth would she leave?; Plus an inside look at the way the national media really works

Editor and publisher: Ron May, ron@themayreport.com, ronaldmay@aol.com, www.themayreport.com , 773-525-3944.

If you missed an article, go here: www.tmronline.com/A55951/tmrarticles.nsf/vwFullNewsletter

Louis Brandeis: “Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants.”
________________________
****************************************
Real-time Communications Conference & Expo
(Formerly the VoIP Conference)
Featuring – VoIP, Video, Mobility, Web, Grid, and more
October 4-6 at Illinois Institute of Technology in Wheaton

Register Now – Special Ron May Rate (use discount code – MAY)
$200 for 2 days / $300 for 3 days (with tutorial)

Join us for the multi-track Real-Time Communications Conference with 2-3 day options that includes 50+ speakers, 200+ attendees, 100+ participating organizations, 30+ sponsors, tutorials (SIP or NG 9-1-1), keynotes, panel discussions, networking opportunities, lunches, and a cocktail party.

Speakers from: Google, Skype, Microsoft, Nokia, Motorola, Alcatel-Lucent, Cisco, and Martin Cooper (innovator of the cell phone), and others
Sponsors: AT&T, Alcatel-Lucent, Avaya, Cisco, Comcast Business Class, NEC, Siemens, Verizon and others

Visit www.cpd.iit.edu/voipconference for more information about the program, speakers and sponsors.

Register Now
To Register: Visit www.cpd.iit.edu/voipconference/ (save with the Ron May discount code – MAY)

Prices:
$300 for 2 days ($200 for Ron May readers)
$400 for 3 days ($300 for Ron May readers)

Sponsor: $500-$2,500 with exhibit table and 2 free attendees
*****************************
________________________
TABLE OF CONTENTS

The Scoop section:

– Groupon’s IPO prospect loses luster as COO leaves
– Groupon Executive Steps Down to Return to Google
– Accounting Change Cuts Groupon’s Revenue
– Eric Savitz, Forbes Staff
– The link to the revised S-1
– Briefly noted, by Ron May
– People attending the Clean Energy networking event tonight at Theory, 9 W. Hubbard
______________________________
**************************************
Fast and Professional Search Engine Optimization Solutions
please contact Backlinks Company www.BLcompany.com
Mike Freud 970-391-0632 mikefreud@gmail.com
***************************************
_________________________
**********************************************
September 2011 Event – Future of the Office – How Technology Will Change the Way We work

September 26th 5:30-8:30 pm

We invite you to our first event of the 2011/12 season and boy do we have some great programs in store for you!

Kicking this year off with The Future of the Office our panel of experts will provide us with a peek at what changes are in store for how and where we work in the future.

Whether it’s the way you collaborate with co-workers, customers, and partners–or doing away with cubicles and office layouts–technology plays a large role in what will shape the way we work. And very soon. We will see social networking migrate into social working. Hear how technology is driving how we source labor and manage the workforce. If you’re tired of being held up in a conference room for endless meetings, see what happens when technology and design join forces for new work spaces.

You’ll also want to be on hand as we make several announcements, including our new relationship with the Global MIT Enterprise Forum and Technology Review, MIT’s respected magazine. Membership changes/benefits and our goals for continuing to support the entrepreneurial community of Chicago are also on the agenda.

The presentation includes panelists from:

· Ross Kimbarovsky, Co-Founder crowdSPRING

· Dr. Hugh Musick, Associate Dean- IIT School of Design

· Jeffery Calusinski, Distinguished Engineer- IBM

· Sudhaker Lahade, Steelcase

One note for our members. We are now charging a nominal $10 fee for each meeting to help defray costs of hosting these events. Be sure to register early, the fee increases to $20 the day of the event.

Register Today

www.mitefchicago.org/content.aspx?page_id=87&club_id=375711&item_id=189515

www.mitefchicago.org

When
Monday September 26th
5:30 – 8:30 pm

Where
Hosted by our host sponsor, IBM
IBM Innovation Center
71 S. Wacker Drive, 6th floor
Chicago
(Note that the Wacker entrance is closed. Enter from Franklin Street)

Cost
$10 for members.
$30 advance payment for guests.
*************************************************
____________________________
******************************************
Hi, I’m Len Bland and I’m an addict. I’m addicted to puffing my skills, credentials and track record.

For years now, I have run a little group with a friend of mine, David Carman, called the BNC Venture Capital Group.

We allow firms to present their business plans before a group of interested attendees but they are not often real investors.

In exchange for the right to present, they sign an agreement that states that if we raise money for them through any of our contacts, they owe us money on a sliding scale depending on how much was raised. For under $500K, we take 10%.

We’ve had a couple of firms raise some funds, one for just over $50K, but for the most part, I make my money on selling consulting and coaching services.

On thing that makes any claims I make about brokering deals or raising a fund problematic is that we don’t do due diligence and presenters are never asked for their financials.

But I made a huge mistake and really an unforgivable one when I told everyone that I and a group of people around me including Norm Fishman, Lee Sussman, Ray Markman and David Carman were raising a venture fund. And we called it the Midwest Renaissance Fund.

I even had a logo and cards printed up for Ray and me and I went around telling people that I had this fund. I use Ray’s office a lot for coaching entrepreneurs on presentations and I routinely take full advantage of Ray’s good will.

We never did raise a fund and we only had some expressions of interest on the part of a few potential LPs.

To give people the impression that we had a fund as I did on May 4th, 2011 at the Funding Feeding Frenzy on the panel I sat on when I was commenting on Howard Brown’s presentation, was a huge NO NO and a big business ethics violation.

For that I am profoundly sorry and I hope to never again exaggerate what I am doing.

But even so, I continue to do that by publicizing half-baked activities I am involved in.

You know, it is possible that if I put that fake business card in an envelope and mailed it, I could be guilty of mail fraud.

We had a guy like me in Chicago high tech once. His name was Barry Moltz. Barry talked a lot to entrepreneurs about funding but mostly he actually sold consulting services.

Yes, my name is Len Bland and I am addicted to puffing what I do.
++++++++++++++++

Hi, I’m Bob Geras and I’m an addict. I’m addicted to having smoke blown up my butt.

I have invested as an angel in a lot of firms for many years for but I do it sometimes for the wrong reasons. I like when the people I invest in kiss my a** and make me feel like a great man of some sort.

Sometimes my addiction has gotten out of hand.

The most flagrant example I can think of is when Al Wasserberger was my CEO at a little firm I had funded called Intellext that then changed its name to Media River. At my 70th birthday party in 2007 which was well attended, Al got up in front of the entire audience, dropped his pants and showed his butt to the audience with a big sign written all over his a** saying “I’m Bob’s.”

I admit that I loved it and it fed my fantasy about myself being some kind of mafia don or godfather. I have even promoted the idea that I am the godfather of Chicago angel investing.

Meanwhile, Al Wasserberger was lying to me and the whole board, dating a 22 year old cocktail waitress, all the while cheating on his wife of many years, spending tons of money on entertainment and travel for his and his girlfriend’s own personal enjoyment and all of this was done on my dime!

And while he was chasing tail, the company was going down in flames.

But I was blind to it for far too long.

My wife Dawn sensed that something was wrong long before I did.

That is because I am an addict and my addiction is to being surrounded by obsequious and sycophantic people.

Another such a** kisser who had me in the palm of his hands for years was Neil Kane. Neil, unlike Al, is a nice guy and not a crook, but in his own way Neil manipulated me just as Al did. Neil kept feeding me lines for years about how he knew what he was doing building the business. I finally had enough of the talk in March of 2011 and got rid of him.

I’ve been pretty clean since then.

Yes, my name is Bob Geras and I’m addicted to being told I’m great.
+++++++++++++++++++++++

Hi, I’m Jerry R. Mitchell. I’m an addict. I’m addicted to having people sit at my feet as though I am the master dispensing great knowledge.

My addiction is that I am so self-absorbed that I don’t see reality, even when it smacks me in the face. I want people to kiss my ring and I can’t deal with it if they see me objectively. My ego is just too damn big.

I once had a successful — moderately –organization for entrepreneurs called the MEF, Midwest Entrepreneurs Forum. It had meetings downtown and in the western suburbs.

I paid so little attention to what people wanted and to the needs of the marketplace and to the “competition” that the organization waned for years. I treated my board like house servants and most of them quit or were thrown off the board by me.

Attendance at monthly meetings kept dropping, all the while I kept soothing my ego with phoney reasons that this was happening. The notices for meetings did not go out on time. The dates for the meetings were often wrong in the notices. Board members for the shrinking board did not show up at board meetings.

The real reason people stopped coming was my overblown ego and my unwillingness to recognize it.

That manifest itself in the fact that I lost touch with what the market wanted.

I often made myself the moderator or to be nice, I made an 87 year old guy who had been loyal to me for years the moderator.

If I was the moderator, I often interrupted the panelists to inject my own opinions.

The organization had been a collaborative effort — somewhat — at one time, but it became too much about me. “It’s all about Jerry,” one local critic put it. And I am “a big crybaby” according to another. Woe is me, Jerry R. Mitchell.

I loved speaking in China. My writings and speeches are popular there and I am wheeled around as an emperor there. And universities use my writings here. I often brag about that.

By the time November 2010 rolled around, we were down to five attendees. They were my wife of six months, David Culver, Jim Eiden, Bill Price and Ron May. Eiden, Price and May had been in the organization for many years.

On that night, we had three panelists and I was the moderator. The auditorium was built to hold 186 people. There were 181 empty seats. I was on stage with the panel and at the table with the microphones.

I looked out at the “crowd” and saw that it was small. I did not care. ‘I am Jerry Mitchell,’ I told myself. ‘I’m a serial entrepreneur. I have taken many companies public. I am just too big to accept that this is happening.’

That is my addiction. I should have said to the audience, such as it was, “I see we have a small turnout tonight and that is my fault. Let’s go out in the lobby and sit on the couches and have our intimate chat there. We can save some money for IIT on the electric bill and we can be more cozy out there than in here where I will be bellowing like Howard Beale to an almost empty room. That was a great scene, wasn’t it?”

The thought should have occurred to me that night: ‘Jerry, where have all your followers gone?’

Where was Bruce Hanson*, Mike Nikolich*, Gary Slack*, Hazel Wagner*, Richard Landman*, Doug Newkirk*, John Moran*, Elliott Black*, Bill Miller*, Katie Spaniak*, Craig McCrohon*, Fred Otto*, Mike Hettwer***, Bill Miller*, Jason Jacobsohn, Cy Griffith, SuAnne Goldman, JoAnne Gucwa, Nik Rokop, Harold Clampitt, Scott Glickson, Lynne Baker, Josh (fka Schneider) Metnick, Sean Murdock, Jeff Coney, Tom Thornton**, Bret Johnson, Sonny Cohen, Todd Allen, Brad Spirrison, Neil Kane, Mary Bober, Ellen Carnahan, Darcy Evon, Bob Brill, Linda Darragh, Terry Doheny, Ada Nielson, Robert Sansome, Robert Harney, Spencer Maus, Steve Miller, Ron Kirschner, Bob Geras, David Gulley, Bruce Montgomery, Raman Chadha, Tom Figel, Dan Limbach, Michele Beaulieux, Dick Reck, Candy Renwall, Tom Churchwell, Paul Tedesco, Jeff Gilbert, Scott Sargis, David Baker, Matt McCall, Wally Cornett, Nancy Sullivan, Greg Rudin, Alan Warms, Michael Pope, Josh Singer, Harold Welsch, Avery Cohen, Michael Gray, Tom Gorman, Lou Calamaras, Jack Philbin, Robert Jacobi, Daliah Saper, Tim Lavengood, Len Bland, Stephen Meade**, Mary Spaeth**, Phil McGuigan**, Chris Sorensen**, Shannon Clark**, Mike Freud**, Cary Nourie**, David Naylor**, Sheldon Rosenfield, Art Brown, Chris Galvin, Ed Galvin, Scott McGowan, A. J. Singh*, Charles Wu, Penny Edecker, Richard Kennedy, Jack Curley, Joe Scroppo, Dick Pilcher, Barb Kremer, Michele Honomichl, Barbara Rapchak***, Mark Achler***, Peter Sturdivant, Lanny Feder, Scott Kane, Walt Sloan, Jon Paul, Adarsh Arora***, Anup Manchanda, Patrick Hughes, Dave Dieter, Alex Bratton, Doug Hart, Erika Blackwell, Chuck Cone, Karan Goel, Irv Jarett, Alex Jarett, Ronnie Jarett, Beverly Conner, Mark Glennon, Pat Statwick, Don Samuelson, Jim Charney, Scott Harris, Rich Kooy, Ray Genellie, Sid Bennett, Ed Cooper, Stefania Aulicino***, Judith Turk, Tanya Sienko, Gary Shorter, Doug Seville, Neil Gorman, Chuck Weinles, Mark Menarik, Mark Baldridge, Maureen Wagner, Jim Peters***, Pam McDonough***, Harvey Lyon***, John Schoeph, Bill Anthony, Jim Hodges, Greg Mackintosh, Jim Hanlon, Barb Kremer, Mark Achler, Helen Yang, John Katsantonis, Bill Davidson, R.H. Bailin, Alex Lemanski, Art Mertes, Greg Scott, Hedy Ratner, Mona Pearl, Layton Olson, Bob Ingersoll, Bernie Ostrowski****, John Chmela*****, Dan Malven, Mark Malven, Dan Lyne, Todd Evans, Jason Rexilius, Garrett Smith, Jed Abernethy, Anjali Gurnami, Nate Williams, David Pessis, Jeff Judge, Harvey Daniels, David Carman, Nural Eusufzai, Paul Caswell, Mike Maddaloni, Elliot Hirsch, Ellen Clough, Michael Guerrieri, Stephen Meade**, Chris Rollyson, Garnet Steen, Mike Nelson, Byron Miller, Fred Roberton, Bob Back, Zoe Quan, John Morgan, Michael Karras, Bob Moschorak, Scott McGarvey, Andrew Clarke, Michael Davis, Stacy Ratner, Sam Fallenbaum, Marcus Newman, Gary Gress, Tom Wieser, Michael Kurgan*****, Lee Neubecker, Irv Michaels, Matt Dalton** and many others?

* Indicates current or former MEF board member who quit or was thrown out by Jerry R. Mitchell
** Indicates person has left Chicagoland for greener pastures
*** Indicates the person had a slim chance of being there
**** Indicates the person has left the planet
***** Indicates the person turned out to be a bona fide crook and probably should not have been there

My name is Jerry R. Mitchell and I can’t take it anymore. I’m too much in love with myself. I’m an addict and I hope that the youthful age of 73, I can cure it.
++++++++++++++++++++++

Hi, I’m Troy Henikoff. I’m an addict. I’m addicted to having everyone tell me how great I am and to lashing out against them if they don’t…. [to be continued]
+++++++++++++++++++++++
Hi, I’m Nancy Sullivan…
+++++++++++++++++++++++
Hi, I’m …. [at least ten more to come]
****************************************
______________________________
The Scoop section:
___________________
Groupon’s IPO prospect loses luster as COO leaves

www.usatoday.com/money/companies/story/2011-09-26/groupon-IPO-in-trouble/50548532/1

Groupon’s IPO prospect loses luster as COO leaves
By Scott Martin, USA TODAY
Updated 8h 50m ago

Groupon’s gold-paved path to a public stock offering is now off track.

Chicago-based Groupon, which created the deals craze, on Friday said Chief Operating Officer Margo Georgiadis is returning to former employer Google. The blow came as Groupon cut in half its previously stated revenue.

Groupon CEO Andrew Mason wrote on the company blog, “Sales, channels, international, and marketing will now report directly to me.” He gave no reason for the departure. Georgiadis will become president of Americas at Google.

Groupon shaved its revenue for the first half of this year to $688 million, from $1.5 billion, in an acknowledgment on Friday of accounting missteps with the Securities and Exchange Commission. Groupon had reported the entire deal coupon as revenue instead of subtracting the merchant’s cut. Groupon says in SEC filings that revenue minus merchant fees was always the metric to consider.

The double whammy is the latest dose of bad news for what was expected to be one of the hottest initial public offering contenders of the year.

Georgiadis is the second COO to exit in six months. Rob Solomon left after starting in early 2010. Georgiadis joined shortly after the company filed to go public in a bid to raise $750 million.

She held 1.1 million in restricted stock options, according to the SEC. A return to Google today would certainly not match such financial reward. Google declined to comment.

“A COO leaving with all those shares? There’s no question that this raises questions,” says PrivCo analyst Sam Hamadeh.

Groupon’s woes are mounting. The start-up recently canceled its IPO roadshow. And it is losing boatloads of cash – $223 million in the first half of 2011 alone, according to the filings – as it faces a crush of rivals, including deep-pocketed Google.

The deals giant is also operating without cash. Groupon reported working capital of negative $305 million in the first half of 2011, SEC papers showed. Worse, company executives are cashing out from the $1.1 billion that venture firms invested.

“You see insiders trying to dump the shares,” Hamadeh says.

So far, some $946 million has been extracted by insiders who cashed out, filings said. Co-founder Eric Lefkofsky took $319 million from the cash-strapped Groupon, according to the SEC documents.

Groupon, in an SEC-mandated quiet period, declined to comment.
+++++++++++++++++
To leave a comment, you need to sign up.

Please wait while we perform your request.

1 comment

Sort:
You voted
Abuse Reported Report Abuse

Score: 0
Name withheld
Baby Face

12:34 AM on September 26, 2011

This comment is hidden because you have chosen to ignore Baby Face. Show DetailsHide Details

Groupon is a sinking ship – who will be the last rat to jump overboard?
______________________________
Groupon Executive Steps Down to Return to Google

Subject: Groupon Executive Steps Down to Return to Google
Date: 9/24/2011 12:09:15 A.M. Central Daylight Time
From: tatvshow@yahoo.com
To: ron@themayreport.com
CC: RONALDMAY@aol.com

dealbook.nytimes.com/2011/09/23/groupon-executive-steps-down/

SEPTEMBER 23, 2011, 5:57 PMI.P.O./OFFERINGS
Groupon Executive Steps Down to Return to Google
BY EVELYN M. RUSLI
The chief operating officer of Groupon, Margo Georgiadis has stepped down afterabout five months at her post, the chief executive, Andrew Mason, announced onthe company’s blog late Friday.
Ms. Georgiadis, a Chicago resident and former Google executive, will return to Google in a new role as president of Americas.
Article ToolsE-mail ThisPrint2 CommentsRecommendShare
TUMBLRDIGGLINKEDINREDDITPERMALINKTwitterRelated LinksAccounting Change Cuts Groupon’s Revenue
“As a fast-growing company, we’ve done a lot of hiring this year, including on our senior executive team,” Mr. Mason wrote in the post. “It would have been great if I could say that we batted 1,000 percent, but that’s rarely the case.”
The abrupt departure of Ms. Georgiadis comes at a particularly awkward time for the daily deals site, which is preparing to go public. Ms. Georgiadis joined the start-up in April, replacing former chief operating officer, Rob Solomon, whose tenure at Groupon lasted about a year. As Mr. Mason noted on his blog, the company’s executive team has welcomed eight additions this year, accounting for more than half of the executive team.
Over the last few months, Groupon’s management has had to wrestle with several issues related to its initial public offering, including the use of uncommon accounting measures, the leak of an internal memo written by Mr. Mason (which discussed financial performance) and tumultuous equity markets.
In a statement published on Groupon’s blog, Ms. Georgiadis did not explain the reason behind her resignation, but commended the company on its progress thus far. “It was a hard decision to leave as the company is on a terrific path. I have complete confidence in the team’s ability to realize its mission,” she said.
Full post from Groupon’s blog:
Update on the Groupon Team
As a fast-growing company, we’ve done a lot of hiring this year, including on our senior executive team. Since the beginning of this year, we’ve made a total of 8 additions – that’s 57% of the total executive team. It would have been great if I could say that we batted 1,000%, but that’s rarely the case; after five months at Groupon, Margo Georgiadis, our COO, has decided to return to Google (her former employer) in a new role as President, Americas.
We’ve built a fantastic team that has proven itself highly capable, so this change won’t have an impact on operations. In fact, we are using it as an opportunity to reorganize in a way that reflects our evolving strategic priorities. Sales, Channels, International, and Marketing will now report directly to me.
Here’s a note from Margo: “Groupon is a great company and I feel privileged to have worked there even for a short time. It was a hard decision to leave as the company is on a terrific path. I have complete confidence in the team’s ability to realize its mission.” We wish her well.
______________________________
Accounting Change Cuts Groupon’s Revenue

Subject: Accounting Change Cuts Groupon’s Revenue
Date: 9/24/2011 12:12:25 A.M. Central Daylight Time
From: tatvshow@yahoo.com
To: ron@themayreport.com
CC: RONALDMAY@aol.com

dealbook.nytimes.com/2011/09/23/groupon-changes-its-revenue-accounting/?ref=technology

SEPTEMBER 23, 2011, 5:51 PMI.P.O./OFFERINGS
Accounting Change Cuts Groupon’s Revenue
BY MICHAEL J. DE LA MERCED AND EVELYN M. RUSLI

Seongjoon Cho/Bloomberg News
Andrew Mason, Groupon’s chief executive.8:56 p.m. | Updated
Groupon disclosed a major accounting change on Friday, essentially halving its once-jaw-dropping revenue after it encountered resistance from regulators with its filing to go public.
Groupon, the online coupon titan, announced separately that its chief operating officer of about five months, Margo Georgiadis, had stepped down.
The changes in the revised filing and the executive departure are likely to spur additional questions about Groupon, a much-envied rising star in the constellation of new Internet companies. The company has grown rapidly, but its ability to sustain that growth, the ways it measures growth and the eccentric public persona of its chief executive have come under fire at times.
Despite those criticisms, and the current turmoil in the stock market, Groupon is still aiming to go public next month, people briefed on the matter have said. That offering could value Groupon at more than $15 billion.
Article ToolsE-mail ThisPrint6 CommentsRecommendShare
TUMBLRDIGGLINKEDINREDDITPERMALINKTwitterRelated LinksGroupon’s amended filing
Groupon Executive Steps Down
The company’s revised filing for an initial public offering also incorporated portions of a memorandum sent to employees by the company’s chief executive, Andrew Mason, that were subsequently leaked to the press. Analysts had questioned whether that letter ran afoul of a mandatory “quiet period” for companies seeking to go public.
The revenue accounting change is Groupon’s second since it filed to go public in May. Early last month, it removed references to an accounting metric that critics said misleadingly showed the company turning a profit.
In its latest filing, Groupon says that it has restated its financial results for the last three years “to correct for an error” in the way it reported revenue. Before, the company reported as revenue all the money it collected from customers, including cash that was later paid out to Groupon’s merchant partners.
Now, Groupon is reporting what it calls “net revenues,” which exclude the retailer payouts.
For example, in a version of the prospectus filed last month, Groupon reported $1.52 billion in revenue for the first six months of the year. In Friday’s filing, that number is now called net revenue and is $688 million. The original $1.52 billion figure is now counted as gross billings.
Groupon’s accounting change is the inverse of what Google did before its own public debut in 2004. The search giant initially excluded cash that was shared with distribution partners in its revenue figures. It later changed its revenue to include those payouts.
The revenue restatements do not affect the company’s bottom line: Groupon still reported a $253.9 million loss attributable to common shareholders for the same time period. Nor do they affect the company’s preferred business performance metrics, including a pro forma measure known as consolidated segment operating income.
The new “net revenue” metric replaces what Groupon once called “gross profit,” a measure that has appeared in previous filings.
Groupon’s latest prospectus is meant to address concerns by the Securities and Exchange Commission, which regularly reviews initial offering filings.
The agency has raised several questions about the company, like its accounting measures and statements made by senior executives during its quiet period. In that time, companies are supposed to refrain from making public comments about their business performance, in an effort to tamp down on improper stock-promoting.
But earlier this year, Groupon’s chairman, Eric Lefkofsky, said publicly that the company would be “wildly profitable.” And the letter from Mr. Mason, the chief executive, included detailed descriptions of Groupon’s recent business performance. Groupon’s solution in both cases was to include both sets of comments, along with a warning to potential investors not to rely on them for planning purposes.
But the S.E.C. is not Groupon’s only headache. Ms. Georgiadis is the second chief operating officer the company has lost in two years. She will return to her former employer, Google, as president of the Americas.
Her predecessor at Groupon, Rob Solomon, worked at the company for about a year before departing in March. “As a fast-growing company, we’ve done a lot of hiring this year, including on our senior executive team,” Mr. Mason wrote in a blog postannouncing Ms. Georgiadis’s departure. “It would have been great if I could say that we batted 1,000 percent, but that’s rarely the case.”
____________________________
Eric Savitz, Forbes Staff

www.forbes.com/sites/ericsavitz/2011/09/23/groupon-cuts-reported-revs-coo-goes-back-to-google/

Eric Savitz, Forbes Staff
Covering the intersection of tech and investing.

Tech|9/23/2011 @ 6:44PM |1,632 views

Eric Savitz
Forbes Staff

After a long career at Barron’s, I joined Forbes as San Francisco bureau chief in December 2010. I’ve been writing about technology and investing for more than 25 years. With the Tech Trade, I’ll pick up where I left off when I was writing the Tech Trader Daily blog at Barrons.com. When I’m not working, you can find me riding my road bike around the Bay Area hills, managing my fantasy baseball team, rooting for my beloved Phillies and Eagles and hanging out in the Valley with my family.
Eric Savitz’s Popular Posts

Groupon this afternoon filed a revised version of the S-1 for its pending IPO, in which the company disclosed the resignation yesterday of COO Margaret H. Georgiadis and restated previously reported revenues.

Georgiadis is returning to Google, where she will be President of the Americas, according to a blog post by Groupon CEO Andrew Mason. According to Bloomberg, Georgiadis will take a job now held by Dennis Woodside, who will now be responsible for managing the company’s acquisition of Motorola Mobility. Before leaving for Groupon earlier this year, she had been Google’s vice president of global sales.

As for the restatement, Groupon said the sharp reduction in reported revenues for 2008, 2009 and 2010 reflects “an error in its presentation of revenue.”

Groupon said that “most significantly,” the company restated revenue to remove merchant fees. “Historically, the Company has reported the gross amounts billed to its subscribers as revenue,” the company said in the filing. “All prior periods have been restated to show the net amount the Company retains after paying the merchant fees. The effect of the correction resulted in a reduction of previously reported revenues and corresponding reductions in cost of revenue in those periods. The change in presentation had no effect on pre-tax loss, net loss or any per share amounts for any period presented.”

The company said it also changed the presentation of certain other income statement expenses to be consistent with reporting revenue on a net basis. “These changes include presenting loyalty programs as a component of marketing rather than as an offset to revenue,” the company writes in the filing. “The company believes that this classification is most appropriate as it is acting as an agent on behalf of the merchant in driving traffic to generate revenue. In addition, refunds made to subscribers under the Groupon Promise are presented as a component of cost of revenue, rather than as an offset to revenue, as these amounts are not paid directly to the merchants.”

Groupon also said that credit card and other processing expenses have been reclassified to cost of revenue from selling, general and administrative for all periods.

•For 2008, revenue was reduced to $5,000, from $94,000.
•For 2009, revenue was reduced to $14.54 million, from $30.47 million.
•For 2010, revenue was reduced to $312.9 million, from $713.4 million.
For the 2011 first half, revenues were $688.1 million.

Most of the changes reflected a restatement of cost of revenues, although there were other adjustments to the marketing and SG&A lines.
_______________________________
The link to the revised S-1

SEC filing

X

Inbox
X

ReplyReply
More|
Martin, Scott ssmartin@usatoday.com to me, ronaldmay

show details 7:37 PM (2 hours ago)

from Martin, Scott ssmartin@usatoday.com
to “ron@themayreport.com”
cc “ronaldmay@aol.com”
date Fri, Sep 23, 2011 at 7:37 PM
subject SEC filing
mailed-by usatoday.com
Important mainly because of the people in the conversation.

hide details 7:37 PM (2 hours ago)

Hi,

Great talking with you, Ron.

www.sec.gov/Archives/edgar/data/1490281/000104746911008207/a2205238zs-1a.htm

Stay in touch.

Scott

Scott Martin

Editor, Reporter

USA TODAY / Technology
100 Pine Street, Suite 250
San Francisco, CA 94111
Office: (415) 901-5365
Mobile: (510) 815-8366
________________________________
Briefly noted, by Ron May

* Here’s an inside look at how the national media works and especially when it comes to Groupon.

I received a call from Scott Martin of USA Today on Friday afternoon at 5:14pm. By the time we connected, it was about 6:30pm Chicago time. Scott was calling from San Francisco.

We talked for about 45 minutes.

I don’t have to tell you that he was calling about Groupon and the departure of Margo Georgiadis.

In that talk, we covered a lot of ground, including Starbelly and HA-LO and the blueprint for the con game being played by these guys, especially the Ponzi scheme.

When I used that word, Scott asked me if I knew Sam Hamadeh of PrivCo (sam@privco.com) and I told him that no, I don’t know Sam. He said that Sam had said exactly the same thing in a Bloomberg interview a few weeks ago.

Naturally, I have looked it up since our conversation. But I can’t view it since I don’t have Flash loaded on my computer.

++++++++++++++++++

www.bloomberg.com/news/2011-08-23/hamadeh-compares-groupon-to-a-ponzi-scheme-video.html

Hamadeh Compares Groupon to a `Ponzi Scheme’: Video
Q
Aug 23, 2011 6:59 PM CT

Groupon Outlook, Accounting Practices

Play Video
Q

Aug. 23 (Bloomberg) — Sam Hamadeh, founder and chief executive officer of PrivCo, and Joseph Ranzenbach, vice president of operations, talk about the outlook for Groupon Inc. and challenges facing the biggest provider of online coupons. They speak with Cory Johnson on Bloomberg Television’s “Bloomberg West.” Emily Chang also speaks. (Source: Bloomberg)

Sam Hamadeh, founder and chief executive officer of PrivCo, and Joseph Ranzenbach, vice president of operations, talk about the outlook for Groupon Inc. and challenges facing the biggest provider of online coupons.

They speak with Cory Johnson on Bloomberg Television’s “Bloomberg West.” Emily Chang also speaks. (Source: Bloomberg)

Running time 08:01
Want to save this for later? Add it to your Queue!

www.bloomberg.com/video/74330222/

Groupon Outlook, Accounting Practices

Aug. 23 (Bloomberg) — Sam Hamadeh, founder and chief executive officer of PrivCo, and Joseph Ranzenbach, vice president of operations, talk about the outlook for Groupon Inc. and challenges facing the biggest provider of online coupons. They speak with Cory Johnson on Bloomberg Television’s “Bloomberg West.” Emily Chang also speaks. (Source: Bloomberg)
++++++++++++++++++++++++++++++++

May again. Sam Hamadeh is a respected analyst. He is no Chris Sweis, although Sweis used the exact same term a week or so ago with me and I quoted him on it.

(Then of course Sweis called to complain that I quoted him by name. He was upset because he might have some business to do with Groupon and I took that to mean perceived intimidation.)

My own conversation with Scott Martin had some pretty blunt talk including con artists, Enron style accounting, pump and dump, and I reviewed the history of Starbelly/HA-LO with him. But there were also a lot of much more innocuous comments.

After Scott and I got off the phone, I emailed him about six items and he sent me the link to the revised (for the third time) S-1. (see above.)

Now a bit of history here. This is at least the tenth or fifteenth time I have been called by a national publication from Forbes about a local brokerage firm I cannot name to the New York Times to the Wall Street Journal to other pubs and they generally don’t quote me. A few of those reporters have stayed in touch and they are good contacts.

I’d say that I get quoted about 20% of the time when they talk to me and I always try to help them because it’s not about being quoted. Years ago, I thought it was but I’ve grown up. There is no room for petty ego issues.

It is about trying to educate and inform the reporters and I learn a lot too by hearing what they have to say. They are wired in at a higher level. That has a lot of value to me and by extension to you. I am long past expecting to be quoted and really long past being disappointed by not being quoted. My primary loyalty is to TMR readers and they can benefit from the inside look at what goes into an article in the national press.

Here’s why they rarely quote the “blogger.”

The reporter may put you in the original article and yet the editor has the final say and editors cut out reference to “bloggers.”

This article was not about the whole history of Groupon and Brad and Eric. It was about the story of the moment which is the departure of Margo Georgiadis. I gave Scott some history and clarified a few things for him. He thought Pawngo was at the same level as Echo. I told him that a lot of the Lightbank firms are just tiny start-ups they have funded to the tune of $1MM.

A concurrent story is the huge amount that the founders and other shareholders are desperately pulling out before the whole ship sinks. We will see huge layoffs and many other top officials of the firm leave soon. I’m saying that. Scott did not say that.

The furthest he would go is to say that it looks like the IPO is not likely or why else would Margo have left.

Everyone sees a sinking ship.

But Scott Martin at USA Today is far more circumspect than I am. He saw Margo’s departure, given that she has 300,000 options that would be available to be sold immediately (he gave me that info. but it did not make it into the article either), and that is about $60MM he said. “I think it is likely that Google is not paying her that much,” he told me.

When Margo started, I quoted the S-1 on 6/5/11.
“Margo Georgiadis

The company has had to spend up to attract top-flight talent as it prepares to go public. President and Chief Operating Officer Margo Georgiadis recently was hired from Google at a salary of $500,000. She also received 1.1 million shares of restricted stock.”

I told him that it is also unusual for Google to bring someone back so soon after he or she has left and especially for a promotion.

BTW, Margo Georgiadis is related to Pete Georgiadis who many years ago was the COO of Lante and also, he has run his own incubator Synetro for years.

I don’t know if Margo is Pete’s daughter or his wife or some other relative.

Here’s the bombshell that Scott Martin dropped on me. We know about the Ponzi scheme and we know about the cash being taken off the table.

But remember Brad Williams, the PR guy who quit about a month ago?

Well, Scott was going to call Brad right after we got off the phone. Apparently, Brad is ready to talk, Scott told me.

But I don’t see Brad quoted. I wonder why.

They may not have been able to get a hold of him. I doubt that.

There may be legal restrictions about what Brad can say. There may be space considerations.

But my bet is that space was not the problem.

They may be holding off on Brad for another article.

Scott did say that he had heard that Brad Williams has a history of job hopping.

The other reporter at USA Today that Scott Martin was talking to about this article was John Schwartz. It was John who suggested to Scott that he call me.

I think there are four reasons I was cut or was not even in the submitted article.

1. I am from their point of view a blogger and mainstream media is reluctant to quote blogs.
2. My quotes were too negative and just as they did not pick up the “Ponzi scheme” quote from Sam Hamadeh which they certainly knew about because they are the ones who told me about it, they probably felt my quotes were too inflammatory.
3. Based on the material I sent to Scott from the TMR archives, he may use me for a future article but those articles do show how long my relationship has been with Brad primarily, and also Eric. That could have been seen by them as a bias. Yes, if knowing people is a bias, I am guilty of that.
4. I did not bring much value-add to the discussion if the topic was limited to Margo and even if it extended to the plundering of the money from VCs, I did not add much and since Sam Hamadeh had already said “Ponzi scheme.” Since they did not quote that, why would they quote me saying more harsh things?

Eric was more the back room guy with respect to Starbelly, fka Zebra, just as Andrew Mason is the face man now.

That’s the inside view of how the national print media works. They get the point across but you often have to read between the lines.

The latest valuation I have heard with the revised accounting is $12B.

When will it drop below the $6B that Google supposedly offered?

My head is still spinning and I am still baffled: How hard is it for serious financial professionals to just report the actual revenue to the firm?

And how embarrassing is it for them to keep on screwing up the accounting and continue to submit new S-1s?

Why are we now on our third version of the S-1 when we have firms like Credit Suisse and Goldman in on this deal?

Why isn’t that issue getting more attention in the press?

Isn’t there a malpractice case against those firms?
________________________________
People attending the Clean Energy networking event tonight at Theory, 9 W. Hubbard

sept26ccea.eventbrite.com/

Attendee List Sort by: Date | First Name | Last Name

Richard Moss, Senior Scientist, Joint Global Change Res. Inst.

——————————————————————————–

Chris Perzan, Sr. Counsel, Environmental & Safety, Navistar, Inc.

——————————————————————————–

Christine Baglin, Principal, AEA-PPC

——————————————————————————–

Erik Maassen, Business Development, Conlon Real Estate

——————————————————————————–

Jared Gonsky, Manager of Market Development, DuPont Danisco Cellulosic Ethanol

——————————————————————————–

Shannon Bookey, Graduate Student, University of St. Thomas

——————————————————————————–

Daniel Kreeger, Executive Director, Association of Climate Change Officers

——————————————————————————–

Carlin Watkins, Program & Marketing Coordinator, Association of Climate Change Officers

——————————————————————————–

Michael Cote, Program Manager, Association of Climate Change Officers

——————————————————————————–

Janet Powaga

——————————————————————————–

Yves Bienvenu

——————————————————————————–

Andrea Moran, Co-Founder / Managing Director, Marengo Hampshire Partners

——————————————————————————–

Allison Hannon, Senior Finance Sector Manager, The Climate Group

——————————————————————————–

Douglas Dobben

——————————————————————————–

Dave Cleaves, Climate Change Advisor, US Forest Service

——————————————————————————–

Mark Maloney, Director of Project Development, AMP Americas, LLC

——————————————————————————–

J.R. Plate, Sales Manager, Fluitecnik, Inc

——————————————————————————–

Katherine Schrank, Founder/Executive Director, Sustainability Partners Inc.

——————————————————————————–

Chelsea Kammerer, Senior Associate, APCO Worldwide

——————————————————————————–

Peter Athans, None, None

——————————————————————————–

Eric Mayer, Business Development, Fluitecnik

——————————————————————————–

Jay Marhoefer Marhoefer, CEO, Intelligent Generation

——————————————————————————–

Luke Lewandowski

——————————————————————————–

Chris Bley, Business Development, Rope Partner

——————————————————————————–

Jamie Johnson, Social Entrepreneur, Verde Sustainable Solutions, L3C

——————————————————————————–

Kristin Denecke, Account Rep., Finch Beer

——————————————————————————–

Kyle Hillman

——————————————————————————–

Joel Spenadel

——————————————————————————–

Joel Spenadel, Executive Director, JPMorgan Capital Corp

——————————————————————————–

Brian Jaymont, Director of Food & Beverage, Renaissance Hotels

——————————————————————————–

Michael Edds, Senior Mgr, Elect Eng, Nordex USA

——————————————————————————–

Alison Andrews, West Monroe Partners

——————————————————————————–

Nicole Yeary

——————————————————————————–

Jett Tackbary, Sr Manager, West Monroe Partners

——————————————————————————–

Boris Kholyavsky, Booth School of Business

——————————————————————————–

Matthew Bigham, Vice President – Finance, Lincoln Renewable Energy

——————————————————————————–

Jeannine Nichols, Founder, SelectPro Services

——————————————————————————–

Christa Iwanski, Green Financial Planner, Water Tower Partners

——————————————————————————–

Kati Scronce

——————————————————————————–

Beth O’Mara, Staff, Alderman Fioretti

——————————————————————————–

Alderman Robert Fioretti, Alderman, City of Chicago

——————————————————————————–

Bryan Villano, Founding Board Member, The Chicago Clean Energy Alliance

——————————————————————————–

Hoyt Hudson, Principal, Eco-Industrial Development

——————————————————————————–

Tim Frick, Mightybytes, Inc.

——————————————————————————–

Kyle Akerman

——————————————————————————–

Bill Dagiantis

——————————————————————————–

Sky Rudokas, Vice president, VySky ENERGY, LLC

——————————————————————————–

Laura Malkani, Vice president, VySky ENERGY, LLC

——————————————————————————–

John Wieland, Development Director, Lincoln Renewable Energy

——————————————————————————–

Donna Prestel

——————————————————————————–

Kevin Borgia, Director, Illinois Wind Energy Association

——————————————————————————–

Jack Darin, Director, Sierra Club, Illnois Chapter

——————————————————————————–

David Mauer

——————————————————————————–

Timothy O’Keefe, Vice President, J.P. Morgan

——————————————————————————–

Brett Cullen, Market Research Analyst, AllFuelCell LLC

——————————————————————————–

joe aamidor, ___, Self

——————————————————————————–

Sheila Epstein, Independent Associate, Viridian Energy

——————————————————————————–

Lauren Leifer, Independent Associate, Viridian Energy

——————————————————————————–

Jeffrey Fort, Partner, SNR Denton US LLP

——————————————————————————–

Debra Shore, Commissioner, Metropolitan Water Reclamation District

——————————————————————————–

Greg Buzzell, Director of Market Development, SoCore Energy

——————————————————————————–

Dwi Sari, CEO/President, Kencana Sari, Inc.

——————————————————————————–

James Flora

——————————————————————————–

Tamer Tullgren, Attorney, Wildman Harrold Allen & Dixon

——————————————————————————–

Ann Bartuska, Deputy Under Secretary, USDA

——————————————————————————–

Casey McGrath, Assistant Vice President, The BSC Group

——————————————————————————–

Thomas Lesch, VP Commercial Lending, BMO Harris Bank

——————————————————————————–

David Hagen, Manager, Eco-Industrial

——————————————————————————–

Tom Wolf, Executive Director, Energy Council, Illinois Chamber of Commerce

——————————————————————————–

Jeff Schulman, Illinois Chamber of Commerce

——————————————————————————–

Ashley Craig, Environmental Business Specialist, Environmental Law and Policy Center

——————————————————————————–

Sven Davies

——————————————————————————–

Elizabeth Rogers

——————————————————————————–

Alex Kelley, Solar Specialist, VELUX America

——————————————————————————–

Dane Sanders, Chief Marketing Solutionist, The Marketing Solutions Lab

——————————————————————————–

Brandon Simmons, Sales Manager, Nordex USA, Inc.

——————————————————————————–

Yuan Zhou

——————————————————————————–

Jeanine Otte, CNT Energy

——————————————————————————–

Anngie Richter, Regional Director, Cardno JFNew

——————————————————————————–

Nick Epstein

——————————————————————————–

Lesley McCain, Midwest Director of Business Development, Community Energy

——————————————————————————–

Stephen Thorn, Attorney, Thorn & Associates LLC

——————————————————————————–

Greg Kozak, North American GHG Business Manager, ERM CVS

——————————————————————————–

Daryl Thompson

——————————————————————————–

Lori Ochman, Independent Consultant, Viridian

——————————————————————————–

Bruce Ratain, Clean Energy Associate, Environment Illinois

——————————————————————————–

arleen O’Donnell, VP, ERG

——————————————————————————–

Missy Stults, Sustainability Analyst, Summit Energy

——————————————————————————–

Nathan Kipnis

——————————————————————————–

Timothy Ryan, Director – Climate Change and Sustainability, KPMG

——————————————————————————–

Klugman, Nadav, Associate, Mayer Brown LLP

——————————————————————————–

Deborah Stone, Director, Cook Co. Dept. Environmental Control

——————————————————————————–

Evan Johnson

——————————————————————————–

Claire Tramm, Business Development, BlueStar Energy

——————————————————————————–

Len Bland, Capital Matchmaker, Concept Equity Group, Inc.

——————————————————————————–

Rebecca Lordan, Student, University of Chicago

——————————————————————————–

Matej Mavricek, Senior Analyst, Power Switch

——————————————————————————–

Kristin Brethova

——————————————————————————–

Daniel Fedor, Board Member, CCEA
_______________________________
END OF REPORT