Huge, sprawling article on Business Insider about Groupon since the early beginnings. It’s telling when an article about the big article is 3 pages long.

Normally we would recommend reading the summary for conciseness – and because the day only has 24h – but the big article is a keeper. It’s even more useful for those running, considering, or investing in start-ups. They got almost all of it right, except for the culture change part. It is more important, and far more disruptive, than they make it seem. That’s the article’s usefulness for the rest of us.

We’ll kick off the blogging with Arianna Huffington, CEO of the Huffington Post, who supposedly wants to make Brazil its third-largest post globally.

Arianna Huffington – CEO, Huffington Post

- “The link economy is the future”.

- Engagement: “we give the readers not just information, we give them a platform. To read, share, comment, write.”

- “Why do people write for free? Because self-expression is the new entertainment form. People used to watch thousands of hours of bad television for free…”

- “Nobody is perfect. It isn’t possible to pretend we’re perfect on Facebook. Everything you do will be online – all the dumb things we said or did included, such as getting drunk in high school. It will never die. So we’ll have to learn to accept our flaws. Social Media will be not about our perfect lives, but about our journeys to become better persons. That involves accepting our flaws and other people’s differences and flaws.”

- Question from a reporter of a leading Women’s magazine in Brazil: “Do you see structural differences between men and women’s behavior in Huff. Post’s properties?” – Answer: “Yes, that’s the big news of the day: men and women are different”… Ouch!

- Question on NY Times’ paywall system: “I’m not against payment for top content, I just think that what they’re doing goes almost against the link economy. Information, unless it’s specialized financial information, wants to be free. We bet all our eggs in one basket, and that’s advertisement.”

- Curation vs. overcuration: “Too much information, so it needs to be curated, filtered, focused”. We get that it’s a great way of adding value, and what is Buysiders if not a filter with added commentary? Even so, the value of information diversity and even serendipity can’t be ignored. It’s the old “knowledge advances as much by accident as by design”. How does one stumble upon new paths if one doesn’t explore somewhat?

- “My mother always told me: multi-tasking is overrated. So now I try to do ‘uni-tasking’.” — and even as she said it, she has 3 Blackberries and checked one of them at least 5 times during the Q&A session of roughly 20 minutes. We feel your pain.

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Panel: Creativity Shock

This is a very star-studded panel with leading publicists in Brazil, specifically the creative directors of major ad companies, responsible for some of Brazil’s most famous campaigns of the last 20 years (given that Brazil routinely routs the world advertisement Prizes, that’s saying a lot).

- One of the publicists answered the question “how do you know when the idea is really great?” by saying that it makes him laugh, it stays in his mind for days, it just “clicks”. It’s obvious, it’s a revelation. When most people around him feels the same way, they’re pretty sure they’ll have a hit if they execute it well – which, very importantly, includes the job of selling the idea to the client. A bad “sell” can kill a great idea. Obviously there’s some “art/magic” involved, in the sense that it’s subjective and one has to rely on inputs other than hard facts/ data. That’s why it’s such a “key people” business. Even so, the question we make is: after you hire great people, how do you create a process or culture in which these Eureka moments are maximized or at least facilitated? What kind of incentives, work environment, teams, team interaction events, research opportunities etc. do you foster and stimulate? The analogies with the investment Research/ Analysis process are many.

Panel: What to expect from Advertising in a 3.0 world?

- IBOPE’s CEO promised to share some presentations with stats of Brazilians’ internet usage patterns and trends (IBOPE is Brazil’s largest pollster). We’ll keep you posted.

- Looking at campaign metrics – ROI, ROE (“E” here stands for Engagement) and many others – used to be done on a daily basis, then the data was interpreted and corrections/adjustments made for the following day. Nowadays, says Marco Gomes (CEO of boo-box), it’s done automatically and in real time – data is measured, feeds a system and algorithms that adjust the campaigns (bids, target CPCs etc.) on the fly.

(Lunch break)

Panel: Brand management in the age of Twitter

- “Social networking still hasn’t caught on in Brazil – for companies, that is. Less than 1% do it by heart rather than by peer pressure.” – Romeo Bussarello, Director of digital environments at Tecnisa (a Brazilian real-estate company).

- “Social media complainants are not always right, but they always have rights.” — Poor translation of what Romeo actually said, just to make it rhyme as he did. What he meant by this is that people will always complain for many reasons, and they won’t be always right, actually he says quite often they won’t be right. But since they have what (to them) seem like perfectly good reasons, they will be very vocal. The temptation is to always try to satisfy the customers, but sometimes it’s not only impossible but wrong.

- Survey by Grupo Troiano de Branding, a Brazilian branding consultancy: Evaluating brands for perceived “digital intelligence”, according to 5 drivers: mobility, agility, sociability, utility and visibility. The survey involved almost 1,500 people voting on a brand in 7 sectors: Autos, Banks, Alcoholic Beverages, Telecom, Apparel/fashion, Electronics and Appliances.

Results: Banks: Itau. Drinks: Skol. Autos: Fiat. Electronics: Sony. Appliances: Electrolux. Telecom: TIM. Apparel/fashion: NIKE. In common, these brands want digital branding not for the “high-tech” aspect, but for the “high-touch” aspect, that is, engagement…

- “The more serious a brand is, the better its reputation, the more it becomes a target for extortionists. Not-so-serious companies just don’t care enough to let it affect them.” — by the very entertaining yet clearly serious professional Romeo Bussarello.

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Panel: Virtual world crises: can companies avoid them?

This one started in Q&A mode, which was interesting to grab a tired audience’s attention (it’s the last panel and your dedicated blogger has to leave before it ends, lest I miss my flight).

- And it started out “hot”: the debate facilitator asked Brastemp’s (Whirpool’s) Head of Marketing about a complicated case with a social media complainant. Ms. Sender explained Brastemp’s procedures which ultimately didn’t prevent a huge backlash against the company even though the company had, by then, already replaced the customer’s item. It’s just too fast. That said, when asked about sales impact she had to agree with the previous panelists: huge, established brands who have a reputation for “seriousness” (better in Portuguese – we’re trying to convey honesty here) have to answer to crisis and complaints, but ultimately they have a certain “goodwill buffer” that doesn’t affect overall numbers.

- Folha de São Paulo, the state’s largest newspaper, had a blog attacking it called “Falha de São Paulo”, and Falha means “failure”. They issued a “cease and desist” letter that was used by that site (via social media) to inflate the issue to huge proportions and frame it in a “censorship” light — the lesson here is not to let the Legal department run these social media/ online crisis episodes, NEVER. Ms. Singer, the Folha ombudsman, said that even Julian Assange eventually came out against Folha thinking that it was strictly a censorship issue.

Groupon has also lit up the alert board with a “just for employees” memo by its CEO, Andrew Mason – conveniently leaked out immediately to the press – with very detailed accounts of how Groupon will silence its critics when it goes public. Yes, it includes financial numbers previously undisclosed. It’s pre-IPO marketing during the company’s quiet period, a very complicated issue the SEC will probably want to look into. Groupon is one of the most scrutinized companies in the planet right now, and there’s no way such a huge, juicy memo wouldn’t be leaked out.

Google just launched its own “Facebook-killer” yesterday. There is absolutely no evidence yet whether Google Plus or any other competitor or substitute will bother Facebook. There is even less evidence about what’s “in the prices” – what prices? what metrics? what predictability of future cash flows? – so Social Media buyer beware. More links inside.MySpace’s demise – Guardian UK – It mentions a “heyday” valuation of $12 billion, now sold for $35 million.

Rest in peace MySpace – IBTimes – Looks at traffic data comparisons.

MySpace offers tough lessons – BBC News.

MySpace sold – FT.com’s Alphaville blog takes a swipe by showing a bullish 2006 story versus the 2011 AllThingsD story we linked to above.

MySpace sold on the cheap? – BusinessWeek – Buysiders.com is all about finding opposing sides of the arguments. However, this is an October 2006 article! It’s about some of the MySpace shareholders who sold to News Corp. supposedly mad about the deal. One M&A “expert” even calls it “the best acquisition ever”…

Google’s latest crack at social media – an FT.com short video showing Google +

Google throws full weight at Facebook – FT.com – is it really its full weight this time? Given how similar it is to Facebook, we’d judge yes. But how are managerial strategy, talent, focus and incentive systems aligned with this project? Facebook simply has no choice, Google does. Kind of.

Google + Demo and Google + “Learn More” pages.

Another try by Google – NY Times.com

Google hopes Spark ignites its social network – FT.com

Is there life after web-death? – FT.com’s LEX column on MySpace – the concept of “barriers to re-entry” is powerful.

Why Facebook beat MySpace – From a Forbes.com blog, it’s certainly not the first nor the last in the hundreds of similarly-themed analysis, but it’s worth the read.

Video interview with Richard Rosenblatt, who founded iMall.com and sold it for US$ 560 million, then sold MySpace for US$ 580 million and has founded and IPO’d Demand Media. Given his timing so far, we’d listen closely! His description of the sale of MySpace to News Corp brought tears to our inner salesmen.

First of all, with this June 3rd post we’ve discussed early impressions of Groupon’s IPO filing and had some early doubts. In it there’s also a link to our Dec. 2010 linkfest on Groupon, mandatory reading for those interested in the subject (or so we like to think).

“Valuation God” Aswath Damodaran has quipped technically about the Groupon “innovative” accounting debate. Level-headed and fair, it’s nonetheless damaging.

Less level-headed is the Fortune blog post Mr. Damodaran alludes to. Still fair, however…

Magic trumps math at web start-ups – The Dealbook’s take on the subject, extensive to other IPOs such as Pandora (let’s not get started on the “socialmedia/app bubble” discussion).

Study offers grim news on deal sites – Fortune – We’ve talked about these studies before and it’s far from a sure-fire way of analyzing the business model, but it’s definitely a building block. In case you miss the PDF link, here it is again.

Groupon gets a pre-IPO smackdown – AllThingsD – Not necessarily business model-related but a dimension that is vital to us: people. In this case, co-founder Eric Lefkofsky.

Fuzzy accounting enriches Groupon – NYT.com – In the first part of this story the author applies Groupon’s “ACSOI” metric to Netflix and even Johnson & Johnson. Amazing results.

Groupon is at a loss to justify itself – FT.com – John Gapper hits at the same issues in the Financial Times.

Forrester analyst questions Groupon’s valuation – Reuters – Ouch: “There is no rational math that could possibly get anyone to the valuation Groupon thinks it deserves,” (…) “This IPO game isn’t about finding value, it’s about finding a greater fool who actually believes the valuation is true. Trust me, you will be the fool.” — here’s his open letter to potential GRPN investors. Just remember that at least part of the motivation for loudly blasting an “easy” target is publicity. Sometimes it’s 100%. We have no idea how big a role it played here. In his defense, he has been pretty consistent about it. She isn’t negative at all about the business of daily deals, so it’s a particular gripe with valuation, which also sounds reasonable.

Coupons.com raises $200 million – NYT – Coupons.com isn’t focused on daily deals, but it has coupons in its DNA. LivingSocial, Groupon’s largest competitor, is also very well capitalized. To consider Groupon in its current form a “winner takes all” beneficiary seems absurd when there’s so much water to run under the bridge.

Groupon’s fate hinges on words – NYT – This in-depth article is a must-read on Groupon’s differentiated content strategy – whether it’s right or it really represents a source of “edge” is still to be seen. It’s also tough to decide whether it’s evidence of little to no operating leverage (other than at the G&A level).

Our previous posts on the subject:

New Year’s Eve bonus: Groupon (Dec. 31st, 2010) – Our massive collection of Groupon-related articles and videos. We wanted to gather as much relevant material as possible in the arena.

Facebook and Local Deals (Jan. 28th, 2011) – Facebook can’t be ignored.

Other sources (don’t miss the video!):

Mosaico buys 40% of ClickOn – InvestInBrazil.biz, May 4th – Nice summary and interviews with the CEOs of Mosaico and ClickOn.

Peixe Urbano’s official press release in English – Reuters, May 6th – A bit more color and numbers, but not the relevant ones.

Benchmark Capital acquires stake in Peixe Urbano – TechCrunch, Jan. 12th

Must-see video interview with Julio Vasconcellos, CEO of Peixe Urbano, on TechCrunch on July 29, 2010. (6:49).

Very interesting story in the NYT this Sunday: how the Web is making it easier to fund/ develop companies that aren’t web-based at all, and actually make tangible products. It reminded us of a conversation we had internally last Tuesday about “open-source chips” and other electronic hardware available for a fraction of the cost of a few years ago, and how much easier it is nowadays to build prototypes. All that was needed was a way to organize like-minded people and help their ideas find interested investors, however tiny the capital needs. No longer. In the words of an MIT professor, “The situation resembles the way that anyone with a laptop and an Internet connection can now start a Web-based company” – and we all know what innovation and wealth creation can come out of that “mold”.

TED Talk by Marcin Jakubowski on “Open-sourced blueprints for civilization” – Feb 2011 (4:11)

“Wait a second”, loyal readers say, “aren’t you the guys who live-blogged the 2009 Berkshire Hathaway annual meeting?” Yes… but there were three of us at that meeting (we note that all travel expenses for that meeting were borne by the analysts themselves). The blogger – yours truly – was in his third trip to Omaha and relied on the other two to share their thoughts later.

From the Farnam Street blog comes an article about the advantages of reading/ thinking alone in some situations. While teamwork is vital, and we can’t stress enough how much we believe in it and foster it internally, it doesn’t exclude the need for the occasional time for reflexive/ deep thinking by oneself.

Finally, in our Feb. 2011 post called “Aha! moments vs. strategy”, we alluded to the “calm state of mind that precedes insight” part of that story by repeating Charlie Munger’s quote about his habits: “We both (Charlie Munger and Warren Buffett) insist on a lot of time being available almost every day to just sit and think. That is very uncommon in American business. We read and think.”

It won’t work for everyone, it won’t work every time, but one should try it.