Great comments on Groupon's IPO today - comparing it with a fertilizer company that had its IPO today as well. Who has the stronger fertilizer?

Groupon's IPO may have surged today, but like most other big tech IPOs, the chances of it staying at that price are slim.

Rentech Nitrogen Partners L.P., a nitrogen fertilizer company, also launched its IPO at today at $20 per share. It probably has a better chance at sustaining its model than Groupon and subsequent daily deal copycats ever will. Says The Wall Street Journal:

Rentech has a lot of alluring attributes. Its chief competitors' stocks are up 50% for 2011. It's riding a wave of positive cyclical attributes such as high product pricing and low feedstock costs. And it plans to pay out a dividend that could yield between 11% and 12% over its next fiscal year, based on the midpoint of its expected $19 to $21 price range, a great draw for income-starved investors.
Groupon's bling is fake. Says the New Yorker, eloquently:

Most big tech I.P.O.s surge and then drop. And, with its decreasing profit margins, fishy accounting, massive marketing expenses, floundering innovations, massive insider payouts, and surging competitors, Groupon is surely not worth thirteen billion dollars, or whatever its market cap is at this very moment.
If merchants start pulling out of the daily deals space because they're losing money on Groupons, the gold will start chipping away, revealing nothing but a cheap trick, a flimsy tin.

- ReadWrite

The Worst Question a Salesperson Can Ask - Matthew Dixon and Brent Adamson - Harvard Business Review

The Worst Question a Salesperson Can Ask - Matthew Dixon and Brent Adamson - Harvard Business Review

What if customers don't know what they need? What if customers' single greatest need, ironically, is to figure out exactly what they need? Ironic, Steve Jobs approach to his entire success at Apple and elsewhere.

Open Source Ecosystem

LinuxCon: Open Source is an Ecosystem, not a Zero Sum Game | TechCrunch

Interesting review of open source ecosystems and the ability to monetize.

A Guide to Open Source Licensing

A Guide to Open Source Licensing: "

If you're working on or launching an open source project, one of the most basic decisions you must make is which license the project will be released under, and choosing the perfect license is more complex than ever. Over the years, we've provided many free guidelines on this topic, but it's a moving target. In this post, you'll find our updeated collection of all the things you need to know to make an informed open source license decision.

The Free Software Foundation is the principal organizer of the GNU Project, and you can find the FSF's guidelines on choosing an open source license in this post. The guidelines cover how to choose an overall license for a project, and also cover making decisions on licensing modified versions of an existing project.

Through the FSF guidelines, you can gain knowledge about what Copyleft is, and it's wise to learn more about the GNU Lesser General Public License (LGPL), and the GNU Affero General Public License (AGPL). t's also worth looking into our post on the Software Freedom Law Center's Legal Issue Primer. It contains a very thorough discussion of most popular open source licenses. And you can find much more introductory material on open source licenses in this post.

These posts also provide much good background on licenses:

First, Know They Licenses

The Unlicense: A License For No License

FSFE and GPL-Violations.org on Reporting (and Avoiding) Licensing Issues

Thwarting Threats: Free OSS Legal Primer Boasts Big Authors

One reason to know about open source licenses is to keep things legal, and we have covered a number of legal resources that can help keep open source projects and developers out of harm's way. In this post, you'll find a discussion of a journal focused on open source law called International Free and Open Source Software Law Review. In the journal's archives, you'll find extremely informed discussions of licensing and patent practices, among other topics.

A little bit of homework can mean a lot when evaluating open source licenses. Hopefully some of the guidelines above will be of help to you.

Image courtesy of The International Free and Open Source Software Law Review.

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Related Blog Posts When Your Open Source Code No Longer Belongs to You (4 comments) Project Harmony: Red Hat and Others are Early Critics (post comment) Can Project Harmony Streamline Rules for Open Source Contributions? (post comment)

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Before you get locked into Lync, consider open source options | Open Source Software - InfoWorld

Before you get locked into Lync, consider open source options | Open Source Software - InfoWorld

9 Steps to Consider When Valuing Your Startup

9 Steps to Consider When Valuing Your Startup

Determining your startup’s worth is one of the hardest parts of the fundraising process. There is no magic formula that will spit out a valuation, namely because the number is highly subjective. The entrepreneur, for example, anticipates huge potential and may therefore put a high valuation on his company. The investor, on the other hand sees a company that needs capital to grow and may fail without it, so he may set a low valuation. To help the process, we’ve devised a few considerations to help value your company.

Defense of the "Daily Deal" Biz from a VC Funding them...

Most merchants participating in daily deals do not have much deal experience. This leaves them at a disadvantage to the daily deal sites when it comes to negotiating the terms of running a daily deal, and can lead to stories like “Groupon Was ‘The Single Worst Decision I Have Ever Made As A Business Owner” (also on TechCrunch). Interestingly, I find that most of the daily deal horror stories come from merchants that a) negotiate terrible deal structure/terms b) do not accurately track redemption or customer spend and c) do not clearly understand the true economics of running a daily deal. This particular post references a story about a coffee shop that signed a 50/50 deal to sell $13 value vouchers (an atrocious 2.5-times their average ticket) for $6 and claimed to have lost $10,000 after selling 890 vouchers.

But, let’s take a look at the real economics:

Total Voucher Value = (890 vouchers) X $13 = $11,570.00
Total Food Cost = $11,570 X (85% redemption rate) X (30% food cost) = $2,950.35
Income From Groupon = (890 vouchers) X ($6 voucher price) X (50% split) = $2,670.00
Cost of Deal After Food Cost = ($2,950.35 food cost) – ($2,670.00 income) = $280.35

Even if we factor in additional variable costs (such as labor, etc.) and amortize fixed costs, a $10,000 seems unrealistically high. Unfortunately, it appears that the poor deal terms and lack of preparation crippled the merchant’s ability to convert new customers into regulars, leaving a bad taste towards the quality of the daily deal model—and daily deal users. Sadly, at times this manifests into merchants and their staff treating daily deal customers like 2nd class citizens. Then they wonder why they don’t come back.

Let’s take a moment to analyze a properly-structured restaurant deal:

A restaurant sells 1,000 vouchers that are $20 for $40 worth of food with a 70/30 revenue split.

• At 1,000 vouchers, the restaurant receives $14,000 for $40,000 worth of food ($14/voucher sold given the 70/30 revenue split).
• Average restaurant non-redemption is 18%, thus numbers adjust to income of $14,000 for $32,800 worth of food when you subtract the no-shows.
• Food cost = $9,840 (30% average food cost multiplied by $32,800)
• Income after food cost = $4,160 ($14,000 – $9,840)
• We could take this further by taking into account three additional points: a) the merchant does not pay ~2.2% credit card processing on the voucher value b) a percentage of customers spend less than the voucher amount and c) a percentage of customers spend more than the voucher amount, however, that goes beyond the scope of this article.

If reservations are required (per deal terms) and proper sales limits are set, the restaurant merchant can fulfill the vouchers with minimal increases in variable costs. The economics further improve for other merchants in different market segments (rock climbing, golf, laser hair removal, and so on—i.e. merchants with lower costs of goods). In the example above, even if the restaurant merchant simply breaks even on the economic side, a minimum of 600 new customers will be walking through their doors at no cost. What other advertising options could possibly beat that?

Excerpt from TechCrunch

Arash Pirzad-Allaei is a co-founder ofKASA Capital, where heads the internet technology development of KASA’s network of websites, including daily deals site Crowd Cut.

Microsoft Windows Phone Beats Android - April Fools

Pyramid Points - Why Windows Phone Will Beat Android http://t.co/AlwoyOu via @AddThis (April Fools)  Funny, Microsoft is history, no impact.  Amazing attempt at analysis.

SEC considers letting startups use social networks to raise money | VentureBeat

SEC considers letting startups use social networks to raise money | VentureBeat

This could be a very interesting formalization and expansion of Micro-Funding used in emerging nations.

The parable of the the PDA: predicting the smartphone’s future | asymco

Great review of past technologies in the context of determining how to develop and bring to market new technology.

The parable of the the PDA: predicting the smartphone’s future | asymco

Android's Users Eclipse IPhone's for First Time, comScore Says (Jennifer Valentino-DeVries/Digits)

WSJ review on users...also some interesting feedback in comments section. Apple users (existing or new - MAC?) still don't get it that Apple prefers their products to remain niche plays...

Jennifer Valentino-DeVries / Digits:

Android's Users Eclipse IPhone's for First Time, comScore Says — For the first time, more Americans say they are using cellphones powered by Google Inc.'s Android system than Apple Inc.'s iPhone, according to a new survey from technology-tracking firm comScore Inc.

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