Gurley argues daily deal platforms with lower take rates will inevitably attract more customers than high-rake competitors.
“In other words if you had a casino on one side of the street that took a 50% rake and another one on the other that took a 10% rake, eventually all the customers are gonna go to where the rake's 10%. Right?”
Gurley argues daily deal business value is inversely tied to platform rake, like a casino.
“The thing that strikes me about the deal business is that the value to the customer is a direct function of the rake of the platform or the margin the platform maker takes.”
Gurley says it took a twelve-year gap before startups like Groupon could burn $150-200M annually.
“I think you look at Groupon, right? I mean, you, it had to take a twelve year gap before someone would say it's okay for a startup to burn $150 $200,000,000 in year.”
Gurley notes Groupon had negative $900M in accumulated deficit on their balance sheet.
“there's this thing on the balance sheet that's called retained earnings, except on their side it says accumulated deficit. And they're negative 900,000,000, right.”