Thursday, June 23, 2011

Making Money Guide


Andrew Mason has been visiting Beijing and Groupon HQ has finally realized there are some problems in China.


On the Forbes website, Rebecca Fannin reports:


CEO Andrew Mason just arrived in China and hasn’t wasted time shaking things up. Four expatriate executives at Groupon who were recruited from rival site Ftuan just a few months ago will be leaving Groupon China.


Update: Groupon has contacted us and denies the original Forbes report. They say that no expatriate executives have been fired or left Groupon China recently.


This seems to be a belated response to the very obvious problems at Groupon China that seasoned observers have been noting since the group buy website first opened up shop in Beijing and Shanghai:


Groupon China was started and has been managed by a bunch of trendy-looking but ineffectual foreigners who can’t speak Chinese and are completely clueless about China.


Firing four unnamed foreigners is not evidence that anything has changed.


Meanwhile, Bloomberg has this report (which I’d wager a PR company helped put together) talking up Groupon’s Chinese partner Tencent:


“Tencent’s scale and user base gives Groupon an advantage, and China’s group-buying market is still at an early stage and has a lot of upside,” said April Su, an analyst at iResearch in Beijing.…


“We think we’ve found an excellent partner in Tencent and we’ve been very pleased with the progress we’ve made,” Mason told reporters in Beijing today, before leaving Ouyang to field queries on Gaopeng…


Gaopeng is seeking an edge in China with “world-class brands,” like Apple Inc., Ouyang said today.


“Our strategy is very strict selection of the merchant deals,” Ouyang said. “It’s not only about discount service but it’s also about being a city guide, a lifestyle.”


A few problems:


1. Tencent will end up shafting Groupon

If the Groupon model works in China, Tencent has nothing to gain by partnering with Groupon. Tencent has its own Groupon style offerings, and there is no need to make Groupon work for them to profit by the model.


2. Apple and “lifestyle”: Ha ha ha ha ha ha ha


This is too rich:


Gaopeng is seeking an edge in China with “world-class brands,” like Apple Inc., Ouyang said today.


“Our strategy is very strict selection of the merchant deals,” Ouyang said. “It’s not only about discount service but it’s also about being a city guide, a lifestyle.”


So, Apple is going to sell discounted iPads in China?


Yeah right, why would Apple do this when there are already Chinese people willing to sell their kidneys to get an iPad, or get into fistfights at the Apple store just to get hold of one.


Apple and Groupon China? Simply ridiculous. Even more ridiculous is the “city guide / lifestyle” nonsense.


I first worked on city guide / lifestyle print magazines in the late 1990s in China:


There is a small amount of money to be made in city guides and lifestyle guide products in big Chinese cities. There is quite a bit more money to be made in Internet and media products that help position brands as desirable for the new rich and emerging middle classes (e.g. Cosmopolitan China magazine and Vogue China , possibly the P1 social network and the Financial Times‘ FT Rui magazine).


There is also money to be made and a huge user demand for Dianping, which is like the Yelp of China that offers real, honest user reviews of restaurants.


But, based on my personal experience since 1997, every foreign-funded company I have ever encountered in China talking about making money from local vendors based on a “lifestyle” proposition has about a year or so before bankrupting itself or being run out of town.


3. iResearch


A final note: I don’t know if Groupon is paying iResearch, but iResearch has a reputation in China for doing “research” for companies who pay them. Somehow, the companies always end up looking very good in their research reports.


It’s all pre-IPO spin. Groupon China is simply a way to bleed cash.


Update Apologies to anyone offended by the original title. It’s a reference to my previous post about Groupon. But since nobody got it, the headline has been changed.


If you only spend one or two nights in Houston for an unexpected business trip, where should you go? What should you see? And perhaps most important: Where should you drink?


This is part of a larger piece I'm doing for Outlaw on nightlife in American cities that are not New York or L.A. (because America has precisely four other top-notch cities that get less press, including Houston).


Beginning: My Friday afternoon started off by meeting up with Mary Rambin, a Houston-based lifestyle and fashion blogger without equal.


She met me at Hotel ZaZa, the tastefully eccentric hotel I'm staying at this weekend in Houston's museum district. Cool features include a fairly massive marble desk, plush robe (I felt like a hungover Gordon Gekko when I checked my e-mail this morning), free Wi-Fi, and a Cadillac Escalade "house car" that will take you anywhere within a 5 mile radius of the hotel, and will blast Hot 95.7 if you ask politely.


We checked out Cru, a laid-back wine bar with good pizza and a wide range of wine "flights" to choose from. I downed all three offerings instantly like a barbarian in a Capital One commercial, which is a testament to how smooth my pinot noir flight was. (Ask for Flight #12 when you go there.)


She also took me to the original Goode Company for barbeque, which lived up to the hype. I'll be back before I fly out this evening -- partially because I know the aroma of a bbq sandwich from Goode Co. will make every other passenger jealous, and it could become a crucial in-flight bargaining chip. Leverage, my boy. "Say, do you mind if I borrow those noise-canceling headphones you have on? You can have what's left of this."


Middle: Shortly before parting ways with my gracious Southern day-time host, disaster struck: I learned that my night-time guide -- another Texas native -- had to cancel on account of an unexpected "pre-Father's Day event" aboard her dad's "yacht" in another city. Umm, alright. (Original observation: People in Texas have money.)


This put me in an awkward spot: I was here to crack Houston's nightlife code, and without a Texan by my side, I'd wind up downing Bud Light at an Applebee's. 


Fortune smiled upon me, though, when I remembered that I had another friend living in Houston. I messaged her on Facebook and she was thrilled to help me out on my mission.


End: We went on a wild tour of Houston's drinking hot spots, purposefully avoiding "douchebag clubs." When you put it that way, I told her, I guess I don't want to check out the night clubs! (I get my fill of Ed Hardy shirts, testosterone, Jager shots, and ice-cold female rejection in my local Vegas night clubs anyway.)


The highlights from last night in Houston included an amazing wine bar called 13 Celsius, which keeps and serves all of its wines at precisely 13 degrees Celsius (supposedly the correct temperature; I'll be forwarding this article to my mom when it posts, subject line FYI).


The vibe was cool/young professional, without being pretentious. People were open and mingled freely with strangers. The owner told me the bar has been open for five years, and has thrived solely on word of mouth from locals. I believe it.


Anvil was after that, rated by various magazines as one of the best cocktail bars in America, a reputation which it deserves.


The bartender was talkative and friendly, giving me a verbal Wikipedia entry of the bar's history and unexpected successes. Most important, he was passionate about the art of making drinks -- a growing rarity among today's soda-gun and vodka slingers. (Anvil does not serve vodka.)


The bar is doing a "Summer of the South" selection of Southern inspired cocktails. As a menu explains, "Today's modern cocktail resurgence tends to emphasize urban speakeasies and Yankee cocktails. Secession anyone? Sure, we admire our Northern colleagues, but it's about time other drinking cultures get a little respect."


I'll drink to that -- always neat to see a bar with a mission statement.


The night ended with a brief jaunt through Etro Lounge next door, which was described to me as "like walking through an old video game." It definitely feels like a club from the 1980s, but in a good way. Think Adventureland.


Customers were ready to party, on the younger side, but thankfully a couple of old dudes filtered in. Their presence made me feel more at home. 


Shortly thereafter everything closed for the night (I was surprised to learn that bars close at 2 a.m. in Houston).


Today my host plans to show me some legitimately cultural day-time things here in the museum district, so more to come...


-- provided by Outlaw


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