I think Groupon won't have enough money to acquire competitors because they have to give half of their revenue back to the merchants AND pay back all these other investors.

The "other" coupon companies probably have profitable business models, not based on market-share, but profitability.

It depends what each company's exit strategy is.

The barriers to entry to this type of business are not that difficult, particularly on a local level (which is where the business activity takes place). Show a deal of the day, take payment, print coupon, have a way for merchant to verify coupon, and have a sales guy getting new deals of the day.

This is probably the type of business that does worse at scale.

Here's the key: Make the deal relevant to the city you are spending a shit-ton of advertising in, not some business 40 miles away.

... Reagan Russia deficit spending comparison. Is this what Bush II and Obama are doing to China, too?

I always thought Reagan single-handedly ended communism, simply by saying, "Tear down this wall!"

Who knew deficit spending was they key to defeating communism?

It must be working in China. We finally have the youth engaged in free-market capitalism, selling their own human organs to purchase iPads.

U S A!