Besides the fact that the idea makes no sense, I find it downright wrong that Loopt is enriching itself at the expense of local businesses. Establishments work damn hard to establish a brand, and here is Loopt going around shitting all over them, without consent.

This is where I'd hope trademark law kicks in. Here's hoping Loopt gets what's rightfully coming to them.

This is slightly reminiscent of Get Satisfaction's model of creating support forums for companies unless they opt out.

And sometimes those companies take offense: http://37signals.com/svn/posts/1650-get-satisfaction-or-else

We're trying something new and innovative, and of course we'll have to iterate on it. We're moving as quickly as we can to fix this and make it work for consumers and businesses--obviously, it doesn't work for us unless it works for both of those groups. We have a chance to really improve local commerce, and I hope we do.

As soon as a business wants to opt out, we block them permanently in the system and remove any pending deals. We're changing the product right now to make the language more clear, and we're not going to use any trademarked images until the business approves the deal. We're going to make it really clear that a business hasn't approved a deal until they do.

We've certainly gotten negative feedback from a few businesses, but in general people seem excited about this--word of mouth is a great referral, and businesses understand that. The promise of u-Deals, if it works, is that your best customers become your big advocates.

Should we have gotten this right from the beginning? Yes, and I'm sorry we didn't. We've gotten things wrong in the past, and we're going to get things wrong again. As always, we'll try not to get the big things wrong, we'll do everything we can to make it up to our users, and we'll get it fixed as fast as possible. That's the nature of trying new things, and it's how the world gets better.

Loopt is causing conflict with a business's potential customers simply by making such "deals" public when they don't actually exist and are meant solely to show businesses that customers want discounts. Off course people want discounts, but that doesn't mean the business is willing to give said discount.

When I first read about this - it seemed like a new Groupon angle that might have some legs.

Seeing it in the flesh - it feels wrong. It's passing-off.

http://en.wikipedia.org/wiki/Passing_off

There are a few things that seam clearly, though not necessarily badly, wrong here. For, example: They use a a Groupon like appearance as many deal-a-day sites use. This sends a strong-ish message that something Groupon-like is going on. A lot of people will have bought these coupons recently and will make quick assumptions. This is the kind of things brands do, usually, to send a message to the buyer/user. It's like when generic coffee comes in a nescafe-like jar. There's also potential for non-savy small businesses owners to feel coerced. I'm not sure trademark is the issue though, at least not a terrible one.

Anyway, I think judgement should maybe be postponed. This could easily be an awkward mistake. The overall intent doesn't seem nasty. The execution, particularly clear messaging, has just (perhaps) been done absentmindedly. It shouldn't be too late to clean this up. Let's see if they do.

Group buying is actually a variant on an older practice called Tuangou (http://en.wikipedia.org/wiki/Tuangou), which Loopt is recreating here.

This reverse deal idea didn't make any sense when I heard about. But I have been surprised before, so would interesting to hear counterpoints.

The fundamental problems as I see it just starting with user persective: 1) I put in effort as a user to create a deal - with the high chance of no payoff - why would I ever do this the first time, let alone the second time 2) I have to wait for other people to join - so gratification is at best delayed 3) Very likely the deal will not be accepted by the merchant.

The ideal model for coupons would be take out the high cost of sales in this business. And getting businesses to go to a website and submit their deals by themselves. Of course SMB are notoriously slow to adopt new technology (many still advertise in YP). But over time, they will get there as well and the winner will be whoever is there when SMB begin making the move.

I would have been willing to pay $50 dollars... anyone willing to reopen the deal? :-)

Loopt seems like a democratized version of group purchase organizations (GPOs), which have been around forever and are used, for example, by groups of hospitals banding together to get bulk discounts on the things they regularly buy.

If you got ten of your friends together and put in bids on Loopt for a few different pizza places, it's not too different from the GPO process. You are basically saying, "I am willing to buy 10 pieces from you at this discounted rate." It makes me wonder if most of this talk about brand erosion etc is mostly alarmism.

When I heard about this the first time, one of the "benefits" of this approach is they only sell deals to companies that actually have demand. And I never understood that. One of the reasons Groupon is so reviled is because the demand for these ridiculous deals causes great problems for the business in question. If the deal didn't have any demand, then there wouldn't be any problem whatsoever and people wouldn't be hating Groupon. If anything, the way Loopt is doing this is far worse than Groupon, as the article demonstrates.

You guys really need to think about the chance that it actually works. Loopt isn't some shady company trying to steal people's credit card information for something malicious. Their goal, in the end, is something benevolent for all parties.

If they fail (which is likely for any startup) then it's because the idea wasn't a good. It stands to reason that they can make this clear to both parties: consumers and businesses. If they didn't at this point then I am sure they'll fix it because ultimately everyone actually will be angry. The market will answer so you need not worry. I am sure Loopt has done a sufficient amount of customer development before exhausting all their engineering bandwidth, marketing resources, and product focus--meaning you should consider giving them the benefit of the doubt.

Let businesses decide. It's not something you're capable of proving. Loopt likely is gaining more feedback about it then you realize.

First airbnb, now loopt. Something evil has infiltrated the house of ycombinator.

I don't understand why Paul thinks so highly of Sam Altman, supposedly a guy with a 40 year old soul [1], that he even made him partner at yc.

I saw plenty of writhing away from the blame (It's a bug!), instead of admitting his mistake and apologizing publicly.

I saw a lame joke written by Sam in this thread (shortly pulled after by the author) that was something to the effects of "I wouldn't help clean his house, he clearly doesn't like me".

If I saw all this and I was on the board, I would've already called a quick board meeting to replace the current CEO.

[1] http://www.paulgraham.com/notnot.html

If you should learn anything from reading tech sites it's this: Opt-in.

Always, always, ALWAYS Opt-in.

Using the names of others to promote yourself until they tell you to stop is unethical and possibly illegal.

This is a stain you can never cleanse from your business. Everyone will always say 'Loopt? Wasn't that the company that used other companies without the approval?' And that's if you're lucky.

Because it if goes any further and a company gets a bad name from this, it'll be 'Loopt? Wasn't that the company that destroyed the reputation of Company X?'

Saying you were 'trying to iterate on it' is not enough. Saying you're trying to fix it is not enough. You need to outright admit how wrong it was and publicly apologize to every company you did this to.

Sam-

There's no way this should be an opt out. Loopt is trading on the business's good name and offering a "deal" that doesn't exist.

It's inconveniencing the business and potentially damaging their relationships with customers to the benefit of Loopt.

It's just plain wrong and indefensible.

(Author of the original post.)

I think there is something one or two steps away from what you're doing now which will be a success. Especially if you can figure out a way to lower marginal costs to deliver a service through this kind of shared pre-buy (for instance, it's only worthwhile for a business to open late at night if customer demand exists; this way customers could prepay for midnight meals at a place which normally closes at 9pm on weeknights).

Or really any service where a business might be capital constrained and where economies of scale exist.

I think it's a great idea.

The only problem here is the deceptive presentation. If the site was crystal clear about how it works then you wouldn't have to apologize to anybody. There's nothing wrong with a bunch of people getting together to ask for group discounts.

Just be upfront about the scheme. I think people will go for it.

When in doubt, use common sense.