Palm Beach County Jail

Remember when everyone wanted Facebook stock? When getting pre-IPO shares was a point of pride, when retail investors worried they weren't big enough fish to rate allotments from their brokerages? That friends, was an opportunity, and there are some men who answer when opportunity knocks.

John Mattera, for instance, the Floridian charged last year with scheming to bilk investors for $12.6 million by promising them the chance to own pre-IPO shares of companies inlcuding Facebook and Groupon, was such a man. At the time of his ill deeds, Mr. Mattera was the chairman of the advisory board of something called Praetorian Global Fund, which offered investors the chance to buy into something called the "G Power Entities," supposed special purpose vehicles which purported to own stock in the pre-IPO firms.

But the G Power entities didn't know own the shares, according to a statement from U.S. Attorney Preet Bharara today, and Mr. Mattera didn't safeguard investors' money. Instead, he "caused the vast majority of the funds to be transferred to other entities with which he was associated." That is, he made off with "approximately $13 million," spending nearly $4 million on luxury items for himself and family members.

Well, Mr. Mattera will face up to 20 years on each of two fraud charges, and 5 years on one count of conspiracy, when he appears for sentencing next year.

But we wonder whether the judge will consider this (from the indictment): "At least one version of the G IV agreement entitled its investors to Facebook shares held by G IV at $39 per share. Similarly, at least one version of the G V agreement entitled its investors to Groupon shares held by G V at $25 per share."

Those prices, you may notice, are well beyond where the respective companies currently trade. Groupon closed today at $4.65, Facebook at $22.27. If Mr. Mattera can raise the cash to pay restitution, his investors may be better off than if they had acquired ownership of pre-IPO shares.

That sounds like an opportunity to plead for leniency.

Deutsche Bank is one of four European lenders being investigated by U.S. authorities for possible violations involving oil-trading and Iran, a source told Bloomberg.

Best Buy named Hubert Joly, the French-born chief executive of the Carlson hospitality chain, as the new CEO of the electronics chain. The electronics retailer is still jousting with founder Richard Schulze over the terms of a deal to allow Mr. Schulze to review company documents as he puts together a buy-out bid.

Spanish finance minister Luis de Guindos is seeking help from the European Central Bank to rein in Spain's sovereign borrowing costs.

The European troika is pressuring Ireland to close a legal loophole impeding foreclosures on loans originated prior to 2009.

JPMorgan tapped former Exxon CEO Lee Raymond to lead an inquiry into the billions of dollars in losses accrued by the bank's chief investment office and the trader known as the London Whale. The inquiry will double-check an earlier internal investigation.

An elder member of the Rothschild banking dynasty has taken a $200 million against the euro.

A Greek hedge fund manager tells Joe Weisenthal to brace for bad news out of Greece as summer holidays end.

Clifford J. White III, director of the Justice Department's U.S. Trustee Program, has presided over more active policing of Chapter 11 bankruptcy filings.

Some early investors in Groupon, including Marc Andreessen, are cashing in and walking away from the company.

Groupon Cat, pawning his bling.

Cut to today! We're not sure whether or not this is routine business—or just how routine this is, but this just showed up in our inbox:

Yes, that is a Groupon—or technically, really, a coupon (even worse)—for a Groupon. A few things to note here:

1. We unsubscribed from Groupon around the time of the IPO. Or at least we attempted to, however unsuccessfully.

2. We definitely don't receive any Groupon offers on a regular basis. How would we know what to use our Groupon on a Groupon for?

3. This:

To paraphrase Randy Jackson: Kinda pitchy, dawg. $GRPN recently hit an all-time low when hit $8.85 on Monday (it closed at $8.95). Maybe they should offer a Groupon on shares of $GRPN? We'd buy that. Maybe.

But they'd have to resubscribe us to their email list first.

fkamer@observer.com | @weareyourfek

La Pomme.

Thomas Monson, the founder of Bookabottle, met The Observer at midnight on a corner of Union Square in a black two-door BMW. He leaned a dress sneaker against the door, drumming his fingers on his knee and listened  to opera by the blue light of a third-party stereo system. This was actually very much in keeping with our expectations—on the website’s FAQ, the people behind the company site are described as “a group of Ivy League nerds that like to party.”

“I’m not a nightlife person,” Mr. Monson said as he pointed the car west through the rain. Next to him sat Seung Hee Kim, a very attractive woman in a short skirt and wellies. The FAQ phrase is more about the spirit in which the site was created, he said. “I don’t like going out. Like right now I really just want to go to sleep, and Friday for me is a crazy day because I literally do a 22-hour day on Friday, every single Friday.”

It was perhaps inevitable, in the Groupon era, that the frenzy for local discount sites would infect the nighclub bottle service business. Bookabottle works like this: Users select a day and a preferred environment ("upscale lounge" vs. "nightclub"), and Bookabottle allows them to pick from some 30 venues and a variety of liquors. Pre-booking means that bottles that usually cost around $350 can be had at a 20 percent discount. The purchaser then flashes his receipt at the bouncer, bypassing the line outside.

It’s a controversial concept. If you’ve ever had to watch a friend explain that you can actually save money with bottle service if you get enough people to go in on the bottle, you’ve experienced Bookabottle’s somewhat tragic contradiction first-hand. And quite possibly lost contact with that friend.

Mr. Monson is confident that there’s a large market for the customer who wants to make it rain responsibly, and at a designated time, and, more broadly, wants to change the very nature of going out. Mr. Monson is obsessive about customer service, and raises his voice only when he talks about the seedier elements of nightlife. At times he projects the air of a dorm’s RA, who, hey, guys, likes to have fun too, but just wants everybody to be safe while they’re at it.

At some point in the night, a customer service representative will swing by to check up on each customer. Ms. Kim usually handles this duty, Mr. Monson explained, because customers are around 80 percent male and would “much rather be greeted with a beautiful woman” when it comes to customer service. Ms. Kim stared out the window during the compliment, and after it.

“I stay up until about four just in case there are any issues,” he said. “[Ms. Kim] has my phone number, the mangers have my phone number, the customers have my phone number.” He demurred on the topic of what goes wrong at 4 a.m., referencing hypothetical mischarges. “For the most part things run very smoothly, but we’re still in this beta stage where I still haven’t gotten things perfect, and not to say that everything will ever be perfect, but we can do a lot better than what’s going on right now in nightlife.”

It’s hard to say what exactly appealed to Mr. Monson about the first stop of the evening, La Pomme on 26th, which seems like a fairly standard nightclub and shares the block with two barbeque restaurants and a place that teaches Israeli martial arts. Nostalgia perhaps—the room is purplish and glossy in the way things were on TV shows at the end of the ’90s.

“We booked the bottle service because one of our girls is engaged,” said Bookabottle user Reno, a tiny woman in a tight dress who falls in the just-under-30 age range. She waved at the group of friends dancing in place around their table. The shin-height table held their liter of Ketel One and chasers. “It’s a pretty good deal.”

“She’s taken, she’s taken!” one of the friends shouted, trying to wave the Observer away. Reno shot her a look.

“We don’t even do bottle service much, but we do party a lot and we were looking on-line, and we saw this stuff it was like, Ah, Bookabottle what’s that?” said Reno (her name comes from Indonesia, not the place where you shoot men just to watch them die). They’re regulars at R-Bar, but this was their first time at La Pomme. “We wanted to try this place out. We go all over the place, our girls do, and we party a lot.”

How frequently?

“Once a month,” she said, then considered. “In the summertime, we go out every weekend. Especially on rooftops, because it gets too hot.”

“Exactly!” her friend Helena agreed. She’d scooted around the miniature table because she heard someone discussing partying, or discounts. “I’m Yelper,” she said. “I do a lot of research, I try to save money. I’m Chinese, so I’m cheap, but I like to spoil myself.”

The conversation transitioned, seamlessly, to the women trying to convince the Observer to take a shot. Other members of the party, who’d been otherwise involved in bounce-dancing or chatter, fell into the chant almost reflexively.

“Shots, shots, shots, shots, shots,” they said. The Observer said and did nothing, and the chant died down.

The Observer piled back into the BMW with Mr. Monson and Philip Kennard, the site’s CTO and co-founder, who’d met us at La Pomme. Ms. Kim had been waiting in the back seat.

Mr. Monson used to be a business vice president at Hopstop—at his insistence, let’s just say he’s around 30—and, he explained, there are some things about nightlife that he doesn’t understand. He goes out of his way to pick the clubs with only the finest reputation and the most stellar customer service around, so who would want to go anywhere else? Conversely, what club could turn down the guaranteed market he’s offering when the mark-up is already so obscene on a $40 bottle of Grey Goose?

“If you know that you can sell your inventory, and you’re not making a 1500 percent markup but you’re still making a 1200 percent markup, common sense says do it,” Mr. Monson said, pounding the wheel with a palm on the last two words. He is, he explained, an “entrepreneur down to the bone.” This is not his only venture, but he clearly thinks it’s among his more promising ones. He says there have been several hack attempts on the site and his email, in an attempt to steal his business model. He’s lost 40 pounds developing it.

Ms. Kim also decided to wait in the car at R-Bar, just below Houston. R-Bar is supposed to be strip club-themed—there are enough oddly placed poles to wear out even the most space-creative ecdysiast—but with its red lighting and gold-framed paintings, the an overall effect of the place is “Haunted Mansion meets an erection.” The waitresses, and the manager, all wear red t-shirts.

We found the shaved-bald Bookabottle customer Sanjay not far past the entryway stripper poles. He gave his friend Anup’s shoulder a hearty slap.

“He just settled down a little,” Sanjay said. “But this man here was single-handedly supporting the New York nightlife industry for a while. He was far more notorious that I was.”

Both were a-bit-over-30. Anup looked left and right out of humility. “My doctor said I need to calm down!” he said.

“He also just got married recently,” Sanjay said. “That’s the big reason. And my girlfriend’s leaving me so I’m going to start going out more.”

He added, “It’s a mutual understanding. I’m just not the guy she wants to spend the rest of her life with.”

Their cramped table was only a few steps from the bar, making its convenience factor low, but they’d attracted a few friendly females, including another bride-to-be, this one in a veil, wearing a ring with a flashing plastic jewel. She said she wasn’t sure whose table this was.

The two work in finance (“Don’t mention that too loudly because we’re not a very popular bunch right now,” Anup said seriously. “We’re having fun but nobody’s asked me what I do for a living. As long as I get them drinks, things seem fine.”) They weren’t attracted to Bookabottle for the discount, then, but for its guaranteed entry.

“You know how it is with New York City nightlife,” Anup said. “You’d have to know the bouncer who would let you in and you’d have to sort it out with them. This way you don’t have to worry about the hassle because Bookabottle is at the club beforehand. If your bouncer’s on vacation or whatever you don’t need to worry about that shit.”

It's important to keep the glamour in perspective, Mr. Monson said repeatedly. “It’s so easy to get sucked into nightlife, if you’re working in that business.”

This was on an earlier phone call, where he’d dropped the RA act to adapt the tone of a burned-out rocker. “The second you forget the party is not yours is when things start to go wrong.” If he ever seemed tempted by the nightlife game himself it was at Cielo in the Meatpacking District, which has a great reputation in nightlife “the same way Goldman Sachs has a great reputation in finance,” he said.

After a businesslike frisking by the giant manager George, Mr. Monson and The Observer entered the club to stand at the back of the room as green lasers scanned just above head-level. The walls were some kind of gray leather upholstery, segmented like an airline seat, or a padded room. George sidled up and crossed his arms, indicating the DJ, someone famous to people who follow that kind of thing. There were no customers here. Mr. Monson just wanted The Observer to see the place.

“My goal is to go through life completely unnoticed and unspoken of,” the Cornell grad said later, growing philosophical as he drove The Observer to the A train around 2:30. “Ultimately I hope to end up somewhere completely isolated, maybe in Montana or something.”

At the subway, he asked that Ms. Kim step out of the car so that The Observer could see her wellies. They’re part of his latest venture Zoubaby.com, which offers a patented way to monogram rain boots.

Update 3:40 p.m. Corrected Mr. Kennard's title, and added his name.

--Which bubblicious web company is to be granted a $750 million imprimatur (must be those witty, charming emails they send us!)?

--What time-honored way to watch more Arrested Development reruns while paying less is about to become illegal in at least one state?

--Which fledgling designer isn't afraid to bite the metaphorical hand of the cable network that metaphorically fed her?

--What other cable network, which we've never actually watched on purpose, is celebrating its 25th anniversary? (It was Al Gore's TV home before Current!)

--How is the Guardian attempting to disprove V. S. Naipaul's sweeping statements about hating women writers' formulaic, "sentimental" writing?

Group Commerce has raised $8 million from a group of investors including Lerer Ventures and Bob Pittman. It wants to offer turn key solutions to publishers looking to jump into the social commerce arena. As it exits stealth today it can already announce four clients: DailyCandy, Meredith Corporation, Thrillist and The New York Times.

As The Observer noted last week, publishers are in a position to capitalize on the daily deal and group buying space. Group Commerce wants to provide publishers with the technology on the back end and scale on the sales side that will allow them to source the best deals. The publishers in turn provide the editorial content and targeted audience. 

One interesting note, Group Commerce is relying on a very modern definition of publisher, indicating that it would be willing to work not just with big news and lifestyle players, but even celebrities with large Twitter followings who might want to pitch deals. 20% off #tigerblood, anyone? 

bpopper [at] observer.com | @benpopper

Market leader Groupon recently closed a massive funding round and New York's Gilt Groupe was just reported have hit that magic $1 billion valuation. 

The NYT's offering, TimesLimited, seems closer to Gilt than Groupon. It lets advertising partners offer deals on a limited number of items for a brief window of time. 

This may start to emerge as part of the overall advertising package for publishers. In fact, local deal aggregator Yipit predicts publishers will dominate the daily deal space. 

TimesLimited is focused on lifestyle, travel, food and entertainment. Based on the web site, The Observer anticipates deals on lambshanks and a discount offer to fall off a very tilted boat.

bpopper [at] observer.com | @benpopper

And yet the ad has a great pedigree--it was directed by Best in Show auteur Christopher Guest. Guest's tone, in his films, is notably off-putting and weird, often alienating. That works for a film marketed as a comedy, but may have been a less apt choice for a brand introducing itself to the nation at large. It's easy to see why they chose Guest (who's not currently working on any films) to direct. He's a god among the young and tuned-in. But his work (as well as the bizarre choice to register a domain name, savethemoney.org, that redirects to a dot-com site showcasing the whole series of faux-charity ads) may just be too self-consciously offbeat for the broad-strokes Super Bowl.

Or maybe the Groupon gang just doesn't know what they're doing! Their apology, as posted on the Los Angeles Times's website, begins with an explanation of the ads that points out how they work as comedy but fails to acknowledge why they might not work for a viewer:

"The gist of the concept is this: When groups of people act together to do something, it’s usually to help a cause. With Groupon, people act together to help themselves by getting great deals. So what if we did a parody of a celebrity-narrated, PSA-style commercial that you think is about some noble cause (such as 'Save the Whales'), but then it’s revealed to actually be a passionate call to action to help yourself (as in 'Save the Money')?"

They go on to note that the whole thing was planned as an elaborate way to get attention for, and give matching funds to, charities, once they got online to the Groupon site. If you have to explain the joke, Groupon, you may have spent too much on Christopher Guest.

http://www.youtube.com/watch?v=vXGYK1eP_wo

ddaddario@observer.com :: @DPD_

Sometimes these companies have real revenue, or profit, like Facebook and Groupon. 

But sometimes this enthusiasm is based on how much hype the company has in the press, or how fast it is growing its user base. 

So The Observer decided to take a look at a number of the top web startups and break down how their user base stacks up to their recent  valuations. 

Check Out Which Web Startup Is Worth The Most Per User Here >>

The Editors | tech@observer.com

And so The Observer asks the most pressing question facing the technology venture capital scene today: What if The Social Network was about Groupon?