All,

It is with great regret we announce to you the closure of Digital Doorstep through Chapter 7 Bankruptcy.

Digital Doorstep has experienced fatal technology challenges to our redemption system causing severe late payment of over $3 Million in past due receivables by 23 Digital Doorstep Clients. Digital Doorstep's clients refusal to pay for services rendered has left Digital Doorstep in a position where it must formally send consumers seeking their product back to the Daily Deal site they purchased the product on.

For the next 45 days Digital Doorstep will continue to capture all consumer information when seeking redemption and forward consumer code request for your deals directly to you weekly from codes@digitaldoorstep.com

Launched in February of 2011, over 1 Million consumers have purchased Digital Doorstep "Experiences" ranging from Date Night to Girls Day Out and many more. Digital Doorstep has successfully serviced on the behalf of our daily deal clients over 600,000 consumers in the past 120 days. We pride ourselves in customer service and are shutting down redemptions to prevent further frustration by consumers.

We respectfully deny any attempts to "increase breakage" or to delay consumers in any manner whatsoever. Our redemption model has not changed from day one, it is simply a process of entering your code on our website and having the cards or codes emailed or postal mailed to you. Prior to our technology crash and late payment issues Digital Doorstep flawlessly serviced over 500,000 codes through our redemption process.

A company of our size simply cannot sustain $3 Million in unpaid accounts receivable.

Effective immediately Digital Doorstep will direct all consumers who have purchased a Digital Doorstep experience through your website  to seek an immediate refund or request direct delivery of their "experience" from your site.

Digital Doorstep has listed you as a potential creditor and you will have the opportunity in the next 45 days to ensure your claim is paid through our asset liquidation. The U.S. Bankruptcy court and a U.S. Bankruptcy trustee will be responsible for liquidating Digital Doorstep's over $3 Million in past due receivables, undelivered inventory of $2 Million in gift cards and digital codes,  and finally our database of over 700,000 active buyers to distribute funds to our clients who have paid in full and have open redemptions in our system.

For the forseeable future, Digital Doorstep will handle all client inquiries through our attorney Tom Polis and all consumer inquiries at info@digitaldoorstep.com

Thomas J. Polis, Esq. 
Polis & Associates, APLC
19800 MacArthur Blvd., Ste. 1000
Irvine, CA 92612

Formal bankruptcy filing information, including case number and details on the claim process will be forthcoming.

We sincerely thank you for the opportunity to have partnered together and will cooperate fully with the U.S. Trustee to ensure any and all financial impact to your company is handled through an expedited asset liquidation process.

Sincerely

Digital Doorstep Team

Smart Hacks 6 pack of Sugru.com fix all silicon

Replacement Gibbons Slack line for one left at camp last summer. This time I bought the “Funline” model which is a little wider and the treewear tree protectors.

The following item was ordered:

Burlesque [Video On Demand] $3.99 Sold By: Amazon Digital Services, Inc.

New Crib coming!

1	"Bloom Alma Mini All-in-One Package, Harvest Orange/Coconut White"

1 "Wilderness Medicine, Beyond First Aid, 5th Edition" William Forgey; Paperback; $9.86 In Stock    Sold by: Amazon.com, LLC 1 "Kill Or Get Killed" Rex Applegate; Paperback; $24.00 In Stock    Sold by: Amazon.com, LLC

Delivery estimate: June 2, 2011 1 "Saxx Men's 24-Seven Trunk, White, Large" Apparel; $23.99 In Stock

hello letterly authors,

In the Daily Deal space, I am constantly surprised by the outrageous restraint of trade attempts made by some vendors.  I can only think that those who practice exclusivity and heavy handed tactics are hoping merchants don’t read their contracts.  Here are a couple of “gotchas” that you should look out for in some of the OTHER guy’s contracts.  This is actual contract language from a Groupon contract.  I have heard that merchants can negotiate these provisions if they know they exist.  I recommend you do so all your options promoting your business can be on the table.

Groupon has 90 day LOCK UP.  You can’t promote your business with any other deal site for 90 days.  At Tippr we do not restrict your ability to market your business.

Groupon holds your money for up to 60 days.  What isn’t a Billion dollars enough?

Groupon tries to muzzle their merchants and asks for “injunctive relief” if merchants talk about their Groupon deals.  That is not very friendly.

The bottom line.  Read your Daily Deal contract.  Object to anything that limits your ability to market or operate your business.  Don’t get muzzled or hobbled.

One such overnight success story is the site Living Social (full disclosure I run a competing platform at Tippr.com). While the site has been a consumer success, they have had more than their fair share of technical challenges. Initially these technical challenges had to do with scaling to meet consumer demand ( a good problem to have). Now unfortunately there are serious security and commerce transaction holes being exposed. Unfortunately Living Social is not just a site with funny pictures of cats. It is a commerce site dealing with hundreds of millions of dollars of transactions on behalf of their merchants and customers. Bugs in commerce sites can lead to GIGANTIC losses for everyone involved. This is not just "whoops the site is down" stuff. This is REAL MONEY.

Here is the latest problem. Living Social doesn't do server side quantity validation (at least they didn't yesterday). Who cares you say? Well Amazon.com for one. Their latest offer of a $20 gift certificate for $10 has the explicit restriction of ONE per customer and no gifts. You see, Amazon actually only wants to discount their product for new customers or existing customers only on $20 of merchandise. If Amazon knew there was a way to buy say 100 vouchers and receive $2000 of Amazon merchandise for $1000, they would probably blow a gasket. Jeff you better sit down. Because Living Social only validates restrictions on order quantity in the client, and not the server, there is a simple inspect element command in many browsers that lets you change the "1" to any number you want. See the screen shot below.

I won't go into all the details of how to perform this hack in your own client and I am only posting this near the end of the Amazon offer because I don't wish this liability to be any worse than it already is. Unfortunately I have received notification of this vulnerability from multiple sources today. Based on the feedback I am getting on the extensive use of this hack on this particular offer, I hazard to guess that thousands of people have exploited it. From the magnitude of the exposure, I wouldn't be surprised if 50-75% of the total purchases of this deal were in violation of the one per person rule (meaning that amazon only got a hundred thousand or so unique customers not over a million).

Bugs are unfortunately a fact of life in software. But this particular vulnerability is not a bug. It is a DESIGN flaw. Programmers took a short cut by putting quantity validation in the client. They hacked the site together and are holding it together with bailing wire. I hope for the benefit of Living Social merchants and advertisers, they take some of their $175M and hire some top notch commerce architects. This didn't need to happen.

Don't let anyone tell you software is easy. Don't trust your business to software cobbled together as a hobby that just happened to take off. Don't underestimate the value of good software engineering. At scale, when you are selling real volume and doing serious business, the details matter.

UPDATE 10:58PM
Thank you to all of you who have written and sent further proof of this and other vulnerabilities in the Living Social system. Here are two screen shots I received anonymously which confirm the hack and show purchased vouchers hitting the credit card and in a user account.

In addition, I received two MORE ways to circumvent the limits by using the browser back button and a simple e-mail address hack (no I won't explain). A reader with the first hack purchased 7 vouchers and a guy with the second hack purchased 5 vouchers.

Business Insider has also made a note of this hack and contacted the company. The CEO claims that they "intentionally" designed their system this way (uhm, ok Tim) and that the server takes care of everything later at settlement. Well I am sure the server does that NOW that the vulnerability is public and I am glad for Amazon's sake that the site is working overtime to fix this problem. Tim further suggests that the problem is not wide spread and that client side hacks are not showing up in the number sold. The screen shots above tell a different story. I have an inbox full in screen shots like that. One person with 100 vouchers in their account. That is not a client side hack that was ignored by the server. 100 of the over million sold were certainly sold to one person. The number sold on the live site that ticks along as people purchase is certainly overstating the unique purchasers by some significant amount. Maybe I just have alot of hacker friends and my 50-75% overstatement is off. When LS runs their "server side reconciliation" and washes out all the gamers (as they claim they will), I wonder if they will issue the "adjusted" number sold. I suspect not, especially if it tarnishes in any way their "biggest day ever".

But this post is not about Living Social sales. It is about quality software development and doing right by your business partners in the deal business. If there were alot of gamers, Amazon just gave 50% off on over $25M worth of merchandise that they probably would have sold at full price to these same people anyway. Amazon are incredible at measuring the ROI on any promotion. If this one turns out to be a dud, I doubt they would admit it publicly, but they will know.

Daily deals done right on a quality software platform with appropriate controls can be the most effective customer acquisition tool an advertiser has. Done poorly they can degrade your brand and erode your value proposition. I hope this Amazon promotion ends up the former not the later.

I am a tech nerd.  I know the difference between a bit and a byte.  I know how to code (not well).  I am passionate about product and technology.  While with Microsoft in the early days (1989-1997), the place was full of similar tech nerds with bad hygiene and hyper focus.  In recent years, Google has become the place for the smartest tech nerds to go.  Google is fundamentally an engineering driven company like Microsoft was.  Back in the early days of online services I remember Microsoft trying to get into the content business with MSN (to compete with AOl) and hired a lot of creative hollywood type people.  The culture clash was crazy bad and I believe eventually that is what killed Microsoft as a content company. Engineers just don’t do content. 

Now onto Groupon/Google.  Groupon is run by a guy who’s last job was in a band.  One of their most prized assets is the editorial voice of a talking cat.  This is a consumer brand/entertainment company.  This is not an engineering driven organization.  The culture clash between Google and Groupon is going to be epic.  If it happens I will enjoy watching the destruction from the sidelines. 

As a Google fan and an ardent believer in the engineering driven culture (it is what we have at Tippr), I will be sad if the merger happens.  It would be a giant mis-step for Google and it will fail. 

Today, this was brought home in spades while reading a story on Business Insider about a Google/Groupon rumor.  Business Insider has a group commerce section which is Powered By Tippr.  What shows up in the middle of the story about Groupon/Google?  A Pipeline deal which is powered by Tippr.  Got to love it when it all comes together.

Tippr ran a deal for Weekly Cinema as they were getting into the market which offered customers 4 movie tickets for $20.  $5 per ticket.  See it here in seattle. After this became one of our most successful deals, Groupon took notice and called Weekly Cinema offering them an exclusive long term relationship.  Now of course the conspiracy gremlin in my head is telling me Groupon is doing that to kill Tippr and deny competition any meaningful revenue.  There is some of that I am sure, but lets look at what happened to consumers. 

Consumers lost out.  Groupon now has 6 tickets for $38 in NYC.  By my math that is $6.33 per ticket.  That is a bad deal.  Groupon costs consumers money an limits merchant’s ability to market their business. 

Each week, we here at Defeat 1098 report our contributions to the Washington Public Disclosure Commission (PDC) in accordance with campaign finance rules. Yes on 1098 is required to do the same. There has yet to be a week where the difference between our two campaigns has been more apparent. We are the grassroots campaign. They are not. We have the support of Washingtonians in every corner of the state. They are funded by wealthy government employee unions and Bill Gates, Sr.
To demonstrate the clear difference between Defeat 1098 and the proponents of the new state income tax, here is a by the numbers comparison:

Total raised last week:

Defeat 1098 - $441,608
Yes on 1098 – $366,810

Contributions last week:

Defeat 1098 - 498
Yes on 1098 - 14

From individuals last week:

Defeat 1098 – $409,608
Yes on 1098 - $1,810

Union contributions last week:

Defeat 1098 - $0
Yes on 1098 - $365,000

Overall total from SEIU:

Defeat 1098 – $0
Yes on 1098 - $997,954

Overall total from unions:

Defeat 1098 - $0
Yes on 1098 - $1,273,454

Overall total amount raised:

Defeat 1098 - $1,554,128
Yes on 1098 - $2,530,496

Approx. contributors:

Defeat 1098 – 1,425
Yes on 1098 – 200

Approx. avg. contribution:

Defeat 1098 - $1,084
Yes on 1098 - $12,652

The opposition is claiming to be the grassroots campaign leading the charge on behalf of the people. Nothing could be further from the truth. They continue to claim Defeat 1098 is funded by a small group of very wealthy citizens. As you can see from the data above, their charges ring hollow. The truth is, 70 percent of the income tax advocates’ funds come from two sources -- government employee unions and Bill Gates, Sr.
We enjoy tremendous support from people all across the state and are proud to be the true grassroots campaign in this race. Thank you for standing with us against this income tax!

A Washington State income tax will only benefit the unions and government employees with more tax dollars.  It will sap competitiveness from Washington State and force it’s best companies and brightest citizens to consider moving (i know i am).  It is also interesting to look at the data on who is actually funding what.  The opposition is very grass roots. The pro tax camp is unions and Bill Gates Sr.  Crazy talk