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idiots...2 years from now, when all the businesses know what a bad value proposition Groupon is, they'll look back and kick themselves for not taking the offer
by vaksel 16y ago
idiots...2 years from now, when all the businesses know what a bad value proposition Groupon is, they'll look back and kick themselves for not taking the offer
- drgath 16y agoWith $2 billion revenues that are likely to continue increasing YOY, it looks like an embarrassingly low offer. http://kara.allthingsd.com/20101203/exclusive-groupon-annual-revenues-actually-2-billion/ http://kara.allthingsd.com/20101203/exclusive-groupon-annual...
- phillian 16y ago"Likely to continue increasing YOY"? Says who? Groupon? At least one compelling academic argument why Groupon's 'deal hawk' business model is not built for sustainable growth: http://docs.google.com/viewer?a=v&q=cache:cpoGFpYf78oJ:www.ruf.rice.edu/~dholakia/Groupon%2520Effectiveness%2520Study,%2520Sep%252028%25202010.pdf+HOW+EFFECTIVE+ARE+GROUPON+PROMOTIONS+FOR+BUSINESSES%3F&hl=en&gl=us&pid=bl&srcid=ADGEESiKMv59au7xMTFYAvrSqNyGrQnXbaGIqhC-gkmX8kUuk5rxWLwQvyTahVeVRVYRqckuMs0pojy_BwAORh-A_CiV29mr14KO8nsY7RbCK41qOdoQP0eUfmxSjUvh9wQdLiO6aZPM&sig=AHIEtbSeO_Jp_agyVX7UjaNE8y8fYqUxGw http://docs.google.com/viewer?a=v&q=cache:cpoGFpYf78oJ:w...
- d0mine 16y agoCould you elaborate? The survey says that Groupon promotions are profitable for two thirds of businesses and three of five (of all businesses) would run another Groupon promotion again.
- andreyf 16y agoHah, funny how such reason and logic didn't make it to the top of hacker news. Great link, thanks.
- csomar 16y agoOnly the future will tell if it's a smart or stupid move. I think the article don't give an in-depth knowledge about the acquisition, thus, since we don't know the ins and outs, we can hardly decide/predict. I also thought that it was a good offer, however, when I read that their earnings are at $2Bn and they have 3,000 employees.. that's already huge. They might have bigger plans, they know better the market and if they can double or triple their profits.
- drgath 16y ago"$0.5Bn" (Allegedly) That's just per quarter. So x4.
- dporan 16y agoDoes anyone remember PointCast? In 1997, they rejected an acquisition offer of $450 million from News Corp. Two years later, they sold the company for $7 million. http://en.wikipedia.org/wiki/PointCast_(dotcom) http://en.wikipedia.org/wiki/PointCast_(dotcom) Google's reported multi-billion dollar offer for Groupon seems like a pretty good deal for the company's founders, investors, and (presumably) employees.
- ojbyrne 16y agoFunny, the instant I read the headline, Pointcast came to mind.
- j_baker 16y agoDoes anyone remember Facebook? In 2006, they rejected an acquisition offer of $1 billion from Yahoo. Four years later, they're clearly a juggernaut of social networking. http://en.wikipedia.org/wiki/History_of_Facebook#Financials http://en.wikipedia.org/wiki/History_of_Facebook#Financials
- mogilny 16y agopeople were and are still trapped with facebook. groupon users have absolutely no reason to be loyal to groupon.
- mkramlich 16y agoyou made a very important point. i hope more people see it.
- okaramian 16y agoThere are far more Pointcasts than there are Facebooks.
- qq66 16y agoBut the existence of Facebooks depends on at least some founders believing that they're Facebooks, not Pointcasts.
- SriniK 16y agowell said but these deals tend to be more complicated than just the figures. google might have put in the conditions or groupon might have their own wishes. When they raised money last time, most of the decision making folks(founders and such) cashed out already with $160M http://techcrunch.com/2010/04/15/the-rest-of-the-details-on-that-monster-groupon-financing/ http://techcrunch.com/2010/04/15/the-rest-of-the-details-on-... So they are not in hurry Looking from google's point of view, not sure how they would have answered their investors. 500M revenues -> 150M-75M income(assuming 30%-15% profit margin) http://www.businessinsider.com/what-are-groupons-real-numbers-2010-4 http://www.businessinsider.com/what-are-groupons-real-number... that is a 12x - on revenue and 40x - on income. Just doesn't make sense.
- LiveTheDream 16y agoIt's been reported[1] that revenue is actually $2 billion, not 500MM. [1] http://kara.allthingsd.com/20101203/exclusive-groupon-annual-revenues-actually-2-billion/ http://kara.allthingsd.com/20101203/exclusive-groupon-annual...
- SriniK 16y agoAs mentioned in the article she is quoting gross merchandise sales not the gross revenue. As with groupon's business model, they pay ~70% of that to merchants. Refer the first link from businessinsider.com on the estimations.
- zhyder 16y agoGOOG itself has a P/E of 23x [1]. 40x for a fast growing company is not crazy. [1] http://www.google.com/finance?q=goog http://www.google.com/finance?q=goog
- mogilny 16y agoas some of the people already mention, numbers were "leaked". There are too many incentives to make up sources (page views, manipulate google share price, to solicit more bids...) revenues numbers are meaningless if you don't see the books for yourself. For example, a company can give 10 dollars to all new users. If this company has 35 million users, and takes in 30% of each transaction, that's 105 million dollars in revenues it can report. We wouldn't know.
- frisco 16y agoComments like this reflect more on their author than the startups and management teams they're about. Have you ever been inside a startup, and seen how one one-thousandth of the relevant information ends up in the press, and even then it's distorted? We don't even have more than rumor that this deal exists -- that should hint to you the quality of your information. These players aren't stupid. You have no idea how much you don't know here.
- SRSimko 16y agoI would agree the devil is in the details because from the outside this doesn't seem to make sense.
- risotto 16y agoAmen.
- aarlo 16y agoA lot of the talk is from people who (should) have low confidence in their predictions. Meaning, there's a 80% chance this is bullshit, but hear my out anyways. Yes, many of the facts are wrong. The conclusions are wrong. So why should we still discuss? First, it's fun. Like a sport for us to watch (and some to play :). More importantly, though: Forcing yourself to open your eyes, stay engaged and keep an active mind about what's going on in the world. To practice thinking things through, even with limited information (you'll never have 100% information). This encourages curiosity - so you get more involved, ask questions, do research. Overall it helps you learn how the world works.
- keltex 16y agoMaybe part of the problem is that they are in Chicago. Seriously. They aren't in the Silicon Valley ecosystem which if they were they would know that there are tons of scary smart people at well funded startups working lots of projects in their space. That might make they realize what they're up against.
- chollida1 16y agoI don't think a company needs to be located in the valley to know that there are "tons of scary smart people at well funded startups working lost of projects in their space"
- j_baker 16y agoThere are lots of scary smart people all over the world. True, there are more scary smart programmers in SV. But that doesn't mean companies can't find them elsewhere.
- chunkbot 16y agoYour analysis is wrong; here's why. The founders, employees, and other insiders of Groupon have already been handsomely paid off. For them, Groupon represents a free option. If it sells for $6 billion, great! But what if in 12 months it could be worth $10 billion? That's $4 billion more! And, compared to a site like YouTube, Groupon looks like a much more stable deal. They're already immensely profitable (something YouTube never was, and still isn't). The $5.3 billion offer, as a multiple of revenue and profit, was a surprisingly cheap offer for Groupon! Maybe Groupon will look back in 2 years with regret. Or maybe they'll have an offer of several billion dollars more. For the people in the position to make the decision, the risk is worth it. Do you know somewhere else with as good a chance as Groupon of making several billion more dollars in a year?
- deleted 16y ago[deleted]
- meric 16y agoI agree with you but your rhetorical question isn't right. If you're Gates with several dozen billions, it is trivial to "earn several billion more dollars"; But if it means I have a 50% chance of losing 10 billion and 50% chance earning 7 billion I wouldn't do it. The same goes for groupon; From the outside it looks like the founders are risking their entire 5.3 billion for a mere 100% increase in a couple of years time. Of course, like other comments say, we know very little; but I do concur with the original comment saying it looks crazy.
- erikpukinskis 16y agoTechCrunch reported they'll do 50m in profit this year, so it's not exactly cheap. If they were to stop growing it'd take 100 years for Google to get their investment back in cash. The question is when they'll stop growing.
- ebun 16y agoCan you (or anyone) elaborate on "The founders, employees, and other insiders of Groupon have already been handsomely paid off."? My understanding is that the handsome payoff comes when the company is either bought out or IPO's
- brianlash 16y agoI bet you said the same thing about Facebook when it rejected that $1B Yahoo bid 4 years ago.
- hugh3 16y agoI did, actually, which is why I no longer trust my own opinion on these things.
- jonmc12 16y agoOn the surface, Groupon probably is not that bad of a deal for businesses compared to the cost of acquiring customers through local advertising. The problem is that businesses get a bunch of customers who buy once, and go away. That's not a great value proposition for every business, but you would be surprised how many local businesses would take these deals any day of the week. Groupon will find its sustainable niche of businesses to work with, the bigger question is whether consumers will continue to flock to those particular deals.
- dbrannan 16y agoI used to think the same thing when FaceBook rejected a billion dollar offer from Google, I believe. Boy, was I ever wrong!
- elvirs 16y agowas not that Yahoo?
- dbrannan 16y agoMaybe it was Yahoo, sorry. I can't remember. Thinking of Yahoo, why in the world doesn't Yahoo push Flickr as a social network? They certainly have all the tools in place (photo, video, users, groups, ads) that have always been superior to FaceBook. Personally, I think Flickr could put FB to shame. Maybe the die hard photo fans wouldn't like it, but if you want to push advertising revenue I think they have a gold mine. Yahoo! Anyone there listening?
- eftpotrm 16y agoAs a user of both - dear God, no! Flickr has a pretty large and pretty serious audience of users who at least regard themselves as proper photographers. A good portion of the (me included) pay for the pro accounts. Flickr could, I'm sure, be tweaked a bit to let you more easily keep track of your friends other than through their photos - journals, one-line 'status updates', link sharing and the like. But how would this not alienate their already large and paying constituency of photographers, or their developing relationship with Getty as a supplier? Honestly, I can't see how this would be a probable net win for Yahoo.
- tzs 16y agoI'm curious if you had the same opinion when they reportedly turned down a three billion dollar offer from Yahoo.
- vgurgov 16y agoLoL )) i wish somebody call me idiot for refusing 6B deal. who are you to judge? dont u assume they know something you dont? all i can say these guys have balls to make such decisions.