No doubt, Groupon prints cash. However, as far as I can tell (and I have actually done significant research and thinking about this type of business) they are f

No doubt, Groupon prints cash. However, as far as I can tell (and I have actually done significant research and thinking about this type of business) they are far more lucky than anything else. Not to say they didn't execute well, clearly they did, but there have literally been hundreds of companies both before (restaurant.com, 1999, val-pak, Entertainment Book) and after (Facebook, Google, Yelp, FourSquare, AOL, LivingSocial, DailyCandy, Zip2Save, + thousands you've never heard of) doing nearly or exactly the same thing. IMO Groupon was indeed crazy to pass on this deal. I agree with others saying that there is a high risk that they will be worth far less in a few years. Why? Their model is not strategically defensible, and there are very few barriers to entry. Look around, anyone with a mailing list or customer base is entering the deals space. Besides that, in the end, Groupon makes money by giving away other people's money. It's great work if you can get it, but this type of business gets very hard to scale past a certain point. While it's great for certain kinds of businesses, it also incites a race to the bottom. I think that over the next few years businesses will get wise to the model and revert to more sustainable discount levels for the majority of situations. In the meantime Groupon will continue to print cash but in the long run there will not be one winner in this category, it will end up very fragmented and very competitive (read: high costs and low profit margins).