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Groupon Authorizes $950 Million Series G
- deleted 16y ago[deleted]
- deleted 16y ago[deleted]
- Eliezer 16y agoSenior in liquidation preference to all other shares? They can do that?
- ghshephard 16y agoI'm presuming that sufficient voting representation of the other tranches are required to do so.
- slapshot 16y agoIt's reasonably standard. The last money in gets to be the first money out. It solves the problem of a startup taking money from a new investor and then immediately disbursing it to the old investors (or other similar shenanigans). The existing shareholders have to vote to approve the new round. They wouldn't do so unless they thought it overall worthwhile.
- aaronblohowiak 16y agoYet another reason for startup employees to not value equity as part of the compensation package. You can be offered 0.1% of a company at a $100M valuation, have it exit for $1B and be left with nothing for your trouble because of liquidation preferences & dilution.
- joezydeco 16y agoSo does that kind of confirm that the founders are already cashed out?
- SpikeGronim 16y agoNope. From what I've heard it is standard practice for later rounds to dilute the investors from previous rounds.
- joezydeco 16y agoWell, it looks like they cashed out. http://techcrunch.com/2010/12/30/groupon-insiders-345-million/ http://techcrunch.com/2010/12/30/groupon-insiders-345-millio...
- 3pt14159 16y agoIt could point to that. The founders wanting to take some home with them after a 6 billion dollar offer is likely. I'd pocket a cool $50mm. It would keep my head in the game, but it would definitely let me sleep better at night in case it turns out to be a trend, rather than a sustainable business.
- c2 16y agoOf course we don't have all the variables here, but this doesn't seem like a very good move from an outside observer. If groupon is making hand over fist in cash, and has a healthy cash flow, part of me is wondering why they couldn't use that to steadily finance overseas expansion? I understand VC's desire to get in on the ground floor of GroupOn's meteoritic growth, but giving them a billion dollars of cash right now doesn't seem like right play here. Get big fast might of worked for a select few dot coms, but it certainly didn't work as a general rule.
- tomerico 16y agoI can give you an anecdote as an answer Here in Israel, there are dozens of Groupon clones, which are extremely popular. But Groupon isn't here yet. It's a land grab game, and in this business, growing fast matters.
- c2 16y agoGood point. I guess the thing I would caution about is expanding fast vs. executing well. Hopefully they learn the lessons in the Yandex vs. Google and Amazon/Ebay vs. Tao Bao fights. Facebook did execute on a very successful international strategy - but from my understanding they didn't need a billion dollars to do it. GroupOn's economics might be different - time will tell.
- jws 16y agoRemember the facebook world map? http://news.ycombinator.com/item?id=2002742 http://news.ycombinator.com/item?id=2002742 See the dark area in Russia? Vkontakte got to Russia first.
- djb_hackernews 16y agoLivingSocial, a Groupon competitor, is expanding aggressively. http://livingsocial.com/jobs http://livingsocial.com/jobs
- pchristensen 16y agoThe idea behind Groupon (spending marketing dollars on customers instead of media) is changing the face of commerce worldwide. No matter what Groupon does, that cat is out of the bag. It's up to them to make sure they capture as much of that value as possible. That takes a lot of money but if they succeed, it will be worth it. The chances are not small that Groupon will be a $100B business in a few years.
- infynyxx 16y agoAt this rate, they will soon exceed series Z
- ghshephard 16y agoTwo Anecdotes: 1) I'm hanging out with Family in Abbotsford, British Columbia, and wherever I go browsing, I'm getting Groupon Ads for interesting things to buy in Abbotsoford. I've been half tempted (for the first time in a long time) to click on these ads. There is 0% chance I would have considered going to these places without those ads. If I find something new and interesting, there is a very good chance that I (or my family) will return as repeat customers. 2) My mother, is trying to figure out how to attract new business into her Coffee Shop for a new line - just to let people know it exists, and is considering a groupon deal. If, in fact, groupon has a sustainable profitable model in their existing markets, and the $950mm Series G is there to expand the same model into other markets, and, if they have no entrenched competition in those markets - then this move makes absolute sense. Time will tell if all of these conditions hold true.
- angryasian 16y agoone anecdote: I've bought into 3 different groupon deals. Yes they were things I probably wouldn't of done on my own, and after trying them..I realized why I wouldn't of done them on my own and really had little interest in them other than thinking of doing it because it was a good deal. Sort of expensive way to learn what I don't care for.
- henry81 16y agoI have yet to buy a groupon, but I keep looking daily - I got some groupon gift cards. There seems to be way too many ads for spas, salons and the like, which do not interest me, yet they seem to attract tons of buyers..
- tlrobinson 16y agoIf you have an account you can specify your preferred types of deals in your profile.
- ShabbyDoo 16y agoThe expected lifetime value of a custom acquisition is so high for these services that Groupon makes sense even if the conversion rate is < 5%. And, since most salon owners can push the risk downward to their commissioned (paid by the job, really) staff, there's even less disincentive. Only the staffers still trying to build a book of business will accept Groupon customers, and those employees' opportunity losses are low because they end-up sitting around between clients anyway. So, the risk/reward trade-off of using Grupon in these industries is quite good.
- aditya 16y agoLocal advertising will be as big (if not bigger) than AdWords, ergo Groupon is the new Google. No wonder they turned them down.
- nhangen 16y agoGoogle isn't AdWords, Google is search (and now, the web). Search > Coupons. Google > Groupon
- malbiniak 16y agoWhat if the argument was Groupon was local search? From a revenue driving. Local Search > Search, Local Couponing > AdWords. Therefore, Groupon > Google.
- nhangen 16y agoLook at how Groupon is driving most of their traffic right now...250x250 AdWords ads. If you could show me how Local Search could exist outside of search, then you might have an argument, but right now, I just don't see it.
- philwelch 16y agoGoogle can't exist outside of the power company. Does that mean the power company is bigger than Google?
- trotsky 16y agoA billion in VC? Or could that just be the high end of a range that they're preparing for? I'd never heard of a round done for that much so I went looking. Only clear has ever taken on more VC than that in total after combining all their rounds... but apparently much of that was from industry partners, and they had a lot of spectrum to buy in small chunks. The second highest company in terms of total raised comes in just below the size of this round alone, with $949.85M. In googling to find that list I came across another fact... 1 Billion more or less matches the total amount of foreign VC expected to flow into all of India in 2011. Clearwire $1,299.50 Solyndra $949.85 Western Integrated Networks $889.00 MetroPCS Communications $733.10 Facebook $677.70 Reliant Pharmaceuticals $574.15 WildBlue Communications $557.99 Force10 Networks $553.42 Better Place $550.00 Grande Communications Netw. $507.40 http://blogs.wsj.com/venturecapital/2010/06/01/the-top-10-richest-venture-backed-companies-of-all-time/ http://blogs.wsj.com/venturecapital/2010/06/01/the-top-10-ri...
- lotusleaf1987 16y agoThis is Bubblicious.
- redorb 16y agoI agree; I also thought the Google 6bn offer was insane. I personally am not a fan of groupon (over valued).
- pchristensen 16y ago[Groupon employee speaking] It might seem so based on publicly available numbers. The publicly available numbers are outdated.
- thinkcomp 16y agoWe integrated coupons into FaceCash just last week. I wonder how much our valuation just went up?
- ShabbyDoo 16y agoHow defensible is Groupon's position? I buy wine online, and I'm happy to sign-up for multiple email wine offers. My Dad would sign-up for multiple Groupons if he observed any evidence of value from copycat competitors. People here have compared Groupon to Facebook, but I don't think the network effects are nearly as strong for Groupon. I don't doubt the first mover advantage, but I don't think it's as strong as some would claim. We should also note that Facebook was not the first social networking site out there. Edit: With this last sentence, I made a poor attempt to imply that, even with incredibly strong network effects, Friendster and MySpace were displaced even after many thought they had attained critical mass.
- pchristensen 16y agoThe network effects aren't a defense. The main defensible advantage is the customer brand. That's what the money is for - making sure it beats competitors to scale in every city in every country in the world.
- ShabbyDoo 16y agoI get that Groupon wants to be a strong brand, and it is probably rational to grow big quickly before other competitors establish themselves. However, I don't see how its valuation is defensible given how relatively defenseless it is against competition. It enjoys much weaker network effects than Facebook, and consumers' cost of using multiple services is much lower than, say, using both Google and Bing for every search. Also, how will they maintain high margins when competitors will likely offer up their services to businesses for a fraction of the margin?
- pchristensen 16y agoThe reason the brand matters is that merchants will only use a competitor if it can drive a meaningful number of customers. As long as Groupon is synonymous with daily deals for both merchants and consumers, it will be difficult for any large scale competitor to emerge.
- ShabbyDoo 16y agoThe guy who owns the salon where I get my hair cut probably wouldn't do a Groupon deal because of adverse selection effects -- he would be worried about attracting a bunch of cheap people who wouldn't pay full price for his premium-ish services and, by virtue of buying into a Groupon, don't have loyalty to their stylists. However, he is willing to discount services to customers who are likely shopping for a new salon. A few years ago, he signed-up for a service which would send an elaborate snail mail invitation for a set of heavily discounted salon services to people who recently bought homes in certain high income zip codes around his business. He owns some pretty sophisticated salon management software which can track conversion rates (and therefore lifetime customer value). I think he wasn't getting enough conversions to justify the price (a few dollars/invite), but he'd be interested in other such services with the proper selection biases. Could someone compete with Groupon by offering very selective discount offers? How much would it be worth for Grocery Store A to target those who shop primarily at Grocery Stores B? Could Visa use its credit card data to build-up such a list? Could it legally use that list to drive such marketing endeavors? Would consumers opt into having their purchasing data used in that way if it meant being offered amazing deals from time to time? How else could one offer up to businesses highly selective campaigns? The problem with Groupon is that it attracts customers who aren't especially valuable, and businesses have to hope to pick up the minority of those who represent profitable new business.