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Groupon Raises, Like, A Billion Dollars
- phuff 16y agoFrom the press release: 'In the last year, Groupon has been called “the fastest growing company ever” by Forbes Magazine and “America’s best website” by one of Groupon’s television commercials.' Are they saying that tongue in cheek? I am asking seriously... I haven't had enough experience with them to know. My wife is the one who uses it...
- defen 16y agoThey're a very cheeky company.
- mortenjorck 16y agoCheck out one of the daily deals in your city and scroll down to "Groupon Says..." (it's by the bling-wearing cat). This should give you a good idea.
- qq66 16y agoThe second is cheeky, the first is correct. If their revenues are what they are widely accepted to be, they have beaten Compaq's record as the fastest company to $1 billion in revenues (and done it profitably -- I could easily build a $1 billion company quicker by selling $100 bills for $50).
- petervandijck 16y agoOk, so I'll ask the question. If they're making so much money, why do they need to raise a billion dollars? "Because they can" might be the answer..
- 3pt14159 16y agoWhen you're CPA is significantly lower than your NPV you raise a billion and start buying media.
- ironchef 16y agoAn old CEO of mine once said: "The worst time to raise money is when you need it. The best is when you don't need it." Funny thing is he's one of the VCs funding groupon...
- jws 16y agoLand rush. There may only be room for one coupon site in the minds of people and if groupon doesn't get to a nation first, they will lose it forever[1]. This will require marketing expenditures. e.g. Facebook lost Russia. [1] in internet time.
- d0mine 16y agoAccording to Alexa there are three social network sites in the top 10 sites in Russia [1]: vkontakte.ru 3 odnoklassniki.ru 8 facebook.com 10 [1]: http://www.alexa.com/topsites/countries/RU http://www.alexa.com/topsites/countries/RU
- semanticist 16y agoFour: livejournal.com is effectively a social network, although it predates Facebook and the like by half a decade or more.
- varjag 16y agoYou can write off odnoklassniki at this point: they are plagued by account theft, and are milking users for money in heavy-handed manner. The only people left there are the long tail middle-aged folk. I expect Facebook to eat VK within a couple of years.
- skbohra123 16y agovkontakte.ru google translate translates this to facebook.
- alex_c 16y ago>"Land rush. There may only be room for one coupon site in the minds of people" I agree this is a likely explanation, but is there any evidence this is the case? I can understand that limitation for a social network, and even for a search engine, but not as much for coupons. I don't care if my dead tree coupons come from several sources, would I care about coupons that show up in my email? I can see two areas of competition, anyway - geography and industry. I suspect targeted coupon sites will always have a fighting chance against more generic ones (Groupon is probably trying to be both, of course).
- jtbigwoo 16y agoBecause they think they've designed a money machine, but it needs priming, maybe? Their business model relies on a ton of sales people. Hiring and training a ton of sales people all over the world is going to cost a ton of money.
- klochner 16y agoFounders and prior investors cashing out some chips.
- martythemaniak 16y agoI guess the price Google was offering wasn't astronomical after all. Good for groupon either way.
- redorb 16y agoI agree. Good for Groupon. Although just because (2) groups of people make the same mistake doesn't mean it wasn't a mistake. Of course we won't know until they either sink or swim and with this war chest it could be a while before we know anything.
- alttab 16y agoEver feel like we're floating in a bubble?
- ryanwaggoner 16y agoI know! All these huge valuations for companies that are posting revenues of hundreds of millions and growing like crazy! Wait...
- wh-uws 16y agoI wish I had more upvotes for this comment. Its crazy to me how many people want to cry bubble 2.0 when all of these companies are turning good profits. The dotcom bubble was all about people throwing a bunch of money at companies that had no clear or proven plan of success
- Silhouette 16y ago> Its crazy to me how many people want to cry bubble 2.0 when all of these companies are turning good profits. Most of them aren't turning good profits, relative to the valuations they have been receiving. The recent valuations for businesses like Facebook would take lifetimes to repay the cost of shares based on their profits today. The valuations only make any sense if you assume that these companies are going to experience very rapid growth rates in the near future. A lot of us who are thinking "bubble" just don't buy the hype about that growth. Social networking sites have come and gone. Search engines have come and gone. Technology platforms have come and gone. So far, I see no reason to believe that the likes of Facebook or Zynga or Groupon will be immune to disruptive competition and find new markets or business models sufficient to sustain dramatic growth for several years, which is what it would take as a minimum to make the valuations realistic. > The dotcom bubble was all about people throwing a bunch of money at companies that had no clear or proven plan of success And what is different here? Amazon has a market cap around $80B and a very high P/E by most standards at 75ish, but it has a solid business model (actually, more than one these days) and a strong brand that has stood the test of time for more than 15 years now. Next to that, does $50B for a social network that reportedly makes only ~$100M per year seem like a good investment? They've had 7 years to monetize their system and they've got 500M users; how long should we wait for the astronomical profits, exactly? Another example: for $5.5B, you could supposedly buy Zynga according to a recent evaluation. Or, you could buy about 10% of Tesco (the UK food store juggernaut).