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Can we call it a bubble yet? Those of us who were around in the early 2000s recognize this game. Brand new ventures filing for IPOs based on 'amazing potentia

Can we call it a bubble yet? Those of us who were around in the early 2000s recognize this game. Brand new ventures filing for IPOs based on 'amazing potential' and even more amazing valuations. This is all going to come crashing down soon. The question is whether it happens before or after Bitcoins. :)

bryanh 15y ago
Did the 2000 bubble come with revenue numbers like these recent IPOs?
- jonknee 15y ago
  Huge revenues are less impressive when coupled with huge losses.
- jsavimbi 15y ago
  > Did the 2000 bubble come with revenue numbers like these recent IPOs? Lol.
- jdp23 15y ago
  When Webvan when public in 1999, they were predicting by 2001 they'd be at $518.2 million revenue with a $302 million net loss, roughly where Groupon is now. So you're quite right: GroupOn's farther down the path of losing a lot of money. Read more: http://news.cnet.com/THE-DAY-AHEAD-Webvan-revs-IPO-as-questions-abound/2100-12_3-265725.html#ixzz1O9G5y4Zx http://news.cnet.com/THE-DAY-AHEAD-Webvan-revs-IPO-as-questi... http://news.cnet.com/THE-DAY-AHEAD-Webvan-revs-IPO-as-questions-abound/2100-12_3-265725.html http://news.cnet.com/THE-DAY-AHEAD-Webvan-revs-IPO-as-questi...
  - brown9-2 15y ago
    Eh, those are all hopeful predictions. Actual revenue numbers for the year in which Webvan filed for IPO (1999): "projecting revenue of $11.9 million and a $73.8 million loss"
  - halo 15y ago
    On the other hand, in the year 2000 Amazon made a net loss of $1.4 billion(!) on revenues of $2.7 billion.
- mechanical_fish 15y ago
  No, but have you corrected for the size of the audience? The web is a lot bigger than it was eleven years ago. Meanwhile, from Groupon's prospectus: Our revenue is the purchase price paid by the customer for the Groupon. Our gross profit is the amount of revenue we retain after paying an agreed upon percentage of the purchase price to the featured merchant. So they have huge revenue numbers because they move a lot of coupons. But they're operating at a loss. It's promising that they have a big audience, and a database of merchants, but what does that really mean when they're not profitable? If I build a scalable website that sells ten-dollar bills for $9, I will probably attract as much traffic as I can afford. If I have a billion dollars to lose I can probably arrange to do roughly $10B in "revenue". But what does that number prove? Not so much in itself. It's other details that matter.
  - achompas 15y ago
    Why would you have to correct for audience size? The web is the web is the web. If you're a web business today, you have a much larger potential market than companies did in 1999.
    - daeken 15y ago
      That's the point. The audience is substantially higher now, and you can thus expect revenues to be higher.
  - rokhayakebe 15y ago
    If I build a scalable website that sells ten-dollar bills for $9, I will probably attract as much traffic as I can afford. If I have a billion dollars to lose I can probably arrange to do roughly $10B in "revenue". I think I will read this sentence once a week.
  - freshfunk 15y ago
    If you take your analogy to completion it makes perfect sense. Let's say you're in the business of giving $10 for $9. Let's say you become so popular at it that you beat out all your competitors and now whenever anybody wants to make $1 comes to you and goes to no one else. So multiply this by the size of your market. Now you add the condition (or maybe you had it in the first place) that those $9 have to stay with you at least 10 years. Now you're pretty much running a bank (well perhaps a CD is closer in terms of return and style of investment. That's a real business. It's not just leveraging capital but now you're the only bank out there so you've pretty much got a monopoly going. Now you can change your terms and say instead of giving back a $1 maybe you only give back $0.50 or $0.25. What is everyone else going to do about it since you have so much power in the industry you can crush your competition?
olivercameron 15y ago
The difference is that Groupon is generating revenue near billions, whereas in 2000 companies were IPO'ing without any significant revenue or traction.
- VladRussian 15y ago
  >The difference is that Groupon is generating revenue near billions, there is no problem to generate a billion revenue that costs a billion and half. Barings bank in 1995, Enron in 2002, Merrill Lynch in 2008 ... >in 2000 companies were IPO'ing without any significant revenue or traction. Of course, nobody would fall for this old trick of 2000 - IPO without revenue. So the new trick of 2011 is huge revenue, profit negative. You see, at the scale of a billion it is clear whether it is a profitable scalable business model or not.
  - olivercameron 15y ago
    Not at all. Groupon is cementing it's position as the market leader by spending a huge amount in expansion, thus it's going to result in losses for the foreseeable future. However, that doesn't mean they're not going to be profitable in years to come.
    - VladRussian 15y ago
      >Groupon is cementing it's position as the market leader by spending a huge amount in expansion, thus it's going to result in losses for the foreseeable future. Iridium satellite phones.
      - portman 15y ago
        Or Amazon.com Amazon lost $3 billion over 8 years before they started turning a profit. [1] It's HARD to tell the difference between Iridium and Amazon. That's why some investors make money and some lose money. [1] http://www.slideshare.net/faberNovel/amazoncom-the-hidden-empire http://www.slideshare.net/faberNovel/amazoncom-the-hidden-em...
evolution 15y ago
Raising money near to revenue doesn't sound bubble.
afterburner 15y ago
This seems more like Amazon to me than random questionable ventures. Of all the big name IPOs on the horizon, this is the only one I've repeatedly given money to.

bryanh 15y ago

Did the 2000 bubble come with revenue numbers like these recent IPOs?

jonknee 15y ago
Huge revenues are less impressive when coupled with huge losses.
jsavimbi 15y ago
> Did the 2000 bubble come with revenue numbers like these recent IPOs? Lol.
jdp23 15y ago
When Webvan when public in 1999, they were predicting by 2001 they'd be at $518.2 million revenue with a $302 million net loss, roughly where Groupon is now. So you're quite right: GroupOn's farther down the path of losing a lot of money. Read more: http://news.cnet.com/THE-DAY-AHEAD-Webvan-revs-IPO-as-questions-abound/2100-12_3-265725.html#ixzz1O9G5y4Zx http://news.cnet.com/THE-DAY-AHEAD-Webvan-revs-IPO-as-questi... http://news.cnet.com/THE-DAY-AHEAD-Webvan-revs-IPO-as-questions-abound/2100-12_3-265725.html http://news.cnet.com/THE-DAY-AHEAD-Webvan-revs-IPO-as-questi...
- brown9-2 15y ago
  Eh, those are all hopeful predictions. Actual revenue numbers for the year in which Webvan filed for IPO (1999): "projecting revenue of $11.9 million and a $73.8 million loss"
- halo 15y ago
  On the other hand, in the year 2000 Amazon made a net loss of $1.4 billion(!) on revenues of $2.7 billion.
mechanical_fish 15y ago
No, but have you corrected for the size of the audience? The web is a lot bigger than it was eleven years ago. Meanwhile, from Groupon's prospectus: Our revenue is the purchase price paid by the customer for the Groupon. Our gross profit is the amount of revenue we retain after paying an agreed upon percentage of the purchase price to the featured merchant. So they have huge revenue numbers because they move a lot of coupons. But they're operating at a loss. It's promising that they have a big audience, and a database of merchants, but what does that really mean when they're not profitable? If I build a scalable website that sells ten-dollar bills for $9, I will probably attract as much traffic as I can afford. If I have a billion dollars to lose I can probably arrange to do roughly $10B in "revenue". But what does that number prove? Not so much in itself. It's other details that matter.
- achompas 15y ago
  Why would you have to correct for audience size? The web is the web is the web. If you're a web business today, you have a much larger potential market than companies did in 1999.
  - daeken 15y ago
    That's the point. The audience is substantially higher now, and you can thus expect revenues to be higher.
- rokhayakebe 15y ago
  If I build a scalable website that sells ten-dollar bills for $9, I will probably attract as much traffic as I can afford. If I have a billion dollars to lose I can probably arrange to do roughly $10B in "revenue". I think I will read this sentence once a week.
- freshfunk 15y ago
  If you take your analogy to completion it makes perfect sense. Let's say you're in the business of giving $10 for $9. Let's say you become so popular at it that you beat out all your competitors and now whenever anybody wants to make $1 comes to you and goes to no one else. So multiply this by the size of your market. Now you add the condition (or maybe you had it in the first place) that those $9 have to stay with you at least 10 years. Now you're pretty much running a bank (well perhaps a CD is closer in terms of return and style of investment. That's a real business. It's not just leveraging capital but now you're the only bank out there so you've pretty much got a monopoly going. Now you can change your terms and say instead of giving back a $1 maybe you only give back $0.50 or $0.25. What is everyone else going to do about it since you have so much power in the industry you can crush your competition?

olivercameron 15y ago

The difference is that Groupon is generating revenue near billions, whereas in 2000 companies were IPO'ing without any significant revenue or traction.

VladRussian 15y ago
>The difference is that Groupon is generating revenue near billions, there is no problem to generate a billion revenue that costs a billion and half. Barings bank in 1995, Enron in 2002, Merrill Lynch in 2008 ... >in 2000 companies were IPO'ing without any significant revenue or traction. Of course, nobody would fall for this old trick of 2000 - IPO without revenue. So the new trick of 2011 is huge revenue, profit negative. You see, at the scale of a billion it is clear whether it is a profitable scalable business model or not.
- olivercameron 15y ago
  Not at all. Groupon is cementing it's position as the market leader by spending a huge amount in expansion, thus it's going to result in losses for the foreseeable future. However, that doesn't mean they're not going to be profitable in years to come.
  - VladRussian 15y ago
    >Groupon is cementing it's position as the market leader by spending a huge amount in expansion, thus it's going to result in losses for the foreseeable future. Iridium satellite phones.
    - portman 15y ago
      Or Amazon.com Amazon lost $3 billion over 8 years before they started turning a profit. [1] It's HARD to tell the difference between Iridium and Amazon. That's why some investors make money and some lose money. [1] http://www.slideshare.net/faberNovel/amazoncom-the-hidden-empire http://www.slideshare.net/faberNovel/amazoncom-the-hidden-em...

evolution 15y ago

Raising money near to revenue doesn't sound bubble.

afterburner 15y ago

This seems more like Amazon to me than random questionable ventures. Of all the big name IPOs on the horizon, this is the only one I've repeatedly given money to.