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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 reven

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?
- dmarquis 15y ago
  The point was that for Groupon the revenue numbers are meaningless not that the example business plan can't work.

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?

dmarquis 15y ago
The point was that for Groupon the revenue numbers are meaningless not that the example business plan can't work.