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Can anyone explain how these guys spend money on the business, how can cost of running Groupon be so high?

by kno 15y ago

melvinram 15y ago
Primarily it's the salesforce and other employees from what I understand. 8000 employees x $40k/year average = $320 mil/year
- jordanb 15y ago
  The office must be a madhouse at the rate they're hiring.
hboon 15y ago
Staffing should be a huge component. Crunchbase[1] lists 3100 employees and yet there's 8000 now. Most of them probably inside sales. Spreading the word out and getting every brick and mortar to hear about and use them is critical now. [1] http://www.crunchbase.com/company/groupon http://www.crunchbase.com/company/groupon
unreal37 15y ago
Advertising. Groupon spends $100 million a month on buying web ads on Facebook and such. They're buying users essentially..
- AJ007 15y ago
  They are also spending a lot on acquiring other daily deal sites around the globe. Everything they have done so far indicates great competence in what they are doing. There are numerous companies that have blown hundreds of millions of dollars on advertising and ended up with a tiny user base (I can think of a particular MVNO a few years back.) Then you have failed acquisitions such as Cisco buying Flip, where the buyer ends up shutting the company down. Neither Groupon's customer or business acquisition strategy is a coin flip. They know very well what these users and business's are worth and they have all of the tools in place to monetize them. Without an extremely aggressive and hyper growth strategy, Groupon stands little chance against Google or Facebook. If they wanted a path on easy street, the original investors could have sat around pocketing millions of dollars a month for years. Once Groupon decided to go big or go bust their profile was raised to the point that ceased to be an option. The real wild cards here are not so much what Google and Facebook do but rather what the business clients do. There is a very fine balance between delivering great value to both sides of the equation. Tipping too far in one direction destroys their brand. I've heard plenty of complaints from users about the quality of Groupon's deal offerings. If Groupon can continue to demonstrate an ability to successfully overcome these challenges while staying a step ahead of Google and Facebook, they might be around for a while. Will they deliver fantastic returns for shareholders at a mature $20 billion valuation over the long term? That is a completely different question, but if you think that an answer of no equates Groupon with a ponzi scheme, all financial markets are ponzi schemes.
  - aneth 15y ago
    "If they wanted a path on easy street, the original investors could have sat around pocketing millions of dollars a month for years" Instead they cashed out for hundreds of millions of dollars with subsequent investor money.
- deleted 15y ago
  [deleted]
- mikecolella 15y ago
  Just to give everyone an idea... my startup tracks advertising on the Google Display Network, which is one of the primary channels that Groupon has been using for advertising since the very beginning. Up until just a few months ago, we were finding Groupon ads at a rate of 5x the next largest advertiser on the network (US data only). Google itself was the next largest, 2nd to Groupon. 5x the reach of the next largest advertiser on the largest ad network in the world is remarkable to say the least. I haven't seen anything like it in the 2+ years that our service has been operational

Can anyone explain how these guys spend money on the business, how can cost of running Groupon be so high?

by kno 15y ago

Can anyone explain how these guys spend money on the business, how can cost of running Groupon be so high?

Primarily it's the salesforce and other employees from what I understand. 8000 employees x $40k/year average = $320 mil/year

jordanb 15y ago
The office must be a madhouse at the rate they're hiring.

hboon 15y ago

Staffing should be a huge component. Crunchbase[1] lists 3100 employees and yet there's 8000 now. Most of them probably inside sales. Spreading the word out and getting every brick and mortar to hear about and use them is critical now. [1] http://www.crunchbase.com/company/groupon http://www.crunchbase.com/company/groupon

unreal37 15y ago

Advertising. Groupon spends $100 million a month on buying web ads on Facebook and such. They're buying users essentially..

AJ007 15y ago
They are also spending a lot on acquiring other daily deal sites around the globe. Everything they have done so far indicates great competence in what they are doing. There are numerous companies that have blown hundreds of millions of dollars on advertising and ended up with a tiny user base (I can think of a particular MVNO a few years back.) Then you have failed acquisitions such as Cisco buying Flip, where the buyer ends up shutting the company down. Neither Groupon's customer or business acquisition strategy is a coin flip. They know very well what these users and business's are worth and they have all of the tools in place to monetize them. Without an extremely aggressive and hyper growth strategy, Groupon stands little chance against Google or Facebook. If they wanted a path on easy street, the original investors could have sat around pocketing millions of dollars a month for years. Once Groupon decided to go big or go bust their profile was raised to the point that ceased to be an option. The real wild cards here are not so much what Google and Facebook do but rather what the business clients do. There is a very fine balance between delivering great value to both sides of the equation. Tipping too far in one direction destroys their brand. I've heard plenty of complaints from users about the quality of Groupon's deal offerings. If Groupon can continue to demonstrate an ability to successfully overcome these challenges while staying a step ahead of Google and Facebook, they might be around for a while. Will they deliver fantastic returns for shareholders at a mature $20 billion valuation over the long term? That is a completely different question, but if you think that an answer of no equates Groupon with a ponzi scheme, all financial markets are ponzi schemes.
- aneth 15y ago
  "If they wanted a path on easy street, the original investors could have sat around pocketing millions of dollars a month for years" Instead they cashed out for hundreds of millions of dollars with subsequent investor money.
deleted 15y ago
[deleted]
mikecolella 15y ago
Just to give everyone an idea... my startup tracks advertising on the Google Display Network, which is one of the primary channels that Groupon has been using for advertising since the very beginning. Up until just a few months ago, we were finding Groupon ads at a rate of 5x the next largest advertiser on the network (US data only). Google itself was the next largest, 2nd to Groupon. 5x the reach of the next largest advertiser on the largest ad network in the world is remarkable to say the least. I haven't seen anything like it in the 2+ years that our service has been operational