8 ms·

Groupon not selling to Google was the dumbest thing I've ever seen a company do. Ever.

by puredemo 15y ago

hvs 15y ago
So, does that make Google offering to buy Groupon also one of the dumbest things you've ever seen a company do?
- mechanical_fish 15y ago
  It's relative. Google has piles of money and the means of making more; if they make a mistake in spending their pocket change, it's no biggie. But Groupon has piles of debts, and their runway is getting shorter.
- emp_ 15y ago
  One goes be dumb and moves on, the other goes dumb and dies.
- SoftwareMaven 15y ago
  I think Google was willing to pay way more than they should have for Groupon, but I wouldn't call it anywhere near the dumbest thing a company could do.
- enjo 15y ago
  Speculating here, but I don't think Google wanted Groupon as an immediate profit center. They wanted their considerable mindshare and ready-made sales and marketing team. I'm guessing that they felt they could merge Googles ability to optimize with that juggernaut and build something to just dominate the local marketing space (particularly the real time stuff).
lucasjake 15y ago
This is pretty simplistic thinking. For all you know Groupon wanted the deal badly, Google walked away from the deal, and both parties agreed to go with the story that Groupon walked away so that it wouldn't kill their prospects of an IPO.
- jonknee 15y ago
  It's always nice to cushion your IPO with fraud...
- uptown 15y ago
  Why would Google go along with a story that made it look like they were powerless to get what they wanted?
  - hello_moto 15y ago
    Maybe because Google can play the angle of "We almost got cheated, now we learn to become better" later on when Groupon crumbles...
    - uptown 15y ago
      That seems like a really complicated narrative for the two parties to fabricate. Isn't it just more likely that Groupon thought they were worth more than Google was willing to pay?
  - lucasjake 15y ago
    I don't think anyone had that feeling when the deal fell through. Many people were surprised Google was interested in the first place. Google had to consider the deal, after all Groupon was buying shit tons of advertising on Google at the time. If you're company realizes a certain scale on the internet (i.e. a billion dollar valuation) there is a good chance the deal is going to get looked at by all the big consumer tech firms. Groupon walked in to the negotiations with a publicly speculated valuation of 1B, and after the deal fell through they were being talked about somewhere greater than 5B, and got an extra investment from DST. Seems like negotiating with Google worked out well for them in that respect. Notice how Andrew Mason never answers the question publicly about why they 'walked away' from Google.
jcampbell1 15y ago
Google's offer was $6B. The IPO is priced at $30B. I am scratching my head how that is the dumbest thing you have ever seen a company do. Ever. I can see the IPO valuation getting cut to a more reasonable $10B, but that is still more than the Google offer.
- jonknee 15y ago
  Who's to say the IPO will be successful? The suits will have to keep their shares for a bit, plenty of time for the whole mess to unfold. Plus, Groupon raised a ton of VC ($950M) after turning down Google's offer. Factoring in dilution, it won't take a drastically bad IPO to make $6B in-hand look like a steal.
  - staunch 15y ago
    Hundreds of millions of dollars already went to the founders. The only risk is whether they'll be super rich or ultra super rich.
    - jonknee 15y ago
      There are more stakeholders in the company than the founders.
      - staunch 15y ago
        Sure, but the founders (and the rest of the board) made the decision not to sell. You can call them fools, but they're laughing all the way to the bank.
        jonknee 15y ago
        Possibly laughing all the way to the bank, it could end up that Google was a much better deal.
    - teej 15y ago
      Incorrect. Tens of millions of dollars already went to founders. Only investors cashed out in the 9 figure range. [1] That's a huge difference, especially considering that Groupon fancies itself a $30B company. [1] - http://www.businessinsider.com/the-millions-of-dollars-groupons-investors-and-executives-have-already-taken-off-the-table-2011-6 http://www.businessinsider.com/the-millions-of-dollars-group...
r00fus 15y ago
It's speculated that Google's terms may have been less profitable for the early funders (ie, the controllers of the company) than the round G (which gave a LOT of money back to early investors) and subsequent IPO. So it could be a case of the powerful people not making enough with a Google exit than going public, even though Google + Groupon might have been a powerful and long-term more meaningful exit.
thomasgerbe 15y ago
I wouldn't say it's the dumbest thing I've seen but Google certainly moved on by acquiring Dealmap.
jayzee 15y ago
It was actually smart. Groupon wanted a hefty break-up $5B fee. Google refused. Groupon must have known that the deal would never pass muster at Google after real number crunching. Hence they refused. With the break-up fee they would have still made like bandits.
- Tofusensei 15y ago
  Source?
  - shrikant 15y ago
    http://www.pcmag.com/article2/0,2817,2373870,00.asp http://www.pcmag.com/article2/0,2817,2373870,00.asp "I think the holdup on GOOG/Groupon deal is size of break-up fee if Gov't blocks deal," wrote Venrock venture capitalist David Pakman in a Twitter message early December 3.
- samirg 15y ago
  The break up fee was to protect against the gov't blocking the acquisition due to antitrust concerns as far as I know. Pretty sure the business diligence was already complete by that time.
Macsenour 15y ago
And how would you rank it with Yahoo not selling to Microsoft?

Groupon not selling to Google was the dumbest thing I've ever seen a company do. Ever.

hvs 15y ago

So, does that make Google offering to buy Groupon also one of the dumbest things you've ever seen a company do?

mechanical_fish 15y ago
It's relative. Google has piles of money and the means of making more; if they make a mistake in spending their pocket change, it's no biggie. But Groupon has piles of debts, and their runway is getting shorter.
emp_ 15y ago
One goes be dumb and moves on, the other goes dumb and dies.
SoftwareMaven 15y ago
I think Google was willing to pay way more than they should have for Groupon, but I wouldn't call it anywhere near the dumbest thing a company could do.
enjo 15y ago
Speculating here, but I don't think Google wanted Groupon as an immediate profit center. They wanted their considerable mindshare and ready-made sales and marketing team. I'm guessing that they felt they could merge Googles ability to optimize with that juggernaut and build something to just dominate the local marketing space (particularly the real time stuff).

lucasjake 15y ago

This is pretty simplistic thinking. For all you know Groupon wanted the deal badly, Google walked away from the deal, and both parties agreed to go with the story that Groupon walked away so that it wouldn't kill their prospects of an IPO.

jonknee 15y ago
It's always nice to cushion your IPO with fraud...
uptown 15y ago
Why would Google go along with a story that made it look like they were powerless to get what they wanted?
- hello_moto 15y ago
  Maybe because Google can play the angle of "We almost got cheated, now we learn to become better" later on when Groupon crumbles...
  - uptown 15y ago
    That seems like a really complicated narrative for the two parties to fabricate. Isn't it just more likely that Groupon thought they were worth more than Google was willing to pay?
- lucasjake 15y ago
  I don't think anyone had that feeling when the deal fell through. Many people were surprised Google was interested in the first place. Google had to consider the deal, after all Groupon was buying shit tons of advertising on Google at the time. If you're company realizes a certain scale on the internet (i.e. a billion dollar valuation) there is a good chance the deal is going to get looked at by all the big consumer tech firms. Groupon walked in to the negotiations with a publicly speculated valuation of 1B, and after the deal fell through they were being talked about somewhere greater than 5B, and got an extra investment from DST. Seems like negotiating with Google worked out well for them in that respect. Notice how Andrew Mason never answers the question publicly about why they 'walked away' from Google.

jcampbell1 15y ago

Google's offer was $6B. The IPO is priced at $30B. I am scratching my head how that is the dumbest thing you have ever seen a company do. Ever. I can see the IPO valuation getting cut to a more reasonable $10B, but that is still more than the Google offer.

jonknee 15y ago
Who's to say the IPO will be successful? The suits will have to keep their shares for a bit, plenty of time for the whole mess to unfold. Plus, Groupon raised a ton of VC ($950M) after turning down Google's offer. Factoring in dilution, it won't take a drastically bad IPO to make $6B in-hand look like a steal.
- staunch 15y ago
  Hundreds of millions of dollars already went to the founders. The only risk is whether they'll be super rich or ultra super rich.
  - jonknee 15y ago
    There are more stakeholders in the company than the founders.
    - staunch 15y ago
      Sure, but the founders (and the rest of the board) made the decision not to sell. You can call them fools, but they're laughing all the way to the bank.
      - jonknee 15y ago
        Possibly laughing all the way to the bank, it could end up that Google was a much better deal.
  - teej 15y ago
    Incorrect. Tens of millions of dollars already went to founders. Only investors cashed out in the 9 figure range. [1] That's a huge difference, especially considering that Groupon fancies itself a $30B company. [1] - http://www.businessinsider.com/the-millions-of-dollars-groupons-investors-and-executives-have-already-taken-off-the-table-2011-6 http://www.businessinsider.com/the-millions-of-dollars-group...

r00fus 15y ago

It's speculated that Google's terms may have been less profitable for the early funders (ie, the controllers of the company) than the round G (which gave a LOT of money back to early investors) and subsequent IPO. So it could be a case of the powerful people not making enough with a Google exit than going public, even though Google + Groupon might have been a powerful and long-term more meaningful exit.

thomasgerbe 15y ago

I wouldn't say it's the dumbest thing I've seen but Google certainly moved on by acquiring Dealmap.

jayzee 15y ago

It was actually smart. Groupon wanted a hefty break-up $5B fee. Google refused. Groupon must have known that the deal would never pass muster at Google after real number crunching. Hence they refused. With the break-up fee they would have still made like bandits.

Tofusensei 15y ago
Source?
- shrikant 15y ago
  http://www.pcmag.com/article2/0,2817,2373870,00.asp http://www.pcmag.com/article2/0,2817,2373870,00.asp "I think the holdup on GOOG/Groupon deal is size of break-up fee if Gov't blocks deal," wrote Venrock venture capitalist David Pakman in a Twitter message early December 3.
samirg 15y ago
The break up fee was to protect against the gov't blocking the acquisition due to antitrust concerns as far as I know. Pretty sure the business diligence was already complete by that time.

Macsenour 15y ago

And how would you rank it with Yahoo not selling to Microsoft?