James Brehm's Blog


Groupon: What are they thinking?

07 Dec 2010 | by James Brehm
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What are they thinking?

 

The folks at rising star Groupon may be busy making deals for you, but they are not looking to make a deal for their company. After turning down an offer estimated at between 5.3 and 6 billion (yes, BILLION) dollars, Groupon is going it alone.

 

Earlier this year, independent companies valued Groupon at $1.3B. In December 2009, Tech Crunch ran a story that estimated that Groupon was worth $250M.

 

(http://techcrunch.com/2009/12/17/groupon-valued-at-250-million/)

 

Growing in value from $250M to $1.3B over a one year timeframe is fantastic (and points out the value consumers are placing on saving money right now), but does it mean they’ll be worth more than $6B tomorrow?

 

We all need to remember that the $6B for Groupon is measured in Google-dollars. My advice to entrepreneurers: “any time you can get Google-dollars for your company, take it.” Google-dollars are better than “Monopoly Money” because as Google has shown; if they can’t buy it they will build it.

 

Adding local community based advertising would be great for Google; however how valuable is Groupon right now, really?

 

As an early adopter of "all things tech", I am a Groupon subscriber. In the months that I have subscribed, there have only been a couple items offered that I would purchase. Because of that, I have been questioning the daily emails that get sent. Most of the offers are just as valuable as the unsolicited SPAM that ends up in my inbox and it is almost hard to distinguish what I have "subscribed" for and what I haven't.

 

Anyway, I may be the exception. Perhaps there is that consumer who wants hair removal, guitar lessons, chai tea, pizza, discounted zoo tickets, car washes, Laser Tag, skin analysis, belly dancing classes, bad furniture, yoga lessons and haunted house tickets in a two week time frame.

 

Google is about getting eyes and that is the core of their business model.

 

Google first emerged as a powerhouse getting companies to invest in paid search. Who would have thought that companies would pay millions for Words that are already in Webster's dictionary? But as we’ve found, Google has made a monstrous business by getting eyeballs on to those words (and web pages).

 

How do they expand on this? By community building and getting every eye to a Google property. That is why the Google/Groupon deal makes so much sense.

 

Groupon should get back to the table with Google, or fear being talked about like Yahoo and Jerry Yang after spurning Microsoft.

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