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Wow, that's a 10X revenue valuation. Talk about an explosive wealth equation ...
This assumes constant growth, or at least that sales will continue.Actually, it's justified. They're taking into account future growth prospects. Keep in mind that Groupon was founded at the end of 2008 so within just two years they've reached about 600 million in revenue so 5 years from now they should be making several billion a year in revenue, especially when they integrate with Google's huge resources, so Google will make it's money back in no time.
Agreed.This news has not been confirmed yet.
I just spent the past 2 hours looking into Groupon for our B&B.
What Groupon says in their (excellent) tutorial videos: 97% of businesses want to do groupon again.
What a biz School study revealed: 40% said they'd never do social coupons again, ever.
That's quite a difference.
How it works:
-You develop your groupon deal (e.g., $75 worth of food for $35)
-You set a minimum for the deal to work (have to sell 500, or 1,000 minimum, or else NO ONE gets it). This encourages people to send the deal to their friends, so they can get the minimum. Clever, that.
-On the day of, you answer the phone like crazy, your website is busy, and you have to deal w/Groupon forums questions.
-As you sell groupons, you see the $$$ go to your account. I honestly don't know if they pay you for ALL groupons sold, or if it's promisary, and only paid when the person comes in. Likely the latter, as it would capitalize on breakage in groupon's favor.
-Groupon takes 50% of your revenues (easy to see how they generated $600 million in sales, eh?)
-Your offer has to be anything from 50-90% OFF.
Spend $10 to get $100 worth of groupons for tanning services. The tanning salon gets $5 total, Groupon gets $5 total, and the customer gets $100 worth of tanning services.
Spend $50 to get $100 worth of groupons for hotel accommodations. The hotel gets $25, Groupon gets $25, and the customer gets $100 worth of lodging.
So in that last example, you get $25 for a $100 booking.
If the person only books a $100 room, you lose money.
If they book $200 (let's say that's our cheapest room), then they pay $150 (the $50 groupon + $100), and we get $125, and Groupon gets $25.
At that point, it starts to make sense.
Very interesting concept. The whole key is to structure the deal so it's enticing to customers, and to make sure you can supply the demand.
I wonder how many of these "deals" use the psychological pricing that most eBooks/internet products(i.e. WordPress Direct or other 30 Day Challenge upsells), "Going Out of Business" Sales or even Black Friday sales use in raising the perceived price above average retail and slashing that in half, thus only giving the customer a 10-30% discount instead of the required 50-90% by Groupon standards?Very interesting concept. The whole key is to structure the deal so it's enticing to customers, and to make sure you can supply the demand.
It's just like the bidding war over 3Par between Dell and HP back in August. currently it is only rumor though... and as they say -"buy the rumor". The only difference here is GroupOn isn't public so ever since the rumor hit, GOOG has been selling off. Perhaps a case of sell the rumor?
Read the details.That rejection has to be the all time dumbest move. Somebody is a little too proud of their project to have told Google no concerning that amount of money. I mean, are you kidding me? I can't see their revenue reaching that mark in a long time to come, maybe even a lifetime, and likely now, never at all.
I would have been fresh dressed and chilling in the Hamptons with my family the very next day whilst penning checks to charities left and right from my Shiatsu chair.
Read the details.
There were strings attached. And anti-trust concerns.
They could have wound up w/nothing. Or, a LOT less than purchase price.
Plus, google wanted to guarantee performance-- that they'd do like 795M next year-- for them to get this.
If they are just a one hit wonder and will crash and burn next year, this also would have killed them.
It aint always as simple as it seems.
Why can't GOOG just buy a smaller, less successful (but similar) competitor to GROUPON and then bury GROUPON?
I'm being serious. MJ? Anyone?
Valuation is tricky when underwriting.For those who invest in stocks what would be the total worth of Groupon if they were to go public considering that their revenue is about 600 million right now?
From your perspective they may be a little too proud of their project, but from mine you care a bit too much about money.That rejection has to be the all time dumbest move. Somebody is a little too proud of their project to have told Google no concerning that amount of money. I mean, are you kidding me? I can't see their revenue reaching that mark in a long time to come, maybe even a lifetime, and likely now, never at all.
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