Monday, January 31, 2011

Fastest Growing Web Company in History

They have about 1000 employees in Chicago and they’re adding sales offices around the world. Their CEO was a music major who migrated to programming. They hired 50 writers from the Chicago improv scene to write catchy sales phrases. The CEO has an ice cream freezer in his office and all are welcome to it. They recently turned down an offer from Google to purchase their company for a reported 6B.

You guessed it. According to Forbes and Wall Street Journal, Groupon is the fastest growing company in Web history. After two years they have 500M in revenue and are expected to grow exponentially. Groupon was valued at 1.35B. The only other company that achieved a Billion dollar valuation as quickly was YouTube, who is still waiting to make a profit.

Groupon is doing everything that a dot com company is supposed to do -- huge sales, big profits and a solid connection between “bricks and mortar” retailers and online consumers. Getting people into stores from online coupons is the “the holy grail” that many others have tried to do and not succeeded. One of their most popular items so far: a $25 ticket for a Chicago architectural boat tour sold for $12. In May Groupon moved 19,822 tickets in eight hours and split the $238,000 with the tour operator. These guys make money.

Vendors generally share half the revenues with Groupon. Why are vendors willing to give such a huge cut to Groupon? For one thing, Groupon makes it so fast and easy for vendors to start using their service. But probably the biggest attraction is the chance for repeat customers. If you get people through your door and they like your product, then they will probably come back. My guess is that the Chicago boat tour did not expect to sell 20,000 tickets in eight hours (those are rock star numbers). This will keep them busy for quite a while.

Groupon is now in 88 US cities and 22 countries. As more and more mobile phones are purchased and upgraded they will continue to grow. Many competitors, like Living Social, have sprung up. Google’s bid to purchase Groupon was unsuccessful. I wonder if Groupon is available at any price. Chances are that they just are not for sale. According to Wired Magazine, Google has built their own Groupon clone called Google OffersFacebook Places could definitely give Groupon a run for their money too.

Many are speculating that Groupon will go public in 2011. They are reportedly talking to banks. What would you be willing to pay for a piece of Groupon? Do you think they will hold their value in the face of the competition? My opinion is that they will go public in 2011. They will have a valuation of over 10B and they will be oversubscribed.
Tim Collins
President and Owner, Stafflink Solutions


  1. Nice list! thanks for sharing this information with us.groupon clone

  2. Hey grouponclone,

    Glad you liked the blog. It's going to be very interesting to see who comes out on top.

    Tim Collins