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.
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
