Oneupweb : Groupon Heats Up
I’m a pretty cheap dude. Ever heard the phrase, Going Dutch? Yeah, add that to wooden shoes, tulips and windmills, and my ancestors don’t really have much to brag about. Other cultures have unique foods, culture and history—we have our ability to avoid a bill. That said, you can imagine my enthusiasm upon hearing about Groupon. Is it true about the insanely large discounts on popular events, services, restaurants and more? Sign me up! Alas, the beautiful town of Traverse City, Michigan, is not yet included. Bad form, Groupon. This social-buying bull is a growing phenomenon that has exploded in popularity and revenue in the past year. My colleague, Leah, explained the ins and outs of the group coupon (Groupon) a few months ago for those who are new to whole social deal (pun intended).
The momentum the young company has generated is staggering—acquiring Ludic Labs and three Asian deal websites in the past few days alone, adding to the slew of European, South American and Japanese companies now under the Groupon name. Even Forbes took notice, naming them the fastest growing company ever, being valued at $1.35 billion at the young age of a year and a half. If the past few days weren’t enough, the young company just released the Groupon 2.0 platform, for a more personalized (think deal feed) and merchant-friendly experience. Just surpassing year two in business, Groupon has the digital world at their feet. Already rumored to have passed on a whopper of a deal from Yahoo! in October, the big dogs in Mountain View have been all over the news with acquisition rumors—initially, $2.5 billion. And then, rumors were afloat that the true price tag was between $5-6 billion.
Why the enormous price tag? Well, despite the fact Google has more than enough cash to foot the bill, as of last week, Groupon was said to be on pace to reach $500 million in revenue in their second year of business, but that was last week. All Things Digital reported Friday that Groupon is actually creeping closer to $2 billion in 2010 revenue. Additional considerations include the perks that come with a social site that is already more than 13 million members strong, including their emails and buying habits (even though Google probably already knows this, including what color shirt you’re wearing). It’s no secret that the folks in the Googleplex want to rule social scene as well, and Groupon would be a fantastic acquisition from a resource point of view.
Well, you snooze, you lose, Google. Groupon passed. Initially I was shocked to hear that Groupon rejected the historic bid, but when I heard the more accurate revenue projections my surprise was followed by an understanding “ohhh.” If the deal had gone through, it would have been the most expensive acquisition Google has made to date, surpassing the DoubleClick deal ($3.1 billion) a few years back and shattering the $1.65 billion acquisition of that one video site in 2006, YouTube, I think they call it? It will be interesting to see where and how fast the Groupon snowball rolls over the next six months. Personally, I think Google, Microsoft and Facebook should just group together for a Groupon coupon. Who knows, maybe they can buy the company for a 50% group discount? Some part of me finds that unlikely.