Groupon says "No thanks" to $5-$6 BILLION Offer

 

As for the Groupon guy, sell the company and 1031 exchange a good portion of it into real estate. Real estate may have its ups and downs, but for the next 50-5000 years I can't think of anything better.

 

Actually, the exception to that rule might be to become mayor of a major US city for $1/year. There's this one guy I know who did it and has significantly upped his billions since 2002.

Isnt that ironic how politicians always become richer after being elected?

Isnt that ironic how politicians always become richer after being elected?

 

True....it's just annoying to see one turn down the nominal $200k salary just so he can come off like a "good person".

For anyone who is interested, more back info to the story.

 

http://www.businessinsider.com/why-groupon...-google-2010-12

:zthread needs pics:

 

I knew that was coming,

 

Can you imagine me pulling a camera out and trying to take shots of his daughter after a business meeting with him? the old man would have me put to sleep

I knew that was coming,

 

Can you imagine me pulling a camera out and trying to take shots of his daughter after a business meeting with him? the old man would have me put to sleep

 

 

Dude, tell him it's for LP, how can he say no?! "You see, mate...there is this site..uhh.. where we men of different ages..uhh.. would like to see..uhhh.. pics of your..uhhh...daughter.. but it's totally for a good cause and all the members are awesome guys! Where are you going? Hello?"

Instead of looking at it as "$6B is a lot of money, they should accept the offer", you should be looking at it as, $6B is only 12 times annual revenues, which is very low for a company growing explosively. 12x sales is what you'd pay for a mature, has-been company. You would expect to pay 25+ times sales for something that's growing at hundreds of percent per year. So $6B is an (insultingly) low-ball offer.

 

How many business owners here, if you had a company growing 500% per year, would sell for 12x annual revenue?

 

Instead of looking at it as "$6B is a lot of money, they should accept the offer", you should be looking at it as, $6B is only 12 times annual revenues, which is very low for a company growing explosively. 12x sales is what you'd pay for a mature, has-been company. You would expect to pay 25+ times sales for something that's growing at hundreds of percent per year. So $6B is an (insultingly) low-ball offer.

 

How many business owners here, if you had a company growing 500% per year, would sell for 12x annual revenue?

 

Yeah, but don't you think things change once you cross the BILLION mark??

 

Theoretically there are limitations to how much a business can be worth.....do you think Google or Microsoft or any other monster could ever be worth $1 trillion?

Yeah, but don't you think things change once you cross the BILLION mark??

 

Theoretically there are limitations to how much a business can be worth.....do you think Google or Microsoft or any other monster could ever be worth $1 trillion?

What if the company stops growing and revenues start decreasing. On paper i agree that 6 B is just 12 years of 500m year income. But 12 years is a long time, imo why risk it? You start a company to make money and now it sparks a more powerful company's interest you decline fast easy money. I dont get it.

Yeah, but don't you think things change once you cross the BILLION mark??

 

Theoretically there are limitations to how much a business can be worth.....do you think Google or Microsoft or any other monster could ever be worth $1 trillion?

 

Given inflation...i'd say its all but assured.

 

probably back in 1910 when you could by a good house for $5000 someone doubted a company could ever be worth $1 billion. (or some example like that) Given enough time (and inflation) we'll see a trillion dollar company.

 

that said...i would have taken the money once you start talking billions the size of my smile doesnt change much from 5 to 10 to 20...its more money than i could ever spend. $6 billion earning 4% pays $240million a year (and it compounding!)...you could spend $660,000 a day and never touch the principal.

EXACTLY... So tell me... how is he just like the average guy with a "decent" job?

I'm not saying he IS an average guy with a decent job. He has a company worth 100m . The discussion is not about any thing other than his spending. Like I said previously, there are MANY MANY reasons for someone to start a business. Not just because you want to spend a bunch of $$ or want a baller life style.

 

All I am saying is he spends money like an average guy with a decent job. Just like Fortis's friend.

 

Let's not go more OT.

 

As for the Groupon deal, it's hard to say if it was a smart move or not. We will know in a year or 2 Facebook made the right choice in rejecting the offfer others did not. Time will tell

 

It makes no difference if the owner only has 5% if he has powerful "A-stocks" that control more than 50% of the votes. I know several use this option when giving over assets to their kids. The kids might sit on 100% of the b-stocks of the company, but the father controls the company because he has the "a-stocks", so he sits with 100% of the voting power. Does anyone know what kind of voting power the owner of Groupon has?

"Private valuation of Facebook reaching about $50 billion"

Says it all doesn't it.

Given inflation...i'd say its all but assured.

 

probably back in 1910 when you could by a good house for $5000 someone doubted a company could ever be worth $1 billion. (or some example like that) Given enough time (and inflation) we'll see a trillion dollar company.

 

that said...i would have taken the money once you start talking billions the size of my smile doesnt change much from 5 to 10 to 20...its more money than i could ever spend. $6 billion earning 4% pays $240million a year (and it compounding!)...you could spend $660,000 a day and never touch the principal.

 

Of course, we'll see a trillion dollar company due to inflation just like eventually everyone in the middle class will all be millionaires.

 

If the law of 72 applies here....with 3% inflation, that's a 24 year period to double money. So it will take a $50 billion company today about 5 periods to become $1 trillion...which is 120 years from now.

I love how you reference a person or two that you have absolutely no idea about and then draw sweeping conclusions. You understand that just because your apple is rotten doesn't mean all apples in the world are rotten? And what do you know about the richest guy in Norway and what he eats for lunch and the cost of his suits? Nothing. I went for a 12.99 haircut last night yet could buy 10 hair salons tomorrow if I wanted to so what does that mean? Even my wife doesn't know the intimate details of my finances so how do you figure that you can draw conclusions about anyone by watching them eat a ham sandwich?

 

The collective sentiment here is that people often live up to and beyond their means. This is a fact. Look at the subprime crisis for example. We're making a statement based on tens of millions of people, not your uncle's daughter's gardener's cousin who drives a Prius yet makes millions a year. For all you know he fills his Prius with gold, wears $50,000 underwear and routinely bangs hookers for 5 grand a stab.

 

 

To say bingo would be an understatement.

 

Alexander Tamas, partner at Digital Sky Technologies (DST), a major investor in Facebook, Twitter, Zynga, and Groupon, defended Groupon’s rejection of Google’s acquisition bid, saying that Groupon could become one of the most important companies on the Internet.

 

Tamas was speaking at the Le Web conference in Paris. He said that there are very few internet companies that have the potential to define their genre and become great companies. Groupon can achieve much more by staying independent.

 

http://memeburn.com/2010/12/russias-dst-ba...tion-of-google/

 

Also looks like Andrew Mason's ownership share is 20%, putting this at no thanks to $1b, not $5. Eric Lefkofsky is the biggest investor with a 30% share who I am estimating is worth without Groupon to be about $450 million. Ultimately Eric is the guy who calls the shots, and obviously he's pretty comfortable where he is at.

 

So this thread's underlying question is completely wrong, and many of the assumptions are also wrong.

 

Groupon CEO Andrew Mason at Startup School 2010

I love watching interviews/presentations from startup founders, great video.

http://memeburn.com/2010/12/russias-dst-ba...tion-of-google/

 

Also looks like Andrew Mason's ownership share is 20%, putting this at no thanks to $1b, not $5. Eric Lefkofsky is the biggest investor with a 30% share who I am estimating is worth without Groupon to be about $450 million. Ultimately Eric is the guy who calls the shots, and obviously he's pretty comfortable where he is at.

 

So this thread's underlying question is completely wrong, and many of the assumptions are also wrong.

 

 

I never said in my initial post that Andrew Mason turned down $6B, I said Groupon did. However that is made up from a shareholder standpoint. Eric, Andrew, Santa Claus whoever it was turned down the chance to be a automatic Billionaire.

 

Also the $500 mill revenues, as far as I know are revenue not earnings. At least thats how I read it, could be wrong but if they arent actually netting a huge percentage of that then its not a simple $500x12 yr comparison.

Google Offers to take on Groupon. It will be interesting to see how this turns out.

Google Offers to take on Groupon. It will be interesting to see how this turns out.

 

 

We all saw that one coming. Groupon should have taken the offer. Google will take a good deal of their market share.

We all saw that one coming. Groupon should have taken the offer. Google will take a good deal of their market share.

 

Hopefully these Groupon kids will learn a lesson.

$500MM was revenue, not profit. Should have taken the offer.

 

Google has access to billions of people doing searches for EVERYTHING. They are the last company I'd want to compete with when it comes to anything Internet. They could clone Groupon within weeks with all their cash and man power.

I don't think Google had a genuine interest in buying Groupon, why would they?

 

They just wanted to come across as "the nice guy" before they go ahead ripping Groupon apart

Google has access to billions of people doing searches for EVERYTHING. They are the last company I'd want to compete with when it comes to anything Internet. They could clone Groupon within weeks with all their cash and man power.

Also, one of Groupon's main advertising channel is... Google Ads. I wonder how Google will handle this.

Just because Google is Google doesn't mean they will be able to annihilate Groupon. Time will tell. Their effort might be just as futile as Microsoft trying to take on Google.

I've been talking to their president Rob Solomon regarding some issues my business had when we used Groupon at the beginning of January. Nice guy, but doesn't seem to have the gravitas for the top job. Neither frankly does their SVP of sales. They have some real sales and operational challenges ahead of them, adding Google to the mix won't help. I am not convinced they have a sustainable business model. Fool me once, shame on you, fool me twice shame on me....it's highly unlikely that I would use them again and if I did I would severely limit the # of coupons available for purchase which would obviously reduce the revenue they generate. I have spoken to several business owners in my space who used Groupon in other markets and they feel exactly the same way I do.

 

You almost get the sense they are ploughing ahead as fast possible to get to the eventual IPO, with nobody looking or caring what happens after that. I told him that yesterday.