In December 2010 I wrote a post saying that Google shouldn’t buy Groupon but that it would be a good idea for Groupon to sell at the then rumored price of $5.3 billion with a $0.7 billion earn out. As of Friday’s close, Groupon’s market cap is $6.3 billion or 5% above what the full deal consideration would have been. So should they have sold back then? It is still far from clear, especially now that important details around the deal have emerged from an article in the WSJ. The key point from ...

In December 2010 I wrote a post saying that Google shouldn’t buy Groupon but that it would be a good idea for Groupon to sell at the then rumored price of $5.3 billion with a $0.7 billion earn out. As of Friday’s close, Groupon’s market cap is $6.3 billion or 5% above what the full deal consideration would have been. So should they have sold back then? It is still far from clear, especially now that important details around the deal have emerged from an article in the WSJ. The key point from ...

The filing of the Groupon S1 has resulted in a lot of discussion about Groupon’s business model. Most of the comments were negative, going as far as calling Groupon a “Ponzi Scheme,” although there were a few defenders, such as Steve Cheney. I was particularly intrigued by a thorough analysis by Yipit that shows that Groupon’s economics appear to be deteriorating in a more mature market such as Boston. If that is indeed the case, then it supports my previous contention that Groupon does not r...

The filing of the Groupon S1 has resulted in a lot of discussion about Groupon’s business model. Most of the comments were negative, going as far as calling Groupon a “Ponzi Scheme,” although there were a few defenders, such as Steve Cheney. I was particularly intrigued by a thorough analysis by Yipit that shows that Groupon’s economics appear to be deteriorating in a more mature market such as Boston. If that is indeed the case, then it supports my previous contention that Groupon does not r...

LivingSocial yesterday was selling $20 for $10, which is a good deal for everyone buying it (and remembering to then make use of their Amazon gift card). Not surprisingly, they sold at least 1 million for a total value of $20 million. Now if everyone who bought one of these were a new LivingSocial registered user, that would amount to a $10 customer acquisition cost. That’s of course a lower bound because there are likely to have been quite a few existing LivingSocial users and some fraction ...

LivingSocial yesterday was selling $20 for $10, which is a good deal for everyone buying it (and remembering to then make use of their Amazon gift card). Not surprisingly, they sold at least 1 million for a total value of $20 million. Now if everyone who bought one of these were a new LivingSocial registered user, that would amount to a $10 customer acquisition cost. That’s of course a lower bound because there are likely to have been quite a few existing LivingSocial users and some fraction ...

Yes, I realize that’s a contradiction, but it seems to capture the essence of deals such as Goldman’s investment in Facebook at a $50B valuation and Groupon’s half-complete $950 million fundraising effort. These deals are designed to provide significant liquidity for insiders (especially early investors and employees), provide a piggy bank for continued aggressive growth and establish a share price for use in acquisitions. Those are all the things that companies traditionally got from an IPO....

Yes, I realize that’s a contradiction, but it seems to capture the essence of deals such as Goldman’s investment in Facebook at a $50B valuation and Groupon’s half-complete $950 million fundraising effort. These deals are designed to provide significant liquidity for insiders (especially early investors and employees), provide a piggy bank for continued aggressive growth and establish a share price for use in acquisitions. Those are all the things that companies traditionally got from an IPO....

Yesterday’s post about the Google-Groupon deal generated a lot of views and comments and two important lessons. First, on a “meta” level there was a lesson about blogging. While I had known this to some degree before, for stimulating dialog it is far better to write about a current topic and take a one-sided approach. The important lesson though that I am still learning is that one then needs to be open to actually engaging with the comments. Disqus is a wonderful tool for doing that as I can...

Yesterday’s post about the Google-Groupon deal generated a lot of views and comments and two important lessons. First, on a “meta” level there was a lesson about blogging. While I had known this to some degree before, for stimulating dialog it is far better to write about a current topic and take a one-sided approach. The important lesson though that I am still learning is that one then needs to be open to actually engaging with the comments. Disqus is a wonderful tool for doing that as I can...