
Groupon Raises, Like, A Billion Dollars - atularora
http://techcrunch.com/2011/01/10/groupon-raises-like-a-billion-dollars/
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petervandijck
Ok, so I'll ask the question. If they're making so much money, why do they
need to raise a billion dollars?

"Because they can" might be the answer..

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jws
Land rush. There may only be room for one coupon site in the minds of people
and if groupon doesn't get to a nation first, they will lose it forever[1].
This will require marketing expenditures.

e.g. Facebook lost Russia.

[1] in internet time.

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pchristensen
[Groupon Employee Speaking]

Bingo. It's hard to put into words how fast the business is moving. One of the
things mentioned in the press release is investing in technology. We have
trouble keeping up with the traffic we have, and we're expecting [redacted]00%
growth over the next year.

We're in the middle of two big projects now: 1) rearchitecting to handle the
aforementioned growth 2) hiring 100 developers or more by September.

That kind of stuff costs money - #1 involves a couple dozen developers for 3-6
months, and #2 means ~doubling the size of the dev team.

(shameless plug: Groupon is an awesome place to be a dev - highly appreciated,
crucial to the company, exciting new projects, etc. Email peterc@groupon.com
or go to <http://groupon.com/jobs> . Chicago or Palo Alto.)

~~~
moe
_hiring 100 developers or more by September_

11 new devs per month? So no development this year, only training?

 _shameless plug: Groupon is an awesome place to be a dev [...] crucial to the
company_

Honestly, I'd be very wary of this statement in combination with the above.

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pchristensen
We're not lowering the bar on who we hire. Process + skill = lots gets done. I
was up and running my first day and released code my first week. Work and
requirements are decomposed and estimated as a team so when it's time to code
it flows quickly and everybody is on the same page.

The only change to our hiring expectations is to open up to great developers
that don't already have Ruby/Rails skills. Aside from that, we are working on
the big hiring push as a creative engineering problem. I'm on the team doing
the push and we've been given lots of freedom, resources (both time and
money), and responsibility. And there are many. Ore initiatives that promise
the same opportunity.

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moe
I'll call bullshit, even though that will score me downvotes.

 _We're not lowering the bar on who we hire._

Good luck hiring 100 top guys in 8 Months.

 _Work and requirements are decomposed and estimated as a team so when it's
time to code it flows quickly and everybody is on the same page._

That's so detached from reality, sometimes I wonder if there's some parallel
universe where phrases like that make any sense.

What these hiring frenzies really do is they transform any company from being
(possibly) productive straight into eBay-mode. They're also usually a surefire
indicator that the last person with a clue (alt: the last person who gave a
shit) has just left the company.

~~~
pchristensen
Feel free to follow up with me on that in October. I'll definitely write a
retrospective.

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alttab
Ever feel like we're floating in a bubble?

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ryanwaggoner
I know! All these huge valuations for companies that are posting revenues of
hundreds of millions and growing like crazy! Wait...

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wh-uws
I wish I had more upvotes for this comment. Its crazy to me how many people
want to cry bubble 2.0 when all of these companies _are turning good profits_.

The dotcom bubble was all about people throwing a bunch of money at companies
that had no clear or proven plan of success

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Silhouette
> Its crazy to me how many people want to cry bubble 2.0 when all of these
> companies are turning good profits.

Most of them aren't turning good profits, relative to the valuations they have
been receiving.

The recent valuations for businesses like Facebook would take lifetimes to
repay the cost of shares based on their profits today. The valuations only
make any sense if you assume that these companies are going to experience very
rapid growth rates in the near future.

A lot of us who are thinking "bubble" just don't buy the hype about that
growth. Social networking sites have come and gone. Search engines have come
and gone. Technology platforms have come and gone. So far, I see no reason to
believe that the likes of Facebook or Zynga or Groupon will be immune to
disruptive competition _and_ find new markets or business models sufficient to
sustain dramatic growth for several years, which is what it would take as a
minimum to make the valuations realistic.

> The dotcom bubble was all about people throwing a bunch of money at
> companies that had no clear or proven plan of success

And what is different here? Amazon has a market cap around $80B and a very
high P/E by most standards at 75ish, but it has a solid business model
(actually, more than one these days) and a strong brand that has stood the
test of time for more than 15 years now. Next to that, does $50B for a social
network that reportedly makes only ~$100M per year seem like a good
investment? They've had 7 years to monetize their system and they've got 500M
users; how long should we wait for the astronomical profits, exactly?

Another example: for $5.5B, you could supposedly buy Zynga according to a
recent evaluation. Or, you could buy about 10% of Tesco (the UK food store
juggernaut).

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phuff
From the press release: 'In the last year, Groupon has been called “the
fastest growing company ever” by Forbes Magazine and “America’s best website”
by one of Groupon’s television commercials.'

Are they saying that tongue in cheek? I am asking seriously... I haven't had
enough experience with them to know. My wife is the one who uses it...

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qq66
The second is cheeky, the first is correct. If their revenues are what they
are widely accepted to be, they have beaten Compaq's record as the fastest
company to $1 billion in revenues (and done it profitably -- I could easily
build a $1 billion company quicker by selling $100 bills for $50).

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martythemaniak
I guess the price Google was offering wasn't astronomical after all. Good for
groupon either way.

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redorb
I agree. Good for Groupon. Although just because (2) groups of people make the
same mistake doesn't mean it wasn't a mistake. Of course we won't know until
they either sink or swim and with this war chest it could be a while before we
know anything.

