

Google Buys Groupon for $2.5 Billion? - Mistone
http://vator.tv/news/2010-11-28-google-buys-groupon-for-25-billion

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melvinram
It's a wonderful business model. Sell other people's services and goods for
half off and keep half of the sales. Yea, I'm a little jealous.

I'm a little skeptical on the longevity of the profits but it's smart to sell
while the momentum is red hot, if this actually did happen.

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phillian
Via anecdotal comments from business owners I've spoken with here in
Philadelphia, most Groupon participants reported no long term increase in
sales.

The beauty of Groupon was it's timing, gaining massive ground during the worst
recession the country has seen. Business owners would do anything short of
giving products or services away for free to get people in their stores.

Their Groupon exposure certainly filled their store for that day, but often at
the expense of the business owner (at least two SMB I talked to reported the
event cost them more than it brought in) and didn't result in a long term
increase as hoped.

The longevity of their profits therefor, if this is more than anecdotal, is
indeed in question.

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bobf
Is "no long term increase in sales" amidst "the worst recession the country
has seen" actually as bad as it sounds? Maybe Groupon actually saved them from
a decline in sales?

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trotsky
I'm pretty skeptical of this report.

$2.5B is 2x the $1.3B post money valuation they got just six months ago.

Groupon is supposedly looking to close a new round, acquisition rumors can't
hurt that process.

I don't see vator having an exclusive like this, let alone broken on a sunday
night.

Twelve hours later and few "legit" news sources have picked up the news.
Everyone who has is simply re-reporting vator. If google really had a $3B deal
in the bag, the WSJ would have been able to get enough off the record
confirmation to run it as a rumor. IMO they've had enough time to look at this
so they've passed on reporting on it.

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spicyj
Somehow the question mark got lost in your submission title.

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Mistone
edited, thanks.

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coryl
I can't really figure out what this purchase is about, if it has indeed gone
down.

Google usually acquires tech companies. Groupon is a marketing company with a
good business model. What would Google want to do with this? Integrate into
Gmail/Google Checkout?

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patio11
Google is an advertising company which likes models which scale to the moon.
Groupon is an advertising company which _demonstrably_ scales to the moon.

One possible strategy for Google is to stop messing around with the seven-pack
on queries like "Houston Pizza" and start selling the AdWordsGroupon among
Houston Pizza shops at the top of that search result. This takes the AdWords
learning cliff out of the local retail sales equation, because retailers grok
"Check this out: you give us a big discount, we will sell your stuff, then we
give you a check for _this much_ and you service people who come in with a
coupon -- no money down and no risk!" much more than they do "OK, so you front
us a couple thousand dollars for CPC ads and if your QS outperforms
competitors in the local auction for the query string, match options
dependent, then as long as your CTR is decent we'll send the user to your
landing page and you might achieve a conversion which if it has a CPA less
than your LTV is a win for you. P.S. If you don't understand that, Pizza Shop
Owner Guy, Google Customer Service says to FOAD."

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krosaen
One interesting difference is that each 'groupon' is sold by a sales person,
and has its witty copy prepared by a staff writer, whereas most of adwords is
100% self service. That's the main reason it would surprise me if google did
in fact acquire groupon.

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jorkos
over time Google could automate a lot of this and increase the margins on the
business; the acquisition makes a lot of sense from my vantage

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ergo98
Google's automation of customer facing services is exactly how they kill
businesses. Google Checkout is horrendous and is going nowhere, and their
customer-facing efforts with the Nexus One, while a model of efficiency, were
a dismal failure.

There are some things you can't automate. Putting a personalized, humorous
face on offers is a major value of Groupon, and Google can't automate that.

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BadiPod
The article says that Groupon has inspired hundreds of clones... Why do you
think some of them (LivingSocial) have taken off and others have been lost in
the dust?

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InfinityX0
Brand name. If Wasabi has taught us anything, it's that brand name is the only
thing that matters for a company.

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Mistone
Is that referring to Brand name deals or building a company brand? I'm
guessing the latter. But even groupon is just becoming a recognizable brand.
They are #1 but the dust has yet to settle. I would say thier abity to drive
demand to a deal is the main reason they are so strong.

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jlgosse
How reliable is this source? I've never heard of Vator TV, but it seems like
Groupon is worth a lot more than $2.5b if they're making $50m/month while
they're still relatively young.

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d2viant
Interesting about the revenue. Arrington pegged them at $30 million a month
earlier this year. Somebody may be off.

[http://techcrunch.com/2010/04/15/the-rest-of-the-details-
on-...](http://techcrunch.com/2010/04/15/the-rest-of-the-details-on-that-
monster-groupon-financing/)

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mgkimsal
Let's see if this follows Google's previous purchases like Etherpad, Dodgeball
and GrandCentral.

Perhaps they'll close down Groupon to new users, give it a really confusing
horrible ('flexible!') interface which no one quite understands, then shut it
down after a year of development on that interface and 4 months after launch.

On the other hand, all of those were _tech_ acquisitions - this is more of a
marketing/advertising one, which Google groks better. It's also a company that
already has cashflow going, so there may be more incentive to keep that going.

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melvinram
GrandCentral came out as Google Voice, which I love and use daily. It has a
nice interface and I'd say that it has been integrated remarkably well so far.

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mgkimsal
Yeah, and it took _years_ between the acquisition and before they let anyone
new get an account.

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HelotRevolt
_The way money is made on the internet is about to change._ Which means the
internet is about to change. Yes, all of it.

Ignore any line containing the phrase "$2.5 billion." The dollar figure is a
formality. This isn't an acquisition. It's a teaming-up, a joining of forces.
Google is D-Wade and Groupon is LeBron. Kobe? _Amazon_.

Amazon is the best at what it does, i.e. selling the way it sells. Trying to
sell the way they sell, nobody ever stood a chance against them. Amazon is
Wal-Mart in a world where Mom & Pop stores lack small town charm _and_ are
hidden on remote desert islands. You want to make money, you'd better build
yourself a lighthouse with a helluva giftshop. Groupon, though, doesn't sell
the way Amazon sells. They're _totally_ different. And now they've got Google
behind them, and everything that means. Watch out.

Everything Google's ever done, every service they've ever offered, was made
(hugely) profitable through advertising, direct or indirect, of one form or
another. Google makes money helping others make money. They sell to the
salesman. With Groupon, they'll become the salesman. Everything is about to
change.

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ghshephard
Is it just me, or does this read like Steve Gillmor?

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hugh3
I don't know who that is. I don't know who D-Wade is either. Though I think
LeBron might be a basketball player.

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gallerytungsten
I suspect that some aspect of Groupon is a Ponzi scheme, and that if Google
buys them, it will work out about as well as Yahoo's acquisition of
broadcast.com.

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ergo98
_I suspect that some aspect of Groupon is a Ponzi scheme_

In what way?

Groupon has a clever model but their valuation is precarious because it's
easily copied. If anything I would say it is already past its peak.

Not only are there the restaurant/teeth whitening/facial generalist
competitors (many of them backed by newspapers that already have sales teams
and business relationships), I've been seeing a lot of niche competitors
appear as well, which really makes sense. The web is naturally distributed so
there's no added barrier participating in multiple sites, especially if
they're using a shared or common login platform like OpenId/OpenAuth.

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necolas
The launch of boutiques.com and now this (if true) would suggest that Google
are moving into the commodity-based affiliate marketing space. Rather than
relying so heavily on selling ad-space in their products, perhaps they are
looking to further diversify their revenue streams by acting as a 'portal'
through which a significant proportion of internet users find and purchase
commodities from online retailers. It would certainly be very profitable.

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faramarz
There's nothing proprietary about Groupon, only a large volume of sale people
on the ground.

If this aquisition is true, the number 2 & 3 in the sector can attract other
buyers (namely YHOO). Just out-pace Groupon in your own demographic or stay
within distance and you will probably attract top dollar.

But I can't see where Groupon currently fits with Google though. Maybe they
are seeing declines in local Adwords spending?

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ditojim
the thing that bothers me about this is that google is a product company, not
a services company. groupon is a service. a service that takes 2400 (and
counting) employees to pull off. the entire business model does not seem to be
a good fit for google. that said, i could see some really slick integration
with google's local products like places, maps, and now hotpot.

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netcan
This sounds like something outside of Google's sphere of competence. If it's
true, it'll be interesting to see how it plays out.

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pjy04
If this is Google entering the deal space then look out Gilt... some people
might want to purchase you too

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te_chris
anyone got a better source?

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portman
The rumor has been swirling for about 10 days.

[http://news.google.com/news/story?pz=1&cf=all&ned=us...](http://news.google.com/news/story?pz=1&cf=all&ned=us&hl=en&ncl=dMt5ygFQolEGAtMvk3a-ykPKlFnaM)

It's not a source, but enough outlets have been reporting this story for
enough days that it seems a good bet the two are at least talking.

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sahaj
yelp, watch out.

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flipp
please no

