Jun 17 2011

if I were ceo of groupon…

I’ve been reading all the viewpoints on Groupon, dissecting its IPO position, and thought I’d suggest an “alternative viewpoint”.

In this viewpoint, perhaps you’ll see a different way to look at their actions and model.  I’m writing it on my own blog because it’s really just one man’s opinion, and not related to my semi-conflicted role as founder of Closely.

So, let’s pretend I’m groupon’s ceo – take a glimpse into my unpublished playbook…

  • Rule #1: spend like there is no tomorrow the year before I go public.  Why?  two reasons – my year-over-year performance charts and investor meetings in post IPO quarters will make me look brilliant through that first awkward year as a pub co!  And two, because I know that the real value I bring to the market is having the biggest freakin opt-in consumer hook for local commerce on the entire planet. Gigantic is better than huge is better than big!
  • Rule #2: Rush to the public market like a bat outta hell – not because of some deep fear about the long-term viability of my business model, but because this is a currency play, baby.  Get with the program!
  • Coming Out: We’ll get out at a BIG number.  So what if that number is $18-20B, it’s still 3X what I turned down from Google.  And, besides, it’s the next step you need to watch.
  • The Real Plan: With my nice lofty new currency, I’ll crank open my acquisition play book:
    • Yelp, check.  When I own reviews + commerce, I have it all to own the local shopper experience.
    • Foursquare, check.  Those boys have more than nice hair. They have the pulse on live mobile. With no local sales force – ergo, they need me!
    • OpenTable, check.  I could really tighten my grip and control inventory flow in category numero uno! The market’s already telling them they need me!
    • Qype, most def! Gotta stay very Euro, and these guys are killing it!
    • And, yes there’s a few others…
  • So, look at this from the other side:  From the new Groupon… I’ll turn those skeptical analysts into my biggest fans, and bring new air into my valuation bubble!  Why? because I’ll be the undisputed big boy in local commerce, baby. Sitting pretty, scaled and diversified nicely from the one trick astro pony that got me here.

So, tell me again that I was stupid to turn down Google?

Or that Groupon isn’t sustainable?  You see, that really doesn’t matter.

…just sayin’

Of course, I have no idea if this resembles the playbook, but I’m willing to bet it’s a lot closer than the image of a company desperately hoping their model holds on as is.  It’s got a smart-as-hell board, a machine under development for hiring and training local sales, and a fundamental model while not sustainable “as is” – very capable of morphing in very interesting directions.

I was just getting a little tired of everyone assuming it’s a company standing still.

Never under estimate the currency of this scale of an IPO, or the fatigue of late stage pre-IPO investors/execs [or hot businesses with an unclear revenue model] to simply take a great exit offer, and “be done”.

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2 Responses to “if I were ceo of groupon…”

  • Harry Says:

    Precisely the playbook. But they won’t do it and no one else can. Except, maybe… Facebook @ $100B?

  • David Strebinger Says:

    Hey Perry, interesting take on things. I think your assessment of what could be going on behind thing scenes has some merit, especially when it comes to the acquisition side and the increasing of the valuation via a public IPO.

    This too is just one mans opinion, but I do think that the playbook looks a lot different from the inside then it does to the outside. My impression is that Groupon is taking a page from Peter Thiel when he was plotting his strategy on how to make PayPal the worlds dominant payment gateway and keep Ebay from competing. At that time, there was competition and major players in the game that were talking acquisition… but the value of the business was not aligned to what Peter and his team were looking for as the exit, so… instead, they continued to go down the “Public IPO” path and allowed the market to dictate the value of the business. This drove the price and value of the business up and the potential acquirers needed to then come to the table with a much hirer value if they wanted to continue to be in the discussion (at the time this was EBAY).

    Then launched their IPO and EBAY who had only months earlier valued the company at around 500M was now paying in excess of 1.2B in the public market.

    We know that Groupon (its core investors and a lot of its management team) are looking for a big exit and relatively soon. We also know that the numbers being thrown around on IPO are triple the numbers that were being discussed on acquisition. We know that the business model they have does not sustain the valuation, but that Groupon getting into large scale acquisitions, and buying other companies that can morph or change their business model and leverage the asset they have built can sustain the story and with proper execution, can also create a very viable business.

    I have a tremendous respect for what Groupon has done from an execution standpoint and, like you, I think there is a lot more here than the eye can see.

    Great Article… thanks.
    David