So this may be admittedly old news, and I also am willing to acknowledge that looking in the rear view mirror is a luxury entrepreneurs don’t have… that being said, WTF Groupon?
Here is the quick timeline: (1) Groupon sees interesting opportunity to take what effectively amounts to a coupon book online to the masses, (2) Groupon is first mover and grabs headlines and market share, (3) Big Gorilla (aka Google) sees success and wants in, (4) $6 Billion dollar offer to Groupon and it is denied, (5) Groupon goes public and now is in fierce competition with lots of other “johnny-come-latelies” in market that is getting saturated with price pressures & margins are quickly eroding.
I could ruminate on this to great length but I think I’ll keep it simple and to the point. Here are the items that I’ve learned from this unfolding drama between Groupon and Google from an entrepreneurship perspective:
(1) Recognize Luck vs. Skill – Not trying to incite a riot here but let’s be honest, Groupon is a local advertising / coupon book taken to the web. They did awesome with it and executed flawlessly. My point with this one is that sometimes right time, right place and the synchronicity of all the variables coming together needs to be acknowledged and appreciated and taken advantage of.
(2) Be Mindful of the Market – I think most persons if they project out could have realized the business model of Groupon is one that is damn hard to defend against. The technology is widely available, the secret sauce of sales is their massive sales team and copy writers. As we see today everybody is in the local coupon space. Being mindful of the market and realistic about the business you’ve created (see point #1) are key.
(3) Think Worst Case – 1000 scenarios could have manifested post Google offer presentation. However, the worst case scenario was that Groupon turned down the money and saw their healthy lead in the marketplace becoming infiltrated with wanna-be’s and others who may have been equally cash rich. Jump til’ today – guess what happened?…. it’s a straight out bare fisted, gang fight in this market that Groupon competes in. In an alternative scenario, upon acceptance of the $6 Billion clams that Google was offering here is what would have happened – (a) Groupon team got handsomely rewarded for 2 years of effort, (b) They got a buyout company with deep pockets and already massive leverage / data and reach into local markets, (c) They transferred the market risk to the buyout entity. I like the latter a bit better.
(4) Recycle and Innovate. What do entrepreneurs love? In my opinion, they love the thrill of the hunt, creating something from nothing, and absolutely loving what they do. Maybe Andrew Mason so loved Groupon that upon the $6 Billion offer from Google he decided his love child was better off going it along. I’m not sure. One thing I can say is that for me – continually innovating is my passion. At a $6 Billion buyout offer from Google, Groupon and the guys that created and made it successful could have a hell of a lot of passion to continue their entrepreneurial pursuits.
So in the short analysis, I think this was a bone headed decision. I sure as hell hope it wasn’t motivated by greed and the belief that if Google would pay $6 Billion then surely we must be worth $10 …. sadly, however, I do believe there was a bit of dollar / valuation chasing taking place on this one. In the end, no one but the team will know whether they made the right decision – but for me, in the lens of the rear view I certainly have learned some valuable lessons from what they did. So for that Groupon, thank you….and no I won’t be making any buyout offers any time soon.
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