Groupon Case
9-511-094
REV: JUNE 13, 2011
SUNIL GUPTA RAY WEAVER DHARMISHTA ROOD
Gro oupon n e as of On November 29, 2010, the technology industry wa buzzing with rumors o Google’s bid for Group pon, a two-y year-old web bsite that pro omoted daily deals offeri y ing deep dis scounts from local merch hants. Google reportedly offered at lea $3 billion, eclipsing a r e o ast rival $2 billion bid from Y Yahoo. And as Groupon re a esisted, Goog quickly rai gle ised its offer t as much as $6 billion.1 to s Ind dustry expert and financ analysts were sharply divided on Google’s mo and Grou ts cial w y ove upon’s poten ntial value. “A multibillion A n-dollar valua ation for a com mpany that is in a busines with virtua no s ss ally barrie to entry an is younger than my tod ers nd r ddler is absurd Forrester Research reta analyst Su d,” ail uchitra Mulpuru said blun 2 David Kirkpatrick, a former Fort ntly. K tune magazin columnist, sniffed, “Gro ne oupon isn’t even a techn nology company, for goo odness’ sake. It’s a discou unter that ha appens to us the se Intern net.”3 Bu others rega ut arded the company highl emphasizi ly, ing its specta acular growt Forbes cro th. owned Group pon the “fast test growing company ev ver,”4 while m media indust veteran a try and journalist John t Battel marveled, “I’ve never seen anything like it—we since Goog And just as Google la lle s g ell, gle. t apped the Ye ellow Pages in a fraction of the time, Gr n roupon seems to be on trac to do the sa s ck ame to Googl 5 le.” At the end of a frantic week, Groupon surprised m t n many observe by rejecti ers ing Google’s offer. Shortl after, the company anno ly ounced that it had raised $ $950 million f from private investors, and was d rumored to be laying the groun ndwork for an initial publ offering. T events pr a lic The rompted a br roader debat about whether Silicon Valley—whic had recent seen very high valuati te V ch tly y ions for Face ebook, Twitte and Zyn er, nga—was sho owing signs of
REV: JUNE 13, 2011
SUNIL GUPTA RAY WEAVER DHARMISHTA ROOD
Gro oupon n e as of On November 29, 2010, the technology industry wa buzzing with rumors o Google’s bid for Group pon, a two-y year-old web bsite that pro omoted daily deals offeri y ing deep dis scounts from local merch hants. Google reportedly offered at lea $3 billion, eclipsing a r e o ast rival $2 billion bid from Y Yahoo. And as Groupon re a esisted, Goog quickly rai gle ised its offer t as much as $6 billion.1 to s Ind dustry expert and financ analysts were sharply divided on Google’s mo and Grou ts cial w y ove upon’s poten ntial value. “A multibillion A n-dollar valua ation for a com mpany that is in a busines with virtua no s ss ally barrie to entry an is younger than my tod ers nd r ddler is absurd Forrester Research reta analyst Su d,” ail uchitra Mulpuru said blun 2 David Kirkpatrick, a former Fort ntly. K tune magazin columnist, sniffed, “Gro ne oupon isn’t even a techn nology company, for goo odness’ sake. It’s a discou unter that ha appens to us the se Intern net.”3 Bu others rega ut arded the company highl emphasizi ly, ing its specta acular growt Forbes cro th. owned Group pon the “fast test growing company ev ver,”4 while m media indust veteran a try and journalist John t Battel marveled, “I’ve never seen anything like it—we since Goog And just as Google la lle s g ell, gle. t apped the Ye ellow Pages in a fraction of the time, Gr n roupon seems to be on trac to do the sa s ck ame to Googl 5 le.” At the end of a frantic week, Groupon surprised m t n many observe by rejecti ers ing Google’s offer. Shortl after, the company anno ly ounced that it had raised $ $950 million f from private investors, and was d rumored to be laying the groun ndwork for an initial publ offering. T events pr a lic The rompted a br roader debat about whether Silicon Valley—whic had recent seen very high valuati te V ch tly y ions for Face ebook, Twitte and Zyn er, nga—was sho owing signs of