Groupon and the Google Deal

So Groupon turned down a five billion dollar deal with Google, and I think this is the biggest mistake a company has ever made. Groupon seems to have this belief that they will take their company public and make lots of money, and continue to thrive, but what they’ve forgotten is what companies are worth at their core.

What is to stop Google from looking at the second place competitor to Groupon, buying it for a few hundred million and spending a billion dollars turning it into something that not only beats Groupon but completely destroys the company in the process? Not only would that be cheaper for Google, but a much better use of their wealth.

And how many companies have effectively fought off a business attack from Google in the past? If I was working at Groupon, I’d be very worried about my future.

I really think that the company should have taken the offer from Google, and worked with them to dominate the discount deals niche. Besides, it would have been an amazing cash-out for all the investors and high level executives.

I think in two years, we will look back and laugh at Groupon as we all spend our money on Google Local Deals, a service integrated into their local search, image search, and checkout services.

4 responses to “Groupon and the Google Deal”

  1. I don’t agree with you – Google has a history of buying things and then they vanish. Groupon is popular, growing and probably isn’t going to fall over if Google buys the #2,#3,#4 companies in that space.

    Quick, without Googling, can you name those three companies? I know I can’t.

    • I agree with you to a point. You don’t offer 5bn dollars for something you want to quash. One of the reasons Google has had that issue in the past is related mostly to the number of engineers they have, executives, business managers, etc versus the amount of revenue they can derive for their stock holders and board from the site.

      Google is working on too many products and services right now, and it has almost become a crippling issue for the company. They are great at the things they give the most focus to, less great at the things they do as “side projects”.

      YouTube at first seemed like a side-project. Google wasn’t giving it much attention because it was a loss leader for revenue, but a market leader for brand awareness. Google pretty much shut down their own video offering service and focused primarily on YouTube, and now, thanks to their integration with their search and ad abilities, YouTube is quickly becoming super profitable, so much so that they can pay video podcasters a percentage of the revenue they bring in for their content, as well as making licensing deals with mid-tier content providers.

      I am not saying Google couldn’t have used Groupon in the same manner, but I think the valuation they put on the company displayed not only their interest in the local deal space, but a real commitment, and I am sure we will see Google make waves in the space soon, with or without buying a third party company.

      (I don’t think it will be until their Google+1 Social Media project is launched, a service to indirectly compete with sites like Facebook)

      And BuyWithMe is the only one I could think of. Though I am subscribed to RedFlagDeals’ Local Deals (not that they are really a viable competitor).

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