Land rush. There may only be room for one coupon site in the minds of people and if groupon doesn't get to a nation first, they will lose it forever[1]. This will require marketing expenditures.
Bingo. It's hard to put into words how fast the business is moving. One of the things mentioned in the press release is investing in technology. We have trouble keeping up with the traffic we have, and we're expecting [redacted]00% growth over the next year.
We're in the middle of two big projects now:
1) rearchitecting to handle the aforementioned growth
2) hiring 100 developers or more by September.
That kind of stuff costs money - #1 involves a couple dozen developers for 3-6 months, and #2 means ~doubling the size of the dev team.
(shameless plug: Groupon is an awesome place to be a dev - highly appreciated, crucial to the company, exciting new projects, etc. Email peterc@groupon.com or go to http://groupon.com/jobs . Chicago or Palo Alto.)
We're not lowering the bar on who we hire. Process + skill = lots gets done. I was up and running my first day and released code my first week. Work and requirements are decomposed and estimated as a team so when it's time to code it flows quickly and everybody is on the same page.
The only change to our hiring expectations is to open up to great developers that don't already have Ruby/Rails skills. Aside from that, we are working on the big hiring push as a creative engineering problem. I'm on the team doing the push and we've been given lots of freedom, resources (both time and money), and responsibility. And there are many. Ore initiatives that promise the same opportunity.
I'll call bullshit, even though that will score me downvotes.
We're not lowering the bar on who we hire.
Good luck hiring 100 top guys in 8 Months.
Work and requirements are decomposed and estimated as a team so when it's time to code it flows quickly and everybody is on the same page.
That's so detached from reality, sometimes I wonder if there's some parallel universe where phrases like that make any sense.
What these hiring frenzies really do is they transform any company from being (possibly) productive straight into eBay-mode. They're also usually a surefire indicator that the last person with a clue (alt: the last person who gave a shit) has just left the company.
What kind of developers are you hiring? I may misunderstand what Groupon does (though I have both offered coupons and consumed coupons via Groupon) but apart from tooling for your sales staff, what kind of 'rearchitecting' needs to be done? Wouldn't expanding the sales staff be a better investment?
Typical high traffic stuff. Expected traffic growth is a big number and we've already had availability problems. We're also consolidating all of the overseas deals onto the main platform, and that alone will double-ish our traffic. If you're good at or want to work on Big Huge Websites, this is a good place to be. There's also the problem of targeting based on preferences, deal performance, purchase history. Think personalized searxh results. The team in Palo Alto is doing a lot of that stuff.
Of course, we aren't spending the whole billion on technology. Lots of sales people will be hired :)
I can't speak to everyone there, but Peter is an exceptional engineer. Their head of affiliates is exceptional. Andrew is clearly exceptional. Their copy is exceptional.
>"Land rush. There may only be room for one coupon site in the minds of people"
I agree this is a likely explanation, but is there any evidence this is the case? I can understand that limitation for a social network, and even for a search engine, but not as much for coupons. I don't care if my dead tree coupons come from several sources, would I care about coupons that show up in my email?
I can see two areas of competition, anyway - geography and industry. I suspect targeted coupon sites will always have a fighting chance against more generic ones (Groupon is probably trying to be both, of course).
You can write off odnoklassniki at this point: they are plagued by account theft, and are milking users for money in heavy-handed manner. The only people left there are the long tail middle-aged folk.
I expect Facebook to eat VK within a couple of years.
Because they think they've designed a money machine, but it needs priming, maybe? Their business model relies on a ton of sales people. Hiring and training a ton of sales people all over the world is going to cost a ton of money.
I wish I had more upvotes for this comment. Its crazy to me how many people want to cry bubble 2.0 when all of these companies are turning good profits.
The dotcom bubble was all about people throwing a bunch of money at companies that had no clear or proven plan of success
> Its crazy to me how many people want to cry bubble 2.0 when all of these companies are turning good profits.
Most of them aren't turning good profits, relative to the valuations they have been receiving.
The recent valuations for businesses like Facebook would take lifetimes to repay the cost of shares based on their profits today. The valuations only make any sense if you assume that these companies are going to experience very rapid growth rates in the near future.
A lot of us who are thinking "bubble" just don't buy the hype about that growth. Social networking sites have come and gone. Search engines have come and gone. Technology platforms have come and gone. So far, I see no reason to believe that the likes of Facebook or Zynga or Groupon will be immune to disruptive competition and find new markets or business models sufficient to sustain dramatic growth for several years, which is what it would take as a minimum to make the valuations realistic.
> The dotcom bubble was all about people throwing a bunch of money at companies that had no clear or proven plan of success
And what is different here? Amazon has a market cap around $80B and a very high P/E by most standards at 75ish, but it has a solid business model (actually, more than one these days) and a strong brand that has stood the test of time for more than 15 years now. Next to that, does $50B for a social network that reportedly makes only ~$100M per year seem like a good investment? They've had 7 years to monetize their system and they've got 500M users; how long should we wait for the astronomical profits, exactly?
Another example: for $5.5B, you could supposedly buy Zynga according to a recent evaluation. Or, you could buy about 10% of Tesco (the UK food store juggernaut).
From the press release: 'In the last year, Groupon has been called “the fastest growing company ever” by Forbes Magazine and “America’s best website” by one of Groupon’s television commercials.'
Are they saying that tongue in cheek? I am asking seriously... I haven't had enough experience with them to know. My wife is the one who uses it...
The second is cheeky, the first is correct. If their revenues are what they are widely accepted to be, they have beaten Compaq's record as the fastest company to $1 billion in revenues (and done it profitably -- I could easily build a $1 billion company quicker by selling $100 bills for $50).
I agree. Good for Groupon. Although just because (2) groups of people make the same mistake doesn't mean it wasn't a mistake. Of course we won't know until they either sink or swim and with this war chest it could be a while before we know anything.
"Because they can" might be the answer..