Daily deals Web site Groupon Inc. saw its revenue surge to $760 million last year from $33 million the previous year, with more than a third of its 2010 sales coming from outside the U.S., according to an internal memo.
The e-mail, sent by Groupon Chief Executive Andrew Mason to staffers in early January, also reveals the founder’s grand ambitions for the company started three years ago. Mason writes that he hopes to achieve “billions in revenue” in 2011.
“By this time next year, we will either be on our way to becoming one of the great technology brands that define our generation, or a cool idea by people who were out-executed and out-innovated by others that were smarter and harder working,” he wrote in the message, which was reviewed by The Wall Street Journal.
Mason and a Groupon spokesman didn’t respond to requests for comment.
Groupon is one of a handful of Internet companies, including Facebook Inc., Twitter Inc., and LinkedIn Corp., which have had investors keening for private placements or an IPO. The scramble has fueled a spike in valuations of these companies.
The Chicago-based company spurned a $6 billion takeover bid from Google Inc. in December and went on to raise $950 million in financing from private investors this year. It is also preparing for an initial public offering later this year that could raise $1 billion, people familiar with the matter have said.
Groupon had grown to more than 4,000 employees and to 565 cities at the end of 2010, up from about 120 employees and 30 cities in 2009, according to the memo. Some of that growth has been fueled by the acquisition of rivals in Europe and Asia. Overseas activity represented about $285 million of its revenue last year and almost three-quarters of its employees.
Mason told his staff to beware of complacency, warning that “clones” and large technology companies, will commit significant resources to taking away Groupon’s market share. “If you feel a little like Frodo climbing Mount Doom, you can’t be blamed,” he wrote, a reference to the protagonist of “Lord of the Rings.”
The company, known primarily for offering online coupons for local merchants, is also moving to generate sales from national retailers. According to the memo, “national deals” accounted for 12 percent of revenue in the fourth quarter of 2010.
Groupon has 51 million subscribers to the e-mail it sends to promote deals and hopes to increase that number threefold, to 150 million, by the end of this year. The company also hopes to generate more revenue that doesn’t rely on this blast. In the memo, Mason wrote that he hopes for, “at least $1B in revenue from new products we launch in 2011, not just the current daily e-mail.”
Does the Tribune own a piece of this company….you follow it around like a dog chasing itself….give it a break.
@knowsbetter: It’s one of the fastest growing companies ever and it’s in Chicago. This is the Chicago Tribune website. Figure it out.
@knowbest…surely there is some more news to report than a stock report on one company. You own stock too??? I figure you Mustb/c ur very defensive.
They should have taken the google money at the $5 billion valuation, been happy as all heck, and reduced their risk exposure. Clones are circling like vultures.
I hate Groupon, they are full of themselves. I hope people get wise and they go under, boneheads. The Trib is kissing their azz.
The Tribune isn’t kissing their asz. This story is in Crain’s, WSJ, Bloomberg etc. It’s business.
I agree with Al, Should have taken the $6b and bounced. Easily duplicated model but they have a monster name.
I agree, should’ve taken the money from Google. Doesn’t seem to be one of a kind like Facebook or something that cannot be cloned. But who knows for sure? Not me. That’s a lot of revenue for something like a daily deal and I don’t have a clue as to their business model.
Lighten up and have some fun.
I can’t claim to be big fan or a supporter – I’ve purchased from Groupon twice and am not on their email list (my wife is and she sent me the two deals I purchased) – but I think this is an outstanding entrepreneurial story that we should applaud. Why not?
I disagree on taking the $6B offer from Google. No one knows what the terms of the deal were. It probably was not a straight $6B deal. And simple valuation would say if they can pump revenue to $2B in 2011 (which seems feasible with their current strategies in place) then that could drive their valuation by the end of 2011 to a real $8B or so – at least.
These guys are making some very wise moves in their expansion efforts and I think it will be tough for rivals to catch them.
Groupon is doing well now, but when the economy improves will they still find enough stores willing to sell something at 75% off? (customer pays 50% off, groupon and the store both keep half). Besides, what is so special about Groupon that keeps stores from using another discount company?
I don’t understand how Groupon makes money. Do the $760M revenues come from the retailers who post discount deals on Groupon? Is there any other source of revenues?
Let’s say I’m a retailer who wants to stimulate sales. I contact Groupon, together we concoct a discount deal, I sell my merch/service at a discount, _AND_ I send a fee to Groupon? Then I hope that the increase in customer traffic outweighs the costs of the discount and Groupon fee? It sounds like a desperate deal to me.
Since I signed up to receive Groupon offers by email, most of the offers have been for silly stuff like dance lessons, tanning spas, etc. It’s just like those little $20 coupon books that marketers have been selling for decades. This is the basis of a $6B 21st century company strategy? I don’t get it.
Groupon has a model that works and it has increased its presence at an amazing rate. I don’t believe it will be able to continue to command the percentages it receives from the businesses that it represents. It is not a great, money making venture for its clients but they do receive advertising benefits from this.
The Tribune should be able to report freely on a local company that is making headlines nationwide. 120 employees to 4000 employees, $33 million to $760 million, etc in ONE year. Newsworthy for sure.
3 year – $1B. WHY DIDNT I THINK OF THIS IDEA. you don’t have to be a Harvard grad to have a unique thought. Although you do need the contacts/networks to obtain financing.
Groupon is expanding very very fast. Especially in Asia. Their strategy is everything must go fast. When they reach one country here are the steps: 1 Start to contact the media companies and HR companies 2 Give Double salary to recruit the people that already in the Groupon business, for instance IT, sales, etc. 3 The new recruitment is encouraged to bring their team into Groupon, so the team expand very fast. That really hurt some local Groupon companies. 4 Start to see their ads when you take subway, bus, etc. They use this way and get success in Japan, Singapore, and now in China. But I think it’s too early to judge it will success or not, quick expansion will surely bring management problems later. Hope they don’t mess up, they really bring some good opportunities for small business people.
There are lot of people they have purchased Groupon Clone from http://www.joomabc.com to start their local groupon business with the lowest start-up cost, and already doing well. To get as big as Groupon, that’s dream, but those people they have good connections with local SPAs, restaurants, that brings them the first group of good deal and traffic really fast. It’s not hard to start a groupon business as before. Before, you need to spend thousands to develop a site, now just few hundreds and your sales people can start to get the good deals.
Looking forward to see groupon and local groupons get really strong!
Any company that grows so quickly should be applauded. I love my social coupons and am very happy for the savings in this economy. There is another alternative. I personally love ImIn.com – it’s a great Chicago based coupon company that is sure to please.