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The market cap dropped from $17.8 billion to $104 million. They also rejected a $6 billion offer from Google (at one moment). Probably a lot of regret among th

The market cap dropped from $17.8 billion to $104 million. They also rejected a $6 billion offer from Google (at one moment). Probably a lot of regret among those who did not cash/sell out, but that is hindsight.

ipnon 3y ago
What’s the game theory of rejecting life-changing, never-work-again money?
- ghaff 3y ago
  It likely depends a lot on how you value your outcomes. If it's mostly about the money, very comfortable complete financial independence (that you don't otherwise have) would be hard for most people to turn down. On the other hand, we'd have significantly fewer large companies built from the ground up if everyone felt that way.
- konschubert 3y ago
  Already rich, bad advice, or really believing in the moral purpose of the mission. can’t imagine the last one being the case for groupon…
- deleted 3y ago
  [deleted]
- bena 3y ago
  Their market cap at their peak was nearly triple the offer, they probably figured they were rejecting life-changing, never-work-again money for life-changing, empire-building levels of money. In other words, they didn't see a future where they could fail.
- lisper 3y ago
  At least two possibilities: 1. You could be beholden to investors who bought in at a higher valuation than the offer. 2. Never-having-to-work-again can only be measured relative to a sustainable lifestyle, so this turns on what kind of lifestyle you want. If you are content to live in a one-bedroom apartment in Topeka you need a lot less money to never-have-to-work-again than if you want a ten acre horse property in the Hamptons and a private jet. To sustain that kind of lifestyle without working takes a hell of a lot of money.
- TaylorAlexander 3y ago
  Well they turned down a $6B offer and then went public with a $13B valuation. If those with a lot of stock were cashing it out during the high period, they still got life changing money.
mortenjorck 3y ago
I wonder, in an alternate timeline where Groupon took the Google offer… Apart from some different fortunes for founders and early investors, would things be much different today? I can easily imagine Google selling the company off again a few years later, leaving it in a similar position to Chicago’s most infamous Google acquisition/divestiture, Motorola.
- bombcar 3y ago
  I think Google would have just rebranded it as Google Groupon, let it die on the vine, and it would slump into the Google Graveyard. I don't think there would be any reason to divest it, it has no manufacturing or anything that stands on its own.
  - jsolson 3y ago
    Instead, Google created Google Offers. It then shuttered it a year or so later, refunding every transaction that had gone through it. I was working for Amazon's bet (AmazonLocal -- https://local.amazon.com/ https://local.amazon.com/) at the time. It lasted a bit longer, but was also eventually shut down.
- ghaff 3y ago
  >would things be much different today? I doubt it. What would have been different--because Google? For an example of another Google property that catered to local businesses, they bought Zagat--and to the disappointment of a lot of foodies--it probably fed into Google restaurant ratings for a while but, at this point, there's not much if anything left.
xnx 3y ago
Seemingly everyone but those making the decision knew it was foolish to decline Google's offer: https://www.theatlantic.com/technology/archive/2010/12/was-groupon-crazy-to-refuse-google-s-6-billion-offer/343150/ https://www.theatlantic.com/technology/archive/2010/12/was-g... Fortunately, there have been plenty of other terrible business decisions that eclipse that one including purchasing Twitter for $44 billion.
dangwhy 3y ago
> They also rejected a $6 billion offer from Google (at one moment). I was at groupon when this happened. My impression was this was more of rumor and wishful thinking.
mbesto 3y ago
Some of them did just fine: In January 2011, Groupon raised $950 million in its last pre-IPO fundraising round. Yet by the end of March 2011, the company only had $209 million in cash, as All Things D’s Peter Kafka reported. So where did all the money go? Turns out that even as Groupon was losing money, the company paid out over $800 million to company insiders, including $300 million to Groupon chairman Lefkofsky. Groupon, which turned down a $6 billion offer from Google, would later go public at a valuation of nearly $13 billion. It is now worth less than $3 billion, a 77% decline. https://business.time.com/2013/03/01/groupon-fires-ceo-andrew-mason-the-rise-and-fall-of-techs-enfant-terrible/ https://business.time.com/2013/03/01/groupon-fires-ceo-andre...

ipnon 3y ago

What’s the game theory of rejecting life-changing, never-work-again money?

ghaff 3y ago
It likely depends a lot on how you value your outcomes. If it's mostly about the money, very comfortable complete financial independence (that you don't otherwise have) would be hard for most people to turn down. On the other hand, we'd have significantly fewer large companies built from the ground up if everyone felt that way.
konschubert 3y ago
Already rich, bad advice, or really believing in the moral purpose of the mission. can’t imagine the last one being the case for groupon…
deleted 3y ago
[deleted]
bena 3y ago
Their market cap at their peak was nearly triple the offer, they probably figured they were rejecting life-changing, never-work-again money for life-changing, empire-building levels of money. In other words, they didn't see a future where they could fail.
lisper 3y ago
At least two possibilities: 1. You could be beholden to investors who bought in at a higher valuation than the offer. 2. Never-having-to-work-again can only be measured relative to a sustainable lifestyle, so this turns on what kind of lifestyle you want. If you are content to live in a one-bedroom apartment in Topeka you need a lot less money to never-have-to-work-again than if you want a ten acre horse property in the Hamptons and a private jet. To sustain that kind of lifestyle without working takes a hell of a lot of money.
TaylorAlexander 3y ago
Well they turned down a $6B offer and then went public with a $13B valuation. If those with a lot of stock were cashing it out during the high period, they still got life changing money.

mortenjorck 3y ago

I wonder, in an alternate timeline where Groupon took the Google offer… Apart from some different fortunes for founders and early investors, would things be much different today? I can easily imagine Google selling the company off again a few years later, leaving it in a similar position to Chicago’s most infamous Google acquisition/divestiture, Motorola.

bombcar 3y ago
I think Google would have just rebranded it as Google Groupon, let it die on the vine, and it would slump into the Google Graveyard. I don't think there would be any reason to divest it, it has no manufacturing or anything that stands on its own.
- jsolson 3y ago
  Instead, Google created Google Offers. It then shuttered it a year or so later, refunding every transaction that had gone through it. I was working for Amazon's bet (AmazonLocal -- https://local.amazon.com/ https://local.amazon.com/) at the time. It lasted a bit longer, but was also eventually shut down.
ghaff 3y ago
>would things be much different today? I doubt it. What would have been different--because Google? For an example of another Google property that catered to local businesses, they bought Zagat--and to the disappointment of a lot of foodies--it probably fed into Google restaurant ratings for a while but, at this point, there's not much if anything left.

xnx 3y ago

Seemingly everyone but those making the decision knew it was foolish to decline Google's offer: https://www.theatlantic.com/technology/archive/2010/12/was-groupon-crazy-to-refuse-google-s-6-billion-offer/343150/ https://www.theatlantic.com/technology/archive/2010/12/was-g... Fortunately, there have been plenty of other terrible business decisions that eclipse that one including purchasing Twitter for $44 billion.

dangwhy 3y ago

> They also rejected a $6 billion offer from Google (at one moment). I was at groupon when this happened. My impression was this was more of rumor and wishful thinking.

mbesto 3y ago

Some of them did just fine: In January 2011, Groupon raised $950 million in its last pre-IPO fundraising round. Yet by the end of March 2011, the company only had $209 million in cash, as All Things D’s Peter Kafka reported. So where did all the money go? Turns out that even as Groupon was losing money, the company paid out over $800 million to company insiders, including $300 million to Groupon chairman Lefkofsky. Groupon, which turned down a $6 billion offer from Google, would later go public at a valuation of nearly $13 billion. It is now worth less than $3 billion, a 77% decline. https://business.time.com/2013/03/01/groupon-fires-ceo-andrew-mason-the-rise-and-fall-of-techs-enfant-terrible/ https://business.time.com/2013/03/01/groupon-fires-ceo-andre...