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Jun 2, 2011

Groupon Files for $750 Million IPO

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Groupon will be launching as a privately traded company very soon. Groupon has just filed for an initial public offering with the SEC. Groupon hasn’t said how much money they expect to raise, but a few sources are pointing to a sum of around $750 million.

Here’s a look at some of the numbers behind Groupon.

  • Groupon started in November 2008.
  • Increased from 37 employees in June, 2009, to 7,107 employees in March of 2011.
  • Sold 116,231 Groupons in the second quarter of 2009. Sold 28.1 million Groupons in the first quarter of 2011.
  • Increased merchants in the marketplace from 212 in Q2 of 2009 to 56,781 in Q1 of 2011.
  • Subscribers increased from 152,203 in June of 2009 to 83.1 million in March of 2011.
  • Went from 5 North American markets in June, 2008 to 43 countries in March 2011.
  • And finally, increased revenue from $3.3 million in Q2 of 2009 to $644.7 million in Q1 of 2011

The filing also showed that Andrew Mason made $180,000 last year, although the company had a net loss of around $400 million in 2010. Groupon spent $713 million in operating costs in 2010, and has already spent $17 million in the first quarter this year.

In the filing, Mason wrote an open letter to potential investors. Mason wrote:

Dear Potential Stockholders,

On the day of this writing, Groupon’s over 7,000 employees offered more than 1,000 daily deals to 83 million subscribers across 43 countries and have sold to date over 70 million Groupons. Reaching this scale in about 30 months required a great deal of operating flexibility, dating back to Groupon’s founding.

Before Groupon, there was The Point—a website launched in November 2007 after my former employer and one of my co-founders, Eric Lefkofsky, asked me to leave graduate school so we could start a business. The Point is a social action platform that lets anyone organize a campaign asking others to give money or take action as a group, but only once a “tipping point” of people agree to participate.

I started The Point to empower the little guy and solve the world’s unsolvable problems. A year later, I started Groupon to get Eric to stop bugging me to find a business model. Groupon, which started as a side project in November 2008, applied The Point’s technology to group buying. By January 2009, its popularity soaring, we had fully shifted our attention to Groupon.

I’m writing this letter to provide some insight into how we run Groupon. While we’re looking forward to being a public company, we intend to continue operating according to the long-term focused principles that have gotten us to this point. These include:

We aggressively invest in growth.

We spend a lot of money acquiring new subscribers because we can measure the return and believe in the long-term value of the marketplace we’re creating. In the past, we’ve made investments in growth that turned a healthy forecasted quarterly profit into a sizable loss. When we see opportunities to invest in long-term growth, expect that we will pursue them regardless of certain short-term consequences.

We are always reinventing ourselves.

In our early days, each Groupon market featured only one deal per day. The model was built around our limitations: We had a tiny community of customers and merchants.

As we grew, we ran into the opposite problem. Overwhelming demand from merchants, with nine-month waiting lists in some markets, left merchant demand unfilled and contributed to hundreds of Groupon clones springing up around the world. And our customer base grew so large that many of our merchants had an entirely new problem: Struggling with too many customers instead of too few.

To adapt, we increased our investment in technology and released deal targeting, enabling us to feature different deals for different subscribers in the same market based on their personal preferences. In addition to providing a more relevant customer experience, this helped us to manage the flow of customers and opened the Groupon marketplace to more merchants, in turn diminishing a reason for clones to exist.

Today, we are pursuing models of reinvention that would not be possible without the critical mass of customers and merchants we have achieved. Groupon NOW, for example, allows customers to pull deals on demand for immediate redemption, and helps keep merchants bustling throughout the day.

Expect us to make ambitious bets on our future that distract us from our current business. Some bets we’ll get right, and others we’ll get wrong, but we think it’s the only way to continuously build disruptive products.

We are unusual and we like it that way.

We want the time people spend with Groupon to be memorable. Life is too short to be a boring company. Whether it’s with a deal for something unusual, such as fire dancing classes, or a marketing.

You can read the entire filing here.


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