Groupon files for IPO... But is it a tech company?

Groupon files for IPO... But is it a tech company?

Summary: The two-year old Groupon has grown extremely fast and now wants to raise $750 million in its IPO. Good news for other tech companies. But is it a tech company?

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TOPICS: Banking, Legal
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Groupon filed for an IPO Thursday planning to raise $750 million reports The New York Times. The filing reveals very fast growth:

Shortly after launching in 2008, Groupon notched revenue of $94 million. Two years later, it had swelled to $713 million.

The company reported $644.7 million of revenue in the first quarter of 2011 alone, with 83 million subscribers across 43 countries, according to its filing.

A succesful IPO could boost prospects for the many private tech companies that are waiting to go public. But is Groupon a tech company?

Tech companies scale their business largely through adding servers and software, which is why VCs love to invest in them and that's why they shun investing in services companies where hiring lots of people is required to expand a business.

Groupon, the two-year old Chicago-based group shopping coupon service, now has more than 8,000 staff, at least half working in sales, says Andrew Mason, CEO speaking at the AllThingsD D9 conference. That's up from 1500 staff a year ago.

That sounds like a services company to me.

So why is Groupon lumped in with other tech high flyers, such as Twitter with 300 staff, Facebook with about 2,000, and Zynga with about 1300?

Why does Groupon have a tech company-like valuation of as much as $25 billion?

Or are services companies at the core of many new "tech companies?" For example, Cloud/SAAS companies can require a substantial number of staff:

- Salesforce.com has more than 5,300 staff and a $19.3 billion valuation.

- ADP has more than 47,000 staff and a valuation of $27.2 billion.

The scalability of tech is no longer the competitive factor in some markets.

(Hat tip @JeffNolan)

Groupon Said to Discuss IPO Valuation of Up to $25 Billion - Bloomberg


Topics: Banking, Legal

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  • RE: Groupon files for IPO... But is it a tech company?

    Who cares if it is a tech company or not? What does it have to do with anything?
    FullFrame
    • RE: Groupon files for IPO... But is it a tech company?

      @FullFrame
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  • RE: Groupon files for IPO... But is it a tech company?

    It's an advertising company. Just like Facebook, Google, etc., etc.

    These companies my use technology, but they certainly not technology creators.
    7mgte
  • RE: Groupon files for IPO... But is it a tech company?

    Who is saying it is a tech company? It's main product is coupons? If using e-mail and the internet to sell your product makes it a a tech company then so is Kohl's and Sears. Certainly right now its main distribution/marketing method is through the use of the internet but that will change too. Netflix ads are everywhere unfortunately (although I like and use Netflix quite a bit - I have always thought that their ads are over the top stupid)
    juanm105
  • RE: Groupon files for IPO... But is it a tech company?

    Bingo! 10-15 years ago, using the Internet as the backbone of your business model made you a tech company. No longer. Investors need to wake up and realize that the Internet is simply a natural sales/distribution platform for nearly ANY company today. Using the Internet is like having electricity, plumbing and phones in your corporate offices: it doesn't warrant sky-high IPO valuations.
    pleric