Groupon is not a joke

(written by lawrence krubner, however indented passages are often quotes). You can contact lawrence at: lawrence@krubner.com, or follow me on Twitter.

I went to lunch today with some folks who work at Second Life. It was kind of amazing to remember that Second Life still exists, and people still log in there. (And likewise, MySpace still exists.) Alot of forgotten companies keep going, and apparently Groupon is doing fairly well:

But it didn’t take long for the wheels to fall off: By June 2012, the company was valued below Google’s proposed acquisition price. The following March, founding CEO Andrew Mason was fired. The company that was supposed to re-energize Chicago’s startup scene — replete with a warehouse chic headquarters that also served as a new business incubator — had run out of gas.

And then everyone seemed to forget about it, as a much larger group of billion-dollar startups emerged. Everyone, that is, except for people who wanted to make jokes about past valuation excess.

But from where I sit, the laughter is unwarranted.

Groupon not only was an original unicorn, but it remains a successful one. The company currently has a market cap of $4.9 billion, which is higher than it ever was valued by venture capitalists. Its revenue and EBITDA have consistently climbed in each year since going public, and there is plenty of cash on hand without a single cent of debt.

If you want to criticize someone for overvaluing Groupon, take a good long look at public market investors. You know, the folks who are supposed to use all sorts of clear-headed, quantitative metrics (as opposed to VCs, who are said to pull unicorn valuations out of thin air). In fact, even Groupon’s final deals in the private market were largely driven by mutual fund managers dipping down to buy secondary shares from VCs who were smart enough to bake in some early gains.

Post external references

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    http://fortune.com/2015/01/26/lets-stop-laughing-at-groupon/
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