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The $6 Billion Lure that Failed to Reel in Groupon

Posted on Jun 07, 2012

In business, decisions are made every day that impact the clients we serve, the markets we dominate and the profits we generate.  Executives charged with making these decisions rely on numerous metrics, market indicators and business experiences as a guide to making the best decision.  What we have recently witnessed  is that all too often these critical business decisions are heavily influenced by the lure of short-term  gains, without proper review of the metrics and market indicators that speak to the long-term vision.  So how did the Groupon executives avoid the powerful lure of $6 billion being offered for what was then a barely two-year old company?

Well, Frank Sennett just published a book, "Groupon's Biggest Deal Ever," that puts some perspective on what had to have been a gut-wrenching decision to make.  The Wall Street Journal interview with Mr. Sennett revealed that the decision boiled down to looking at the long-term vision for Groupon and letting nothing, not even a $6 billion offer stand in the way.

The founders and key executives at Groupon did not want to slow down progress and ultimate total domination of the group-buying space, while waiting for the antitrust regulators to approve the deal.  Plus there was key market indicators that demonstrated a large untapped revenue source that Groupon could realize by making better use of the data it collected.  Every payment processor knows the real money is in the underlying data.

Only time will tell if the Groupon decision to shun Google's offer and proceed to IPO was the best decision.    But for now, with the company valuation hovering around the $6 billion mark, the decision looks pretty sound.

Source:  The Wall Street Journal - June 5, 2012  - Video and Article