Finance

Groupon: The Best of IPOs, the Worst of IPOs


Groupon (GRPN), the daily-deal site and purveyor of half-off sushi and mani-pedis went public on Nov. 4. The Chicago-based company’s shares gained 31 percent on IPO day, then dropped 8 percent over the next three trading days, adding fuel to a long-raging debate: Is Groupon’s IPO a harbinger of a new golden era of e-commerce—or a bubble that’s ready to burst? Below, chatter from the Valley, Wall Street, and the Windy City.
 
Vivek Ranadivé
Founder, Chairman, and CEO of TIBCO Software (TIBX)

This is the largest creation of wealth in the shortest period of time in human history: Over $10 billion in three years. They have hired 10,000 people, helped 250,000 small businesses who in turn have had to hire more people as well. In fact, they have done more for unemployment and the economy than Congress and the Administration combined. So people get jobs, small business gets revenue plus new customers, and investors have seen incredible value—sounds like a win-win-win. We should be applauding American ingenuity.
 
Aaron Levie
CEO of cloud storage startupBox.net

There was a collective sigh of relief in the Valley among startups, investors, and bankers, as this will open the gates to more IPOs that were “on hold” until Groupon tested the waters.
 
Kevin Landis
Portfolio Manager at SiVest Group

The Groupon IPO looks like so far, so good. That’s good for everyone else. Now word leaks out that our friends at Yelp are doing their banking beauty contest.
 
Lise Buyer
Founder of Class V Group, an IPO advisory firm

The company’s banks were able to successfully place the shares offered, but the ultimate success of this company as a public entity will now totally depend on how management deploys the new cash in an effort to build a sustainable business. At the very least, the warm reception for this IPO, in light of the not insignificant questions both about management and business model, suggests investor optimism is alive and well.
 
Jasper Malcolmson
CEO of Groupon competitor Bloomspot

The question for this IPO is, Is this an endorsement of their model or just an endorsement of the space? The general skepticism about the model, the way it’s defined today, remains. I don’t think that’s been shaken off.
 
Erick Maronak
Chief Investment Officer,Victory Capital Management

If they actually succeed, there’ll be plenty of time to get in.
 
Seth Priebatsch
CEO of SCVNGR, a Groupon competitor

The story isn’t over yet, but I think the fundamental lesson is twofold. First, entrepreneurs need to focus on building a business that provides real, trackable value to everyone your business touches. If you don’t, when the time comes that you’re put in a very public place, there’ll be far too many people waiting in the woodwork to tear you down.
 
Second, don’t mess with the SEC. No internal “leaked” memos to employees or funny accounting practices. I think [Groupon’s] two shennanigans cost them about $5 billion apiece.
 
Andy Page
President of online retailer Gilt Groupe

The market has rewarded Groupon for being the mass-market leader in the daily-deal space. It may take time to grow into the current valuation, but Groupon clearly has the capital and brand recognition.
 
Richard M. Daley
Former Mayor of Chicago

We were never identified as a tech city. We’ve identified the city as acity with tech people, creative people, risk-takers, and it’s changed the whole image.
 
Vivek Wadhwa
Visiting Scholar at University of California at Berkeley and Executive in Residence at Duke University

Groupon isn’t a tech company. It is a low-tech Yellow Pages-like business. Its investors like Marc Andreessen are doing the tech industry a big disservice by positioning it as a software play.
 
Jack Ablin
Chief Investment Officer, Chicago-based Harris Private Bank

For individual investors, it’s hard to justify buying. You’re buying it at what could be a very elevated valuation.
 
Howard Lindzon
CEO of StockTwits, an online investing community

This is not Demand Media (DMD) or Pandora (P). This is an important IPO because Groupon is a platform.
 
Whether it works or not is up to Groupon at this point, not short-sellers. Groupon threatened, inspired, and created a new way to think about local and Web. It’s far from perfect and obviously could implode, but it deserved a chance to be public. It feels less engineered as an IPO than recent ones.
 
Brad Feld
Managing Director at venture capital firm Foundry Group

Groupon went public?

The bottom line: Groupon’s Nov. 4 IPO, which raised $700 million for the company, won’t settle any arguments about the viability of the company.

With Ari Levy
MacMillan is a reporter for Bloomberg News and Bloomberg Businessweek in San Francisco.

Steve Ballmer, Power Forward
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Companies Mentioned

  • GRPN
    (Groupon Inc)
    • $6.14 USD
    • -0.08
    • -1.3%
  • TIBX
    (TIBCO Software Inc)
    • $23.22 USD
    • -0.19
    • -0.82%
Market data is delayed at least 15 minutes.
 
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