IF GOOGLE pays $6bn for Groupon, it will be a staggering achievement for the start-up’s founders. The firm, which was valued at $1.35bn in Spring of this year, is expected to pull in revenues of $500m this year: that means Google’s offer is worth a staggering twelve times sales.
But normal rules don’t apply in the world of fast-growing start-ups; with $500m of sales in its second full-year, Groupon is expanding at a scorching rate. Even the titans of the web industry, like eBay and Google, didn’t have such impressive revenues in such a short space of time. Nor were any of them in the black, as Groupon is.
The real question is whether Google can make the acquisition work. YouTube, bought by the web giant for $1.65bn in November 2006, still hasn’t turned a profit. In fact, outside of search, Google has struggled to make money. Its laudable projects in mapping, books and voice recognition might have pleased consumers and geeks alike – but they barely make a dime.