I was surprised by the values placed on two of the hottest closely held companies -- Groupon and Twitter -- both for their sheer size and the fact that Groupon is worth more.
Groupon, a gimmicky coupon site, was valued at 50% more than Twitter, which has become core to the lives and marketing strategies of millions of people.
All Things Digital, the Wall Street Journal-affiliated Web site, is reporting that Google will pay up to $6 billion for Groupon.
And TechCrunch reports that VC giant Kleiner Perkins wants to invest in Twitter at a valuation of $4 billion.
Those are eye-popping numbers -- reportedly ten times Groupon's anticipated revenue this year, and nearly 30 times the Twitter revenue for 2010 that was projected in some stolen documents a year ago.
Groupon has a lot of revenue for a two year old company. But it only has 12 million users, and it already has a lot of competitors. As a happy user of Groupon, I can't differentiate it from the other coupon sites I use like EverSave. Setting up a local couponing site would seem to be easy to do for anyone who can inspire a sales force. Yellow Book salespeople, whose jobs would seem to be in jeopardy now, would seem like obvious competitors.
Twitter has 175 million users and it has a huge role in the social-media zeitgeist. In terms of mindshare it's already the equivalent of Facebook and YouTube. It's going to be very hard for anyone to compete for its niche. Even better micro-blogging technology wouldn't give many people a reason to shift away or add another service.
Obviously, the Groupon valuation is based on real money. Twitter's value is much more conceptual. Still, if I had the opportunity to own 1% of either company, I'd opt for Twitter.
Now there is something you could never say at the WSJ, "Still, if I had the opportunity to own 1% of either company, I'd opt for Twitter."
ReplyDeleteI am not so sure about all this. I think with the Wikileaks issues that the next iteration of social media will be less so. That being said having the most activity today can mean nothing tomorrow, ask friendster, ask AOL how their one time dominance is working for them?
Larry:
ReplyDeleteYou make a good point that lead positions in cyberspace can vanish fast. But I think Twitter has a much better chance of maintaining its position than Groupon does.
Twitter has been very smart to follow the Facebook model of downplaying revenue in favor of user growth. By providing a great user experience, it has grown so big that businesses are eager to throw money at them for a chance to reach those consumers.