Launched in November 2008 in Chicago, Groupon calls itself a collective-buying platform that features daily deals for things to do, eat, see, and buy in more than 40 countries. By promising businesses a minimum number of customers, Groupon can offer deals that aren't available elsewhere. Groupon sells coupons for deeply discounted products and services to its subscribers, who then have a period of time, such as a year, to use those coupons to purchase the products and services from the supplier at the discounted prices. At the end of 2010, Groupon's revenues were in the $50 million per month range, and the company had roughly 50 percent gross margins, making it one of the fastest-growing companies on record and drawing a valuation of $6 billion from Google, which Groupon turned down, reminiscent of Facebook's refusal to accept a multibillion-dollar offer from Yahoo!. Interestingly, in mid-2010, another social shopping website, Woot.com, agreed to be acquired by Amazon Inc. for about $110 million. Woot's business model was admittedly different from Groupon's (i.e., Woot.com offered a limited quantity of one product at a special price per day). But the difference in valuations is nevertheless striking. Many enthusiastic supporters have called Groupon a runaway success, but an article on TechCrunch.com identified some potential problems with Groupon's business model. It needs a lot of salespeople on staff for each market it handles, and there are no barriers to entry or switching costs for either buyers or sellers. Business models that rely on this approach have difficulties sustaining their profit margins and become less attractive as time passes. Groupon www.groupon.com Questions

Why do you think Groupon didn't accept Google's offer? Was it the right decision?