I can't help but remember Geocities, which sold for $3.5 billion way back when. Sometimes you buy a company on the cusp of rapid exponential growth, other times it's merely on the cusp of rapid obsolescence by a flurry of superior competitors.
I have a hard time buying the idea that groupon is actually worth $5 billion.
In hindsight, sure. At the time of its acquisition by yahoo geocities was the 3rd most visited site on the web, and was publicly traded with a market cap very near what yahoo paid. At the time it looked like a sure bet to snag geocities, bring it under the Yahoo ad network umbrella and simply wait for the inevitable windfall from ad revenue tied to continued exponential traffic growth.
Unfortunately, Yahoo screwed up, they killed a lot of traffic by driving away users through unpopular terms of service changes and other silly changes. Meanwhile, the web was growing up and sprouting innumerable new free content hosting sites that were far better than geocities (blog hosting sites like blogspot being the prime example) while the cost of full service paid web-hosting was falling through the floor. At the same time the dot-com bubble burst and internet ad revenue dried up. Geocities found itself obsolete, unliked, and decidedly unprofitable.
In comparison, groupon looks positively questionable. It needs to grow not merely 100x but more like 1,000x in order to justify the huge investment that google will put into it.
I have a hard time buying the idea that groupon is actually worth $5 billion.