Groupon buys into 18 European countries

Thursday 20 May, 2010

I caught with interest this little diddy in the Chicago Tribune  Groupon expands by acquiring Citydeal of Europe

Hat’s off to a Chicago tech company making a bold move to go after markets outside of the U.S.  It’s mind-boggling that both of these companies are less than 2 years old & are already $B companies.

However, I question whether “Citydeal’s rapid growth across Europe has proven that the Groupon model is truly global,” Andrew Mason, Groupon’s founder and CEO, said in a statement.  1st of all, coupons are not as widely accepted in many other countries throughout the world as they are in the U.S.  Given comments I’ve seen, it appears as if the competitive landscape is different in other places, which will impact on the business model, margins, etc.  I’ll be interested to see how these 2 firms integrate.  I would bet there will a number of unexpected changes.

I have little doubt Citydeal was founded to be acquired by Groupon, which is an indicator of a few things:

  • clever entrepreneurs in the rest of the world do well to copy American innovations.  Apparently the CityDeal guys are master-cloners.
  • this is another example of an American company that failed to approach the world market from the outset & ended up having to buy a copycat @ who-knows-what price.  If they had established themselves in Europe from the start, they could have built a European operation from the start rather than having to pay for it.  The question is “how much did Groupon pay for CityDeal?” which has not been disclosed.  In this case, it’s obviously cheaper to buy than build.
  • it’s encouraging to see globally-oriented investors, venture capitalists, financiers supporting global growth so early & so strongly, especially in today’s market where money is so tight.  Unfortunately, it’s not surprising that the funders of this deal are not local.

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