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Hitting the big $1 billion

Groupon nears $1B in revenue, but when did Google, Facebook, and Amazon hit $1B?

Innovation series by Faith Merino
March 2, 2011 | Comments
Short URL: http://vator.tv/n/17b0

2010 was evidently a good year for Groupon, according to reports that emerged last weekend pegging the three-year-old social commerce company's revenues at $760 million. Even more stunning, this is an increase of some $730 million.  Groupon brought in only $33 million in 2009. 

Groupon is like one of those cartoon lab experiments gone awry, like the one where the ambitious scientist endeavors to create the world's ultimate never-ending cake, only--oh no, it won't stop growing!! 

Founded in 2008, Groupon was profitable after only eight months, and the company's continued upward trajectory can't really be described as a steady climb so much as a slingshot to the top--without really knowing where the top is. 

In a leaked memo published in the Wall Street Journal, Groupon CEO Andrew Mason stated that he hopes to make "billions in revenue" in 2011. 

As the company approaches the magic $1 billion mark at such a young age, a little compare and contrast might be in order to add some perspective. Let's start with the company that would have bought Groupon back in December: Google.

Google and Groupon have a very public history. As many are aware, Google offered to buy Groupon for $6 billion in December, only to be rebuffed in early January. But looking back on Google's youthful frat boy days, before it was the leviathan that it is today, it wasn't that different from Groupon. It, too, saw its YOY revenue spike dramatically--not as dramatically as Groupon, for sure, but it was certainly nothing to sneeze at. 

In 1999, when Google was just getting its sea legs, it brought in a comfy $220,000 in net revenue--which is not bad when split between two grad students. A year later, BOOM! Google's revenue blasts to $19 million. In 2001, $19 million suddenly became $86 million, which became $348 million in 2002. 

Google was, in fact, only two years older than Groupon is now when it hit $1 billion for the first time in 2004, the same year it went public. The company was five years old when it brought in $1.55 billion. Six years later, the company is showing no signs of slowing down. In 2010, Google's revenue totaled $8.44 billion--marking an increase of 26% over the previous year, when it brought in $6.67 billion. 

Let's switch gears for a moment and look at another major player in the tech world: Facebook. Obviously, this one is a little trickier since it's a privately owned company, so Facebook revenue figures are largely derived from rumor and speculation, but they're likely pretty close to the real number. In the summer of 2009, Facebook board member Marc Andreessen said that the company was on track to surpass $500 million in revenue for the year.  Not bad.  At that point, the social networking giant was five years old and just beginning to topple MySpace's throne. But it made a key move in 2008 that set the stage for wildfire success: it dropped its student-only exclusivity and opened the site up to all Internet users. 

It later came out that Facebook's real revenue for 2009 was actually in the $700-$800 million range, according to reports. This means that Facebook was actually two years older than Groupon is now when it breached the $700 million mark. The following year, Facebook's revenue was approximately $2 billion--more than double its rumored 2009 revenue, according to reports from insiders. 

So far, it's looking like Groupon is getting a headstart on both Google and Facebook, both of which were two years older than Groupon is now when they hit the $1 billion mark. Of course, the glaring difference between the three companies is the fact that Google and Facebook are largely ad-based revenue models, while Groupon is an e-commerce business that takes a direct cut of all sales on its site. So maybe it would be better to compare it to Amazon, which passed the $1 billion mark in 1999, when it brought in $1.6 billion in revenue. Founded in 1994, the company was five years old (hey!) and was two years past its IPO. 

So...Facebook, Google, and Amazon were all five years old when they passed the $1 billion mark (or got near it anyway, in Facebook's case), so Groupon is two years ahead of its time. But Groupon's rapid growth is not unprecedented. There was one other company whose wild success closely parallels Groupon's--who came close to hitting $1 billion only three years after its creation, just like Groupon: MySpace. Tread lightly, Groupon. 

Image source: post-gazette.com


Related companies, investors and entrepreneurs

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Andrew Mason
Founder/CEO,
Groupon
Bio: Andrew Mason is the founder and CEO of Groupon, which has been called "America's Best Website" by one of their television commercial...

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