The Offer: Google Courts Groupon

There is a courtship this week, and the courtship is the offer: the six billion dollars that Google was ready to pay for Groupon, the daily deals site from Chicago. The courtship is the talk: the reports that ran on Friday, the number that stunned the industry, the price that would have been the largest acquisition Google ever attempted. The questions began that day: why pay so much, why say no, what is local worth. The questions are the December 2010 story, and the story is the lesson: the local Google wants, the list Groupon built, the no that changed the land grab.

The Offer is the subject of this article: the courtship that Google began, the company that Groupon built, the six billion dollars offered, the no reported on Friday, and what the refusal means for local commerce.

1. The Courtship

The courtship is the news, and the news is the week: the reports that Google was in talks to acquire Groupon, the daily deals site from Chicago, the six billion dollars that were mentioned in the last days of November. The courtship is the number: the reported five point three billion in cash, the seven hundred million in performance bonuses, the total that rounded to six billion, the sum that stopped the industry. The courtship is the talk: the story the tech press chased all week, the confirmation that never came, the Friday reports that said the deal was off.

The courtship is also the history: the Google that had bought DoubleClick for three point one billion in 2007, the company that had never attempted a bigger deal, the threshold that six billion dollars would cross. The courtship is the courtship: the suitor with the deepest pockets in the industry, the target that did not need the money, the dance that was reported for days and ended in a no. The courtship was the talk of the week, and the talk was the question: what is Groupon worth, and what is local worth, and who will pay for it in the end.

2. The Company

The company is the origin, and the origin is Chicago: the Groupon that Andrew Mason founded in 2008, the daily deals site that grew faster than anyone expected it to. The company is the concept: one local deal per day per city, the restaurant that is half off, the spa that is half off, the activity that is half off, the offer that expires when the day ends. The company is the formula: the group buying that unlocks the price, the merchant that gets the customers, the subscriber that gets the bargain, the cut that Groupon takes from every sale.

The company is also the scale: the thirty five million subscribers by late 2010, the more than three hundred markets, the revenue that was on track to pass five hundred million dollars for the year. The company is the youth: the two years since the founding, the profits that had not yet arrived, the growth that the valuations were really paying for. The company is the prize: the local merchants in every city, the email list that reached millions every morning, the attention of the biggest buyer in the industry, the offer that came this week and then went away on Friday.

3. The Model

The model is the deal, and the deal is the day: the one offer per city per day, the half price that draws the crowd, the group buying that makes the numbers work. The model is the email: the morning message in millions of inboxes, the list that Groupon built one subscriber at a time, the channel that no newspaper and no billboard could match. The model is the merchant: the restaurant that fills the empty tables, the spa that fills the empty hours, the customer who would never have walked in, the fifty percent the merchant gives for the new face.

The model is also the business: the cut that Groupon takes from each sale, the revenue that was on track to pass five hundred million dollars in 2010, the margins that the skeptics questioned. The model is the debate: the merchants who swore the deals brought new customers, the merchants who swore the deals brought only bargain hunters, the question of whether the model would last. The model is the bet that Google wanted to own: the local advertising that was still a mystery, the small businesses that no one else could reach, the list that was worth six billion dollars.

4. The Offer

The offer is the number, and the number is the story: the six billion dollars that Google was ready to pay, the reported five point three billion in cash, the seven hundred million in performance bonuses, the price that would have been Google's largest acquisition ever. The offer is the comparison: the DoubleClick deal at three point one billion in 2007, the threshold that this offer nearly doubled, the scale never attempted before. The offer is the prize: the two year old company with no profits, the price that made the skeptics blink, the sum that the industry repeated all week.

The offer is also the ambition: the local bet that Google had been building for years, the advertising market that the search giant could not crack, the merchants and the email list that Groupon already owned. The offer is the admission: the search business that was mature, the growth that had to come from somewhere new, the local commerce that was the next frontier. The offer is the question that Friday answered: the six billion dollars that were offered, the no that came back on Friday, the deal that was reported dead in the same week it was reported alive.

5. The Local Bet

The bet is the local, and the local is the frontier: the advertising that happens in a city, the restaurant that wants the new customer, the spa that wants the full calendar, the merchant who cannot afford a Super Bowl spot. The bet is the gap: the search that Google had won, the display that Google had bought, the local that still belonged to the yellow pages. The bet is the reason: the six billion dollars that made sense only if local was the next big market, the email list that was the key, the merchants that were the door.

The bet is also the list: the thirty five million subscribers who opened the morning email, the local merchants in more than three hundred markets, the relationship that no search result and no banner could replace. The bet is the future: the local commerce land grab that was already underway, the rivals who were circling the same merchants, the advantage that belonged to whoever owned the local customer first. The bet is the lesson that Friday taught: the local is worth billions, the list is worth billions, and the company that owns them can say no to Google and mean it.

6. The No

The no is the news, and the news is Friday: the reports that said on Friday the deal had collapsed, the talks that had seemed so close only days before, the six billion dollars that would not change hands after all. The no is the decision: the board that chose independence, the investors who chose to go big on their own, the backers who kept the company that Google wanted. The no is the surprise: the suitor that never loses, the offer that was the largest in the suitor's history, the refusal that the industry did not see coming this week.

The no is also the cast: the Eric Lefkofsky and the Brad Keywell who backed the company, the board that stood with them, the decision that was reported as a walk away from the table. The no is the confidence: the belief that the company could be worth more on its own, the growth that was already enormous, the five hundred million dollars in revenue that was coming for the year and beyond. The no is the signal: the local commerce land grab that would continue, the rivals who would keep bidding, the market that just learned its own value overnight.

7. The Numbers

The numbers are the argument, and the argument is the value: the thirty five million subscribers, the more than three hundred markets, the five hundred million dollars in revenue on track for 2010. The numbers are the youth: the two years since Andrew Mason founded the company in 2008, the profits that had not yet arrived, the price that was paid for growth and not for earnings. The numbers are the math: the six billion dollars that worked out to a staggering sum per subscriber, the multiple that made analysts reach for calculators, the number that the offer made real.

The numbers are also the story: the company that was on track to pass five hundred million dollars before its third birthday, the list that grew by millions every quarter of the year, the local market that the numbers finally quantified. The numbers are the proof: the daily deals that merchants kept buying, the subscribers who kept opening the email, the revenue that kept climbing with no profits in sight at all. The numbers are the December 2010 reading: the growth that was real, the value that was debated, the six billion dollars that the numbers almost justified on Friday afternoon.

8. The Lesson

The lesson is the value, and the value is the local: the advertising market that sits in every city, the merchants who have never been reached, the email list that is worth six billion dollars. The lesson is the shift: the deal that would have been the largest acquisition Google ever attempted, the no that ended it, the land grab that will go on without the search giant. The lesson is the December 2010 story: the two year old company that said no to six billion dollars, the confidence that the prize is bigger, the market that just found its price.

The lesson is also the question: the local that Google still wants, the rival that will try next, the price that will be paid by someone in the end. The lesson is the rhythm: the search that was won, the display that was bought, the local that is still open, the frontier that moves every year, not every decade. The lesson is the December 2010 story, and the story is the lesson: the offer that was made, the no that was reported on Friday, the company that stayed independent, the land grab that continues, the six billion dollars that will be remembered.

# The Offer: Google Courts Groupon