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Comment by dporan | Hacker News Reader

Does anyone remember PointCast? In 1997, they rejected an acquisition offer of $450 million from News Corp. Two years later, they sold the company for $7 million.

http://en.wikipedia.org/wiki/PointCast_(dotcom)

Google's reported multi-billion dollar offer for Groupon seems like a pretty good deal for the company's founders, investors, and (presumably) employees.

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Does anyone remember Facebook? In 2006, they rejected an acquisition offer of $1 billion from Yahoo. Four years later, they're clearly a juggernaut of social networking.

http://en.wikipedia.org/wiki/History_of_Facebook#Financials

There are far more Pointcasts than there are Facebooks.

But the existence of Facebooks depends on at least some founders believing that they're Facebooks, not Pointcasts.

I don't think that's true, if you control for time. Can you think of other examples of startups that turned down acquisition offers in or around 2006 and are now regretting it?

1) Digg turned down an acquisition and regrets it. That was probably around 2006.

2) I'm pretty sure LinkedIn could have sold for a mighty sum in 2006. My guess is they're pretty nervous that Facebook will subsume them. They might wish they had sold back then for $1 billion or whatever.

3) Very speculative: Xobni, but that was 2008.

4) Technorati may have turned down an offer in late 2005 that they would definitely take today.

I'm not sure these prove anything, I just had fun trying to think of them.

I don't know of any offers LinkedIn or Technorati turned down, and I know Xobni doesn't regret turning down early offers.

I agree Digg got an offer they probably regret not taking.

What's your point? How many Pointcasts there are and how many Facebooks there are is irrelevant. All that matters is whether groupon is a Facebook or Pointcast.

Or somewhere in between, but what really matters is who ends up making money in the transaction.

If there are more Pointcasts than Facebooks that would infer that it would be statistically more probable for this company to be overvalued than undervalued.

Pointing to outliers and using those as examples of good decisions doesn't seem very wise. Sometimes you get lucky and hit it big, that's how the game works. Sometimes that risk bites you down the road, a la Pointcast.

"Pointing to outliers and using those as examples of good decisions doesn't seem very wise."

It's wise if you are an outlier. And Groupon seems to be an outlier to me.

The implication is that it is far more likely that Groupon is a "Pointcast" than a "Facebook". But the statement that there are "far more Pointcasts than there are Facebooks" is impossible to falsify.

Is that true? How would you know?

people were and are still trapped with facebook. groupon users have absolutely no reason to be loyal to groupon.

you made a very important point. i hope more people see it.

You could probably take your pick of overvalued companies from the 1997-1999 dot com era. Even if we are in another boom period, Groupon has the revenue, growth, P/E, and market potential to justify the high price tag, unlike it's boom counterparts Twitter and Facebook.

If Facebook and Groupon both IPO'd tomorrow, something tells me Groupon would have the higher market cap, and without looking at numbers, my hunch is it would be the better long term investment too.

Remember, Facebook is already over the uncanny valley - they have 500 million users, and starting to enter a saturated market. Groupon is still relatively small and has a long way to grow.

If Facebook and Groupon both IPO'd tomorrow, something tells me Groupon would have the higher market cap...

Sorry, you're wrong.

Google purportedly just offered Groupon $5 billion. That's my best estimate of Groupon's probable market cap.

SecondMarket just did an auction of stock in a company whose sole asset are some shares in Facebook. Based on this, my best estimate of Facebook's market cap is $50 billion. (See http://www.pcmag.com/article2/0,2817,2373614,00.asp for more on that auction.)

If Facebook and Groupon both went public on Monday, Facebook would have a higher IPO. But in the space of a year or two, Groupon would have the higher market cap. Facebook's valuation is based on a lot of hype and not very much revenue potential. Groupon's valuation is far more likely to survive sober, realistic analysis outside of the Valley echo chamber.

Little revenue potential? That's a crazy thing to say, anyone with 600 million users has a fairly decent revenue potential... Now what about when you know every single detail about those 600 million people's lives... HUGE revenue potential.

It doesn't matter how many users you have or how much information you have if you can't monetize it, especially when you have to categorically rule out all the obvious options (charge people money to use the service, sell people's private information) and other feasible options (sell devices designed to integrate with Facebook) are instantly shot down by the company's own efforts (free iPhone and Android apps).

Maybe Facebook will find a way to make tons of money, rather than merely tons of hype. As it stands, I bet the number of users they have represents high cost rather than high revenue potential. It's definitely too big to go away, but unlike Groupon, it also hasn't found a way to make tons of money yet, and no method to do that seems forthcoming.

Or the coupon thing is just a novelty that people will get tired of, for one of any number of reasons.

Groupon also turned them down, so what does that mean?

I guess we'll just have to wait and see, huh?

Secondary markets don't mean anything, let's see if the big investment banks, pension funds, and the real market movers are going to appreciate Facebook's tiny margins and slowing growth.

Again, I don't have the numbers, and no one outside of direct involvement with Facebook (or Groupon) does either, but with the numbers being thrown around, Groupon has so far demonstrated much more capability for running a fast growing, profitable, high margin business.

Funny, the instant I read the headline, Pointcast came to mind.

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