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Comment by bryanh | Hacker News Reader

Did the 2000 bubble come with revenue numbers like these recent IPOs?

No, but have you corrected for the size of the audience? The web is a lot bigger than it was eleven years ago.

Meanwhile, from Groupon's prospectus:

Our revenue is the purchase price paid by the customer for the Groupon. Our gross profit is the amount of revenue we retain after paying an agreed upon percentage of the purchase price to the featured merchant.

So they have huge revenue numbers because they move a lot of coupons. But they're operating at a loss. It's promising that they have a big audience, and a database of merchants, but what does that really mean when they're not profitable?

If I build a scalable website that sells ten-dollar bills for $9, I will probably attract as much traffic as I can afford. If I have a billion dollars to lose I can probably arrange to do roughly $10B in "revenue". But what does that number prove? Not so much in itself. It's other details that matter.

Why would you have to correct for audience size? The web is the web is the web. If you're a web business today, you have a much larger potential market than companies did in 1999.

That's the point. The audience is substantially higher now, and you can thus expect revenues to be higher.

I think I will read this sentence once a week.

If you take your analogy to completion it makes perfect sense.

Let's say you're in the business of giving $10 for $9.

Let's say you become so popular at it that you beat out all your competitors and now whenever anybody wants to make $1 comes to you and goes to no one else. So multiply this by the size of your market.

Now you add the condition (or maybe you had it in the first place) that those $9 have to stay with you at least 10 years. Now you're pretty much running a bank (well perhaps a CD is closer in terms of return and style of investment.

That's a real business. It's not just leveraging capital but now you're the only bank out there so you've pretty much got a monopoly going. Now you can change your terms and say instead of giving back a $1 maybe you only give back $0.50 or $0.25. What is everyone else going to do about it since you have so much power in the industry you can crush your competition?

The point was that for Groupon the revenue numbers are meaningless not that the example business plan can't work.

When Webvan when public in 1999, they were predicting by 2001 they'd be at $518.2 million revenue with a $302 million net loss, roughly where Groupon is now. So you're quite right: GroupOn's farther down the path of losing a lot of money.

http://news.cnet.com/THE-DAY-AHEAD-Webvan-revs-IPO-as-questi...

Eh, those are all hopeful predictions. Actual revenue numbers for the year in which Webvan filed for IPO (1999):

"projecting revenue of $11.9 million and a $73.8 million loss"

On the other hand, in the year 2000 Amazon made a net loss of $1.4 billion(!) on revenues of $2.7 billion.

Huge revenues are less impressive when coupled with huge losses.

> Did the 2000 bubble come with revenue numbers like these recent IPOs?

Lol.

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