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When people saw Groupon, Twitter and Facebook taking those huge rounds did everyone think they were going to invest back in the business? I'm pretty sure most thought that founders and early investors were taking money off the table.

Though, the degree to which Groupon did is amazing. I can't believe any investor would have agreed to those terms. In the Groupon case as well, with 3000+ employees (which is, frankly insane), I don't know how anyone looking at the numbers, the terms, the business and the structure would have agreed to invest. Marketing be damned, unless someone blows this up it won't make money.

I'll never understand why they turned down $6B from Google.

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When they IPO, you'll see why they turned down $6B from Google.

With all the frothiness happening now, it actually makes sense - because they are doing the fiduciary responsible thing for their shareholders.

No.. when they turn a profit we'll see.

Nope...I was responding to the OP's statement about not understanding how they could have turned down $6B from Google.

If they IPO and the company is worth $12B - $20B and all their investors get to cash out. As much of a shell game as it is, that would have been a fiscally prudent move by management.

Oh, you're totally correct.

Can I rephrase 'is worth' as 'is valued at'?

You know what I mean ;)

    with 3000+ employees (which is, frankly insane)

Keep in mind that's not 3000 developers, I believe it's mostly people calling out to set up deals, so basically a massive call centre.

Actually, they have 7,107 employees.

From the SEC S-1 filing[1]:

We grew from 37 employees as of June 30, 2009 to 7,107 employees as of March 31, 2011.

[1] http://www.sec.gov/Archives/edgar/data/1490281/0001047469110...

This is correct. Though it's well over 3000+ employees. Nearly 7000 and most of them are sales people. I've been inside and interviewed at Groupon and it's rows and rows of people on the phone for as far as the eye can see.

The investors are tasked with making money. The investors are going to have made a lot of money after the IPO. It doesn't matter much to them whether the Groupon CEO took their money and rolled it up and lit it to make a really awesome bonfire, if the investors put in $1 billion and get back $10 billion they're happy. That's why they allowed it, and it's also why they turned down $6b. They're all acting in accordance with their financial incentives.

Its 7000+ employees not 3000+.

There's a big difference between private trading of already-issued shares and purchasing newly-issued shares. With the former, you know it's not going back into the company. With the later, the presumption should be that the money is being used to grow the business.

Nearly every investment agreement has a "how will this money be used?" section, and I can't believe a fund would give hundreds of millions of dollars to a company that was explicitly going to be put it to founders' pockets, unless they too are in on the scheme and are hoping for a quick flip.

They probably realized that Google would see through their scheme during due diligence. The investment banks that IPO'ed them, on the other hand, only made a big commission...

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