Groupon and other Daily Deal sites will likely spend $1 billion in online ad spend this year. And most of that will be on Facebook and Google.
Given that Facebook will likely be the number one source, is it so preposterous that Groupon would buy MySpace at the right price? Now that News Corp has hung the for sale sign out and CEO Chase Carey seems particularly repulsed by the subsidiary, the timing seems right for a low price.
As well as the upfront cost, Groupon would have a large headache in getting the property to break-even but if they left 25% for current management as an incentive and kept the firm autonomous perhaps the incentives could take care of that headache for the Groupon mothership.
Also attractive about MySpace is that since it was the early leader in social network it does have a very large US userbase. Even the ghost town accounts have some value.
Given the capital markets willingness to value Groupon stock at such a high multiple, buying MySpace for $200m upfront and then perhaps another $100m a year for 2 years to get it to breakeven doesn’t seem that farfetched at all.
Eric Ries, one of the leading lights of management theory in startups, made a very good point around the wrong kind of metrics. Metrics that don’t correlate with revenue or the chief value event and says nothing about the why are vanity metrics.
I couldn’t but help think of vanity metrics when I was reading about Path’s funding by Kleiner Perkins and Index. Path is an iphone app that let’s users share private moments with friends and put a constraint on the number of friends that could happen with.
The company is founded by Dave Morin, who ran Facebook’s platform, and a series of other very talented executives. Now let’s be honest: The funding and the competitive seed round before it is entirely based upon the team and their product instincts.
But at $8.5m the company probably felt like they needed to come up with some meaningless but suitably large number and they came up with this: “The company says they have hundreds of thousands of users who’ve experienced “over 2 million moments shared.”
Now let’s unpack that 2 million into what actually could be happening. If 2,000 users with 50 friends each shared a photo 2 times each week for the 10 weeks that Path has been operational then 2 million moments would have been shared.
They should have just said nothing at all.