I was surprised when I heard that Groupon turned down the $6 billion offer from Google, and even more amazed when the company was allegedly valued at $30 billion. That had all the signs of a bubble to me, because I cannot imagine that a company that gives out vouchers to the public, for half price services, could ever achieve such value.

There are a number of problems with its model that would prevent many retailers from using it, and those include the fact that people who chase discounts don’t necessarily actually ever become loyal customers. In other words, you pay a lot of money to get in a new client but you don’t retain them. Interestingly enough, Groupon are now talking about trying to arrange financing for their IPO of $3 billion – less than half of what Google was prepared to buy them for a year ago, and which offer they rejected.