Business Bytes
Renee Oricchio

Groupon's Growing Pains

 

Two summers ago Groupon had 37 employees. Now it has just under 10,000. There's rapid growth, and then there's Groupon. So, is this a good thing?

Groupon announced its second-quarter results this week and the numbers just make you dizzy when you read them.

Again, let's rewind to the summer of 2009 when Groupon announced a net gain of $21,000. This summer, it's a net loss of $102 million in one quarter. In large part, all those new employees are being blamed for this mega burn rate right now.

The good news; gross sales have mushroomed to $878 million (it was $3.3 million two years ago). Even better news: subscribers have jumped from just over 10 million last year to 115 million today.

Here are some thought questions to leave you with:

  • Can a company grow too fast? What are the risks and how should growth be managed?
  • While, yes, we can draw analogies to the rapid growth of the Amazons and the Googles and the Twitters and the Facebooks during their first couple of years. But for every Amazon, Google, Twitter and Facebook, how many long forgotten, long since gone bust companies rose like a meteor and then fizzled away?
  • There's something about Groupon's growth that scares me. What is it? Help me out!

Renee Oricchio is a technology writer and former supervising news producer for CNN Financial News. She has been covering the computer industry since 1987. @oricchio