Groupon a ‘tech startup’? I don’t think so

Tech companies can scale their business largely through adding servers and software, which is why VCs love to invest in them. That’s why they shun services companies (like agencies), where hiring lots of people is required to scale a business.

Groupon, the very well-known two-year-old Chicago-based group-shopping coupon service, now has more than 8 000 staff, at least half working in sales, says CEO Andrew Mason, speaking at the AllThingsD D9 conference. That’s up from 1 500 staff a year ago!

That sounds like a services company to me.

So why is Groupon lumped in with other tech high flyers, such as Twitter with 300 staff, Facebook with about 2 000, and Zynga with about 1 300? Why does Groupon have a tech company-like valuation of as much as $25-billion?

Or are services companies at the core of many new “tech companies?” For example, Cloud/SAAS companies can require a substantial number of staff:

  • Salesforce has more than 5 300 staff and a $19.3-billion valuation.
  • ADP has more than 47 000 staff and a valuation of $27.2-billion.

Could this mean that the scalability of tech is no longer the competitive factor in some markets?



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