Groupon filed for IPO today.  This company is a rocket ship!! Revenue grew from $30M to $713M within one year; their run rate must be over a billion dollars now.

While the idea of group buying service isn’t new - we first heard that in China as early as 2007 - Groupon’s true addressable market is the huge local advertising markets. Local businesses get real customer traffic from Groupon that they could never get before through other advertising means.  With this line of thinking, Groupon’s valuation may not look too outrageous.

Scale is obviously key to this game, so Groupon is clearly focusing on acquiring as much subscribers ASAP, before more (and likely stronger, think Facebook, Amazon, Google) competitors gain foothold.  That’s why cost of marketing was 37% of revenue in 2010, and salespeople make up half the workforce. Early snafus like the botched flower deal will be forgotten and forgiven. We’re in the “land grab” phase, simple as that.

Click on the graphic to see a waterfall of Groupon’s 2010 income statement.