Groupon Acquires Pre-Launch Startup Campfire Labs
Groupon (NASDAQ:GRPN) has reportedly made yet another acquisition, this one a pre-launch startup called Campfire Labs, a 7-person firm working on social networking technologies. [1] TechCrunch first reported the deal when the Campfire Labs website began transferring traffic to Groupon’s site, and the deal has now been confirmed by Campfire Labs’ founders, who have . [2] While Campfire Labs’ business is still somewhat of a mystery, the basic concept is said to be “getting people to transfer their social activity from online to offline interaction.” [2] Groupon continues to invest heavily in acquiring new technologies and talent in order to differentiate itself from similar daily deal providers. Groupon will be getting a rich talent pool from this acquisition, with the co-founders of Campfire having extensive backgrounds in managing ventures within Yahoo (NASDAQ:YHOO) and Google (NASDAQ:GOOG).
See our full analysis for Groupon
Differentiation is a Must for Groupon’s Growth
Groupon’s declining sequential revenue growth has shown that its business needs a unique selling point to provide a competitive advantage. Unfortunately, previous ventures like Groupon NOW have not been able to garner as much growth as the company had hoped, with Groupon NOW contributing less than 1% of Groupon’s total North American gross billings through September 2011. [3]
As a result, the company is trying hard to experiment with unique deal-based offerings, which is being helped by technology acquisitions. A recent example is Groupon Scheduler, an online appointment service based on technology provided by OpenCal, a firm that Groupon acquired. It’s not currently clear exactly what technologies Campfire Labs would be providing, but the nature of the startup suggests that consumers might be looking at higher personalization/customization levels for the Groupon deals they receive by e-mail.
We recently launched coverage of Groupon with a $13 price estimate. Refer to our note on why Groupon’s valuation has fluctuated significantly over the past 2 years.
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Notes:- Exclusive: Groupon Acquires Stealth Silicon Valley Startup Campfire Labs, TechCrunch, 29th Dec 2011 [↩]
- Campfire Labs co-founders discuss Groupon acquisition: “The deal is closed”, Washington Post, Dec 2011 [↩] [↩]
- Groupon Now!, Groupon’s Bet on the Future, Off to a Disappointing Start [↩]