(image credit: webtreats)
You know how (old) people are always saying that “texting and Facebook are the end of the world because kids can’t write anymore and say ‘u’ instead of ‘you,’ blah blah blah?” (like, omg, it’s nbd…)
Well, the SEC is now taking issue with the way Groupon and other start-ups are reporting their finances. Groupon, which is preparing for its IPO (i.e. selling shares of itself to the general public), is using some new – and misleading, according to a lot of financial experts and regulators – terminology to talk about how much money they are worth.
Other web and social media start-ups have done this sort of thing in the past – like talking about “eyeballs” (the number of people who view a website) instead of dollars to demonstrate a company’s value. However, some are saying Groupon is going too far, and others are saying stuff like “eyeballs” should never have been put next to traditional financial metrics in the first place.
So, do you think this is just an example of old finance not really getting the new way stuff works, or are Groupon and Zynga trying to punk us?
The number of eyeballs viewing a web page is a valuable metric. Even if it is not revenue it can be converted into it with the right strategy. Sometimes web based companies need to be flush with cash in order to capitalize on site popularity, and “eyeballs” is a good measurement of potential.