The business idea is being copied and applied by many already strong companies; OpenTable
Still, Groupon is the Kleenex or Xerox of this industry. Vendors want their business on Groupon's site and this has created a competitive advantage through bargaining power that its competitors don't have. In addition, CEO Andrew Mason has built a local sales force with a strong culture that Google has attempted -- but failed -- to create organically and through attempted acquisitions (Yelp).
I bring this up because shares of Local.com
The point is that making investments on companies with shaky fundamentals based on potential acquisition is a risky proposition. However, while you may not be able to invest in hot dot-com companies of today like Groupon, Twitter, and Facebook there are still best-in-breed ways to play this online social trend. You just need to look overseas to China.
Internet leaders in China
China now has more Internet users than any country in the world, taking the lead from the United States in 2008, and it is still growing rapidly. In fact, China has added about 36 million new users since 2009, which equals the entire population of California.
SINA is also working with other companies and services to make its microblogging site a more integrated social and networking experience. For example, it is partnering with Microsoft
Even Facebook founder Mark Zuckerberg is excited by the prospects for SINA and Baidu, as he visited with both companies on his recent "vacation" to a country where his own website is banned. No one is quite sure exactly what was discussed or if any partnerships were formed during his visit. However, Zuckerberg has mentioned on many occasions that China is a key area of growth, and a market he badly wants to be in. For now, it seems that alliances with these social media leaders may be his best bet.
These Chinese leaders offer best-in-breed online businesses in the fastest growing Internet market in the world, which sounds pretty good to me.
Andrew Bond owns no shares in the companies listed. Amazon.com, eBay, and SINA are Motley Fool Stock Advisor recommendations. Google and Microsoft are Motley Fool Inside Value picks. Baidu, and Google, and OpenTable are Motley Fool Rule Breakers recommendations. Motley Fool Options has recommended a diagonal call position on Microsoft. Motley Fool Options has recommended a bull call spread position on eBay. The Fool owns shares of Google and Microsoft.