According to Bloomberg, Groupon has held talks with banks about an IPO that would give the company a valuation of no less than $15 billion, and as much as $25 billion.

Groupon’s eye-popping growth hasn’t slowed since the Google offer fell apart, and despite solid efforts from LivingSocial (the closest competitor) and a Super Bowl ad campaign that rubbed some people the wrong way, they now have 70 million users in 500 markets – up from 300 markets when the Google talks were under way.

Google was rumored to have their eye on BuyWithMe – a much more distant competitor who is fighting with most of the other group buying sites for third place (earlier coverage here) – but decided to get into the group buying game with their own product.

Facebook also reportedly has their eye on the group buying market, but Groupon’s massive sales force and first mover advantage haven’t been easy for Google to catch up to, and we’re pretty sure Facebook will have similar challenges.

Why? It’s not totally about the size of the audience – although 70 million users is really, really impressive. Having the audience is one part, but the success of Groupon is also due to their significant sales force. The Groupon page on LinkedIn shows 1,353 employees, with 43% in sales and marketing. Google and Facebook, while incredibly valuable companies in their own right, are much more tech heavy. For comparison, the Google page on LinkedIn shows 26,899 employees with only 13% in sales or marketing functions. Facebook has 2,540 employees, with 23% in sales and marketing.

While Google and Facebook battle each other out over top tech talent, Groupon is building themselves up on sales talent. For small businesses, that’s important. The vast majority of small business owners aren’t sales or marketing geniuses. They may be fantastic chefs or wonderful masseuses, but that doesn’t make them online marketing experts. So when Google or Facebook present self-serve options, they may be technically perfect, but without the human touch of someone to help walk the business owner through the process and explain things to them those self-serve option will continue to underperform when compared to a company like Groupon that’s driven by sales people rather than engineers.

So far Groupon’s been using the massive amounts of money they’ve raised to acquire companies with local sales teams, and hire additional sales and marketing people. Google and Facebook largely used the massive amount of money they have to acquire new tech talent, and while that’s serving their core businesses well, it’s very difficult to change the culture of a company from tech led to sales led overnight. Google and Facebook find their strength in ideas, Groupon finds its strength in execution. No, their business model isn’t completely original, and yes, there are many other companies doing the same thing. The thing is, none of those companies are doing it better.

For the tech giants it’s going to be very difficult to add on that culture fast enough to pose an immediate threat to the group buying leader. For competitors, if Groupon is snapping up the top local sales talent it will be expensive to compete with them, and in the group buying space, it’s near impossible to outspend Groupon.

Yup, just like that, things are going to be a lot more interesting for current group buying leader Groupon.

First, the details on Google’s planned competitor.

Image via Mashable

Mashable received a confidential fact sheet spelling out the merchant benefits of Google Offers, “a new product to help potential customers and clientele find great deals in their area through a daily email.” From the fact sheet, we learn that Google will provide writers to write up offers (just like Groupon), promote the offer on the Google Offers website and through email to local subscribers (just like Groupon).

Right now Living Social is Groupon’s closest competitor, and even with a national promotion that topped Groupon’s national promotion (their 50% off Amazon giftcard deal ended up pulling in a little more than $13 million), they’re a distant second. Here’s why competition from Google will be unlike anything else that Groupon’s had to deal with so far:

1. Google knows Groupon’s secrets

Even though an acquisition never happened, Google surely had plenty of time during due diligence to examine Groupon’s operations inside and out. They know their strengths, but more important they know their weaknesses in a way that other copycats don’t.

2. Google knows a lot of Groupon’s secrets

Even beyond anything they learned in due diligence, Google runs what is arguably the largest ad network on the internet. Perhaps you’ve heard of a little product called AdWords, or a small acquisition that did happen called DoubleClick. Google will offer some church and state separation assurance that they aren’t looking into specific advertisers campaigns, but let’s be honest – Google’s seen a lot of things on Groupon that they can’t unsee and we’re pretty sure that includes ad data.

3. Google made $8 billion last quarter

Groupon recently raised $1 billion and is rumored to be going for a $15 billion IPO. They also do approximately $2 billion per year in revenue – as much or more than Facebook pulled in, on a smaller user base. Google made $8 billion in one quarter. And they own millions of email addresses through Gmail. And they own the ad network that runs ads to those users. And they could afford to keep pace with Groupon’s spending, even if they didn’t.

Uh oh.

Lest we seem to be all doom and gloom about Groupon’s prospects, there are a few things to keep in mind. First is that the companies have different DNA, and if Google was willing to buy Groupon in spite of that – or perhaps even because of that, it’s a sign that email addresses and an advertising budget may not be the end all be all of dominating the space. As a company, Google is probably the smartest guy in the room but Groupon is the life of the party.

When it comes to local business, that may make a difference. When it comes to your search results, or your phone doing cool new things, you probably want the smartest guy in the room. When it comes to trying new things, you probably don’t want that guy telling you what’s fun, even if it’s algorithmically correct.

That life of the party, witty promotion is central to the type of community spirit that got users hooked on Groupon and the businesses they promote in the first place, and will be what keeps Groupon in the fight as much as billion dollar investments.

The 24-hour deal, which runs today, offers LivingSocial members a $20 Amazon giftcard for $10.

TechCrunch notes that it’s unlikely most people will spend exactly $20, which would make it a winner for Amazon. Add to that, a $10 discount isn’t steep enough to really cut into margins on most products and is probably about the amount most online retailers calculate when offering free shipping and it’s a no-brainer for Amazon. For the math portion of this post: of the $10, Amazon probably only sees $5 since the split on most group buying deals is 50%, but with Amazon being a major investor the margins could be more favorable. Even if they aren’t, we repeat the major investor portion of the statement for why this is a no lose situation for Amazon.

As for LivingSocial, the Amazon investment obviously helps in bending some of Amazon’s rules. Most affiliate promoters of Amazon products are restricted when it comes to offering any incentives or cash back promotions, putting up a barrier that would be harder for copycats to overcome. Also, it’s worth remembering that Groupon’s Gap promotion where people got $50 credits for $25 was the company’s most successful and brought in $11 million in a single day.

While the majority of the daily deals on any site are targeted to specific local markets, the power of a national promotion with a major brand is still the kind of thing that gets attention after one too many spa or yoga class discount offerings. With the sheer amount of stuff on Amazon, the low purchase amount and the fact that you really aren’t likely to see the deal anywhere else, we wouldn’t be surprised to see LivingSocial having a multi-million dollar day of their own today.

With 14 hours to go, nearly 850,000 gift cards have already been sold putting the total revenue close to $8.5 million. Figuring that they can continue to average 85,000 cards per hour (!), you’re looking at about 2 million cards sold or $20 million.

Groupon for one, please.

For $6 billion, this site would be sold in a nanosecond (possibly with a kidney included), but Groupon looked the multi-billion dollar offer in the face and decided to walk away. Chicago Breaking Business {via TechCrunch} reports that two sources close to the deal have confirmed that Groupon has decided to stay independent, possibly in advance of a IPO filing, though a decision on that won’t come until 2011.

How could anyone possibly walk away from $6 billion? According to Kara Swisher at AllThingsD, the $500 million annual revenues that everyone’s been tossing around (including us) are actually closer to $2 billion. While that figure doesn’t take into consideration what Groupon pays out to merchants, most estimates have Groupon taking a 50% cut of each deal that passes through its site, which means the company could be seeing $1 billion from the deals that pass through their system. Considering this is still in a span of just 2 years, heading for an IPO might make more sense. With their own focus on acquisitions – of both smaller companies outside the US and new customers – Groupon hasn’t been resting on their first to market status to grow, and it’s obviously working out amazingly well. If they hit $3 billion in revenue next year, an IPO could easily see the company valued at much more than the $6 billion Google offered.

Only time will tell if this is the right move: when Facebook turned down a $2 billion offer from Yahoo!, many observers who’d seen Friendster’s rise and fall thought it was a risky move. Today the company is valued somewhere close to $50 billion and it looks like the right bet. As successful as they’ve been, it’s still impossible to know for sure if Facebook will continue to hold the number one social network spot that MySpace once held, and officially conceded. For Groupon, the loudest criticisms of their multi-billion dollar valuation have been over the fact that the model can be easily duplicated, and that there’s not much that would keep someone loyal to Groupon exclusively.

While they may not be the only daily deal site that customers keep up with, Groupon is quickly turning the space into a winner take most market and sometimes that’s enough to build a defensible business on. The momentum Groupon has going for them at the moment may be a challenge to sustain, but it would be an even tougher battle for competing companies to overtake them.

Meanwhile, this puts Google back to square one. Amazon recently offered competitor LivingSocial $175 million, BuyWithMe is the next largest competitor, but not in enough cities for Google to spend money on an acquisition rather than trying to build its own product and sales force. Will we see Google Deals/Goopons making their way into local listings? Google branded products have been hit (Maps, Earthview, Gmail, News) and miss (Video, Buzz, Wave, Froogle, Base) so it’s difficult to say how they’ll move forward, but we can’t see them walking away from the  daily deal model after what was on the table.