SXSWorld
Issue link: https://sxsw.uberflip.com/i/81862
Groupon Tells Funny Stories, But a $15 Billion Business Is No Joke by Patrick Nichols R humorous descriptions that blur the line between fantasy and reality. A style guide recommends "absurd images," "fake history" and "highly technical language … when it's least called for to overcomplicate things." While Groupon descriptions often read like comedy gold, the com- pany itself is no joke. Launched in November 2008, it turned profi table after just six months. A year later, Forbes anointed it "the fastest growing company in Web history." A host of suitors pursued Groupon in the closing months of 2010, culminating in Google's spurned $6 billion bid. How did Groupon rocket from startup to superstar in just over two unique. And the social commerce company he founded is the embodi- ment of Mason's playfulness and creativity. Writers who create deal-of-the-day copy are encouraged to craft are is the entrepreneur who can stare down a $6 billion buyout off er and walk away empty handed. But Andrew Mason, the 30-year-old CEO of Groupon, isn't just rare—he's downright years? By turning the century-old tradition of coupon marketing into a social commerce revolution. Groupon partners with businesses to sell credits for products and services at discounted rates, but only when those credits reach a tipping point of interested consumers. Say a spa off ers a $100 treatment for just $50, but 200 or more people must agree to purchase the Groupon. If the off er falls short, the deal dissolves. Working with local businesses, Groupon caught on quickly in its Chicago hometown and soon expanded to other markets. Today, it is active in more than 300 markets and 35 countries, with a reported 50 million subscribers receiving daily deal alerts. While local deals remain Groupon's core off ering, it has off ered national deals with Gap, FTD and Barnes & Noble. Analysts believe the company has yet to tap its full potential. While active in hundreds of locales, you have to identify your location to fi nd relevant deals. "A Groupon app that tells me the active deals imme- diately around me would be much more compelling," said Simon Salt, CEO of International IncSlingers and author of Social Location Marketing. "I think location is defi nitely the next big piece of the puzzle, knowing where I am and being able to show me an off er that is relevant to my location." Th is is a pivotal year in defi ning location-based services, said Aaron Andrew Mason, CEO of Groupon " ... Groupon is becoming as entwined with social commerce as Google is with search or Kleenex with facial tissues. Obsession over daily deals is labeled 'Grouponitis.' January, it raised $950 million in capital, a sum Th e New York Times described as the largest ever for a startup. (In typical Groupon fashion, the company's press release was headlined "Groupon Raises, Like, A Billion Dollars.") Reports indicate the company may go public soon at a $15 billion valuation. Strout, CMO of Powered Inc. "In a perfect world, I would love to see Groupon buy foursquare and/or Whrrl, Where and Gowalla. Th at would be a match made in heaven. Conversely, I could also see four- square buying one of the Groupon competitors like Living Social and really owning the space. I think we are probably six to 12 months from seeing one of these become a reality." Groupon faces added competition from powerhouses entering the daily deals market. Facebook rolled out Places and Deals last year. Th e company Groupon spurned in December reportedly is readying a direct competitor in Google Off ers. Wall Street fi rms are showing confi dence in Groupon's future. In 28 SXSW ORLD / M ARCH M USIC 201 1 Chrystia Freeland, an editor for Reuters, found traces of Groupon in the political upheaval sweeping the Middle East. Social networking enables individuals disenchanted with ruling regimes to realize they are not alone and, once the masses reach a tipping point, to take action together. Freeland called this "the Groupon eff ect." In just over two years, Groupon has surged from a local startup to a global power with 3,000 employees. Rapid growth hasn't dulled the company's edge. Witness Grouspawn, a program pledging $60,000 trust funds to two children conceived as a result of Groupon dating. For those lacking child-bearing partners, there's also the Date Assist service to match deal-loving soulmates. ■ Groupon won the People's Choice Award at 2011 SXSW Interactive Awards. In terms of public awareness, Groupon is becoming as entwined with social commerce as Google is with search or Kleenex with facial tissues. Obsession over daily deals is labeled "Grouponitis." Acknowledging the phenomenon, Groupon's website states, "We want Groupon to be an addiction you can feel good about." Th e business model also is fi nding relevance in global politics.