Groupon = Fastest growing company…ever?
When the company’s name is starting to become a part of the daily vocabulary (“hey, I got a ‘Groupon’ for that place”), you know the business is taking off. Groupon’s CEO and Founder, Andrew Mason, “has managed to build the fastest-growing company in Web history,” according to Forbes Magazine.
“The company is on track to pass $500 million in revenue this year…No technology stalwart–including Ebay, Amazon.com, Yahoo, AOL and Google–grew that big that fast. At just 17 months old this April Groupon boasted a $1.35 billion valuation when it raised $135 million, the biggest chunk of it from Digital Sky Technologies, the curious Moscow investment fund behind Facebook and Zynga… The only company to reach a $1 billion valuation faster was YouTube (now part of Google), founded in 2005 and still waiting to turn its first profit. Groupon broke into the black just seven months after inception.“1
A few Groupon facts/stats:
- Founder: Andrew Mason (29-year-old former music major from Northwestern)
- Founded: November 2008
- Privately held company
- Based out of Chicago
- 900 employees
- Presence in 170 cities in over 22 countries
- Main competitor–Living Social. Other competitors:
http://techcrunch.com/2010/07/11/groupon-competitors-guide/ - 700+ other ‘social coupon’ companies have since sprouted2
- Groupon’s actively acquiring rival companies (US and internationally)3
How does Groupon work?
One signs-up (free) to receive a deal-of-the-day coupon (offering 50-90% off) for the city(s) of his or her choice. The coupon is only activated when the required minimum number of people commit to purchase it. If the minimum buy-in is met, one’s card is charged same day but there’s typically a generous time-frame in which to use the coupon. If the quota isn’t met, the deal is canceled and no charges are incurred.
How does Groupon make money?
In many cases, Groupon and the company offering the deal of the day split the revenue up the middle. In other words, if $50 worth of food from a restaurant was available for a $25 Groupon, the restaurant would get $12.50 and Groupon would get $12.50. So, for an upfront payment of $12.50, the restaurant would be giving away $50 worth of food. Now you know why Groupon can profit so quickly, and that’s why there are hundreds of competitors. It’s a likely assumption that the competitors will ask for a much smaller piece of the coupon “pie” to get their collective foot in the door.
Read on:
TechCrunch – Groupon Clones Pop Up Like Mushrooms In The United States, Too
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i <3 groupon!!