Groupon Final

I. Situation

Timeline

Groupon, a website offering deep discounts through mass purchase, evolved from

Founder and CEO Andrew Mason’s first website, “The Point,” which was launched in November

2007. Deploying a similar concept of group persuasion, The Point was about social action and

stressing the idea that “…every problem has a tipping point of public frustration that will force a

solution. If enough people want a problem to be solved, they will solve it.” (47) People were

asked to give money as a group once a ‘tipping point’ had been reached showing that they were

taking a stand. The Point failed to attract enough advertising revenues to stay in business, but it

reinforced for Mason and his investors how powerful group action can be. (47)

Andrew Mason and his team launched Groupon in November 2008 in Chicago to focus

on collective buying power. (18) They saw that by using the framework of The Point, they could

help other city-dwellers obtain affordable access to goods and services without overwhelming

them by the sheer number of choices. Groupon started out offering one deal per day. During

2009 and 2010, Groupon experienced rapid growth and was soon serving over 150 markets

domestically and over 100 additional markets internationally. (47) The seemingly overnight

success of Groupon drew attention from many different industries and those that wanted a piece

of the daily-discount-deal pie. During the same period of 2009-2010, Groupon saw several

competitors and copycat firms appear including LivingSocial, BuyWithMe, and the new “Deals”

section on Facebook. (47)

Groupon began to attract interest from investors and others in the business world. In

April 2010, Groupon together with Digital Sky Technologies, a Russian investment firm, raised

$135 million in new capital to help solidify “that social buying has rapidly matured into a real

business.” (47) Groupon used the new capital to acquire its German clone, CityDeal, which

doubled Groupon’s global reach. (47) By August 2010, Groupon was valued at $1.5 billion and

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