Why I Love Groupon
I love Groupon, and I've never even used the service. I love Groupon, and I've never even been to its Web site. Why do I love Groupon? I love it because, for the first time since Netflix, we have a "digital company of the moment" that's not just about some new whiz-bang technology.
To me, Groupon represents the beginning of a new trend in digital marketing companies. Here's what I mean:
Business model innovation. The technologies that power the Web, email, ecommerce, couponing, social sharing and status update have already been invented. It's about time someone created a great company focused on how to turn those platforms into a great marketing service. In Groupon's case, it's a $2 billion a year revenue company in two years. We haven't seen anyone as successful at that since.
Not about the Valley (or New York or L.A., for that matter). Technology start-ups depend on access to critical masses of risk-taking engineers and lots of tech-savvy venture capital. Not so with business model innovators. They can start everywhere you have smart people who want to change the world. I am sure that Groupon's success with Chicago roots will be an inspiration to everyone out there. Innovation is no longer limited to Silicon Valley.
All about sales & marketing. Many argue that Groupon isn't defensible since it's a sales & marketing company at its core, suggesting that only technology companies can build competitive barriers to entry. Clearly, Groupon is building a "network effect" that could be as powerful as the "friend effect" of Facebook or the "auction effect" that Google created with AdWords. Time will tell.
The girl (or boy) next door. Groupon is run and staffed by people like those who most of the rest of us grew up with, went to school with, or have drinks with after work. That has not always been the case with many technology-driven start-ups. It makes the notion of start-ups feel more accessible to all. It helps democratize them. I think that this is good for all.
Given the apparent lack of technology defensibility, do I think that the founders shouldn't have taken the reported $6 billion offer for the company? No more than I think that Google or Facebook should have sold at those levels. I believe that Groupon is on to something big. I believe that it will revolutionize local marketing services. What do you think?