The Rise & Fall of Groupon

The Amazing Rise (and Inevitable Fall?) of GROUPON Groupon recently made waves in the business world by turning down a reported $6 billion buyout offer from Google. Their unprecedented growth places them among some of the heaviest hitters in Internet startup history. Here's the story of how they made it happen, and why it could all come crashing down just as fast. The idea that would eventually evolve into Groupon was born out of the frustration site founder Andrew Mason felt when trying to cancel a cell phone contract in 2006. "I just thought, there has to be a large number of people with these same problems, and if we were united in some way, we could leverage our collective power." Mason began developing a web platform, based on the "tipping point" principal (the number at which an idea or cause reaches critical mass), that would utilize social media to organize collective action. 350. Launched in November 2008, Groupon grew swiftly, expanding from a staff of a few dozen people to over 350 in just a year and a half. It's not just the staff that's booming, Groupon was estimated to be worth over $1 billion dollars after just 16 months in business. The only website to reach the $1 billion mark faster was YouTube, which did it in 12 months. 16 MONTHS Groupon makes its money by taking a commission on every "Deal of the Day" that gets triggered. A predetermined number of shoppers have to purchase the deal before any money changes hands. 75/75 BOUGHT! THE DEAL IS ON! LOCAL BUSINESS GROUPON The combination of an ever increasing number of daily deals (not to mention an increasing daily deal price) and no physical inventory has been the key to Groupon's explosive growth.