The hottest internet
company this week is certainly Groupon, the one-a-day deal site. Yesterday, CNBC reported the 2-year-old company was in discussions about a $1 billion IPO by spring of 2011. By the end of the day, the figure being repeated in other outlets was up to $15 billion. Groupon is a cash cow, no doubt, but let’s not forget the origins of the latest dot-com darling lie in two noble start-ups aimed at solving social problems and improving public policy.
Groupon will probably be valued at closer to $15 billion than $1 billion when all is said and done. After all, Groupon turned down a $6 billion acquisition offer from Google last year and continues to demonstrate exponential growth, in its 50 million-strong subscriber list, as well as sales now approaching $2 billion per year according to some accounts like this one at Business Insider based on unnamed sources in the company.
Along Groupon’s path to billions, though, is a wake of impressive but half-finished projects aimed at making the world a better place, each the pet project of Groupon’s talented and quirky founder Andrew Mason.
After stumbling into computer programing from a music degree in college, Andrew Mason, 30, started a political website. His Groupon bio explains: “Excited by the power of technology to change the world, Mason developed Policy Tree, a policy debate visualization tool.” All kinds of political debates—should we eliminate the estate tax, for example—are represented in flow charts of logical arguments and counter-arguments. It’s meant to make policy discussions more accessible, a noble goal. Now Policy Tree sits idle, frozen in 2007 with headlines about George Bush and Karl Rove and this message atop the homepage:
Hello! Policy Tree is indefinitely on hold — I’m busy working on The Point. Want to take over? E-mail me at myfirstname at bandrew.com. Thanks! Andrew Mason January, 2007.
The site helped earn him a scholarship to graduate school for public policy but he dropped out after just three months when he got funding for his next online idea to improve the world: The Point. A more earnest and activist iteration of Kickstarter, The Point organizes groups of people to fund a cause but only if there is enough collective action pledged. The point also has calls for action like boycotts and awareness campaigns. Groupon proudly talks about The Point in several places on the site:
Groupon grew out of a website called The Point, a website launched in November 2007 that lets you start a campaign asking people to give money or do something as a group — but only once a “tipping point” of people agree to participate. By delaying action until enough people come together to have a real impact, The Point helps consumers, employees, citizens, activists, parents — or anyone — come together and solve problems that they couldn’t solve alone…
While we started Groupon as a side project of The Point, it’s taken on a life of its own.
In addition to fundraising, The Point also helped groups get deals through bulk buying. That was the genesis of Groupon. So The Point spun off little Groupon and off it went headed toward the business hall of fame.
Cause is no longer the driving force behind Mason’s big venture, but it should be noted, Groupon is successful because the main driver isn’t only saving money. Mason attributes the attractiveness of the groupons to the excitement of exploration. Groupon’s single offer a day helps overcome the paradox of choice inherent in big cities with a kind of “purposeful randomness” with a yes/no answer and a deadline.
Buried in a wonderful exploration of coupons, as a concept, in the digital world, Wired discusses this “purposeful randomness” idea:
Andrew Mason, Groupon’s 30-year-old founder and CEO, sees it, this tantalizing window of opportunity gives people the license to indulge in experiences they wouldn’t otherwise pursue. “That’s the beauty of the model,” he says. “We’re using these game mechanisms to trick people into getting out of the house and doing the things they always wanted to do.”…To his mind, the most effective coupons aren’t the ones that save you money on things you’d buy anyway; they’re the ones that come from out of nowhere, giving you license to buy something you otherwise wouldn’t.
Buried deep within the profit machine that is Groupon there are still daily opportunities to do good through the platform in the section called G-Team. For instance, today in New York, you can donate $15 to purchase bed linens for The Friends House, which provides housing to 50 homeless AIDS patients.
Hopefully as Groupon grows, and before it is tossed to the vagaries of the open market, Mason will honor the roots of his company by institutionalizing a deal a week for a good cause, or some other social impact target worthy of The Point’s grand ambitions and Groupon’s massive potential.
