Andrew Mason is known as a serial prankster. But there was no larking about last week when he spurned a $6bn takeover from Google for Groupon, the discount shopping website he founded just two years ago, says Bloomberg. Like Facebook chief Mark Zuckerberg who famously turned down a $1bn offer from Yahoo! five years ago Mason, 30, is betting big that he can go it alone. Few disagree; Forbes declares Groupon "the fastest growing web company in history".
By just about any measure, "Groupon is killing it", says Thenextweb.com. Breaking into the black just seven months after inception, it has already steamed into 88 US cities and 22 countries. Mason's trick is to have made cash-saving vouchers and coupons sexy, says The Daily Telegraph. "It is social networking meets bargain-hunting."
Each day, the outfit's 35 million subscribers are offered a different deal tailored to their location and profile. If enough sign up to buy in bulk, they get discounts of up to 50%. "We want to do for local e-commerce what Amazon did for normal consumer goods," says Mason (see below). But with a very different spin. Described as "affectionately quirky with a healthy dose of weird", Mason's relaxed personality has shaped the site, says The New York Times. He even hires comics to concoct witty pitches for deals.
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Mason is certainly a refreshing newcomer to the scene, says Forbes. No Silicon Valley geek, his first love was music (in which he holds a degree). "I thought I was going to be a rock musician until I was 25 or so," he says. "It was about being part of the counter-culture." After college, Mason landed a job with InnerWorkings, an auction site founded by Chicago's then most prolific internet entrepreneur, Eric Lefkofsky. There he hatched a plan to launch an online platform to help wannabe activists raise funds and build petition lists, securing $1m in backing from Lefkofsky. Thepoint.com was a popular hit, but a commercial flop. But Mason noticed the promising response to a regular blog he ran, offering discount deals. Groupon then called Getyourgroupon.com was born.
Within a year, Mason was in the money big-time, raising $135m mostly from Digital Sky Technologies, the Moscow-based investment fund behind Facebook and Zynga. But he hasn't lost his taste for surreal humour, nor his desire to puncture a hole in corporate pomposity. In a typical tease last week, he announced he would only take interviews about "my other passion, building miniature dolls houses". It makes you almost feel sorry for Google it flirted with Mason on Twitter "for months", before eventually being turned down flat, says Gawker.com.
Some think Mason was mad to reject Google's billions as copycat sites are springing up by the day. But beneath the jokey exterior lurks a driven entrepreneur, concludes Bloomberg. Many on Wall Street are pencilling in a big IPO next year.
Does Groupon hold the Holy Grail for online profits?
Mason is calling the shots in the fastest market on the web, says The Observer. "Local is hot", and big boys such as Amazon and Google are jostling to beef up their presence. The prize? A virgin advertising market reckoned to be worth $300bn globally. "So far, no one has cracked the code to bring all local merchants online," says Sandeep Aggarwal, an analyst at Caris & Co in San Francisco. It's become a Holy Grail. But, to date at least, Groupon has by far "the most compelling model".
Unlike so many dotcom rockets, Groupon is "a real business".It has hit upon a solid revenue stream and "incentive for both users and businesses to pay for its services", says Fortune. Although the company which typically takes half the profits of every deal features regular offers from big names such as Gap (a recent promotion generated $11m in a day), the focus is on drilling down to local communities. The attraction for small companies is that it puts them on the map. On a typical day, offerings might range from a bargain breakfast deal in Manchester, through tickets to a show in Chicago, to a discounted pair of designer sneakers in Istanbul.
Mason professes to be far more into people than algorithms. But the chief problem with his model is that "anyone can replicate it", says Forbes. Being the first mover has its advantages: "Groupon" is now part of the lexicon of online shopping. But the company faces a big challenge from its chief US rival LivingSocial (currently being courted by Amazon), as well as countless group-discount sites globally. That won't be much comfort for Google, currently in the doghouse for failing to "grope Groupon", says Fortune. The search giant is still desperately in need of a "killer local business offering".
The real lesson highlighted by the deadbeat charm of Andrew Mason is how quickly power on the web can shift.
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