Groupon Case Study

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Groupon

Groupon

Lauren Byrd

Startup Case Study

February 24, 2015

Entrepreneurial Journalism

Quick facts

Launched in November 2008 by Andrew Mason and Eric Lefkofsky

Groupon was previously ThePoint.com (an online collective action website founded by Mason and funded by Lefkofsky)

Named the Fastest Growing Company Ever in 2010 by Forbes Magazine

Extreme highs and lows

Email Marketing Strategy

Improvement in 2014 and 2015

How was groupon founded?

Andrew Mason, graduate student at the University of Chicago

Intern for entrepreneur Eric Lefkofsky, web developer for Lefkofsky company

Mason created and Lefkofsky co-founded ThePoint.com

Social media platform, collective place for people to solve problems

Money problem came up, ideas about group-buying, later dismissed

Mason began featuring a blog that offered one deal a day, investors encouraged him

After failing economy and little to lose, ThePoint.com was converted to GetyourGroupon.com in 2008

7 member crew hunted for daily deals, Mason realized he was onto something after deal purchasing skyrocketed

6 months later, opened offices in New York, Boston, Washington D.C.

How was groupon founded?

In October 2009, Groupon raised $30 million from Accel Partners and New Enterprise Associates.

In April 2010, Digital Sky Technology and Battery Ventures invested $135 million in Groupon at a valuation of $1.35 billion.

Mason is credited with most of Groupons defining characteristics

One deal a day, deal doesnt go into effect until enough people buy voucher, vouchers should be for local businesses.

Pitched as a way to help local businesses when banks were not lending money.

Lefkofsky recruited successful businessmen

Ted Leonsis, Vice-chairman (built AOL)

Brad Keywell, lifetime business partner

Rapid startup growth

Rapid growth in first few years.

Reached 45 countries in 16 months.

In 2010, the company had 300 employees.

In 2011, the company had 5,000+ employees.

In August 2010, Forbes reported that Groupon was the fastest growing company in history.

Startup growth

Revenue growth

Market need

Mission to become the worlds commerce operating system and saw the need to connect both consumers and buyers through price and discovery.

Consumers looking for great experiences at a great value.

Merchants seeking solutions to attract more customers and run their businesses better.

Offer businesses customizable deal campaigns, credit card payment processing, and point of sale solutions to help businesses grow and operate more effectively. Groupon has become a way for merchants who are seeking a way to attract more customers.

Need to connect the two, significance to both sides.

cost growth

losses

Declined offers

2010 Yahoo offered $3-$4 billion dollars, offer declined.

A few months later Google offered $6 billion, offer declined.

Beginning of 2010, Groupon was worth $13 billion.

After offers were declined, COO and CTO stepped down.

In October 2011, Groupon raised $950 million in private funding in January and then paid $810 million to employees and investors.

Mr. Lefkofsky and family were paid $398 million of these funds.

Quiet period of unsuccessful quarter results.

Now, the company is valued at somewhere near $4.5 billion.

Firing of ceo, andrew mason

In 2013, Andrew Mason was fired as CEO of the company he founded.

Many people blame lack of inexperience on the downfall of company and believe he should have taken the buyouts.

Venture capitalists want a way out.

Eric Lefkofsky took over as CEO in 2013 after Masons exit.

Groupon stock shot up.

Investors disappointed by companys financial performance.

Revenues rising again.

Shift in market strategy

No longer focusing on one daily deal a day

Open ended marketplace

Third-party coupon business not scalable

Sacrifice profits for revenues

Focus on building revenues from direct sales, Groupon Goods

Email marketing strategy fading, people are tired of spam

Instead of waiting for an email on one daily deal, you can choose from open-marketplace of services online. Emails now include all deals.

At first spent too much marketing dollars to sign up more customers than were actually interested in the product.

Deal idea too easily copied by others.

Third party revenues

Direct revenues

Total revenue

How are they making money?

Direct Sales, Groupon Goods

Third party sales (not making very much money in this aspect)

Investments in other companies

Bought South Korean e-retailer Ticket Monster from competitor Living Social in November 2013

Expanding services

Not just local deals anymore

Groupon Getaways

Groupon Goods (direct sales)

Groupon Works (promotes success stories)

Groupon Grassroots (campaigns, connect communities, connects back with ThePoint.com s original characteristics

future

Are people burnt out on daily deals?

New website

Mobile App

New developments

Open to acquiring new startups

Digital marketplace

Questions?

sources

http://www.forbes.com/forbes/2010/0830/entrepreneurs-groupon-facebook-twitter-next-web-phenom.html

http://dmarron.com/tag/internet/

http://www.statista.com/statistics/273245/cumulative-active-customers-of-groupon/

http://www.businessinsider.com/inside-groupon-the-truth-about-the-worlds-most-controversial-company-2011-10?page=1

http://www.microfundy.com/2014/11/04/groupon-why-the-fastest-growing-company-in-history-had-to-pivot/

http://www.groupon.com/press/about-groupon

http://money.cnn.com/2013/02/28/technology/groupon-ceo-andrew-mason/

http://www.forbes.com/sites/joanlappin/2014/05/05/groupon-down-40-in-2014-finally-does-something-for-shareholders/