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Inside Andrew Mason's plan to remake Groupon, fend off copycats, and change your spending habits forever
Photograph by Chris Buck
By Brad Stone and Douglas MacMillan
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On a frigid Chicago morning in early March, Andrew Mason stood on a street corner outside his company's offices to reveal his ambitious plot to eradicate that age-old human conundrum: where to eat lunch.
Mason is the 30-year-old chief executive officer of the digital couponing comet known as Groupon, the Google-spurning, Super Bowl-flopping startup that sends deal-of-the-day e-mails to more than 70 million subscribers around the world. He's wearing a heavy winter coat, a lime-green track jacket embroidered with the Groupon logo, sneakers, and garish red Christmas socks. ("Only clean socks I could find," he says.) Holding his iPhone before him like a tricorder, he logs into the new service, called Groupon Now, and shows off two simple buttons that have the potential not only to transform humankind's lunchtime habits but also to alter the topography of the multibillion-dollar market for local commerce.
The two buttons: "I'm Hungry" and "I'm Bored."
It's only 11 a.m. Mason clicks the "hungry" button, and his phone transmits its location to Groupon's servers and then displays a list of deals from nearby restaurants. Across a bridge spanning the Chicago River, the Asian fusion restaurant Thalia Spice is testing Groupon Now by offering $20 worth of food for $12. A block to the north, an eatery named @ Spot Café is dangling a $10 coupon for $6. Each restaurant has specified that its discount is good only during select hours on that particular day, when a few of their tables would otherwise be empty.
And that, Mason declares as he taps his phone and purchases $8 of savings from Thalia Spice, could turn Groupon into a combination Yellow Pages, Valpak coupon packet, and price-conscious concierge for millions of consumers. "People could end up being driven to eat by what they find on Groupon and when they find it," he beams.
Andrew Mason commands a lot of attention these days. In a little over two years the former rock band keyboardist has managed to build what could be the fastest-growing company of all time. Yes, you read that right. Groupon's deal-of-the-day business is set to generate $3 billion to $4 billion in revenue this year, up from $750 million in 2010, according to two people familiar with the upstart's finances. Groupon was valued at $1.4 billion last April, sought funding at a $3 billion valuation in November and snubbed a $6 billion offer from Google (GOOG) two months after that. The company has been meeting with bankers to discuss a potential initial public offering that would value it at up to $25 billion, Bloomberg Businessweek has learned from two sources close to the negotiations.
"Starbucks and eBay were standing still compared to what is happening with Groupon," says Howard Schultz, the Starbucks (SBUX) CEO and former eBay (EBAY) board member who joined Groupon's board in February and invested in the company. "I candidly haven't witnessed anything quite like this. They have cracked the code on a very significant opportunity."
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Photograph by Chris BuckBy Brad Stone and Douglas MacMillan
Browse Issues
Browse the BusinessWeek Archive
On a frigid Chicago morning in early March, Andrew Mason stood on a street corner outside his company's offices to reveal his ambitious plot to eradicate that age-old human conundrum: where to eat lunch.
Mason is the 30-year-old chief executive officer of the digital couponing comet known as Groupon, the Google-spurning, Super Bowl-flopping startup that sends deal-of-the-day e-mails to more than 70 million subscribers around the world. He's wearing a heavy winter coat, a lime-green track jacket embroidered with the Groupon logo, sneakers, and garish red Christmas socks. ("Only clean socks I could find," he says.) Holding his iPhone before him like a tricorder, he logs into the new service, called Groupon Now, and shows off two simple buttons that have the potential not only to transform humankind's lunchtime habits but also to alter the topography of the multibillion-dollar market for local commerce.
The two buttons: "I'm Hungry" and "I'm Bored."
It's only 11 a.m. Mason clicks the "hungry" button, and his phone transmits its location to Groupon's servers and then displays a list of deals from nearby restaurants. Across a bridge spanning the Chicago River, the Asian fusion restaurant Thalia Spice is testing Groupon Now by offering $20 worth of food for $12. A block to the north, an eatery named @ Spot Café is dangling a $10 coupon for $6. Each restaurant has specified that its discount is good only during select hours on that particular day, when a few of their tables would otherwise be empty.
And that, Mason declares as he taps his phone and purchases $8 of savings from Thalia Spice, could turn Groupon into a combination Yellow Pages, Valpak coupon packet, and price-conscious concierge for millions of consumers. "People could end up being driven to eat by what they find on Groupon and when they find it," he beams.
Andrew Mason commands a lot of attention these days. In a little over two years the former rock band keyboardist has managed to build what could be the fastest-growing company of all time. Yes, you read that right. Groupon's deal-of-the-day business is set to generate $3 billion to $4 billion in revenue this year, up from $750 million in 2010, according to two people familiar with the upstart's finances. Groupon was valued at $1.4 billion last April, sought funding at a $3 billion valuation in November and snubbed a $6 billion offer from Google (GOOG) two months after that. The company has been meeting with bankers to discuss a potential initial public offering that would value it at up to $25 billion, Bloomberg Businessweek has learned from two sources close to the negotiations.
"Starbucks and eBay were standing still compared to what is happening with Groupon," says Howard Schultz, the Starbucks (SBUX) CEO and former eBay (EBAY) board member who joined Groupon's board in February and invested in the company. "I candidly haven't witnessed anything quite like this. They have cracked the code on a very significant opportunity."
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