Kara Swisher

Recent Posts by Kara Swisher

Groupon’s Andrew Mason Speaks!


The last time I really was truly bullish on a start-up and its founder–BoomTown’s motto is wait-and-see rather than hype-it-up–was AdMob’s Omar Hamoui.

That turned out pretty well, with the sale of the mobile advertising site to Google (GOOG) for $750 million last fall.

My 2010 start-up that passes the slightly-less-raised-eyebrow test is Groupon, a group-based social buying service that nabbed another $30 million in funding in December.

So earlier this week, I sat down with Groupon’s Midwesternly-nice Andrew Mason, 29, to talk about where the start-up is headed with its pile of dough and growing base of consumers who want to make a deal.

The Chicago-based Groupon has actually raised a total of just under $36 million from angels, New Enterprise Associates and Accel Partners so far.

Not that it needs it. The company–like AdMob–is profitable, despite having 200 employees and and a lightning growth path to expand its base of local sites.

The innovative service, which launched only a year ago, features a “daily deal” with a huge discount on a wide range of things–from spas to skydiving and, recently, pole-dancing lessons–in more than two dozen U.S. cities, including Chicago, Boston, New York and San Francisco.

Not everything works–a recent offer of a lobster dinner shipped to buyers was a bomb, as was a tour of Michael Jackson’s childhood home in Gary, Indiana.

The deals are offered to large groups of potential buyers on the Web, through email or via social networking sites like Facebook and Twitter.

Using social tools, Groupon–a mashup term for “group” and “coupon”–tries to use collective buying power to get low prices and push customers to local businesses.

If it reaches the number of buyers it needs, which can be in the thousands, Groupon sells coupons to the consumers and collects a hefty fee for the sale from the businesses it sends customers to.

At the cost of discounting and of paying off Groupon, small businesses get a crack at a lot of new customers–think of it as social networking lead-generation or, perhaps, the “Social Shopping Network.”

Groupon grew out of a project of The Point, an online community launched in 2007 for organizing group action.

This kind of thing has been tried before, of course, centering on consumers who group together to get discounts on items by purchasing them in bulk.

In Web 1.0, there were many group-buying sites, most of which failed badly. One of the more high-profile ones–Mercata–got $90 million in funding from investors, including Paul Allen’s Vulcan Ventures.

But now the group-buying space has been reinvigorated, with a spate of competitors, some of which are clear copycats–which, touchingly, really bugs Mason.

There is even a site, called Yipit, that aggregates all the group-buying sites.

Here’s the video of my interview with Mason at the Accel offices in downtown Palo Alto, Calif., on his second visit to Silicon Valley–as well as a video below it from Groupon about how the service works:

Learn How Groupon Works! from The Point on Vimeo.