Groupon's Sun Valley Debut
Allen & Co. handpicks a number of innovative, successful entrepreneurs to attend its annual Sun Valley conference.
This year Groupon CEO Andrew Mason, Pandora founder Tim Westergren, and Coupons.com CEO Steven Boalwere on the list. They meet and mingle with tech titans and media moguls who could potentially buy them. And some of the startups have worked with Allen & Co to raise money.
Groupon's Mason has attracted a lot of attention here, and squeezed in an interview with us between a slew of meetings with CEOs.
Groupon has been profitable for a year and now has 11 million customers. It leverages the power of social connections to enable group discounts.
Here's how it works: a restaurant agrees with Groupon to offer $100 gift certificates for $60 if 300 people sign up. The restaurant is exchanging the free $40 bucks for the guarantee of 300 customers spending $60, with a fee going to Groupon. The restaurant wins awareness and new customers.
Groupon is designed so it's easy for users to spread the word about deals through the likes of Facebook and Twitter. And users are incentivized to get their friends on board as well - they only get the deal if a certain number of people sign up. Deals are only offered for a short period of time, giving reason for people to click and spend, even if they have no immediate plans to use the coupon. And in the meantime Groupon and its partner companies get to sit on the cash.
Mason says Groupon's biggest challenge is actually a pratfall of its success: companies participating in Groupon have been overwhelmed with customers. Mason cited examples of sushi restaurants running out of rice because they were flooded with a rush of Groupon members. It's a better problem than the alternative and one that Groupon is working to manage.
What's next for Groupon?
Mason said that he's just interested in building his company and that it's too early to talk about an IPO or a sale. How big is the market? He says it's as huge as all the empty restaurant seats and empty salon chairs.
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