around Chicago. He realized local discount deals would work well for group buying. Theaters had empty seats, restaurants empty tables, museums could use more members. The merchants could make a discount offer to fill some of that unused capacity, and the extra revenue would be found money.
Each deal would last only one day, so customers could buy quickly. He’d sell only one deal a day, which would allow for a focused marketing effort. There would be a tipping point for each deal that the merchant could set. If enough customers didn’t buy the deal, nobody got it.
It wasn’t hard to come up with a name. The product was a “group coupon,” or Groupon for short. At first the name was “Get Your Groupon.”
The local-deal idea offered a revolutionary new way small merchants could affordably advertise online. Groupon also used the Internet in a novel way that NEA’s Weller says grabbed his interest: instead of encouraging people to stay home and online, it encouraged them to go out and experience new things in their community. It wasn’t world peace, but it was a positive goal.
“We could make life better for small-business owners and increase buying power significantly for consumers,” Andrew says. “Somebody who makes $30,000 a year can live like they make $60,000. That translates into freedom and experiencing more life—and that’s something we could all get very excited about.”
To sign up his first merchant, Andrew simply went downstairs. The owners of Motel Bar, a restaurant and bar on the ground floor of Echo’s Montgomery Ward building, readily agreed to do a deal offer. In October 2008, Andrew put together the first Groupon, a two-for-one on Motel Bar pizzas. Customers would pay The Point and receive a voucher through the site, which they would redeem later at the restaurant. The Point would send Motel Bar its share of the proceeds.
“We could make life better for small-business owners and increase buying power significantly for consumers. Somebody who makes $30,000 a year can live like they make $60,000.”
“We went from idea to launched product in just over a month,” Andrew says. “And it was a success—25 people had to buy in, and it tipped.”
Encouraged, Andrew tried more deals. But in 2008, Groupons were still a sideline to The Point. Revenue for the year was just $5,000.
For Andrew, a couple of key deals that came shortly afterward demonstrated the potential of Groupons. One was for a stay in a sensory deprivation tank, an offbeat service Andrew was unsure would sell—but it did. Another notable offer was for a $180 tooth-whitening treatment, a much higher price than Andrew had yet tried. When hundreds of people signed up, the team knew Groupons could be a real revenue stream for The Point.
“We realized we’d tapped into this insane demand,” says Eric. “People wanted to go skydiving, try that massage parlor, become a member of the Art Institute, or go on an adventure trip—but they needed something to push them. Groupon was that thing.”
In January 2009, Chief Technology Officer Ken Pelletier threw a late holiday party at his small apartment for the entire The Point staff, their spouses and friends. It would be the last time the company would fit in such a small space.
“People wanted to go skydiving, try that massage parlor, become a member of the Art Institute, or go on an adventure trip—but they needed something to push them. Groupon was that thing.”
It was clear Groupon wasn’t a revenue model for The Point—Groupon was the point. The company was reorganized and renamed that month, with Brad serving as a director. One year later, Groupon would have 300 employees. The year after that, Groupon would have a staff of 5,000.
A bumpy ride on a hockey stick
Chicago clearly loved Groupon, snapping up $100,000 worth of deals in the first quarter of 2009. It was time to test Groupon deals in another market to see if Groupon would work beyond the founders’ home
Each deal would last only one day, so customers could buy quickly. He’d sell only one deal a day, which would allow for a focused marketing effort. There would be a tipping point for each deal that the merchant could set. If enough customers didn’t buy the deal, nobody got it.
It wasn’t hard to come up with a name. The product was a “group coupon,” or Groupon for short. At first the name was “Get Your Groupon.”
The local-deal idea offered a revolutionary new way small merchants could affordably advertise online. Groupon also used the Internet in a novel way that NEA’s Weller says grabbed his interest: instead of encouraging people to stay home and online, it encouraged them to go out and experience new things in their community. It wasn’t world peace, but it was a positive goal.
“We could make life better for small-business owners and increase buying power significantly for consumers,” Andrew says. “Somebody who makes $30,000 a year can live like they make $60,000. That translates into freedom and experiencing more life—and that’s something we could all get very excited about.”
To sign up his first merchant, Andrew simply went downstairs. The owners of Motel Bar, a restaurant and bar on the ground floor of Echo’s Montgomery Ward building, readily agreed to do a deal offer. In October 2008, Andrew put together the first Groupon, a two-for-one on Motel Bar pizzas. Customers would pay The Point and receive a voucher through the site, which they would redeem later at the restaurant. The Point would send Motel Bar its share of the proceeds.
“We could make life better for small-business owners and increase buying power significantly for consumers. Somebody who makes $30,000 a year can live like they make $60,000.”
“We went from idea to launched product in just over a month,” Andrew says. “And it was a success—25 people had to buy in, and it tipped.”
Encouraged, Andrew tried more deals. But in 2008, Groupons were still a sideline to The Point. Revenue for the year was just $5,000.
For Andrew, a couple of key deals that came shortly afterward demonstrated the potential of Groupons. One was for a stay in a sensory deprivation tank, an offbeat service Andrew was unsure would sell—but it did. Another notable offer was for a $180 tooth-whitening treatment, a much higher price than Andrew had yet tried. When hundreds of people signed up, the team knew Groupons could be a real revenue stream for The Point.
“We realized we’d tapped into this insane demand,” says Eric. “People wanted to go skydiving, try that massage parlor, become a member of the Art Institute, or go on an adventure trip—but they needed something to push them. Groupon was that thing.”
In January 2009, Chief Technology Officer Ken Pelletier threw a late holiday party at his small apartment for the entire The Point staff, their spouses and friends. It would be the last time the company would fit in such a small space.
“People wanted to go skydiving, try that massage parlor, become a member of the Art Institute, or go on an adventure trip—but they needed something to push them. Groupon was that thing.”
It was clear Groupon wasn’t a revenue model for The Point—Groupon was the point. The company was reorganized and renamed that month, with Brad serving as a director. One year later, Groupon would have 300 employees. The year after that, Groupon would have a staff of 5,000.
A bumpy ride on a hockey stick
Chicago clearly loved Groupon, snapping up $100,000 worth of deals in the first quarter of 2009. It was time to test Groupon deals in another market to see if Groupon would work beyond the founders’ home
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