Since launching in November 2008, Groupon has seen insane growth. “A year ago at this time, we were in 5 or 6 cities,” the social-coupon site’s CEO Andrew Mason said this morning at TechCrunch’s Social Currency Crunchup
. “Now we’re in 170 cities and have about 5000 users,” Mason said. “Now we have 12 million users, and are adding 50 employees in the U.S. every month.”
Groupon started in a completely different space: as an organizing and action space.
“It started as a way for one person to get several people to help do something, for example, we had a group raising funds to build a dome over Chicago for winters," Mason said. "But people were also using the site for buying things, so we introduced coupons for revenue."
“The success took us by surprise, too,” Mason said.
The first few things Groupon tried to sell didn’t work.
“We had these slippers with flashlights,” Mason said. “About half of the people who bought them sent them back.”
Flashforward from that failure to this figure: 97 percent of businesses who are now featured by Groupon want to be featured again.
“Businesses see it as the most important form of local advertising there is,” Mason said. “They’re not handing over a check, but only paying when a customer walks in the door. For merchants with a low marketing budget, it’s great. “
Groupon sees its role as larger than that of just a coupon provider.
“We’re like a city guide, but we have this deal to nudge people to do things,” Mason said.
Mason wants Groupon to promote local hidden gems. You can think of it as a carrotmob at a glacial scale.
Chances are, Groupon won’t be around forever, seeing as its success is dependent upon social tools that will soon become vestiges. But it’s perfect for the content-sharing Web 2 moment.
Another part of Groupon’s success is that the majority of people who purchase a groupon, use it.
“We don’t build ourselves around breakage, because we think that’s a bad business model," Mason said. "About 10 percent of customers don’t redeem coupons. Businesses don’t want breakage. “
“The stuff that we’re selling is inherently social,” Mason said. “There’s a natural incentive to share it with people, and Facebook and Twitter make it frictionless model to share.”
Even though Groupon is less than two years old, there are already more than 500 Groupon clones. But Mason doesn’t mind this, and actually thinks there is a place for them.
“The reason a business turns to the clones is because we’ve turned away that business,” Mason said.