CouponsAct

Groupon taps into the energy of online social networking, but combines it with something grandma would understand — saving money with coupons. The company has seen astounding growth in the past year-and-a-half, beginning in its home base of Chicago, then spreading to 65 cities across America — including Pittsburgh in January — and 80 cities across Europe.

The company’s founder and CEO, Andrew Mason, 29, grew up in Mt. Lebanon, before moving to Chicago for college. He explains Groupon as a “a local shopping site,” tailored specifically to each city in which it operates.

“Every day, we feature one local business — it could be a restaurant, theater, spa, skydiving, just about anything cool to do in the city,” he says. “And we sell a gift certificate at a huge discount — 50, 60, 70 percent off, that you can buy, but only on that day, and then it’s treated like cash.”

Groupon.com offers a different gift certificate each day, which can be purchased or ignored. A recent deal featured $60 worth of food and drink at Bangkok Balcony, a popular Thai restaurant in Squirrel Hill, for $25. The deal lasts for only a day, ending at midnight. Once purchased, it’s typically good for a long time, ranging from several months to a year.

Despite the steep discount, it’s viable for merchants because of the numbers involved. If the number of buyers doesn’t reach a set level, the deal is canceled, and nobody is charged.

“We accumulate a huge group of people in order to buy each deal, and that’s how we get the great prices — by promising the merchant a really large number of new customers,” Mason says. “The whole group-buying thing — that a minimum number of people need to sign on — was essential, especially in the early days, in order to get merchants comfortable with this. … Now, we often sell so many that the minimum doesn’t matter.”

Catherine Batcho’s Cut & Sew Studio in East Liberty was featured recently — $50 worth of sewing classes for $25.

“I had a lot of people call who said they hadn’t known about me until seeing Groupon,” Batcho says. “My Intro to Sewing class has filled up for the next two months, pretty much. Just a spot or two is available. People have a year to redeem it. My idea is to see how many people spend beyond the Groupon. And I’ve already found that people have signed up for things beyond what the Groupon offers. I think I’d probably do it again.”

Mason actually began as a community organizer, not an Internet capitalist. Groupon evolved out of The Point, a website he designed to help activists connect and raise money, sign petitions and organize events.

“Just as a side project, we started playing around with ‘a deal a day,’ and it just took off, under this different name, Groupon,” Mason says. “It started in Chicago and just went crazy — but we were a coupon site, and no longer trying to save the world.”

“But in some ways, we’re doing so much more good with Groupon than we ever were with The Point. It ends up being an awesome way to get people out of the house, going into the city, having new experiences. We hear from customers all the time who say how it helps them be more social.”

Groupon is closing in on 5 million users. There already are signs that it’s changing many people’s shopping and social habits.

“A lot of people work Groupon into their lives by using it as a city guide, a way to discover things around them,” Mason says. “The cool thing we do is we give you the nudge you need — to do it, instead of just read about it.”

“People call it ‘social commerce,’ ” Mason says. “We think of Groupon as an e-commerce layer that sits on top of the social (media) graph — meaning, the infrastructure that’s been laid by Facebook and Twitter. All of our content is inherently social. When you get that Groupon, your impulse is to share it. Tools like Facebook and Twitter ease the friction of that type of sharing, in a way that has allowed us to grow at an unbelievable pace.”

Of course, there’s no guarantee Groupon’s success will continue. Getting there first isn’t everything in social media, and it’s easy to go from pioneer to has-been. Already, there are dozens of competitors. Then there are the day-to-day concerns of finding quality businesses to feature every day.

“We research every business we feature, and we turn away businesses all the time,” Mason says. “We need some source of external credibility. So, if the business has never been reviewed anywhere, the owner has no history as a businessperson who builds good companies, we won’t run them.”

Mason thinks Groupon is especially suited to a place like his old hometown.

“Every time I go back there, it seems more awesome,” he says. “The city becomes more vibrant. There, more than most places, (seems to be) a reversal of the suburban sprawl. More and more, Pittsburgh has an awesome urban life. But there’s still lots going on in suburbs, and more and more, we’d like to go increasingly hyper-local and serve people out there.”

By: Michael Machosky

From: Pitsburg Tribune