The idea for Groupon was created by now-CEO and Pittsburgh native Andrew Mason. The idea subsequently gained the attention of his former employer, Eric Lefkofsky, who provided $1 million in "seed money" to develop the idea. In April 2010, the company was valued at $1.35 billion. According to a report conducted by Groupon's marketing association and reported in Forbes Magazine, which was reported by the Wall Street Journal, Groupon is "projecting that the company is on pace to make $1 billion in sales faster than any other business, ever".
Business model
The company offers one "Groupon" ("group coupon") per day in each of the markets it serves. The Groupon works as an assurance contract using ThePoint's platform: if a certain number of people sign up for the offer, then the deal becomes available to all; if the predetermined minimum is not met, no one gets the deal that day. This reduces risk for retailers, who can treat the coupons as quantity discounts as well as sales promotion tools. Groupon makes money by keeping approximately half the money the customer pays for the coupon.
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