Groupon was born from The Point, an online fundraising startup founded by Andrew Mason. People donated their money and saw others donating The progress towards the goals made it more reliable, but that startup was still a failure.
One good thing about it was group deals, and that's when the idea of Groupon was born. Mason's team called hundreds of vendors to get new group deals and put them on their website. The first deal bought (by 20 people) on Groupon was two pizzas for the price of one. The vendor with that deal was placed at Groupon's HQ.
The Point ran on what Mason called the tipping point principle: using social media to organize enough people around a cause that the group's combined weight could get something done. It found only modest traction in Chicago, until a group of users started repurposing that same mechanic for something more practical, pooling orders to get a lower price on things they wanted to buy anyway. Mason had actually listed group buying as a possible business line in The Point's original plan, but when Eric Lefkofsky, the investor behind the company, raised the idea again more than a year later, Mason and his early executives waved it off as not core to the mission.
The idea kept resurfacing because the timing forced it. By September 2008 the financial crisis had hit hard enough that Lefkofsky and Mason were laying off staff and watching their burn rate. Group buying went from a side idea Mason's own team had dismissed to the thing worth trying because the company needed a reason to survive. Groupon launched that November, running its first deal out of Motel Bar, the restaurant on the first floor of the same building Groupon worked out of in Chicago.
- Groupon's US monthly revenue went from $11 million in January 2010 to $89 million by January 2011.
- By October 2010 it operated in 150 cities in North America and 100 more across Europe, Asia and South America, with 35 million registered users.
- Yahoo reportedly floated more than $3 billion for the company in October 2010, then Google offered $5.3 billion plus a $700 million earnout that November.
- Groupon's board rejected Google's offer in December 2010 and took the company public instead.