The tech industry has a total crush on Groupon, that darling of the start-up scene that emails you huge discounts on everything from Gap jeans to gym memberships. Now that Google is about to acquire the Chicago-based start-up for billions of dollars, it’s like the tech blogs are all competing to see who can gush the most about how great Groupon is and how smart Google is for wanting to acquire them. It’s really not that big of a deal – how many times have we seen this kind of Cinderella story before?
Though I don’t find the acquisition all that interesting, I’m fascinated by the concept of Groupon, mainly for the incredible opportunity they missed. On the surface, Groupon seems to be about killer deals. They negotiate huge discounts with national and local businesses in exchange for the promise of thousands of new customers – pay $25 and get $50 worth of Thai food, for example, or pay $60 for a normally $250 dental exam. It’s a classic loss-leader tactic – gain new customers at a loss in hopes that they return and generate more business later.
When you take a closer look at Groupon’s phenomenal success, though, there’s a lot more going on than just bargains. Groupon was one of the first companies to successfully harness the power of group behavior across the social web in the name of a common purpose. That’s incredibly powerful! Think of the potential – for the first time in history, the physical barriers to collective, powerful action have been torn down, and Groupon figured out how to focus that power into a single, common goal. That’s huge!
