Andrew Mason on the Future of Groupon
Despite a valuation of some $12.5 billion, Groupon has yet to turn a profit. But CEO Andrew Mason sidestepped questions about whether his investors are restless.
"We have decided—along with our investors—that local commerce is an enormous opportunity and [that] we should invest in our long-term success in that opportunity," Mason told Spiegel Online. "Our investors are focusing more on building long-term shareholder value."
Mason bristled when asked if he knew when he'd be allowed to sell his stock." If you're implying with your question whether I count the days, I do not," he said. He also noted: "Financially, I've achieved all I ever wanted to achieve."
The 32-year-old founder also dismissed a frequent criticism of analysts that the company's business model is too easy to copy by pointing out large Internet companies who failed or reduced the scope of their efforts to compete, among them OpenTable, Facebook, Yelp, and TravelZoo. "What those companies have found is that the barriers to enter this business are quite low, but [that] the barriers to success are equally high," he said.
The business is more complex than it may appear, he said: Groupon has salespeople in 47 countries, negotiating deals with a quarter of a million merchants, and "at the same time, [we are] innovating [and] thinking about what Groupon will become in three or five years. It's a full time project."
The company is investing heavily in mobile couponing—it recently announced a partnership with Deutsche Telekom, for example. He said: "All the trends show that e-mail usage among the younger cohorts of Internet users is declining. Whether it will take five or 30 years for e-mail to go extinct, I'm not sure. But a lot of our work is making the Groupon website just as powerfully a pull experience, rather than just a push one, as well as making investments in mobile."
He does not fear Google or any other large company that might attempt to take on Groupon. "Local commerce is an enormous market, so there's room for plenty of winners," he said. "And, second, I don't think it would be that easy for [Google] to spin off a sales force over night."
With mobile couponing, Mason predicts a world where the price of, for example, a hamburger will depend on the time of day—what the demand is at any given moment, will dictate what coupons local businesses will offer.
To critics who say that small businesses will lose out if people can compare prices online, and that the businesses may be forced to charge prices that are too low just to compete, Mason said: "Even if a business might make a little less on each hamburger, they'll sell enough additional hamburgers to far outweigh the reduced margin. Think about how much food merchants and restaurants throw away. Think about how many empty shops you see walking down Main Street in your town. Right now, 80 percent of businesses are 20 percent full. That's the problem we're trying to solve."
Inc. contributing editor Courtney Rubin was for five years a London-based staff writer for People magazine. Rubin, a former senior writer for Washingtonian magazine, has written for the New York Times magazine, Time, Marie Claire, and other publications. She is the author of The Weight-Loss Diaries.