According to several sources close to the founding of Groupon, it was actually The Point’s chairman, Eric Lefkofsky, who pushed the idea that the company should focus on group-buying – not Groupon founder and CEO Andrew Mason.
During The Point’s early days, Mason, Lefkofsky, and and Lefkofsky ‘s business partner, Brad Keywell would meet with select executives to discuss the company’s progress.
One Monday, in the middle of 2008, Lefkofsky started pushing an idea he thought could revitalize the struggling start-up. The idea was based on a campaign he’d seen launched on The Point.
Ordinarily, people used The Point to organise around some sort of cause that might make the world a better place.
But in this case, a group of users decided their cause should be saving money. Their plan was to round up 20 or so people who all wanted to buy the same product and see if they could get a group discount.
“Eric said maybe this is the thing that we do,” says a source who was at the meeting. “Maybe we set up a separate page, make it dedicated to group buying.”
In his intitial business plan for The Point, Andrew Mason had actually mentionend group-buying as a possibile way the startup could eventually make money. But when Lefkofsky brought it up more than a year later, Mason and The Point’s other early executives dismissed the idea. “It didn’t seem core to our mission,” says the person who was at the meeting.
Through the rest of the summer and early fall of 2008, Lefkofsky would not let that idea go. He’d bring up all the expensive purses his wife and all her friends were buying, and say, “It’s crazy! Couldn’t they buy 20 of them and get a discount?”
Around this time, the global economy entered free-fall as the sub-prime mortgage crisis exploded and credit markets ground to a halt. Then in September 2008, Lehman Brothers filed for bankruptcy and famous Silicon Valley venture capital firm Sequoia sent out a presentation called “R.I.P. Good Times.” Mason and Lefkofsky decided to lay some people off.
“There was this pressure from the market crash [and] looking at our burn rate and revenue — it was time for us to try something to scratch that itch,” says a source close to early employees.
Groupon was born.
It should be said that sources do credit Mason for coming up with some of Groupon’s defining characteristics: that it’s one deal a day, that the deal doesn’t go into effect until enough people buy the voucher, and that the vouchers should be for local businesses.
It should also be said that Lefkofsky didn’t invent anything new. Group-buying web sites have been around for a long time.
But the fact is, he was The Point’s primary advocate for pivoting into group-buying.
Update: Two sources close to the founding of The Point and Groupon reached us to say that group-buying had been mentioned in Andrew Mason’s original business plan for The Point.
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