CHARLIE ROSE INTERVIEWS ANDREW MASON [GROUPON]

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At least Mark Zuckerberg wrote a few lines of computer code at Harvard before he left to launch Facebook. Now Andrew Mason, a relaxed and lanky 29-year-old music major from Northwestern, has managed to build the fastest-growing company in web history.

Groupon represents what the dot-com boom was supposed to be all about: huge sales, easy profits and solid connection between bricks-and-mortar retailers and online consumers.  The company is on track to pass US$500 million in revenue this year, according to a report Morgan Stanley put together to win some underwriting business.

No technology stalwart – including Ebay, Amazon.com, Yahoo, AOL and Google – grew that big that fast. At just 17 months old in April Groupon boasted a US$1.35 billion valuation when it raised US$135 million, the biggest chunk of it from Digital Sky Technologies, the curious Moscow investment fund behind Facebook and Zynga. (Mason will not disclose his stake, which he says is less than 50 per cent.) The only company to reach a US$1 billion valuation faster was YouTube (now part of Google), founded in 2005 and still waiting to turn its first profit. Groupon broke into the black just seven months after inception.

Mason’s model is transforming the way companies – especially smaller ones with limited marketing budgets – snag sales. In May Groupon sold 6561 tickets to a King Tut exhibit in New York’s Times Square for US$18 apiece, little more than half the list price. The campaign brought in US$120,000 at virtually no marginal cost to the exhibit; Groupon pocketed about 50 per cent for a day’s effort. The most popular item so far: a US$25 ticket for a Chicago architectural boat tour sold for US$12. In May Groupon moved 19,822 tickets in eight hours and split the US$238,000 with the tour operator.

Landing a Groupon deal, even at a loss, can put a small business on the map. In March East Coast Aero Club, a flight school in Bedford, Massachusetts, offered introductory helicopter flying lessons, normally priced at US$225, for US$69. The deal had to be shut down at 11am after subscribers signed up for 2500 lessons; the club had expected perhaps 200.

“I knew we had a problem when I checked in right after receiving the e-mail and 30 lessons had already been sold,” recalls Philip Greenspun, the head helicopter instructor. “We look at this as incredibly effective advertising.”

Groupon is on pace to pull in $1 billion in sales faster than any company in history. This list excludes investment holding companies (which tend to be preassembled before formally launching) and those built mainly through mergers or acquisitions.

 

culled from Forbes.com
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