Groupon grew from a staff of a few dozen to over 350. Revenue and bookings also grew swiftly, and the company was valued at over $1 billion after just 16 months in business, the fastest company ever to reach this milestone.[20]
A little-known Midwest company called The Point became the fastest-growing company ever up until that age.
By developing a collective coupon, the idea that if a certain number of people agreed to buy a product or a service, all of them would receive a discount, the Point surged on explosive viral growth.
One problem with the Groupon model: Anyone can replicate it. More than 200 copycat sites have sprung up in the U.S., with another 500 overseas, including 100 in China.
— Forbes
Fast growth brought with it tremendous competition. At the time, U.S. press reported there were a thousand Chinese copycats in China & at least 200 within the U.S.
The AI gold rush is on.
It’s a gold rush with Groupon-like characteristics.
Just as daily deals transformed commerce overnight, AI has fundamentally altered how companies acquire customers. Consumers’ insatiable curiosity about AI’s transformational change drives huge volumes of avid buyers with wallets in hand.
In the Groupon era, the cost to try many of these solutions was quite small, & the initial retention could be quite low, particularly in product-led growth companies. Consumers flitted to whichever platform had the best deal.
Likewise in AI. Who has the best model? Let’s try that. Who has the better workflow engine? Let’s try that. The differences with each new iteration are significant enough to try before settling.
As the performance improvements plateau, however, this rabid desire to try newness will attenuate.
But don’t mistake this dissipation of interest for value destruction.
There is lasting value within distribution. The ability to cross-sell to a massive audience acquired inexpensively is a fundamental & sustaining competitive advantage, both in consumer & software.
Fifteen years after the Groupon era, Groupon is worth about $2 billion, but within China, where the competition was more intense, a massive conglomerate called Mei Tuan is now worth $97 billion, converting the initial distribution into a conglomerate. The others? Time has not been kind enough to remember their names.
Decrying this wave of innovation & its inevitable transformation undervalues its disruptive force.
These singular platform shifts can produce massive businesses. They can produce many companies who are unable to convert initial distribution into longer-term sustainable businesses.
The key is finding great leaders who can both manage the wave, acquire large audiences, & iterate to sustainable businesses.