Growing Pains at Groupon

As an undergraduate music major at Northwestern University, Andrew Mason eagerly sought a version of rock music that would fuse punk with the Beatles and Cat Stevens. Little did he imagine that within ten years he would be the CEO of one of history’s fastest growing businesses. After Northwestern and faded dreams of rock stardom, Mason, a self-taught computer programmer, was hired to write code by the Chicago firm InnerWorkings. InnerWorkings was founded in 2001 by Eric Lefkofsky who had built several businesses around call centers and the Internet. In 2006, Lefkofsky became interested in an idea of Mason’s for a website that would act as a social media platform to bring people together with a common interest in some problem—most often some sort of social cause. Lefkofsky provided Mason with $1 million of capital to develop the concept that became known as “The Point.”
Virtually no one associated with The Point initially envisioned commercial aspirations for the venture. In the fall of 2008, at the height of financial crisis, ventures with little or no commercial aspirations were in jeopardy. Lefkofsky and Mason faced a decision on how to proceed with The Point. Lefkofsky seized on an idea proposed by a group of users on The Point. This group attempted to identify a number of people who wanted to buy the same product, and then approach a seller for a group discount. Mason had originally mentioned group-buying as one application of The Point, and now Lefkofsky latched onto the concept and pursued it relentlessly. In response, Mason and his employees began a side project that they named Groupon.
The business plan was relatively simple. Groupon offered vouchers via e-mail to its subscriber base that would provide discounts at local merchants. The vouchers were issued only after a critical number of subscribers expressed interest. At that