The biggest trend to come out of the eCommerce world in the last 12 months has been the rise of US group buying website Groupon, and its army of imitators, including more than a dozen in Australia.
As Patrick Stafford wrote in his brilliant exploration of the Australian group buying sector, the rise of these sites – the first of which launched in April – has something of a bubble feel to it.
When everybody rushes to do the same thing, and big companies start investing big money to do it, it can be a recipe for trouble.
But the hype shows no signs of abating.
As we reported yesterday, rumours started on the weekend that Google was set to buy Groupon for $US2.5 billion.
But overnight, respected publications such as the New York Times and the Wall Street Journal began reporting that Google may pay as much as $5-6 billion for Groupon in a deal that would be one of the biggest tech stories of the year.
If the price is right – and it does seem a little high for a business with a reported $US350 million in revenue and very low barriers to entry, as we’ve seen in Australia – then it would make the two men behind Groupon into instant billionaires.
The company, which was started in 2008, was founded by Eric Lefkofsky and Andrew Mason, who previously worked at a business called InnerWorkings in Chicago. Lefkofsky, the founder of InnerWorkings, gave Mason $1 million in angel capital to launch Groupon.
According to Forbes, Lefkofsky still retains 35% of the company, which would make his stake worth $US1.5 billion even at the lower $US5 billion valuation.
Mason, who is aged just 29, would be worth $US1 billion thanks to his 20% stake.
So what do we know about Mason? Well, not that much, given he has only risen to prominence in the last 12 months.
According to a profile piece in the Chicago Magazine in August, Mason started a Saturday morning delivery service called Bagel Express at the age of 15, but his real passion was music, which he studied at Northwestern University. After college, he went to work as a web designer at InnerWorkings, and then met up with Lefkofsky.
Mason comes across as a bit of an unconventional entrepreneur and CEO. He says he doesn’t consider himself to be an entrepreneur, and instead says he is just someone who likes to “build things and do things”.
One of the funniest stories I’ve seen is how he once spread a rumour that he owned 200 cats.
“Most CEOs will make stuff up about themselves to sound way smarter and cooler and people are disappointed to find out otherwise,” he explained in a later television interview.
“I decided to set the bar very low and make up lies about myself that make me sound lame.”
But the overall sense you get from reading interviews with Mason is that he can’t quite believe this is all happening to him and his little company.
“It’s an exciting time, and even though it’s unbelievable to me, I’m enjoying it. Not that long ago, I never imagined being involved in anything like this. But life is full of surprises.”
In a few days, his life could also be full of cash.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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