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| Groupon |
Groupon is offering a small fraction of its stock to the public, just 4.7 percent. That is below the percentage that many prominent tech companies have offered.
The company has had a rocky road to its IPO. Groupon's IPO has gone better than expected, with shares selling $2 above the expected top price, valuing the company at almost $13bn.
In June, Groupon filed for the IPO and immediately ran into issues with an unusual accounting metric.
As Groupon Inc. hits the public markets Friday, its executives are working behind-the-scenes to shape the company in the image of another Internet pioneer: Amazon.com Inc.
Inside Groupon's Chicago's offices, Amazon has become its business-model inspiration, its IPO pitch, and even its excuse for recent troubles that pushed its value down since June.-- This summer, the company faced growing criticism for both its accounting and future prospects.--The message: Groupon, like Amazon a decade earlier, was undergoing a public trial that in time would prove short-sighted.
In the last year, Groupon Chief Executive Andrew Mason hired three top lieutenants from Amazon, including Child, who was at Amazon for 12 years and until last fall managed its international finance. Those hires, say people familiar with the matter, frequently speak about comparisons between the two companies, leading lately to a public strategy that attempts to paint Groupon as the second coming of Amazon.
Groupon once even considered an Amazon joint venture and investment, say people familiar with the matter. Mason met Amazon founder Jeff Bezos at the Allen & Co. Sun Valley investment conference in the summer of 2010.--Those talks eventually foundered, in part because Mason had many other suitors, say people familiar with the matter. Amazon ended up investing in Groupon rival, LivingSocial Inc., and launched its own Amazon-branded local deals service.
An Amazon spokeswoman declined to make Bezos available and declined to comment for this article.--That hasn't prevented Bezos from having an influence at Groupon. When Mason and Eric Lefkofsky founded Groupon in 2008, the two talked about emulating sites like Yelp Inc., Gilt Groupe Inc. and Daily Candy LLC, says a person familiar with the matter.
Like Bezos, Mason has been unapologetic about spending big before he can point to profits. Amazon listed on the Nasdaq Stock Market in 1997 but didn't turn a profit until the fourth quarter of 2001. The Amazon model of heavy early investments began to help inform that strategy, one of those people said.
In November 2010, in the midst of negotiations over a buyout offer from Google Inc. (GOOG), Mason borrowed another move from the Amazon playbook: becoming a platform.
Early in its history, Amazon launched a marketplace for third-party sellers to peddle goods on the site, and they now represent a third of Amazon's volume. Similarly, in the summer of 2010, programmers working in a large tent at Groupon's headquarters began working on a mobile version of Groupon that was part of a shift from a deal-of-the-day site to an all-purpose retailer where merchants could post their own deals.
By the time that launched, Mason had solidified the Amazon metaphor: "We want to do for buying at local businesses what Amazon did for buying online," Mason said a year ago.
Since then, Groupon has filled its top ranks with Amazon alumni. In addition to Child, Mason acquired a company owned by former Amazon senior executive Jeff Holden, who had spent nine years building Amazon's e-commerce services, and promoted him to senior vice president of product management. Groupon poached Rich Williams from Amazon to be Groupon's senior vice president of global marketing after his nearly four years of running marketing and advertising.
Even if Groupon does track Amazon, its path may bring the same tough times that Bezos went through. To build Amazon's dominant position and beat out hundreds of other e-commerce startups, Bezos spent heavily for nearly a decade on marketing and fulfillment infrastructure. "Groupon doesn't have that."
Unlike Bezos, who worked at investment house D.E. Shaw & Co. before founding Amazon, Mason is a college music major who never set out to make a lot of money in business. The original business that gave rise to Groupon was designed for nonprofits.
In the first few months of preparing for the IPO, Mason largely relegated financial decisions to Lefkofsky, say people familiar with the matter. But over the summer Mason changed course, and become increasingly responsible for running Groupon's financial matters, one of those people said, and wore a suit and silver tie for an online presentation to potential investors.
Amid criticism of its business model, Groupon has very publicly called attentions to its Amazon-like strategy. During its IPO road show, Holden told potential investors that the "parallels between Amazon and Groupon are amazing." Just as Amazon created a new platform to retail goods online, he argued, Groupon is poised to become the world's "commerce operating system" for local businesses. As Groupon Inc. hits the public markets Friday, its executives are working behind-the-scenes to shape the company in the image of another Internet pioneer: Amazon.com Inc.
Inside Groupon's Chicago's offices, Amazon has become its business-model inspiration, its IPO pitch, and even its excuse for recent troubles that pushed its value down since June.--This summer, the company faced growing criticism for both its accounting and future prospects.--The message: Groupon, like Amazon a decade earlier, was undergoing a public trial that in time would prove short-sighted.
In the last year, Groupon Chief Executive Andrew Mason hired three top lieutenants from Amazon, including Child, who was at Amazon for 12 years and until last fall managed its international finance. Those hires, say people familiar with the matter, frequently speak about comparisons between the two companies, leading lately to a public strategy that attempts to paint Groupon as the second coming of Amazon.
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