For Startups To Succeed Means to Evolve

by Nathaniel Whittemore

Published November 05, 2009 @ 03:36PM PT

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PayPal started as a payment and cryptography platform for palm pilots. Apple - perhaps the savviest consumer company of our era - began by selling assemble-it-yourself computer kits for the uber geeky. Change.org started without any of the content features through which I'm now writing this post. In the land of startups, the ability to adapt and seize new opportunities is perhaps the essential required skill.

I was thrilled yesterday to see a Wired piece on Groupon, the group-purchasing tool for local services. Every day, Groupon emails its subscribers a new offer, or "Groupon." A Groupon is a certain service - like a massage, or a dinner or something else - that has a discount included. The Groupon is only applicable, however, if a certain threshold of people sign up for it.

In that way, the services harness collective buying power to enable businesses to reduce cost in a great big exciting circle. Launched just a year ago, the service now has over a million subscribers, operates in 23 cities, and has sold 600,000 Groupons.

I've known the folks behind Groupon (including a fellow Northwestern University alumni) for a couple years now. It evolved from Thepoint.com, a site that was all about harnessing "reverse auction" models and tipping points for collective action. The idea behind The Point is that sometimes, every little bit doesn't count, and if a certain threshold isn't reached, then its effectively no different than not using any resources. An example would be a well project that needs $10,000 to happen. If it costs $10,000, then $9,000 raised just isn't going to cut it.

The Point accomplished some very cool things, and is still a valuable platform, but it never took off the way that I thought it would. While they haven't shut it down, it's clear that their focus is largely in Groupon right now.

Interestingly enough, they haven't left their community-oriented mission behind. Founder Andrew Mason commented that while originally he just figured that Groupon would fund more social missions, what he heard from his customers made him rethink: “What surprised me was that we got e-mails from people saying it wasn’t just about getting a discount, it was about helping us get out in the city. People said, ‘We go on more dates.’ Groupon was getting people out from the couch and that was a fulfilling purpose. In some ways it’s more impactful than The Point.”

One more notch in the belt of evolution. So what's in the future? According to Wired, maybe Groupon Healthcare?