A new word is about to enter the Las Vegas lexicon: Groupon.
It's not only a business, but also a noun used to refer to a group coupon, just like it sounds. Here's how it works: A deal is offered online and will look something like, "Get $50 of wine at The Geriatric Grape Wine Bar for $25 (wine bar name made up by author for the purpose of the story)." Or "Get $100 at Uncle Tykie's Sushi and Ribs for $50 (restaurant name made up by author for the purpose of this story)." The deal hinges on a certain number of people buying in—a tipping point, if you will. If it doesn't reach that number then it fizzles (the number is determined by the business and Groupon).
A Chicago skydiving company serves as an example of the brute force of group buying. Groupon offered a 44 percent discount on the $229 price of skydiving. In a single day, 1,600 people purchased the deal. That number is even more phenomenal when you consider that the company behind the offer usually sells 6,000 lessons per year. So even with the deep discount, the company (and the skydiver) comes out ahead.
- Beyond the Weekly
Las Vegas will be Groupon's 30th city when it launches January 25, and the company says that during the first few weeks, deals will revolve around wine bars, teeth cleaning, fine dining, hotels, home cleaning services, fitness and museums (Groupon declined to go into specifics, because the surprise is part of the appeal of the service, among other reasons). Founder and CEO Andrew Mason says that the response from Las Vegas has been the most enthusiastic since the company started a little more than a year ago. As of deadline the local service had yet to publish a deal, yet 30,000 had already signed up for the e-mail list. Mason attributes that to the city's transience and the locals' enthusiasm for money savings aimed at them, as much as tourists.
If other cities — like Chicago, where Groupon began — serve as any indication, within just a few months Las Vegas residents will be uttering "Groupon" with a hint of reverence, a kind of secret code word for the in-the-know crowd. Want to go to sushi tonight? I got a Groupon. And the restaurant will be excellent. That's one of the perks of Groupon—it also serves as a guide, not just your standard super-saver kind of deal. The company employs a team to research and write about the places it features, and the places it features are the types of joints that the young(ish), smart, entrepreneurial staff at Groupon endorses. "We turn away far more businesses than we actually feature," says Mason.
The idea started after Mason began the website thepoint.com, which is a collective action platform using a predetermined tipping point where people can come together and start a campaign (one campaign says that if 100,000 people sign on to "Make Election Day a National Holiday," then all involved agree to skip work and make it a de facto holiday; others raise money; some petition for change or organize events). The collective-buying response was great enough that Mason started thinking of ways to make money using a similar platform. He started Groupon in December 2008 with the goal of saving people $50,000 in the next year. "We're now at a point where we've saved people $64 million," he says. They've sold 1.2 million deals so far, and have 2.5 million subscribers.
When you consider that the company recently received a $30 million investment and was rated the No. 1 hottest website of 2010 by Fox Business, it seems its own tipping point is still a long way off.