News reports about Google's interest in coughing up $5-billion (U.S.) for Groupon not only grabbed my attention because of the sheer size but how it shows that an old idea can be given new legs with a fresh coat of paint.
For anyone not familiar with Groupon, it's a Web site that offers deep discounts on products and services if enough people decide to purchase it. For example, a massage therapist could offer a 30-minute session for $20, as long as a certain number of Groupon members accept the deal.
The benefits for companies that offer these discounts is they generate new and, hopefully, repeat customers - customers that will pay the regular price after taking advantage of the discount.
While Groupon has captured the imagination of budget-seeking consumers, online group buying is far from a new idea. At the height of the dot-com boom a decade ago, there were several start-ups pursuing the same idea.
One of them was Accompany.com, which raised $50-million in venture capital and had Netscape co-founder Marc Andreessen on its board. The company, which co-founded by Canadian Jonathan Ehrlich, was a good idea but it suffered from bad timing because not enough consumers were willing to climb on board.
Unlike Groupon, Accompany did not have the benefit of being able to use social media to spread the word about its deals. A key part of Groupon's appeal is that word of its deals can spread far and wide via social media without it having to spend any marketing dollars.
Groupon's success reflects the fact that old ideas - even those that weren't successful - can be revitalized by taking a new approach or by entering the market when consumers are ready to embrace the concept.
In many ways, the success of a new business depends on being in the right place at the right time with the right product or service. Toss in a little luck and management execution and, voila, you could have yourself a major success.
A good example is Sysomos, a social media monitoring and analytics start-up that I have been working with for the past two years. After more than three years of research and development at the University of Toronto, Sysomos launched its first social media service in late-2008 to much enthusiasm.
Over the next 18 months, the company saw impressive growth in customers and sales to the point where Toronto-based Marketwire acquired it earlier this year. Sysomos has world-class technology and services that meet the needs of customers but it probably benefited the most by launching at a time when the market was ready for it. If Sysomos had launched two years earlier or even a year afterward, perhaps it would not have enjoyed the same kind of success.
The lesson for entrepreneurs is that you don't have to invent something new to be successful. Sometimes, it is just a matter of coming up with a better mousetrap such as what Groupon did, or, like Sysomos, hitting the market at exactly the right time.
Special to The Globe and Mail
Mark Evans is a principal with ME Consulting , a content and social media strategic and tactical consultancy that creates and delivers 'stories' for companies looking to capture the attention of customers, bloggers, the media, business partners, employees and investors. Mark has worked with three start-ups - Blanketware, b5Media and PlanetEye - so he understands how they operate and what they need to do to be successful. He was a technology reporter for more than a decade with The Globe and Mail, Bloomberg News and the Financial Post. Mark is also one of the co-organizers of the mesh, meshUniversity and meshmarketing conferences.