“Anyone can start a Groupon” and other startup myths

I think for you, "starting a groupon" just implies the tech- the post acknowledges the trivial technical hurdle and argues that the real obstacle is the $30 per email sub. It's not real until you are actually making money on deals, and the cost per email is the real bottleneck.

I think this is incorrect. Before Groupon was Groupon, they were The Point. A company that applied the same social tipping-point approach to consumer and political organizing. Think "if 2,000 people all agree, we'll donate $10 each to the WWF." Or march on city hall. This was powered by a RoR app that Ken Pelletier and a small team built. I'm fairly certain that the early tests of Groupon leveraged this app. If so, the early version of Groupon was powered by tech far more substantial and purpose-built than Wordpress.

The post specifically mentioned a valid strategy as going after other geographies where groupon is not currently operating.

I spoke with the CEO of a company that aggregates a very large percentage of the daily deal sites. They have several hundred they currently follow. Two things which may be salient. First, the CEO claimed that the smaller deal sites were all desperate to be aggregated, as building their list has proven to be far more expensive than they expected. Second, the aggregator is seeing a 30% annual turnover in the deal site population. That is, approximately 1/3rd of deal sites go under annually and are replaced by a like number of newly launched companies.

I interpret this as evidence that the lion's share of the market is likely to go to a few large players like Groupon, Living Social, Facebook, etc. It's been 2.5 years since Groupon launched. If smaller players were going to successfully carve up this market, wouldn't we see signs of that happening by now?

I don't think Andrew's being literal. Of course you could START a groupon tomorrow.

What he's saying is that 85 million subscribers at a current acquisition cost of $30 (!) is a helluva moat.

Yep. I've seen it in some other industries as well, particularly with auction markets like AdWords. One company will figure out a novel PPC strategy that pays out considerably more in profit than than it costs to acquire a customer. If this strategy also scales, it's a license to print money for a time. Problem is, competitors notice and mimic the same strategy, bidding up the price of the ad units in question (keywords, what have you) until it cost of acquisition is very close to the lifetime value of the acquired customer. It's not so much that the competition buys up all the inventory (although that happens if you don't pay attention) but that the price of the good inventory soars for everyone. So more value gets captured by the publisher of the ad units and less by the buyer.

Even though theoretically what you are saying is correct. In reality however the tremendous investment group on has done in the building up the sales power provides them with more defensibility than you would think.

For example - A vendor is parting away with some money for every new customers. She could have used the same money via adwords? Still lot of these merchants may not have even tried adwords before. There in comes the power of having reach to direct markets.

Of course sales power doesnot provide as good protection against competition as technology or even UX, but that does not mean we can write off Group on that easily as well.