

How Google can beat Groupon: Algorithmic Price-Sensivitiy Quotients - ahmadalia
http://www.ahmadalia.com/blog/2011/01/google-groupon-strategy.html

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alanh
I’m so tired of “How Google can…” and “What Google should do to…” posts.
Enough already?

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ahmadalia
I agree. The problem is, no one will look at your work, profound as it might
perhaps be, if you give it a boring title like 'A price discrimination degree
transformation framework for understanding Groupon'. Trust me. I've tried
already. Do you have any better suggestions?

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zmitri
I think less verbiage would help a lot in the case of this article. You would
get to the point much quicker and people would 'read' it instead of just give
it a quick glance over.

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ahmadalia
Agreed. Thanks.

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trentonl
How Google can beat Groupon: take 4 of the best developers, rent an apartment
in Palo Alto, wait 3 months, take the Groupon clone they create and give
everyone in the US $10 to signup: [http://www.cringely.com/2011/01/bring-me-
the-head-of-eric-sc...](http://www.cringely.com/2011/01/bring-me-the-head-of-
eric-schmidt/)

~~~
diziet
Funny, but how do you get four developers to find the deals for the
100,000,000 americans and talk to the local businesses and administrate
everything and and and..!

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ahmadalia
His recommendation is brilliant. No one is saying that the platform the 4
engineers build has to be identical to Groupon's.

Do you know why Groupon needed a $950 million round? Because scaling the
business model requires the scaling of the sales and service organization. And
that requires a lot of cash and working capital. Finances are the limiting
mechanism on how fast they can grow.

Also, their centralized sales and service organization, cloistered in their
Chicago office, is not going to be as knowledgeable of local markets as
natives. Local folk will always have an advantage in forging relationships
with merchants.

The point?

If the platform the 4 engineers build externalizes the merchant facing
function (sales/service) to local affiliates who are far better positioned to
do it - and incidentally adheres to Google's own model of just being a
platform - Google won't have to invest in building a sales and service
organization.

Local affiliates would deal with the merchants, do the marketing, sign the
contracts, and do all the promotional design - essentially all the stuff done
by the merchant facing side of Groupon - all for less than the 50% of revs,
and would then use the Google platform to push out deals.

The platform could follow an auction model like their current Adwords and
Adsense platform. Local affiliates would bid to run the Google daily deal for
their area.

Groupon's business model is only version 1.0. If they don't innovate, they
will be in trouble.

