Groupon is the fastest growing company in history. Just two years after launching the company reportedly turned down a $6 billion acquisition offer from Google. But what many people don’t know is that Groupon was launched by a social entrepreneur.
Back in 2007, 26-year-old Andrew Mason was working away on a website called The Point. The concept was that people would pledge to take some sort of social action – give money, volunteer, join a campaign – but they would only follow through on the pledge if a certain number of other people made the same pledge. This allowed someone raising money via The Point to tell a potential donor that they could pledge $100, but would only have to make the gift if at least 100 people made the same pledge. In this way the donor would know that they would only have to give the money if the nonprofit was going to get $10,000 and fully fund the project.
The Point quickly joined Social Actions and during the FORGE event in late 2008, Andrew approached me about setting up a Tactical Philanthropy community project on The Point.
It turns out that just about the same time, Andrew was launching a little side project called Groupon that would apply the tipping point concept to buying discounted goods and services. That little side project exploded in popularity and the now 29-year-old Andrew is the CEO of a multibillion dollar company.
But Andrew’s social entrepreneur roots are still solidly in place. The Point is still operating and recently Sharon Schneider argued that Groupon might be the most successful social enterprise ever. Sharon’s argument rested on the fact that Groupon deals are not just for restaurants and spas, but also drive increased traffic to nonprofit museums, offer discounts on local sustainable food and other products and services are offered by nonprofits or result in some sort of social good. For instance Groupon has offered deals on Kiva.org microfinance credits (which Oprah pointed to as a “best holiday gift”) and offered what was effectively matching funds for donations via Donorschoose.
Now Groupon is focusing directly on social impact activity. Since Groupon has dramatically higher brand awareness than The Point, the two organizations have teamed up to launch G-Team on the Groupon website.
Here’s how Groupon explains the new platform (Andrew is known for his sense of humor, telling the NY Times during the rumored Google takeover that he couldn’t talk on the record with them unless they wanted to talk about his true passion… miniature dollhouses):
“Long, long ago (2008), Groupon was born out of a group action and fundraising platform called The Point. As the Groupon community grew, our collective consumer power helped people get great deals and discover fun ways to experience their cities.
After a desert vision quest where we invoked our ancestral spirits, we are repossessed with The Point’s powers. Newly inspired, we’ve devised a way to connect Groupon users with their communities in a different way—with G-Team. Groupon followers who want to do good, have fun, and make a real impact can now join forces through G-Team campaigns.
G-Team campaigns range from ridiculous flashmobs to fundraisers that benefit local community organizations. Every G-Team campaign connects you with enough people to achieve something awesome that you couldn’t have done alone.”
G-Team isn’t just replicating The Point, it is combining the offering of Groupon and The Point.
One of the examples explaining the service is a Groupon discount where buyers can get an $80 bike tune-up for just $35 (so long as enough people sign up). However, since this is a G-Team joint effort with The Point, the offer also includes the fact that if the discount tips, a local bike cooperative will fix up 100 broken bikes and donate them to disadvantaged youth.
In some ways, G-Team looks like a cleverly designed corporate philanthropy effort. One in which Groupon gets “good karma” credit for the social good offered by the companies that use their service. But unlike much of corporate philanthropy that is almost wholly disconnected from the for-profit activities of the company, G-Team seems perfectly aligned with the strengthens of Groupon.
I’ve written recently about Facebook founder Mark Zuckerberg’s philanthropy. But with Andrew Mason we have a true social entrepreneur who seemingly stumbled into an unbelievably profitable business venture. While Zuckerberg and other signers of the Giving Pledge should be rightly applauded for their efforts to give money generated in business to social impact organizations, the next frontier is business leaders who figure out how to embed social impact into the DNA of their profit engine.
With the launch of G-Team, which has the potential to deliver social impact as well as increase revenue for Groupon, we may be seeing the emergence of a multibillion dollar social enterprise.
(A special thanks to Christine Egger for pointing out G-Team to me)
15 Comments
Just because someone has launched a social enterprise in the past, and may have “social entrepreneur” roots, doesn’t necessarily make every business venture they launch in the future a social enterprise.
Sharon Schneider makes some great points about some social good coming out of Groupon, but what else are they doing? Are they setting aside a portion of their profits to have a social impact? Do their employees have ownership (and not just “options”) in the company? Are their offices “green”?
I included the question mark in the title of this post and said that we may be seeing the emergence of a social enterprise because I agree with you that Groupon is not yet a social enterprise. But I do think that the G-Team concept goes beyond corporate philanthropy and may end up turning Groupon into a social enterprise.
Thanks for sharing, Sean. As you know, we’ve worked with dozens of brands to help build portals to both market their products and facilitate civic engagement between consumers and nonprofits. Over time, the use of coupons to incentive sharing and volunteer sign ups has become increasingly important for these campaigns. The challenge has been to make the technology affordable, to make the sharing super easy, and to have the right “balance” between the coupon offer and the social benefit activity that is being facilitated (it’s easy to oversell volunteering and flood nonprofits with too many request to help.)
But as I think about the example in the G-team link you shared, it’s easy to imagine that this is what cause marketing will one day look like — a hybrid of consumer purchasing, social sharing, and nonprofit engagement. If and when Groupon ships its widget or API functionality that a service like VolunteerMatch can adopt, I can definitely see future integrations down the road.
Thanks again,
Robert
(twitter: @volmatch)
It will be interesting to see if the concept of The Point takes off now that it has the brand power of Groupon behind it. If it still doesn’t ‘tip’ then I think that might imply something about the appetite (or lack thereof) for cause-oriented social media. I for one hope it succeeds.
I think we need to be a bit more deliberate in applying the social enterprise label. I like to say if a social enterprise has a high gross margin, then they are clearly maximizing their profit bottom line at the expense of their social impact bottom line.
At NetSuite.org we like to consider ourselves a social enterprise since our financially sustainable activities (software donations & discounts) extend and expand the social impact of the social enterprises and charities that we serve.
But we’re really just a corporate citizenship program — I would argue a highly effective one that is a model for integrated corporate philanthropy — but our existence is not a byproduct of our social mission, our existence is a byproduct of NetSuite Inc.’s mission.
Similarly, the G-team is a potentially highly effective corporate citizenship program that exists because the GroupOn business model throws off silly amounts of cash at ridiculous gross margins.
I don’t think this is “embedding social impact into the DNA of a profit engine” – it is too easy to forget that corporate DNA is coded with one and only one instruction – maximize shareholder value.
But I do agree this could be the emergence of a multi-billion dollar corporate citizenship program AND virtually every corporate citizenship program would benefit from aspiring to be a social enterprise.
But calling these things social enterprises takes away from the folks who build businesses from scratch for social impact.
Well said David!!!
specially like “But calling these things social enterprises takes away from the folks who build businesses from scratch for social impact.”
let’s also not forget that the groupon model is very suspect as it does NOT create win-wins as social enterprise should. Groupon win, the consumer wins yet the local business often gets screwed by having to sell their good at 25 cents on the dollar. while traditional charity and philanthropy is used to having arrangement like this. hat strategy fails in the business world. there most b legitimate reciprocity 4 all or it bust. groupon is a raw deal.
the “result in some sort of social good.” is a big problem in this space. get carried away by sentiment and the pretense of well meaning desires and good intentions that excuse poor thinking through and long term effects.
When only a few at the top reap the benefits all are screwed. See recent global economic crash.
most of the businesses i talked w where not happy with their groupon results. it’s good for events, services or software or the like not good for tangibles like food or retail. and asking non profits and charities to short sell their stuff also not good. the model is no sustainable.
at best business breaks even and i’m told repeat full price customers are VERY low. desire & good intentions r often worse than bad ones.
this is just another manifestation of mis appropriating business terminology and practices to make charity and non profit/ philanthropy seem cooler and edgier. much like calling donors “customers” or “investors” and donations “investment”
I’m all for innovation and think Andrew is a great guy with a great heart and mind. don’t doubt his desire and good intentions for a second. Lets combine those good desires/intentions with some analytical thinking & less marketing hype to create a win for all.
I do also wonder how we collectively define a social enterprise. By including Groupon it seems that we should also include Chevron as social enterprise since they provide us with the energy we need to turn on our lights and fuel our stove tops and power our cars in order to heat our homes and feed our children and get to our jobs every day. I would argue that Chevron has a much stronger purpose than Groupon, in terms of actual societal value. What about Genentech? Or Google? Are they social enterprises? If you are going to call Groupon a social enterprise, then my answer is definitely yes.
Colin wrote “It will be interesting to see if the concept of The Point takes off now that it has the brand power of Groupon behind it.” imho the CONCEPT of The Point HAS taken off. It was an early influencer on the proliferation and design of all kinds of microphilanthropy aka crowdfunding sites (200+ at http://bit.ly/actionsourceslist). Personally, I’d like to see Groupon pull from every single crowdfunding site and beyond for campaigns to link to Groupon deals. The Social Actions API (an open dataset of campaigns from 60+ sources, including VolunteerMatch, Kiva, DonorsChoose, GiveIndia, GlobalGiving, etc. etc.) could be a ready resource for that access.
On the question of whether Groupon qualifies as a social enterprise, I’m all for bringing MORE nuance into that label rather than less. But I have to admit I’m not one to get excited about labels and categories and who fits in which box.
Much more interesting to me is whether and how the Groupon/ThePoint team can craft an engaging model for blending increasingly positive social impact with increasingly positive experiences for the organizations and individuals participating in its programs, with an emphasis on including and amplifying the efforts of their colleagues in the online giving sector.
THAT’S the subject that gets me dancing:
http://my.socialactions.com/profiles/blogs/why-im-dancing-the-point
And looking at the Groupon deals that arrive daily in my inbox in a whole new light, too.
I’m going to write a follow up to my post where I’ll address some of the issues raise here. I’ll say now though that:
1. I agree that Groupon as it exists today should not be called a social enterprise. The question mark in my title and my ending sentence was suppose to suggest that Groupon may emerge as a social enterprise.
2. The Social Enterprise Alliance and others have fought big internal battles over the meaning of the term. I can’t say I care all that much about the definition of the label. But I think two things are important to keep in mind. First, that all organizations create social and financial value. Second that any relevant definition of social enterprise would seem to have to focus on intent. Chevron and Google and others might create social value while they pursue financial value. Much as I think Groupon does when they sell museum tickets other other nonprofit offered deals. But with G-Team you have clear intent. It might be that Groupon itself is not a social enterprise, but if G-Team becomes more and more integral to the overall experience, then this “subsidiary” may be a clear social enterprise.
Regardless, I was probably sloppy to use a term that has been so debated in the past without better clarifying what I meant. But my point was to suggest that Groupon may become a massive force for good.
Very good article Sean. Especially for the perspective it opens and as you state here in your comment “…become a massive force for good.” That is the point; What today actions can lead to. What are the seeds of a better tomorrow. Your article raises this awareness. Thank you.
Glad you liked it, Philippe. At the end of the day, I care more about what approaches can be “massive forces for good” than whether they fit the definition of “social enterprise” or any other definition.
Looking at the G-Team site, I think it is clear that this is not the lead up to a social enterprise. It is the add on, not the lead, and at this stage Groupon is not communicating in a way that would lead me to believe that they are going to make this social platform the core of their business model (and put their pure profit model in the backseat).
That being said, I think this is a great example (on the surface) of how a firm can develop a sustainable CSR platform that is focused on leveraging the core capacity of the firm. It isn’t a simple one off donation, or a pledge of executive support for the “cause”, and beyond highlighting their corporate commitment to supporting wider causes, it will (if all goes according to plan) effectively engage their customers across a wide spectrum of issues through every transaction.
It is a program that I hope other firms will look to in developing their own ideas about how to develop effective programming, and while Groupon may not be a social enterprise, it is showing some true social entrepreneurialism through this program.
R
Sean’s point about “intent” is an important one, perhaps more than any financial metric (such as gross margin) that may be too rigid for the wide array of social enterprises. However, if Groupon were to apply and earn B-Corp certification, the company would be making an explicit commitment to solving social and environmental problems through business, which perhaps is what’s most important here. B Corporations must meet comprehensive and transparent social and environmental performance standards in conducting business, which addresses dual intent – financial & social – without the need to compromise one for the other.
Whoa! Is social enterprise an all-or-nothing undertaking? Does a company have to make no profits as well as chip away at a social problems? I’d like to think we give credit for being on the right path.
I think Andrew Mason qualifies as a social entrepreneur because he came up with The Point and the G-team concept. Whether Groupon crosses over to social enterprise is yet to be seen. But I’d rather encourage Mason with kudos for what he has done than berate him for being less than perfect.
Hey, I would encourage everyone to check out http://www.dealsfordeeds.com …we’ve been operating in Washington, DC for about 7 months or so now, and are a triple-bottom-line business. We’re in the process of becoming B-Certified, and are for-profit, for-good business.