Andrew Mason is one of the most successful new internet entrepreneurs that you have probably never heard of. Mason, the new 20-something internet phenom is the founder of Groupon - now officially billed by Forbes magazine as the "fastest growing company - ever" - at least to this point in it's short lived existence.

Groupon has recently undergone acquisition negotiations with several large online companies such as Yahoo and Google.  It recently rejected an offer of $6.0 Billion from Google.  Whisperings on the street suggest that Groupon is now evaluating the possibility of an IPO (initial public offering).  Given its robust growth rate and solid profitability, an IPO may be a good option. However, assuming the Forbes has its numbers right and that Groupon will generate $500 million in revenue this year and assuming further a very generous margin of say 25% of revenue - that translates into $125 Million in current year profit - and I believe that these numbers are all on the high side. But assuming for the moment that these numbers actually materialize, a $6 Billion haul on an IPO would be stratospheric. It would represent 12X REVENUE and a whopping 48X PROFITS. Numbers like these haven't been seen since the last internet bubble burst resulting in a catastrophic tech meltdown and we all know how that ended - no recovery yet in sight. In my opinion, Groupon would be wise to take the Google offer and do a fast sprint to the nearest offshore bank account. I believe that Groupon does appear destined to be acquired by Google (or possibly another major internet player with more money than sense) for a transaction which will almost certainly be valued north of $5 Billion.  If Google is successful in acquiring Groupon, the transaction will officially be billed as the largest acquisition Google has ever made. It is no small feat to create a startup company and then to sell that startup to one of the most successful internet companies of all time - Google - in a multi-billion dollar transaction, and all in a two year time frame. This deal should play out fairly quickly - either way.  It is always possible that Groupon will choose to remain independent and attempt to increase its market value even further. However, they need to understand that the barriers to entry here are low. Copycats already abound - and as other well capitalized companies enter the fray margins will shrink - and possibly very quickly. Time will tell if the Groupon geeks made a smart move in passing on the Google offer, or if they are just bluffing in the hopes of a sweetened offer.  (I am assuming the latter).

So what exactly is Groupon? Well, the name Groupon combines the two concepts of group sales and coupons to offer deep (and Groupon exclusive) online discounts on everything from theatre tickets to sushi. The Groupon concept is brilliant, simple, and obviously timely. Groupon founder Andrew Mason has succeeded in accomplishing what millions of budding internet entrepreneurs dream about. He has built a business that is on target to generate over half a billion dollars in revenue and is solidly profitable.

The most impressive part is that he has done all this in less than two years. Groupon is the consummate definition of an overnight success. Unlike pet rocks and beanie babies, however, the Groupon sales model looks like it might have some legs. Sales continue to rocket as economically strapped consumers flock to the site in droves to see the latest and greatest daily offer in their home area.  Groupon specializes in identifying deeply discounted purchase opportunities for consumers on a local level. Many Groupon addicts anxiously login every morning to see what new treasure awaits them as the deal of the day. "Today's Deal" in Salt Lake City is a $50 order of Sushi for $20 at the Flying Sumo in Park City. In Detroit, it is a Signature Massage valued at $75. The Groupon price? Just $35.  If you are lucky enough to live in Rochester, New York, you can score $10 worth of freshly baked cookies or sandwich products from Classy Cookie and Deli for a mere $5! So what is the catch?

First of all, the offers have a limited life - ofen just a single day. Second, in order for the offer to become bonafide a certain number of people have to purchase the discount coupon on the same day. This of course encourages people to recruit friends to participate in particularly enticing deals.
Groupon is able to share in the profits by splitting the proceeds it receives from its vendor clients. As a result the company has enjoyed a high level of profitability almost from the outset - something ebay, YouTube, Amazon, and other darlings of the internet revolution can only dream about. Andrew Mason has ammased an army of sales people peddling opportunities to thousands of vendors all over the country looking to gain a spectacular injection of exposure in a very short period of time from the marketing hysteria generated by the Groupon marketing model. With hundreds of salespeople and dozens of writers, the company creates focused, original, and compelling scripts as it pitches everything from jewelry to tickets to the King Tut exhibit - all at incredibly discounted prices.  
Most internet wonderkinds are tech savvy programmers. Not Groupon's Mason. Andrew Mason is actually a music major who studied at Northwestern. Mason grew up with an entrepreneurial spirit and hatched an idea that may just prove to be the most lucrative idea in the history of the internet, marrying every conceivable business product with cost-conscious and bargain seeking consumers in a way that literally compels consumers to action and invites them to share with friends. Combining the most profitable aspects of e-coommerce and social networking, Groupon promises to bring its version of bargain shopping to every city and country in the world. Stay tuned!