Rue La La Chicago to challenge Groupon

(Reuters) — Rue La La, an online flash-sales company partly owned by eBay Inc., is expanding its local offers business, stepping up competition with Groupon and LivingSocial.

Rue Local will offer one deal a day on local products, services and events in San Francisco, Chicago and Miami. That adds to current locations in New York City, Los Angeles and Washington DC, Boston, Philadelphia and Seattle.

Rue San Francisco is set to launch on Wednesday. Rue Miami will start Aug. 9 and Rue Chicago later this month.
Rue La La started as a fashion flash-sales website, offering discounts on women's apparel for very short periods. It has added men's clothing, home goods and other products since then.

With Rue Local, the company is trying to offer its members more products and services in a similar way to daily deal leaders Groupon and LivingSocial, part owned by Amazon.com. Flash-sale company Gilt Groupe, which initially focused on high-end fashion, has expanded in the daily deal area too, with Gilt City.
"We're trying to cover everything for members, to be an editor for people's lives," Mark McWeeny, president of Rue Local, said in a recent interview with Reuters.

Rue La La has over four million members and almost two million of those have signed up for Rue Local offers.

Rue La La was owned by GSI Commerce, an e-commerce company that was acquired by eBay this year. After the deal, eBay said it would sell 70 percent of Rue La La to a new, private holding company run by GSI chief executive Michael Rubin.

Groupon launches a partnership with Foursquare

Groupon Inc. has launched a long-expected partnership with mobile social-media site Foursquare.

GrouponNow, the daily deal company’s location-based and time-limited offers, will appear on Foursquare, Chicago-based Groupon said on its blog Friday.

Foursquare offers its own discounts with merchants to users who check in at businesses using its mobile-phone app. But the New York-based company recently created partnerships with Groupon competitors LivingSocial, Gilt City, AT&T Interactive, BuyWithMe and Zozi.

Warren Buffett eyes Groupon, Exelon, ADM

(Crain's) — Renowned investor Warren Buffett will read Groupon Inc.'s filings for an initial public offering, according to a report.

Mr. Buffett told Bloomberg TV he hopes to buy another company this year and that Chicago-based Exelon Corp. and Decatur-based Archer Daniels Midland Co. are the types of firms that interest him.

He declined to comment on specific targets to Bloomberg TV.

Chicago-based Groupon, a daily-deal coupon site, filed last month for an IPO.

Apprentice contestant James Sun working on mobile deals with Microsoft

Former reality-show contestant James Sun is working on a mobile deals app with Microsoft.


The app, which will launch in July, will offer mobile deals at Seattle restaurants. Microsoft's Tag group is designing the graphic codes similar to bar codes designed to be scanned by a mobile phone at the restaurant.

The application is similar to deals website Groupon in that it offers deals for a limited time, but it lets restaurants manage it more closely so they aren't crushed by a stampede of people who all want to redeem their coupons at the same time.

People can download the app, search what deals are closest to them and select one. To redeem the coupon, they go to the restaurant and scan the code at the restaurant with the phone. It will be available for the iPhone and Android phones.

Sun is chief executive of a Kirkland company called Pirq which he started in the spring. He previously was a contestant on the sixth season of the television show "The Apprentice."

Restaurants that will offer the deals in July include Sip, 13 Coins, Desert Fire, Red Mango and Cupcake Royale.

People can sign up for accounts now at www.pirq.com.

Groupon hires Margo Georgiadis, COO from Google

(Crain’s) — Groupon Inc. didn’t go far to find its new chief operating officer, hiring Google Inc.’s highest-ranking executive in Chicago, Margo Georgiadis.

Ms. Georgiadis, vice-president of global sales planning and technology for Google, is expected to be named to the job this afternoon, a source briefed on the matter told Crain’s. Groupon declined to comment.

The Chicago-based daily-deal site has been searching for a COO since former Yahoo marketing executive Rob Solomon said last month he would be stepping down from the No. 2 job to return to Silicon Valley. Filling the job is seen as crucial for Groupon, which is said to be preparing for an initial public offering later this year, because investors will want to see a seasoned management team around 30-year-old co-founder and CEO Andrew Mason, a programmer who is untested as a day-to-day manager of a sprawling company.

Groupon hired Jason Child, 42, a top finance executive from Amazon.com as its chief financial officer in December.

Groupon has undergone explosive growth, mushrooming from about 200 employees a year ago to more than 6,000 worldwide today. Revenue is believed to be more than $200 million a month and growing 25% to 30% a monthly.

“When you have free thinkers as CEOs, investors are OK with that, but they want a strong operating person as the No. 2,” says Lise Buyer, founder of Class V Group LLC, an IPO advisory firm in Palo Alto, Calif.

Ms. Georgiadis, 47, is a former McKinsey & Co. consultant, who joined Google last year. She leads sales for several Google businesses, overseeing 1,600 people.

She was chief marketing officer at Riverwoods-based credit card company Discover Financial Services before joining Google.

Ms. Georgiadis is the latest Google executive in Chicago to be hired by other high-profile technology companies. Kevin Willer, who opened Google’s Chicago sales office in 2000, left earlier this month to head the Chicagoland Entrepreneurial Center. Jeff Levick, a former vice-president of marketing for the Americas, was hired as AOL Inc.’s president of global advertising in 2009.

Groupon Says Chief Operating Officer Solomon Is Departing

(Crain's) — Groupon Inc. President and Chief Operating Officer Rob Solomon is leaving his job at the Chicago-based daily deal site.

The reason is not known, but the departure seems sudden, according to the Wall Street Journal's All Things Digital blog, which first reported the move.

"Rob has added enormous value to Groupon and we'll miss having him around," Groupon CEO Andrew Mason said in an email to Crain's Tuesday evening. "He'll remain a friend and adviser to the company."

Mr. Solomon, 44, a former executive with Yahoo Inc., held the titles for about a year.

As Groupon has hurtled toward an expected IPO, Mr. Solomon's role had him racing to build the management structures and marketing strategies needed to harness its growth.

Recent reports said Groupon has discussed an IPO with banks that would give the company a value of as high as $25 billion. The move to go public has been widely seen as happening this year and would not value the company lower than $15 billion, Bloomberg Businessweek reported earlier this month, citing “two people with knowledge of the discussions.”

The company's revenue has been estimated by outsiders at about $150 million a month and continues to grow by about 25% per month. Half the revenue comes from overseas, the fastest-growing part of the business.

“When I got here, we had less than 200 people,” Mr. Solomon told Crain's last month. “Now we're over 5,000.”

Solomon joined Groupon last year after a stint at Crossover Ventures and previously spent 6 years at Yahoo overseeing its shopping site. He was widely considered to be the "adult supervision" for the young founding staff -- much like Eric Schmidt at Google.

He is apparently moving back to Woodside, the toney rural Silicon Valley location where Larry Ellison, Steve Jobs, and other tech bigwigs make their homes.

Groupon sued over expiration dates

(AP) — Groupon Inc. was sued Tuesday by a Minnesota man who alleges the expiration dates on the company's discounts are deceptive and illegal.

The lawsuit filed in U.S. District Court in Minneapolis said federal and state laws prohibit companies from selling or issuing gift certificates with expiration dates.

The suit says Chicago-based Groupon and its retail partners issue their daily deals knowing many customers won't use them before they expire, and "many consumers are left with nothing, despite already having paid for the particular service or product."

"Accordingly, Groupon and its retail partners reap a substantial windfall from the sale of gift certificates that are not redeemed before expiration," the lawsuit said.

Groupon spokeswoman Julie Mossler said the company never comments on litigation.

After settling a lawsuit in Chicago last year, the company said in a blog post that when a Groupon gift certificate expires, customers can still redeem it for the amount they paid for it. For example, if a consumer pays $20 for a Groupon that offers $40 worth of food at a restaurant, the customer can still redeem the Groupon for $20 after it expires.

Under Groupon's terms of service, if a merchant refuses to redeem the voucher for its cash value, the company will either refund the money or give users a Groupon credit.

Chinese "Groupon"

Chinese Groupon

As Groupon eyes China, it faces doppelganger—Groupon

(Crain's) — After expanding into more than 40 countries, Groupon Inc. wants to move into China. Trouble is, Groupon already is there.

Ren Chunlei, a Chinese entrepreneur, bought the Internet domain name www.groupon.cn last year and now claims to have a footprint in 368 cities and 2,000 employees, according to a press release issued Wednesday. The site apes Groupon's look, from its logo to the color scheme and type font.

Mr. Chunlei's company, Mission Po Network, is for sale, according to its website.

Chicago-based Groupon declined to comment on the Chinese company’s footprint claims.

When it launched two years ago, Groupon fueled a worldwide explosion of daily-discount websites offering deals to e-mail subscribers, and China alone has more than 2,000 such sites, the People's Daily reports. For its part, Groupon operates in Hong Kong, Singapore, Philippines and Taiwan.

The original Groupon has yet to launch in China, despite reports that it has joined with Tencent Inc., China's largest web portal, and owns the domain Gaopeng.com.

The Wall Street Journal reported over the weekend that Groupon has opened a Beijing office and has begun to hire a sales staff in China. The People's Daily reports Groupon hopes to have a salesforce of 1,000 within three months.

Groupon IPO could mean $15B value

Groupon CEO Andrew Mason

(Crain's) — Groupon Inc.'s pageant of investment bankers included Lloyd Blankfein, CEO of Goldman Sachs Group Inc., who visited the company's headquarters on Friday, Bloomberg News reported.

Chicago-based Groupon last week raised nearly $1 billion from a host of new investors, including some of Silicon Valley's biggest venture firms such as Kleiner Perkins Caufield & Byers, in what's expected to be a prelude to an initial public offering. Now the company is said to be interviewing investment bankers to handle the IPO, which could come later this year.

The two-year-old company could raise $1.5 billion to $2 billion in an IPO, according to CNBC. The New York Times said Groupon could have a market valuation of $15 billion to $20 billion.

Groupon isn't under any pressure to do an IPO. Unlike many tech startups, the company is profitable. And about $344 million of the $950 million it raised recently will go to cash out some early investors and employees.

But the company, which dominates the deal-of-the-day space on the Web, is generating massive buzz, and investment bankers are eager to take social-networking companies public in hopes of jumpstarting the IPO market. For Groupon, an IPO would further cement its brand while providing additional capital for growth.

Groupon's overseas shopping trip rings up rivals in South Africa, Israel, India

(Crain's) — Just a day after raising nearly $1 billion from investors, Groupon Inc. expanded into the Middle East, India and Africa.

The Chicago-based daily-deal site bought rivals in Israel, South Africa and India for undisclosed prices. Groupon previously bought daily-deal sites in Europe and Asia.

Groupon dominates the U.S. daily-deal business, but it's scrambling to maintain that lead internationally. The company said Monday that it would use some of the $950 million it raised for international growth.

Groupon bought the Indian site SoSasta, which operates in 11 cities; Grouper, the first and largest deal site in Israel, and South African site Twangoo.

Groupon raises $950M in new funding

(Crain's) — Groupon Inc. has finished raising $950 million in new investment, just a month after rejecting a buyout offer from Google Inc.

The Chicago-based Web coupon company landed a who’s who of Silicon Valley investors in what is believed to be the last big round of funding before a possible public offering.

The company said new investors include including Andreessen Horowitz, the venture fund started by Netscape founder Marc Andreesen; Kleiner Perkins Caufield & Byers; Maverick Capital Ltd.; Silver Lake Capital; Greylock Partners, and Technology Crossover Ventures.

Groupon said the proceeds will be used to further expand globally, to invest in technology and to provide liquidity for employees and early investors. Groupon previously disclosed that $344.5 million of the first $500 million raised went to insiders.

Groupon raised about $170 million in previous investment rounds.

U.K bans 3 Groupon deals

(Crain's) — Groupon promised to raise its game after the United Kingdom banned three of its online ads for misleading consumers.

The group discounter said it will tighten up on staff training and quality control safeguards in light of the rulings, which came from the Advertising Standards Authority, an industry-established group that's recognized by the government.

Groupon has been growing at a dizzying pace, expanding from one country to 35 last year. Last month it rejected a $6 billion acquisition bid from Google. But Groupon's continued growth relies partly on consumer trust, which is one reason it told the standards authority that it had no commercial interest in misleading its customers.

One of the challenged Groupon promotions claimed to offer a banquet for $15, but failed to make clear that one person had to pay for a full price meal in order for the second diner to get the discount. Another offered 60% off a safari but did not point out that customers had to pay an extra $15 on weekends. The third offered a three-course meal for $45 instead of $120 -- even though the three most expensive courses did not add up to $120.

The standards authority investigated and upheld complaints from the public that Groupon was misleading customers, rejecting the group discounter's detailed defenses of all three complaints.

Groupon claimed that the banqueting claim came about as a result of an error by its editing team, whose skill has been touted as one of Groupon's major assets. Groupon said in its defense that it had hired hundreds of new employees in recent months to meet the demands of its exponential growth and that the offer in question had been written up by a new employee. Groupon offered to reimburse customers who requested a refund.

The safari error was explained as a miscommunication between the account management and customer service teams.

And in answer to the three-course meal complaint, Groupon said that its pricing had been correct at the time the offer was calculated, and sent evidence to prove it. The Advertising Standards Authority, however, ruled that the 65% savings claim might not always be achieved and that Groupon should have made it clear that the savings calculation was based on choosing the most expensive menu options.

Google talking with smaller online coupon firms after Groupon rejection

(Reuters) — Google Inc. is in talks with smaller players in the online discount coupon market after Groupon turned down the web giant's $6-billion buyout offer, the New York Post said, citing a source close to the situation.

Groupon's smaller rivals LivingSocial and BuyWithMe may now be on Google's radar after Groupon deal fell through, the Post said.

BuyWithMe interim President David Wolfe, who declined to comment on whether he was speaking to Google, told the Post that he believes Google needs to enter the coupon advertising market.

Google could not immediately be reached for comment.

Groupon, a privately held Chicago-based company which was launched about two years ago sends its members daily e-mails with about 200 deals for goods and services.

Groupon hires Amazon exec as first CFO

(Crain's) — Groupon Inc., the homegrown daily-deal website that recently rejected a reported $6-billion acquisition offer from Google Inc., has hired an Amazon.com veteran to be its first-ever chief financial officer.

Jason Child, most recently vice-president of finance for Amazon's international business, spent nearly 12 years at the company. He also worked in investor relations, technology, marketing and as corporate controller for the online retail giant. Before that, he spent more than seven years as an accountant and consultant at Arthur Andersen.

“Groupon is one of the most amazing businesses I have ever seen,” Mr. Child said in a release. “I am thrilled to join a great team that is attacking one of the biggest opportunities in e-commerce today.”

Mr. Child, 42, received a bachelor of arts in finance with an accounting concentration from the University of Washington. He and his family have relocated from Seattle to Chicago.

Until now, the CFO job had been informally filled by Eric Lefkofsky, one of Groupon's early investors.

Mr. Child's hiring follows reports that Groupon is seeking several hundred million dollars in funding. Last week, Bloomberg News reported that the financing, which sources said would put Groupon's value lower than Google's reported $6-billion offer, could help Chicago-based Groupon expand and maintain is size advantage over rival deal sites.

Groupon Hires Amazon Finance Executive Child as CFO

(Bloomberg) -- Groupon Inc., owner of a daily coupon website with 40 million subscribers, named Jason Child chief financial officer as it considers raising more money to fund growth.

Child, 42, previously served as Amazon.com Inc.’s vice president of finance, overseeing its $14 billion international business, Groupon said today in a statement. He will relocate to Chicago, where Groupon is based.

Groupon, which offers deals in more than 300 cities, spurned a $6 billion offer from Google Inc., people familiar with the negotiations said this month. The closely held company will top $500 million in sales this year, the people said, a milestone reached faster than Web pioneers Amazon, EBay Inc. and Yahoo! Inc.

“It’s a pretty clear signal that Groupon’s going to go public, and it’s probably in 2011,” Greg Sterling, an analyst at Internet2Go, an advisory service with Opus Research in San Francisco, said today in an interview. “I wouldn’t expect them, like Facebook, to hang out for a while.”

Child held various positions during his almost 12-year tenure at Amazon, including vice president of finance in Asia, finance director for Amazon.de in Germany and director of investor relations. Before joining Amazon, he worked for Arthur Andersen LLP as a consulting manager.

Groupon was introduced in November 2008 by founder Andrew Mason. The website offers daily group discounts on restaurants, theme parks, clothes and other consumer items.

Groupon aims to raise several hundred-million dollars, a person familiar with the matter said this month. The increased financing would value Groupon at less than $6 billion, said two people, who asked not to be identified because the talks are private. An investment group led by Digital Sky Technologies in April valued Groupon at about $1.3 billion.

LivingSocial, Groupon’s biggest rival, announced a $175 million investment from Seattle-based Amazon this month.

Groupon rejects Google buyout offer

(Crain's) — Groupon Inc. has spurned an offer to be purchased by Google Inc., the Chicago Tribune reports, citing two sources.

Chicago-based Groupon was considering an offer from Google, reported to be worth up to $6 billion.

Groupon's board was reportedly divided over selling to Google, with directors representing some more-recent investors wanting to put off a sale in hopes the Chicago company will be worth more down the line, according to a report Friday on the Wall Street Journal's Deal Journal blog.

According to a story posted on the Tribune's website Friday evening, a source told the paper that Groupon might decide next year to pursue an initial public offering.

Representatives from Groupon and Google were not available to comment Friday evening.

Groupon allows online buyers to join together to qualify for a discounted service or product it offers everyday online in more than 300 markets in the U.S. and abroad. A Groupon spokeswoman declined to comment.

Google said to acquire Groupon for nearly $6 billion

(Crain's) — The last time Google Inc. bought a local startup, the seller stayed virtually intact and in Chicago, from the executive suite on down to the rank and file.

The acquired company was FeedBurner Inc., an RSS feed service with fewer than three dozen employees that Google bought in 2007 for a reported $100 million.

Since then, Google has kicked its shopping habits into overdrive. The Mountain View, Calif.-based company, which made 15 buys in 2007, three in 2008 and five last year, acquired 40 companies in just the first nine months of 2010, spending a total of $1.6 billion, according to research firm CB Insights and regulatory filings.

It's a tough call on whether the FeedBurner takeover portends what might happen to Groupon Inc. if Google's rumored $5.3-billion purchase goes through.

For one thing, Groupon, with 630 full-time local workers and about 2,600 employees worldwide, dwarfs FeedBurner, with 30 employees. Groupon's business also doesn't fit as neatly into Google as FeedBurner’s did.

But if the FeedBurner buy does provide any kind of roadmap, Groupon employees — and the city of Chicago — likely needn't worry about job losses.

"Google acquires a company as much for the star talent as much as they do for the technology," said Matt McCall, a partner in Chicago-based venture capital fund New World Ventures. "There are a lot of stars at Groupon."

Augie Ray, a senior analyst of social computer for Forrester Research, said that he doesn't see any job redundancies between Groupon and Google, but some jobs may leave Chicago for Mountain View.

"(Google) has really been looking at experienced entrepreneurs with backgrounds in social business," Mr. Ray said.

FeedBurner is an example of Google keeping its acquisition intact. After the purchase, the four founders of FeedBurner and its employees were absorbed into Google's River North office. The majority still work at the web-search behemoth.

Two of FeedBurner's founders are still on Google's payroll, too: Steve Olechowski is product manager for Google's AdSense program, and Matt Shobe is a user-experience designer.

FeedBurner co-founder Dick Costolo was the first to leave Google in 2009, for Twitter Inc. In October, he was named CEO of the social media website.

Eric Lunt, the other FeedBurner co-founder to depart Google, still has ties to the search-engine giant. Mr. Lunt was named chief technology officer of BrightTag Inc. in August. Chicago-based startup BrightTag has received financial backing from Google CEO Eric Schmidt through his TomorrowVentures LLC investment firm.

The Groupon deal would mark one of a few billion-dollar acquisitions in recent years for Google Inc. In 2008 it paid $3.2 billion in cash for New York-based DoubleClick Inc., and it paid $1.65 billion in stock for YouTube LLC in 2006.

But if size is any indicator, Groupon might worry about suffering the same fate as DoubleClick. Google eliminated 300 of DoubleClick's 1,200 domestic jobs a month after it acquired the online ad company from two private-equity firms.

YouTube had a smoother transition, with its 67 staffers being integrated into Google. Two of the three founders — one had left prior to the Google acquisition — remained as YouTube executives until recently.

How Groupon executives and backers would fare financially from a Google deal hinges on the terms of the purchase.

DoubleClick's $3.2-billion purchase was an all-cash deal, while YouTube's founders and investors received Google stock.

YouTube co-founder Chad Hurley received a total of 735,319 Google shares, valued on the day the deal closed — Nov. 13, 2006 — at more than $349 million. Co-founder Steven Chen received a total of 694,087 shares, with a value of more than $329 million. YouTube investor Sequoia Capital XI fund, which plowed $11.5 million into the online firm, got shares valued at more than $446 million.

Groupon strains under Oprah; gets eyed by Google

(Crain's) — Looks like Groupon Inc. is again too popular for its own good.

Groupon launched its second nationwide deal with a major clothing retailer Friday — a half off special at Nordstrom Rack — that is causing problems with the site.

An unrelated plug from Oprah Winfrey only added to the traffic.

Meanwhile, Chicago-based Groupon is attracting a different kind of attention from Web giant Google Inc., according to a report by Wall Street Journal's All Things Digital blog, which reported that Google is interested in buying the Chicago-based startup.

Groupon's site was overwhelmed early Friday, and visitors encountered this message: “We are experiencing unusually high volume on our site right now. Please check back later."

A spokeswoman says the site recovered by early afternoon.

Usually, Groupon offers a single discount each day with a local merchant tailored for each of its more than 100 U.S. cities. But as it looks for new sources of growth, Groupon has dabbled in national deals.

The first, in August, featured clothing retailer Gap Inc. It attracted nearly 500,000 people and swamped the company's servers. The same thing is happening Friday with its deal with Nordstrom Rack. Both deals offered $50 worth of merchandise for $25.

Though frustrating, the flood of interest is good for Groupon. The Gap deal brought in about $11 million in a single day.

Last week, Business Insider reported Web portal Yahoo Inc. offered to buy Groupon for $3 billion to $4 billion.

The company founded two years ago by Andrew Mason has exploded as the idea of daily online deals caught fire. Like Facebook, the dominant social-networking site, Groupon has been the target of endless speculation about an initial public offering or buyout by one of the Internet giants, such as Google, Microsoft, Amazon or eBay.

Chicago entrepreneurs Eric Lefkofsky and Brad Keywell, along with Mr. Mason, own the majority of the company.

A year ago, Groupon attracted major money from Silicon Valley venture fund Accel Partners, valuing the company at $250 million. By April, after Russian venture fund DST Ventures paid $135 million to buy a chunk of insiders' stock, Groupon's valuation soared to $1.3 billion.