This was a guest post for Crain’s Chicago Business, published on December 7, 2010 as part of Ann Dwyer’s Blog for Entrepreneurs. I could not find it in their archives, therefore, I’m re-posting it here.
Much speculation exists about why Groupon turned away Google. But rather than analyze the deal, wonder what Groupon’s board was thinking, or ponder its prospects for an IPO, consider the firm’s impact on Chicago both financially and culturally.
In two years, the company raised over $200 million in capital, has reached nearly $1 billion in annual revenues, is most likely profitable, and has created about 1,000 jobs locally – all done during and after a recession.
Now add to that the following. In the near term, it will continue to generate revenues, profits, and jobs. And at some point, Groupon will sell or go public. While that will result in an enormous payout for its investors and cash infusion into Chicago’s economy, how much is yet to be seen.
Most of the company’s current and major investors are venture capital funds headquartered in Silicon Valley and Russia. CEO Andrew Mason is only 30 years old, is originally from the Pittsburgh area, and can go anywhere he chooses after a big payday. We don’t know how many of Groupon’s 1,000 local employees have stock options and are from, or likely to stay in, Chicago.
The company’s original two investors, Eric Lefkofksy and Brad Keywell, apparently cashed out in a recent venture capital round but it’s doubtful they took all their money off the table. Based on their track record, Eric and Brad are likely to continue building and investing in Chicago companies after a liquidity event for Groupon.
So while the view of Groupon’s economic impact might be a bit hazy, it’s safe to say that its cultural impact on Chicago is clear.
For people in Chicago’s entrepreneurship community – founders, start-ups, investors, universities, and organizations – Groupon has created the rising tide we’ve been seeking. The company has single-handedly put entrepreneurship on the map in Chicago and gives our community an emotional and psychological boost.
Truth be told, we have seen many entrepreneurial firms get acquired or go public in recent years. But Groupon stands above them all in terms of its publicity and how quickly it has had an economic impact. It is arguably Chicago’s biggest start-up story in history, and could be for years to come.
By gracing the covers of magazines and newspapers, being an endless source of Internet banter and rumors, and becoming the talk of the town, Groupon has turned into the Michael Jordan of Chicago business. People beyond the entrepreneurship community are now seeing what start-ups can do, how they do it, and why they are important to our economy.
Entrepreneurs in this town will now attract a little more attention. In high schools and colleges, more students will pursue start-ups. In board rooms, executives will worry more about small, emerging competitors. Job-seekers will apply to more start-ups and second-stage firms. And more high net worth individuals will include early-stage firms in their investment portfolios.
Every one of those people will be pursuing the same thing – wanting to be, or be a part of, the next Groupon.