--- title: "Groupon: the email list that built a $12.7B IPO" canonical: "https://www.roadtoone.space/blog/open-rate-groupon/" pubDate: "2026-10-19T00:00:00.000Z" updatedDate: "2026-10-21T04:16:48.000Z" author: Gaurav description: "Groupon grew from 1.8 million to 83 million subscribers in 15 months, went public at $12.7B, then lost about 80% of its value. Episode 1 of Open Rate." tags: [email marketing, case study, Groupon, daily deals] categories: [Open Rate] --- Groupon built the biggest deal email list in the world, rode it to the largest US internet IPO since Google, and then lost most of its value within sixteen months. It is the strongest case study in email marketing, and the warning that comes with it. **The background.** Groupon started as a failure called The Point. Andrew Mason was three months into a public policy graduate program in Chicago when Eric Lefkofsky, a local investor, offered him about a million dollars to build a website instead. The idea was collective action. A user could say: I will do something, but only if a critical mass of other people do it with me. Boycott a cable company together. Fund a cause together. Nobody knew what to do with it. In the early days the team mostly sat around reading academic books on collective action, Saul Alinsky and the like. After nine months without growth, the investors were close to shutting it down and handing the money back. Mason laid people off to bring the burn down to about $40,000 to $50,000 a month, and used the runway to experiment. One of the experiments was group buying. Instead of an open marketplace, find one deal a day and email it to a list of people who might want it. **The first deal.** Groupon launched in November 2008, in Chicago only, and stayed a one-city operation for its first six months. The site was called getyourgroupon.com, because groupon.com belonged to someone in England. The first deal was two-for-one pizza at Motel Bar, the bar downstairs from the office. It sold about twenty. The team earned those twenty the hard way: standing in the building lobby with printed postcards, walking strangers through the signup one at a time. Then a sushi place sold about five hundred, and they knew they had something. **The layup.** The daily deal was built for email. A deal lasts one day, so it needs a channel that reaches people that morning and pushes them to act before midnight. Groupon emailed its subscribers discounted offers for local goods and services every day, and it bought subscribers aggressively, mostly through paid search and social ads, at $5.53 each by early 2011. Restaurants and spas made up a slight majority of the offers. The list was not a marketing channel for the business. The list was the business. Everyone else noticed. Once Groupon hit the tech press, new daily deal clones launched every day. Groupon's answer was speed: new cities, telesales teams signing merchants, and a bigger list than anyone else could assemble. By late 2010 the list had grown to 35 million subscribers across 300 markets, and the company was pulling in more than $1 billion a year. In December of that year, Google offered a reported $6 billion to buy it, which would have been Google's largest acquisition ever. Groupon said no. **The results.** The IPO filing in June 2011 showed what the list had become: - 1.8 million email subscribers at the end of 2009. 50.6 million at the end of 2010. 83.1 million by March 31, 2011. - Revenue of $713 million in 2010, up 2,241% from 2009, and a $2.6 billion annual run rate by the first quarter of 2011. - 30.3 million Groupons sold in 2010. By March 2011, 15.8 million people had bought at least one. - In mature markets like Boston and Chicago, about a third of all email subscribers had bought a Groupon. - Groupon kept 40 to 50 percent of each coupon's value, and 54% of revenue already came from outside North America. It was among the fastest-growing companies in history. It was also unprofitable on paper, with a $389 million net loss in 2010, though it generated $72 million in free cash flow, because customers paid up front while North American merchants typically waited about 60 days to be paid. On November 4, 2011, Groupon went public at $20 a share, a $12.7 billion valuation, the biggest US internet IPO since Google in 2004. The stock closed up 31% on day one and hit a record closing high of $26.19 ten days later. **What came beyond.** The peak was the end of the story. Under pressure from the SEC, Groupon had already dropped a custom accounting metric that had made the company look profitable in its filing. Through 2012, growth slowed and the clones, plus Google and Amazon, squeezed the model from every side. By early 2013 the stock had lost about 80% of its value. In February 2013 the board fired Mason. His memo to the staff opened: "After four and a half intense and wonderful years as CEO of Groupon, I've decided that I'd like to spend more time with my family. Just kidding - I was fired today." The company he left was worth about $3 billion. Two years earlier, it had turned down $6 billion. Under new leadership the business stabilized enough for the stock to rise 88% in the first year after Mason, though it never came close to the IPO price again. Groupon still exists. In 2024 it reported $492.6 million in revenue and 15.4 million active customers, a fraction of its 2011 run rate. **Why email worked.** Groupon understood that a deal with a deadline is an email product. The morning email creates urgency that no website visit can. And the economics compounded: a subscriber cost $5.53 to acquire, about a third of them bought, and every buyer kept receiving the email for free. Distribution, conversion, and retention ran through one channel. That concentration is also what made the company fragile. When the novelty wore off and the clones piled in, the inbox that built Groupon belonged to everyone else too. **The lesson for builders.** An email list can be the entire engine of a company, not just its newsletter. But a channel builds you faster than it protects you. Groupon proved both halves at full scale. --- ## Sources 1. Groupon S-1 (June 2011): https://www.sec.gov/Archives/edgar/data/1490281/000104746911005613/a2203913zs-1.htm 2. Lee Hower, reading of the S-1 (agilevc): https://agilevc.com/blog/2011/06/05/groupons-s-1-from-zero-to-like-billions-in-30-months/ 3. Andrew Mason interview, New York Magazine (2018): https://nymag.com/intelligencer/2018/10/andrew-mason-on-groupon.html 4. Andrew Mason, Y Combinator Startup School: https://www.ycombinator.com/blog/startup-school-andrew-mason 5. NYT DealBook, Google offer (Dec 2010): https://archive.nytimes.com/dealbook.nytimes.com/2010/12/03/groupon-said-to-reject-googles-offer/ 6. Reuters, IPO day (Nov 2011): https://www.reuters.com/article/world/groupon-shares-surge-but-concerns-linger-idUSTRE7A404X/ 7. TechCrunch, Mason fired (Feb 2013): https://techcrunch.com/2013/02/28/groupon-stock-goes-up-in-after-hours-trading-on-news-that-ceo-andrew-mason-has-been-fired/ 8. NYT DealBook, Mason's tenure (Feb 2013): https://archive.nytimes.com/dealbook.nytimes.com/2013/02/28/remembering-the-long-strange-trip-of-groupons-now-fired-chief/ 9. Fortune (Feb 2014): https://fortune.com/2014/02/28/groupon-up-88-in-first-post-mason-year/ 10. BBC News (Feb 2013): https://www.bbc.com/news/business-21625280 11. Groupon FY2024 results (SEC exhibit): https://www.sec.gov/Archives/edgar/data/1490281/000149028125000006/a2024q48-kxexhibit991.htm