Thursday, August 18, 2011

Groupons Problem: It is Not a Platform

At HBR.com, Rob Wheeler wrote a post entitled Groupon Doomed by Too Much of a Good Thing. Rob discusses why he believes that "Groupon's fundamental problem is that it has not yet discovered a viable business model."

I would disagree as I think Groupon does have a business model, it is just flawed and will never work. What do Facebook, Twitter, Constant Contact, Apple, Google, and LinkedIn all have in common? These firms all have built a platform. These are not single solution apps, like Groupon, but rather large scale platforms that can be used by these firms to add features and functions as well as tap into a community of users to help build out exciting new applications. What exactly can Groupon do to build out its application? Is it a platform? Can people leverage it in many different ways? No. It is what it is - an email application for the most part.

Think of Apples app store and all of the apps that people have built to make the iPad and iPod that much more useful and vital to people's everyday life. Can Groupon do something similar? No.

They key here is if you want to succeed and be relevant in today's web world, you need to build a platform, not a point solution.