How do you become the fastest, most successful company in the history of business?
What kind of secret formula do you need to thrive in an emerging industry?
How does your business feast in an environment where businesses starved; pioneering through uncertainty, resisting rescue and outlasting vicious competition?
Few businessmen and women embrace the audacity of risk amongst controversy, succeeding with grit in one of the most controversial times in American history.
It hasn’t been one decade and America has begun to forget about the entire country teetering on the edge of economic crisis. The summer and early fall of 2008 spelled historical drama of the highest order when the global economy entered a massive free-fall. The sub-prime mortgage crisis had become the talk of Wall Street as credit markets dropped massively.
When Lehman Brother filed for bankruptcy, the business world reacted with horror. Famous Silicon Valley venture capital firm Sequoia sent out a presentation, “R.I.P. Good Times.” The days of emerging, multi-billion-dollar firms were now a thing of the past. Or were they?
Staking a Claim in an Emerging Market
And yet two brilliant Chicago entrepreneurs – one a very eccentric dreamer and the other an established structural businessman – simply wouldn’t let their idea go by the wayside. They believed that somehow, there were some seeds that could be planted in a landfill of American dreams gone bad.
When local businesses were floundering; finding ways to survive the market collapse, Chicago start-up kings Andrew Mason and Eric Lefkofsky founded a small website called Groupon. The site had a simple concept: group buying for local businesses that boosts the interest while giving great deals to those in the know. The premise was simple; it was one deal per day and the deal wouldn’t go into effect until enough people bought the voucher.
The humble launch of a business with very audacious ambitions was a definite risk. There was a tremendous uncertainty in the market and certainly no guarantee that the public would bite. But there was a growing sense of desperation looming that made the risk irresistible. The group buying trend was born out of a growing anxiety from the lost trillions in the market’s disaster coupled with a burning intentional desire to be a part of something they believed in. According to Forbes, one of the early employees said, "There was this pressure from the market crash [and] looking at our burn rate and revenue — it was time for us to try something to scratch that itch."
The concept took off like a rocket. Local press got word of the new and innovative company and blew up the blogosphere with praise. Employees were successfully recruiting local business owners to sign up. They moved from Chicago to Boston to New York within a span of a few months. By January 2010, Groupon had around 300 employees. By 2011, it had over 5,000. Today, Groupon is a publicly-traded company with over 10,000 employees worldwide and a multi-billion-dollar valuation. In April of 2016, they received an additional $250 million in investment from Atairos Management.
Consistent Brand Intentionality in an Emerging Market
The foundation in Groupon’s rapid ascent starts at the feet – or rather, the minds – of Mason and Lefkofsky. Mason was the creator; he was responsible for the unique, comedic copy, the blinged-out cat logo and the inviting color scheme. Lefkofsky took the concept and plugged the data behind it, developing an aggressive game plan to expand and dominate. Together, they uplifted Groupon with an unshakable and unmistakable brand etched in the minds of millions. They’re collective intensity didn’t allow for any doubt; this business was going to win despite the uncertainty of the future. They’re borderline arrogance coupled with a confident system brought a tiny unknown startup in Chicago to a billion-dollar global web business in less than two years’ time. What’s more impressive is that when the company seemed most vulnerable, they trounced the competition and constructed what is arguably the most valuable email list in the world.
The critical moment was on a Monday during the summer of 2009. Lefkofsky was aware that they were holding lightning in a bottle and subsequently started pushing hard for growth in Groupon's Monday meetings. He began by suggesting Groupon be in five cities by the end of the year. Suddenly, the number had jumped to 10 cities within a few weeks.
Finally, according to Business Insider, Lefkofsky began to unleash his grander ideas saying, "Why don't we try and go as fast as we can? Why don't we turn up the jets?" Lefkofsky was quoted as saying, "we realized the main barrier to entry is going to be scale. So we wanted to get to as many cities as we can because we saw direct, outright, verbatim copies of what we were doing, popping up all over the place pretty quickly. We said we can either go chase them and beat them back and fight them legally, or race ahead and do what we do, as best we can. So the choice was to not look back, and try to be better and bigger."
Unshakable Vision in the Face of Adversity
Being better and bigger was connecting in ways other competitors simply couldn’t duplicate, despite hundreds – if not thousands – of companies who tried. Business insiders point to Groupon’s ability to appeal to all the levels in Maslow's hierarchy of needs. Whereas other deal companies gave you good deals, Groupon made you feel better in multiple ways - you were getting a good deal, you were going to be in the "in crowd", you are going to look good, and last but not the least, if you don’t get it right now, you will be out of the club.
Other big time competitors like Google Offers and Facebook Deals emerged as ways to enter the market and perhaps push Groupon out as the top group buying website. They all failed, due mostly to an inability to connect the way Groupon connected. Other smaller websites like LivingSocial, Fruugaldeal and DealSnap attempted to catch on, but have had limited success compared to the giant that is Groupon. Their ability to remain unique and efficient within the emerging marketplace kept them as a leader throughout their most turbulent times.
Keeping their unshakable vision, Mason and Lefkofsky resisted relief through massive buyouts, specifically a $3 - $4 billion offer from Yahoo! in 2010 and a significantly larger $6 billion buyout offer from Google, as they were determined to establish themselves a worldwide brand. WarnMasoner’s signature stubbornness and defiant attitude to hold onto their brand ultimately convinced the board of directors to reject those bids.
In June of 2011, Groupon eventually filed to go public under the ticker symbol GRPN. The massive IPO was handled by Morgan Stanley, Goldman Sachs Group and Credit Suisse Group. Continuing their incredible growth rate, from January 2010 through January 2011, Groupon's U.S. monthly revenues grew from $11 million to $89 million. Groupon had been established a name brand and undisputed king in their marketplace.
In the last three years, history was made in the cannabis industry, both in the United States and abroad. Moving forward, history will continue to be made in the cannabis industry.
The digital world will certainly play a major role as new markets will begin to emerge online, and several states and countries are set to legalize either medical or recreational marijuana. As a result, the business opportunities have never been better.
Consultant Avis Bulbulyan told MJ Biz Daily, “Over the past six to eight years, we made a lot of progress in this industry, especially last year and this year. But come 2016, I think we’re going to make more progress than all those years combined. This is going to be the breakout year for this industry.”
This is great news for marijuana retailers, cultivators and other associated businesses in the industry. Evolution will spawn new creative niches; analysts are forecasting that a Groupon-like business is on the horizon, which will certainly have incredible consequences, for better or worse.
Finding Your Edibles Niche
A few celebrities are attempting to make inroads, but the fact remains that infused product companies are at the tip of the iceberg in terms of product diversity. There remains a tremendous opportunity to develop new products.
Patrick Devlin, co-owner of Washington State-based Db3, which manufactures infused products, is a big believer that topical products are on the rise. “The biggest trend in the edibles sector next year is going to be probably new product development. Specifically, topicals. People are being very, very creative.”
Savvy Investing into the Established Firms
“Established marijuana companies will certainly see their reward for their grit and perseverance says,” Kind Financial CEO David Dinenberg. He, along with several other analysts believe that 2016 will be the year established marijuana companies will gain a large number of serious investors that are preparing hundreds of millions of dollars into the cannabis industry.
Companies that dug their ground years ago and have established themselves as market leaders thus far are primed for serious investment as accredited and institutional investors are taking a harder look at whether marijuana reform is happening.
Whether you are seeking to invest in emerging companies or staking your claim in an uncertain market, using the same principles and strategies Mason and Lefkofsky used to build Groupon can be used to your success. Identifying a niche in the marketplace and taking massive, imperfect action is a foundational key to your overall positioning and eventual success. Branding, connecting and building an unshakeable philosophy around your business in the cannabis marketplace can place you on the fast track to amazing success. The question however remains; do you have what it takes to usher a relatively unknown business into a massive empire in a growing marketplace?
About Khadijah Adams
Khadijah Adams former founder and senior managing partner of MIPR Holdings, LLC, a professional consulting and investor relations company located in Aurora, Colorado (www.miprholdings.com). She is the VP/COO of The GreenStreet Academy (www.thegreenstreetacademy.com) and C. E. Hutton, LLC (Denver, Colorado)