In Groupon’s $6 billion wake, a fleet of start-ups

interns Contributor
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If you can’t beat ’em, repeat ’em.

That is the rallying cry for hundreds of start-up companies imitating Groupon, the group-buying Web site that offers daily deals on knitting supplies, skydiving lessons, barbecued ribs, pole-dancing classes and a smorgasbord of other stuff you may (or may not) want.

Groupon’s competitors have been called groupies, copycats and clones. But who can blame them? In just over two years, Groupon has accumulated 60 million subscribers, more than $1 billion in venture capital and $760 million in annual revenue to become the fastest-growing Web company ever. In December, it declined a $6 billion buyout offer from Google.

So the race is on to emulate the company’s appealing business model: team up with a local merchant, send out an e-mail blast pitching a discount coupon for the merchant’s product or service, and keep half of the revenue that comes in.

Groupon’s closest rival, LivingSocial, has confirmed a $175 million investment deal with Amazon. Other Web heavyweights — including Facebook, Yelp, Travelzoo, OpenTable and the spurned suitor Google — are all adopting features similar to Groupon’s.

But most of the companies grabbing at Groupon’s coattails do not have a vast subscriber base or millions of dollars. Instead, they are relying on a strategy called fast following — the idea that copying a blockbuster start-up yields fewer risks and potentially great rewards.

Will it work?

Full story: In Groupon’s $6 Billion Wake, a Fleet of Start-Ups