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Ask HN: How do you launch a network effect startup like a Groupon clone

28 points by throwaway1984 ↗ HN
Hi HN, lets take a groupon clone as a case study. Assuming you had a significant differentiating factor that would make you more attractive than Groupon to a particular group of businesses/buyers - how would you go about launching it? How would you line the first set of businesses and attract buying customers the first week of launch?

26 comments

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Kilimanjaro
I am very interested in this topic since I am working on a project that, if marketed properly, will leave groupon biting the dust.
petervandijck
I'm working on a project that, if marketed properly, will leave Facebook biting the dust.

;)

Kilimanjaro
Good luck on your project, you will need it much more than I ;)

The difference between facebook and groupon is that the former has plenty of competition and everybody seems happy with it, while the latter is practically a new niche and is pissing off everybody with their huge cuts from 50% to 100%

So, there is plenty of room for better groupon alternatives that can treat their customers better.

il
There are actually several groupon clones out there. Some are growing, most are failing to get any traction.
Kilimanjaro
I've seen some of them. They all do the same, so they can't compete with someone who has millions in funding.

We are going to try a different approach, something really appealing to the merchants while being fun to use everyday for the consumer.

There is nothing technologically challenging but as the main post suggests, getting the first merchants on board will be the most important step.

Wish us luck.

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chaosmachine
You need to get some deals that:

1. Are so good people will tell their friends. 2. Appeal to a wide enough audience that all of your initial customers have at least one friend who would actually be interested.

If you can convince a few retailers to make these kinds of deals with you, then you just need to get a core group of highly connected early users to start the word-of-mouth chain. If you have a popular Twitter account or blog, you're half way there.

Obviously this is kind of chicken/egg, so you need good connections in the retail world, the kind who owe you a favor or take "incentives".

andrewtbham
I agree the key is some good deals. maybe you can get a retailer to do some cross promotion... i.e. the retailer promotes your site.
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systemtrigger
> How would you line up the first set of businesses

Call prospective partner merchants and pitch them over the phone. If they seem open to the idea, set up an appointment to meet in person. Present, negotiate terms and get them to sign a contract. Take photos and write a blurb about the business. Rinse, repeat.

> How would you attract buying customers

Before launch, make the homepage a signup form. Chat up the social media channels. Launch when you have a big list (~10k) of email subscribers.

yeabuddy
Groupon spent a LARGE amount of money on marketing. They had a pretty large affiliate marketing program that paid out ~$2ish range I believe for an email submit. Affiliates blew this offer up.
il
Best answer here. I used to run traffic to Groupon clones so I know all about their affiliate program. The secret is building high converting landing pages and a strong backend. Then push the offer out to affiliates who can drive lots of traffic and sit back and wait for signups.
sandGorgon
care to elaborate about strong backend ? are you referring to the system architecture (DB, site responsiveness, PHP vs Ruby, etc.) ?
instakill
I think by strong back-end he means a strong google adwords program with good optimization and conversion rate etc.
waitingforgodel
He's using backend in the direct marketing sense... What you do with a customer after you make the initial sale (cross selling, up selling, follow up pitches, customer reactivation, referral drives, special events, etc, etc)
il
You got it right :) Specifically, in this case, it's all about how well you can upsell and how effectively you can email your existing customer base to keep them engaged.
ajitvarma
They also had a large call center that were experts on selling over the phone. There are well documented reviews of how they were able to get so many deals for so cheap on the web. In my experience as a software engineer, talking to businesses about giving me offers is not what I want to do and terribly boring but many people love it. You need to find the right people.
aberkowitz
The best way to start any sort of "social business" is on a micro scale. In this case, for example, you could start with a local shopping area. Niche stores and small businesses are a lot more willing to try new ideas. Once you become more successful, you can branch out.
aymeric
I'd focus on building a followers list (email list, facebook fans, twitter followers, blog subscribers).

Then when you speak with businesses, you tell them how many people you can contact, it will help them accept to offer a greal deal for your launch.

Affiliates might also help building that list.

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tincho
Hi. I can tell you my experience w/groupon. I live in Argentina, but I've known groupon since march. They launched here like 2 months ago, and as someone has said before, they are trying to crush the competition with MASSIVE advertising. The thing is, that they wanted first mover advantage.

Now, considering that you are trying to enter to compete to a well established business you have 2 alternatives. 1) get funding and launch masively 2) start small and try to bootstrap. Anyways..the question in the end would be..how fast can groupon copy your features? (if they are that good at all). Best of lucks!