Groupon CEO unveils the secrets of his start-up

In only three years, "deal of the day" company Groupon is the fastest growing company in the world, in 500 cities in 46 countries and with 7,500 employees, mostly local sales representatives.

Groupon founder and CEO Andrew Mason closed the day of presentations and panel discussions at the first e-G8 Summit in Paris, telling the audience that the Chicago-based Groupon's secret for success is a focus on customers.

"We put ourselves in the shoes of the customers every day," Mason said. "We have to make Groupon the coolest, most user-friendly company. The company is run by irrationally entitled Gen Y people. We try to imagine that customers have that same mentality. One benefit of not being in Silicon Valley is that you don't look at your customers with skepticism."

Groupon gets a 50 percent margin from each deal. Mason said the merchant only pays if the customer purchases a Groupon.

The daily deal company also knows the profile of its customers: About 70 percent are urban women, mostly young, and many offers are geared toward this customer. About 90 percent of all Groupon offers are successful as reported by advertisers, Mason said.

Another key to ramping up the company quickly and successfully is that hiring thousands of people required a specific profile and training for each person, worldwide.

"We hire entrepreneurs who can follow our playbooks. We hire people who can do the hiring, and we find people who can share the information about hiring well. Once you figure out the playbook, the model works so well. Maybe it's even easier than it seems," he said.

The "push" model of daily deals pushed to customers'' e-mail boxes with permission is now being supplemented by a "pull" model called Groupon Now (groupon.com/now). The new geographically-based offers are being tested in the Chicago market. If a customer wants dinner now, for example, he can search for current offers in his geographic area. Advertisers can also offer deals on the fly that would feed into the deals offered to customers seeking a restaurant in their neighbourhood now.

"We are trying to build a true local e-commerce marketplace," Mason said. "While serving in our role as curators, we make it easy for customers to try businesses that aren't the big brand."

Mason said the serendipity associated with receiving a deal of the day in their e-mail boxes has helped some customers experience activities they would have never experienced, like yoga or sailing. "We are catalyzing passions. Customers never imagined rock climbing, but find they love it."