Back in the 90s, I was a huge fan of Mercata (during its fleeting existence), the predecessor to all of today's group buying sites. And it doesn't take long these days in any conversation about the consumer internet for Groupon to come up, at which point anyone who has been around a while will usually point to Mercata and say something like "clearly it was too early for the concept."

Outside of how much information people are willing to publish about themselves, I find this to be a poor excuse for why something didn't work before. And as it happens in the case of Mercata/Groupon, I've finally discovered why. Listening to Andrew Mason (the Groupon founder) on Mixergy over the weekend, it becomes clear quickly that he was applying a key lesson from his failed attempt at a "collective action platform" (The Point): getting the audience super-focused by providing limited choice. More importantly, he did this in the local space— where unlike Mercata's attempts in electronics— it was fairly easy to overwhelm a local merchant with a relatively small user base. This online/offline lever quickly proved the concept both to themselves and to the merchants upon which they relied to drive the "deals" that grew the site.

In these heydays of lean startup mania, everyone talks about focus as the key way to find your initial product/market fit, but this kind of "limited features that please a small number of people across the Internet" is a bit different from Groupon's leveraged approach for early traction. For sure the early merchants were underserved when it came to performance marketing channels which is most likely what has helped the category explode both in the US and abroad. But the better early lesson for small startups might be that finding the right source of overwhelming leverage to prove out a an early business model (i.e., send your 400 Facebook friends to your local coffee shop on a given Saturday morning) might provide some interesting avenues for getting started.

Especially as mobile and location seem to be the race du jour, it would seem that thinking through applying this online/offline leverage might yield better early outcomes that obsessing about the first million users and being stuck with fundamental user density challenges.