(ex-Groupon dev) The businesses that Groupon works well for have a) unused capacity to service additional marginal customers, and b) good retention/ongoing bus

(ex-Groupon dev) The businesses that Groupon works well for have a) unused capacity to service additional marginal customers, and b) good retention/ongoing business once people try them. Good examples: gyms, salons, masseuses, adventure sports, skydiving, concerts, travel packages, overstock goods, etc. Bad examples: popular, crowded restaurants. Unfortunately, people eat out a lot more than anything else, so a lot of people bought Groupons for businesses whose business model didn't match Groupon's value proposition. This was not well understood in 2012 (well, maybe it was to leaders of Groupon/Living Social/etc that had the numbers) and so the market size was not clear. But everyone knew that the returns would go to the biggest player, hence the intense competition for funding, advertising, customers, and merchants. I suspect that Groupon's competitive landscape is one reason why Uber has been so aggressive in fundraising and expanding - to win at lower cost than having to battle every every market, and correctly size fundraising to the actual market.