These days, Groupon (GRPN) reminds me of Travis Bickle, Robert De Niro’s character from Taxi Driver. It was down and out just a few months ago, but it’s been doing pushups and saying, "You talkin’ to me?" into the mirror, ready to take on the world.
Its latest push, a foray into the world of payment processing, is its most daring move yet.
The aggressive, competitive strategy that the company has adopted is interesting because it’s so obviously not the easy way out; instead of abandoning creative solutions and trying to better calibrate its existing online-coupon business model, Groupon has instead opted to reinvent itself. It has good reason to do so: Ever since the company’s IPO in November of last year, its share price has dropped from its initial value of $20 to as low as $4.15 in September.
Now, a company doesn’t have to be grasping at straws to give itself a makeover. Both eBay (EBAY) and Microsoft (MSFT) have recently launched new, ultra-modern logos to go along with their new directions, as eBay becomes more of a socially-oriented shopping experience (incidentally, one of eBay’s social media programs is a very Grouponesque “Lifestyle Deal”), and Microsoft shifts towards becoming a hardware-and-services provider. But while Groupon’s move is certainly a bit of a Hail Mary, it's the degree of the changes that is most intriguing.
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A couple of months ago, I wrote about a few niggling doubts I had concerning mobile payment company Square’s partnership with Starbucks (SBUX). Since then, Square has been fighting battles on a couple of fronts when it comes to its competition in the payment processing industry, the strength of which means that while I’m still hesitant about Square in particular, I’m fascinated by the potential of this quickly-developing field.
Groupon’s entry is particularly interesting because it’s competing directly with Square in the race to turn every cash register in the world into an iPad. Groupon’s most recent purchase, a company called Breadcrumb, just completed a successful pilot run here in New York and launched nationwide yesterday. This has led to an uptick in the company’s stock, which is up 4.36% to $5.27 just a day after the launch.
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I’ve already seen both Square Register and Breadcrumb in use, and I have to say that Breadcrumb is more intuitive to use and better designed for the role of a cash register stand-in. Also, intriguingly, a YouTube or Flickr search for "breadcrumb" triggers a sponsored advertisement by Square above the search results. Is Square CEO Jack Dorsey getting a little defensive, perhaps?
It’s not just mobile payments that Groupon is going for, though. It’s online payments, too. Groupon Payments came out last month in direct competition with eBay’s PayPal service, and the company immediately saw a 14% jump in its stock price. Groupon is trading at its highest value since August, and so far it seems like an obviously successful turnaround that’s only going to improve.
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This strategy from Groupon is an interesting one: Abandoning an original, novel idea to instead watch developing fields and try to elbow out the competition by producing better solutions. Investors love the idea of originality; the company’s stock popped 40% on its first day of trading. But eventually that thrill of discovery fades, and it’s the companies that admit their mistakes and move into new areas that might just survive. Groupon looks to be doing just that.