Groupon expands into SA: Daniel Guasco - co-founder, Twangoo
This interview first appeared in Moneyweb.
ALEC HOGG: Groupon.com - that's a multibillion-dollar business that's from a standing start in November 2008 is now a huge operation globally. Well, it landed in South Africa. The company has been the proverbial ship that came in for the entrepreneurs who founded a local equivalent called Twangoo.co.za. This highlight package of a fairly lengthy discussion that I had with co-founder Daniel Guasco starts with his response to my question whether he sold out 100% ownership to the Chicago-headquartered phenomenon called Groupon.
DANIEL GUASCO: We've been bought out by Groupon. We will remain in the business to grow it and continue the execution that we started last year. And of course our aspirations are to indeed become one of the leading e-commerce businesses based here in South Africa, which is indeed Groupon's intention as well. And we are happily invested by scaling the business - which I think brings us into another point, which is really what this means for this industry in South Africa, and the many start-ups that we've come into contact with along the way. In terms of text-based online e-commerce plays, it's certainly one of the success stories. The commitment and encouragement that Groupon then creates for South Africa and indeed Africa, is fantastic for anyone that's in the e-commerce online space.
ALEC HOGG: Daniel, it reminds me a bit of what Mark Zuckerberg did [with Facebook]. Of course the numbers are very, very different. Mark hit it right at the top of the bubble and unfortunately your sale of this business - well, we aren't in a bubble company any more. But it is interesting that a big international player, when it looks to expand into other parts of the world, has identified South Africa as a potential market.
DANIEL GUASCO: Sure, absolutely, ja.
ALEC HOGG: How did you get this idea? Where do you come from? What's your background?
DANIEL GUASCO: At a fairly young age - I've always been an entrepreneur. I started my first business I think at the age of 12, and nothing ever with the success that this one has been. But ja, I followed an fairly entrepreneurial path at quite a young age, and then in the process also lost everything. So it's followed the sort of typical entrepreneurial process, I guess, to some degree - or as some people do. I went into corporate life for a couple of years and did a stint over in the UK and Eastern Europe, and then decided to take some time off to focus on completing an MBA, which I did in 2008. And coming out of that I was very adamant to get back into my own business and get something started. This was the second venture - the other one was in the renewable energy space. So this was 2010's success, eventually.
ALEC HOGG: Ja, the renewable energy space is still going to take a little time, I guess, to really get traction. So you'd be an entrepreneur rather than a techie?
DANIEL GUASCO: Absolutely. In fact, the whole development of our website - we saw the opportunity, and I come predominantly from a sales and marketing background, and so does Wayne, and we realised that that was very important in terms of our position to actually make this model work. It was less about technology and more about the actual ability to execute, find the right deals, and indeed grow our subscriber base. Of course we have learnt a lot along the way, but the tech was all outsourced and in fact bought, and we partnered with a company called El Media Global, and co-developed the application and then launched a chain in South Africa.
ALEC HOGG: Interesting, Dave. He started his first business at the age of 12.
DAVID SHAPIRO: What does Twangoo do?
ALEC HOGG: It's the same as Groupon, exactly the same thing. What happens is that you go to, say, a restaurant owner, and you say to them, "If I bring you 50 people, will you give them all a 30% discount?" And the restaurant owner says "Sure." You then advertise it and if you get 50 people who sign up for it, then it gets triggered and those 50 people then get coupons and they go to that restaurant. If there are only 48 people who sign up for it, the whole thing falls out. So the whole idea here is you use social media to do restaurants, get movie tickets, plays, tickets for the arts. A big competitor to something like Computicket, for instance. You are using social media. And Groupon, started by a 29-year-old guy, is now worth billions of dollars. He's not quite a Mark Zuckerberg, but he certainly is moving in that direction. Daniel was telling me that he's engaged with him and this fellow's name is [Andrew] Mason. He's very impressive and they reckon he could be the next Steve Jobs - he's already been compared with Steve Jobs and Jeff Bizos. Fascinating story and nice to see that they've selected South Africa as place to come and invest.