Tippr Expands to 10 Cities, Takes on Groupon in Social Buying Online

5/11/10Follow @gthuang

Tippr vs. Groupon. It sounds like a mismatch on paper.

Groupon is the Chicago-based goliath of online “group buying” that seemingly came out of nowhere to raise $135 million last month at a company valuation north of $1 billion; at last count, it had some 270 employees. Tippr is the Seattle-based social discount voucher site that got started in February, led by entrepreneur and investor Martin Tobias (pictured above right), and has about 20 employees. The key is, it’s trying to play a different game.

This week, Tippr is expanding beyond Seattle to a total of 10 cities nationwide, including San Francisco, Los Angeles, Chicago, Boston, New York, Washington DC, and Atlanta. In terms of the number of local markets, Tobias says that puts Tippr at #3 after Groupon and LivingSocial, and just ahead of BuyWithMe, another group buying site.

But I wanted to drill down into why Tobias thinks Tippr really has a chance against the likes of Groupon and other big competitors. “Tippr has the most extensive and deep patent portfolio in group buying,” he says. It’s what he called “the pocket aces of IP,” the last time we spoke. Those patents come from Mercata, a failed Paul Allen-backed startup from the dot-com era, and they cover things like price optimization, demand curve modeling, and buyer-seller interaction models. (Tobias was non-committal when I asked whether he thinks Groupon’s offerings infringe on Tippr’s IP—but he didn’t say no.)

OK, that all sounds pretty abstract. What Tippr does is offer discount vouchers online for local stores and services, such as restaurants, hair salons, and cleaning and repair shops. As more people sign up, the savings per consumer increases, in a process called dynamic pricing (or an “accelerating deal”). Tobias says Groupon and LivingSocial don’t have that. “We bring new features to the market,” he says.

Tippr also seems more focused on small businesses than its competitors are. “We’re in the business of helping merchants, rather than just making ourselves a buck,” Tobias says. “It’s such a big win-win for both the consumer and the merchant. It is a great business model.”

More fundamentally, he says, “Groupon is building a brand. We’re building software.” What he means is that Groupon has positioned itself as a consumer brand and category leader, and other competitors are playing catch-up. Tobias says he is trying to capitalize on a different model and approach. “Tippr is creating a platform to allow other publishers and other providers to be in the daily deal business,” he says. Seattle Magazine, for example, has formed a partnership with Tippr to put a “deal widget” on its website so its readers can see daily deals. Tobias says this sort of affiliate relationship will help drive Tippr’s traffic in the next three to six months.

Tobias also counts his previous CEO experience as a competitive advantage. The former head of Seattle-area companies Imperium Renewables and Loudeye Technologies—and Kashless, which spawned Tippr—points out that Groupon used to have expiration dates for its vouchers, which he says is illegal in 28 states and led to a recent lawsuit in Illinois (which was settled last month). “At Tippr, there are no expiration dates,” Tobias says. “We follow all the rules.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

By posting a comment, you agree to our terms and conditions.

  • groubuyer

    Tippr has absolutley no traffic. There are only a few daily deal sites seeing any traction…tippr is not one of them.

    http://siteanalytics.compete.com/tippr.com+yipit.com+dealon.com/

  • David L

    Tippr very well might carve out a niche for themselves. But if they do, it won’t be because of their amazing IP portfolio.

  • David

    We’ll see where it goes. But when I just subscribed, of course the only deals present are for a hair salon and personal training/gym (and only in LA – whereas I am in San Diego). Groupon is REALLY getting old with the spa treatment deals. If all Tippr has to offer are more spa treatments, they’ll crash before they even get off the ground.

  • Pingback: Lost Remote | Tippr will battle Groupon, Living Social in 10 cities

  • Mike

    Tippr is terrible…Martin patent trolling and his patent “arrogance” will soon bite him back…the picture above shows it all. In poker, 2 aces does not mean you win.

  • IPRulez

    Wow, i think Tippr focuses more words gloating about its IP than focusing on deals… i guess by software he means nailing down some super loose IP.

  • Charles

    First, the media shouldn’t be giving Tippr one second of coverage. I hate to see them on this website. Second, Martin Tobias is an unethical business man looking for an easy dollar. He’s a patent troll. Instead of working hard and building a business from the ground up like Groupon and the other group buying sites, he is going to buy his way in and use the legal system. Martin Tobias is going to use these patents to blackmail the rest of the industry. Third, the group buying sites have played a very important role in the current economy. I believe many small businesses can use group buying very effectively to find new customers. Mr. Tobias will put a halt to this unless he use his site and only his. Fourth, businesses and consumers should stay away from Tippr and put them out of business. Fair competition breeds success and Martin Tobias and Tippr don’t believe in fair competition and hard work. Small businesses and consumers need to boycott them and anyone they work with.

  • Mark

    I cant agree more with “Charles” (above post. Here is something even more laughable http://www.deepgreencrystals.com/archives/2010/05/when-is-an-api.html

    It’s Mr. Tobias crying about Groupons API. Guess he could not steal it. Shame on tippr and shame on you Mr. Tobias.

  • Charles

    I just read the link Mark provided and all I can say is, “Mr. Tobias…Would you like some cheese with your wine?”

    Let me give you some advice Mr. Tobias. There are three things I learned as a kid that apply here. First, don’t be a cry baby as it wont get you anywhere. Second, nobody likes a tattletale. Third, and most important, stealing is bad.

  • http://www.magicgig.com David

    I hope to see group buying sites that will deep inside the major cities of each states and even with more than one category per day.

  • http://www.cgfunding.com Stefan Gruenwald

    Several groupon-like site aggregators (like http://www.dealosaurs.com) are showing up where you can see all the deals at once without signing up for the individual sites and getting these annoying daily emails. These sites are much more useful.

  • Robin

    I just saw a charge for AT TIPPR on my bank statement for 19.00 and it stated recurring Purchase. I immediately called the phone number associated with the company and the number has been disconnected. Scary stuff, oh yeah, I stopped the payments.

  • Pingback: Dealzapoppin’ in the Group Buying Space | The SunBreak