With approximately $36 million in funding and a $280 million valuation, Groupon is the 900 pound gorilla when it comes to group buying sites. If you’ve studied economics, you’ve probably realized that these sites are successful because they allow local businesses to take advantage of economies of scale whereby average unit cost decreases as more goods are purchased. With the model’s success and lack of barriers, the group buying space has gotten crowed as the likes of LivingSocial, Homerun, Myjoffer, and a slew of smaller sites have set up shop. In fact, because the model is predicated mainly on “reach”, anyone with a large user database can start selling “groupons”. After carefully analyzing the group buying market, I’m convinced that we’re witnessing the first iteration of a new form of highly competitive commerce. Unlike social networks like Facebook and Linkedin which seem to operate as an oligopoly, the group buying market will have lots of players selling almost identical products. So with this being the first iteration, there are three distinct areas I've identified that need improvement.

A buddy of mine pitched me on a business idea recently, it wasn’t a bad idea but it really made be wonder about the types of internet startups people are launching today. His idea revolved around a plug-in that he felt would add value to the social world. These types of ideas seem to be rampant lately, everywhere you look, a new product is launching based on some API. Facebook started this, then came Twitter and Yelp, these days it seems like API’s are everywhere with Citysearch, Foursquare, Gowalla joining the mix. Think about this, how many sites have you come across recently with a domain name that incorporates the word “Tweet”?

Feedback, feedback, feedback! If you’re planning to launch a startup, you better get use to it. Virtually everyone will have something to say, some will share their opinion about your product, while others will tell you what you need to do to grow market share. As an entrepreneur, the trick is to develop a way to effectively evaluate this constant flood of information. Anyone who has built a successful business would probably agree that their ideas very rarely ever turn out as they were envisioned. Meaning, a significant amount of initial business plans are changed or discarded within the early phase of business as founders realize that their initial concept is flawed. Generally, the feedback entrepreneurs receive isn't any better.

We’ve all heard that being an entrepreneur is difficult. There’s never a shortage of people willing to explain the reasons your idea won’t reach fruition. Family, friends, even recent acquaintances, constantly remind you of the probability of failure. Without a strong team to not only help with the workload but also serve as a support structure, I wouldn’t even recommend purchasing that domain name. Needless to say, as soon as you start to take your idea seriously, it feels like the odds increase exponentially against you.    

As difficult as it is to decide to go for it all, this difficulty can be further compounded when your life feels relatively stable in a midst of a severe recession. And what if you’re employed in an industry (Finance, Real Estate) that’s struggling but you’ve managed to keep your job, should you quit?