A restaurant owner I worked with agreed to run a Groupon. They offered a 40€ dinner for two at a 50% discount for 20€. That was already a fantastic deal. But Groupon took 50%, so the restaurant owner got only 10€ per sale. They sold a lot of them.
The Groupon sales person promised them that this would be great advertising, that people would bring their friends, and that they could sell fancy drinks and cocktails to the guests, so they would make a lot of money.
So over the next 6 months or so, every day a few people would show up, redeem their Groupon to get their 40€ meal, order no drinks, and never come back again.
It was a really shitty deal for the restaurant, but it was a fantastic deal for groupon -- they got a 50% cut for selling a ridiculously cheap meal.
Of course, no business owner in their right mind would ever agree to such a crappy deal a second time. So the success of Groupon was based on finding new, unsuspecting businesses who could be talked into offering such a sweet deal.
In the beginning, with all the hype, that was an easy task. So they saw huge growth at the beginning. But it wasn't sustainable growth. Groupon was exploiting hapless business owners that haven't yet been burned by sleazy marketers.
As soon as the too-good-to-be-true deals became less frequent, Groupons customers also started leaving.
I don't understand how anybody who knew anything about the business could think that this was sustainable.