Mihir Shah of Mob.ly on Why Groupon Bought His Company

Groupon, the fast-growing collective buying site, said today that it’s setting up an outpost in Silicon Valley by buying the mobile app development shop Mob.ly, whose CEO, Mihir Shah, we spoke with this afternoon. Shah wouldn’t spill the beans on the purchase price — though Groupon clearly has cash to burn — but he did offer up a bit about the background behind the deal.

Mob.ly CEO Mihir Shah

Mob.ly started life in late 2007 as Goodrec, and launched its mobile recommendations site under that brand in September of 2008. Investors Jeff Clavier, Richard Wolpert, John Borthwick, Aydin Senkut, David Shen, Eric Ly and Auren Hoffman put in a total of $1.1 million on the strength of Shah, who had formerly led product management at Yahoo, and co-founder Yishai Lerner, the former director of engineering for Carrier IQ. Goodrec is still operational — there’s also a restaurant recommendation spinoff GoodFood app — but shortly after the product launched, Mob.ly moved its focus to helping other companies build mobile applications on the BlackBerry, iPhone, Android and Palm platforms.

The Palm OpenTable app made with Mob.ly

Mob.ly’s existing customers include Yahoo, Digg, OpenTable, NBC Local Media, The Colbert Report and Tripit. Shah said Mob.ly has built up expertise in adding location-based functionality to enable local functions suited for a mobile phone. So for instance OpenTable now sees 7-8 percent of its reservations booked from mobile. Mob.ly also knows the ins and outs of the user interfaces possible on each platform, and has provided strategic mobile advising for its customers.

The six-member Mob.ly team will now comprise Groupon’s mobile team. Groupon currently has a iPhone app but Shah said there’s “a lot of potential” in mobile for the company. “It was just a phenomenal opportunity” to join Groupon, he said of the acquisition. Shah, joined by Groupon Chief Data Officer Mark Johnson (formerly of Netflix), will also help Groupon establish a Silicon Valley office for hiring purposes.

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