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LivingSocial expected to lay off 400 in U.S.

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Re: LivingSocial expected to lay off 400 in U.S.

#21

Post by Domenic_S »

ChuckMcM wrote: post #14
moocow01 wrote: post #8

Earlier quoted context omitted.

I think for the most part daily deals were a macro- experiment. Everyone jumped on board - startups, businesses of all shape and sizes, as well as end-customers with high hopes everyone would win. I think what were finding out through the experiment is that it just isn't really sustainable for much of anyone. I dont know if that segment will be disappearing anytime soon but the model will have to adapt.

I agree and I think it is an important insight. Why did everyone jump onto this thing? My intuition is that the turbulence in media, from mp3 players to PVRs to online newspapers to Netflix and other on-demand video experiences has seriously damaged the way in which small business would "talk" to their potential customers. This is a gaping hole that has yet to be well served. So I wonder if the macro experiment was t…

> So I wonder if the macro experiment was that something like Groupon would replace it those other forms of outreach.

It's flawed as an experiment in reaching people through new media because the price points are unsustainable. If you're offering a product or service that's at least marginally interesting at 70% off as a reward for booking through a certain channel, then some portion of the population is going to book through that channel no matter how cumbersome it is.

In other words, if the deal is compelling enough, the channel doesn't really matter.

What we're seeing is small businesses wising up to the fact that no, they're not going to get enough increased sales to account for the loss leading groupon. So they're moving back to the traditional 10-20% off 'deals', and the deal sites are taking a bath in the process.

Re: LivingSocial expected to lay off 400 in U.S.

#22

Post by Domenic_S »

brianbreslin wrote: post #12
Domenic_S wrote: post #6

I still wonder about the daily-deal business model. The premise that loss-leading discounts will spark increased retail-price customers is losing its believability. In my circle I've never heard a business referred to as "that place I found on Groupon" -- I've really only seen it used as a marketplace for deep discounts on one-time (or nearly one-time) purchases. A groupon for skydiving or a guided tour? It doesn't m…

I don't think daily deals was the end-goal. Getting small business customers was.

If the small businesses take a bath on the daily deals though, you've alienated the small businesses instead of gaining them.

Re: LivingSocial expected to lay off 400 in U.S.

#23

Post by hkmurakami »

A percentage figure gives us a much better idea of what the scope of this layoff will be.

> LivingSocial, which has raised more than $800 million in funding, entered 2012 with a staff of roughly 5,000. The company’s most recent publicly disclosed headcount stands at “more than 4,500 employees,” according to its website.

So that's around 8-9% of its workforce.

Re: LivingSocial expected to lay off 400 in U.S.

#24

Post by RandallBrown »

MatthewPhillips wrote: post #20
dm8 wrote: post #3

Honest question, why daily deals sites are imploding all of a sudden?

It's not profitable for the customers (mostly small businesses). They take big losses for the events and don't acquire repeat business. The consumers who partake are only doing it for the deal.

Maybe for some businesses it's not profitable, but it could be fantastic for places like a restaurant.

Every time I buy a groupon for a restaurant it's one I haven't been to before. It's never enough to pay for more than 1 meal and I don't really ever go alone. I usually buy a drink, soft or alcoholic, they're high margin. If I like the food it's on my list of places that I'll go back to. If I don't like the food, they still made some profit.

I think the problem is that these daily deal companies scaled way too fast. Instead of getting profitable in one city and growing, they tried to go nationwide and hired gigantic sales teams. Then, to make quick money they started selling terrible products and people lost interest.

Re: LivingSocial expected to lay off 400 in U.S.

#25

Post by untog »

thaumaturgy wrote: post #19
incision wrote: post #17

Can't say I'm surprised by this. I pass their fancy offices [1] all the time, but I'd have a hard time naming anyone who uses their deals regularly. They've gone from expanding rapidly [2] to laying off heavily in 7 months. It's a shame as they were often touted as a success story for tech [3] and business in general in the area. 1: http://www.businessinsider.com/living-social-office-tour-201... 2: http://www.washing…

Wow. Look at all that money spent on things that didn't make their business better.

Yes and no. While you can go too far with it (and I'm not judging whether LS did) having a nice office makes workers happier, and more likely to stay. Providing free food means they are less likely to leave the office, etc. etc.

It's not a total waste of money, but it can be.

Re: LivingSocial expected to lay off 400 in U.S.

#26

Post by TillE »

thaumaturgy wrote: post #19
incision wrote: post #17

Can't say I'm surprised by this. I pass their fancy offices [1] all the time, but I'd have a hard time naming anyone who uses their deals regularly. They've gone from expanding rapidly [2] to laying off heavily in 7 months. It's a shame as they were often touted as a success story for tech [3] and business in general in the area. 1: http://www.businessinsider.com/living-social-office-tour-201... 2: http://www.washing…

Wow. Look at all that money spent on things that didn't make their business better.

Except for the giant screen, I don't see much that looks particularly extravagant. Too much space (why all those meeting rooms?) and too many employees, probably, but it's hardly Ion Storm.

Re: LivingSocial expected to lay off 400 in U.S.

#27

Post by columbo »

untog wrote: post #25
thaumaturgy wrote: post #19

Earlier quoted context omitted.

Wow. Look at all that money spent on things that didn't make their business better.

Yes and no. While you can go too far with it (and I'm not judging whether LS did) having a nice office makes workers happier, and more likely to stay. Providing free food means they are less likely to leave the office, etc. etc. It's not a total waste of money, but it can be.

> a nice office makes workers happier

I agree, but there's always going to be a 'good enough' point somewhere between drab-gray-walls-office-park and million-dollar-renovation. When I see startups do this I see them pushing too far to the right end of the bell curve.

Some startups really come off like 'new money' people: buying lavish top-of-the-line-equipment with the same mindset as someone who buys $500 flip-flops because they saw Jennifer Aniston wearing them.

I'd much rather see experienced people that know when to invest in something and when something is 'good enough' over someone bragging about their 50+ retro arcade room.

> Providing free food means they are less likely to leave the office

This bothers me to a point that I am less likely to consider a company that offers free food. I look at these 'perks' as "Oh hey, we'd prefer if you would stay and work through lunch, also, why not just stay and work through dinner! We're having Pasta tonight! Breakfast anyone???" Nooooo Thankyou.

Re: LivingSocial expected to lay off 400 in U.S.

#28

Post by bananafoster »

Kopion wrote: post #4

Maybe Hungry Academy wasn't such a good idea after all...

FWIW, I applied to Hungry Academy and made it to the interview round, where they flew me to DC and put me up in a downtown hotel.

I was sort of boggled that they flew in and housed about a hundred applicants, some from as far away as China.

If you can afford to do that, great, I guess - but clearly they couldn't. In fact their first massive loss announcement (of almost $600MM) was about a week later.

Re: LivingSocial expected to lay off 400 in U.S.

#29

Post by incision »

TillE wrote: post #26
thaumaturgy wrote: post #19

Earlier quoted context omitted.

Wow. Look at all that money spent on things that didn't make their business better.

Except for the giant screen, I don't see much that looks particularly extravagant. Too much space (why all those meeting rooms?) and too many employees, probably, but it's hardly Ion Storm.

>Too much space (why all those meeting rooms?) and too many employees, probably, but it's hardly Ion Storm.

Keep in mind that space in DC is anything but cheap [1][2] and LS has some prime locations.

1: http://www.businessnewsdaily.com/2855-most-expensive-commerc...

2: http://www.inc.com/news/articles/2010/10/washington-dc-rents...

Re: LivingSocial expected to lay off 400 in U.S.

#30

Post by untog »

columbo wrote: post #27
untog wrote: post #25

Earlier quoted context omitted.

Yes and no. While you can go too far with it (and I'm not judging whether LS did) having a nice office makes workers happier, and more likely to stay. Providing free food means they are less likely to leave the office, etc. etc. It's not a total waste of money, but it can be.

> a nice office makes workers happier I agree, but there's always going to be a 'good enough' point somewhere between drab-gray-walls-office-park and million-dollar-renovation. When I see startups do this I see them pushing too far to the right end of the bell curve. Some startups really come off like 'new money' people: buying lavish top-of-the-line-equipment with the same mindset as someone who buys $500 flip-flops…

"Oh hey, we'd prefer if you would stay and work through lunch"

While some offices might be like that, not all are. I have a cafeteria in my office and I'm very glad for it- it saves me having to go out in the rain to get lunch. It has a separate seating area so it's not like you're expected to be typing while you eat.

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