Over 5 years ago I turned down an offer to work at LivingSocial. Last year, I would've been worth $10 million on paper. All of that fake wealth evaporated today. What a mess.
Did another company offering options take its place?
LivingSocial: Employees' and Founders' Common Stock Now Worthless
61–70 of 238 posts
Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless
#62This is absolutely terrible news. I don't care if you "like the daily deals business model" or "hate the daily deals business model" - this is very very bad news for a lot of people. It will have impact on the rest of the industry and perhaps already has. We should be very disappointed that things have gone south in this way. We should work harder to build profit into our businesses and we should hope still that Livi…
Maybe I am being too insensitive, but ...
I think that if the valuation for companies, which have been overvalued corrects itself, that is ultimately a good thing for the industry and society at large. It means that resources are being freed up to work on more valuable things. It is also another case study from which this young industry can learn.
As for the employee and investors, they have taken a deliberate bet on the company and lost their stakes. This is what you sign up for when you decide to work for / invest in a start up.
Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless
#63I know some of Living Social's original investors, and I approached them for an investment in my startup about 8 months ago. Part of our pitch was that daily deals solve and amazingly valuable problem in an inherently not-valuable way, and although our system would take less of a straight line, it would and already WAS solving the problem for a small subset of businesses in a more valuable and vastly more sustainable…
Whether or not they privately thought you were right, openly betting against one's own companies is rarely a prudent move for any investor.
The simple fact is that over the long (enough) run, there is no such thing as sustainable competitive advantage – markets change, grow, shrink, die – if you're not actively exploring what will replace your offering or share the market with it, you can rest assured that someone else is and eventually, they will enter your space.
So, IMHO, the smart money finds the best alternatives and bets on them too, at some point... (or they exit, if the market is simply going to die, but that's another angle).
Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless
#64Not enough cash to pay local merchants? If I were a merchant on LivingSocial I would be cancelling any further deals and notifying my customers that they should be filing chargebacks. I doubt the credit card companies would let LivingSocial off as easily as their employees had to.
Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless
#65Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless
#66You never would have thought by their office space that anything was wrong... http://www.businessinsider.com/living-social-office-tour-201...
So true, also surprised they didn't have a super bowl commercial. It's like the dot com hype all over again but with crazy short term revenue that's unsustainable
But they did have a Super Bowl commercial: http://www.youtube.com/watch?v=33jb2Ns7yaQ
Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless
#67I am honestly surprised they've lasted this long. The whole current premise of daily deals does not work whatsoever. Every business owner I've ever known that has done one of these daily deals has never done them twice, why? Because every deal offerer (restaurant, beauty spa, dentist, tooth whitening formula company, discounted holiday) loses out and it has been proven a daily deal coupon doesn't mean you'll get a return customer because lets face it, most of the people buying these daily deal vouchers like bargains and your standard price offering is probably way out of their affordability league.
I once considered a daily deals type site where the premise was there is a strictly limited number of deals driving up the demand and at the same time, not bankrupting the family owned hardware store because 800 people bought their $500 worth of tools for $120 voucher because they thought more vouchers would mean more return business. Sucks about the stock though, I'm sure every single employee of LivingSocial deserves that money, they had a good thing going. I feel sorry for the families of the employees who are about to lose their jobs. They say the economy is on the mend, the increasing number of failing business stories I read every week says otherwise...
Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless
#68Whenever someone offers you equity or shares....
Try to remember how many times it ends up being worth something, and staying something.
otoh, getting valuable mentorship like YC is probably worth paying for.
Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless
#69Earlier quoted context omitted.
Do you think Daily Deals are a fundamentally flawed concept? I tend to think there's nothing wrong with them other than an over-saturation of the market and a prevailing attitude that says all you need is a sufficiently large mailing list to win. But that's just my outsider's view.
They are flawed unless you can do something about retention. Has anyone tried the concept where the "deal" is that you go, name the site, and get a coupon giving you a deep discount the SECOND time you go back to that store? That would seem to make more sense. Because everyone that the store gives the deal to, has actually paid full price once. And wanted to go back. And if you've been twice, you're more likely to go…
Very good point. I haven't tried the concept in the context of a deal site, but it absolutely works for a regular business.
I learned early on with my company that when people say things like "give me a deal - I promise I'm going to be your #1 customer if you give me a discount for my first purchase" that the best (for me) possible response is: "How about your pay full price now and the next time you come back I'll give you that 20% off you're asking for." Those that bite actually become loyal customers and appreciate it. Those that don't probably wouldn't have come back anyway.
And, btw, I learned the hard way that 99% of those "future #1 customers" never came back - even when I caved and gave a discount. Hence the revised model.
Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless
#70Over 5 years ago I turned down an offer to work at LivingSocial. Last year, I would've been worth $10 million on paper. All of that fake wealth evaporated today. What a mess.
Had you approached the offer cynically, how much of that money could you have gotten out before this collapse?