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LivingSocial expected to lay off 400 in U.S.

bizjournals.com

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

#31

Post by druiid »

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…

Well, I can say about the same thing in my experiences. I personally have purchased a good number of the 'daily deal' kinds of things (including from LS), and have returned to a grand total of one. Pretty much among my friends it is much the same story. I think in general the 'deal' market was highly hyped for a product that wasn't providing (and still continues to not) a good value for the actual customers of the deal sites (the businesses, not the users).

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

#32

Post by aes256 »

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.

The sheer number of Herman Miller SAYL chairs and iMacs is unbelievable, not to mention the sheer number of employees.

Is Living Social even profitable?

Edit: To answer my own question, a $558 million loss last year: http://www.bizjournals.com/washington/news/2012/02/01/regula...

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

#33

Post by pyre »

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…

Just because you eat in the office and/or at your desk doesn't mean that you're necessarily working. I've worked places where lunch time would consist of people browsing the news on their computers or just kicking back with the people around them while they ate.

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

#34

Post by fudged71 »

dm8 wrote: post #3

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

They all fed off of the same positive network effects of the social networks, without the consistency.

I know within my own network, they were cool for a while because you got some great deals if you all worked together and shared the deals with others... but after a while, it just turns into spamming your friends, and the deals were getting less and less attractive and rare.

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

#35

Post by thaumaturgy »

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.

The giant screen was my first real "huh" moment, but also: rock walls really aren't cheap, nor is that office space, or the multiple stainless steel appliances.

It's not that I think this money was mis-spent -- at best those things might have been able to pay for the salaries of only a few employees -- it's that, taken together, it seems to be a sign of a company that might be distracted where its resources are concerned.

Or maybe they just got really good deals on everything. :-)

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

#36

Post by patmcguire »

daniel-cussen wrote: post #16

Does anybody else remember the articles about Tim O'Shaughnessy in entrepreneurship magazines? http://www.inc.com/magazine/201203/liz-welch/the-way-i-work-... Stepping back a bit, I'm starting to see a pattern. One day, the magazines are like, "Bobby Clampit built Something2.0 out of his own golden shit with his bare. ALONE." Ten month later we have an announcement that reads "And, ah, Something2.0 announced 2,000 la…

Are we back to headcount as a success metric? The most surreal thing I remember about Startup.com was the company going "oh no, we're in trouble" every few months, doubling in size, and then going "oh no, we're in even more trouble."

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

#37

Post by patmcguire »

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.

DC office space has to be expensive, they can only build up 7 or so stories by law (nothing can be taller than the Treasury building).

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

#39

Post by rwhitman »

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…

The thing that leaped out at me from those galleries is the obvious evidence they were building a headcount empire...

The rock climbing wall and big TVs don't strike me as quite as outlandish as the sheer number of workstations and chairs stuffed in the conference rooms

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

#40

Post by unohoo »

dm8 wrote: post #3

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

Here's why things are headed downwards - There are way more reasons as well, but these are the most significant:

1) Victim of its own success. Groupon, LS expanded way soon, way fast. Daily deal sites start popping around all over the place creating chaos and irritation for both the merchants and the customers (merchants bcos the same merchant gets solicited by 10 diff daily deal sites - customer bcos now you're unsure which site has the best deal and too much email)

2) The last part of (1) above can be listed as merchant and customer fatigue.

3) Its uneconomical to hire and retain salespeople in big cities like Chicago/DC etc. For this model to work, the sales team should be in a extremely low cost area. Sales team will be one of the biggest expense for such a company/startup

4) Groupon / LS are not proving effective ROI to merchants

5) Novelty factor has worn off -- making it difficult to keep customers engaged. Now, the customer is engaged only if its an awesome deal from an awesome merchant. For the remaining merchants, the purchase pattern is more driven by 'need' -- not so much impulse any more. For eg: Meh - I need to get oil change done. Might as well check on Grpn/LS to see if there's a deal being offered.

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