31–40 of 154 posts
Oh for chrissake: Just release the funding docs and term sheet. The letter was full of possible half-truths(eg: 'There is no "4x liquidation preference"' does not preclude 3x or 5x or any other number besides 4), so smart employees should be looking until they see the docs.
Earlier quoted context omitted.
Not sure why you are getting down-voted, since what you say is unquestionably true. I hope the whole "daily deals" fad dies soon, along with all the shitty companies (LivingSocial, GroupOn, etc.) that promote it. There is nothing more frustrating than getting consumers in the mindset of "I want to try it, but I'm going to wait until a daily deal comes along."
He's getting downvoted because he is commenting on the headline, and not the article. The article has absolutely nothing to do with how LivingSocial got to where they are, and everything to do with the investment that was just anounced. "What happened" is strictly referring to the details of that investment. A cursory glance at the original article makes it obvious that his comment is irrelevant. It's just pithy snar…
How did it apply to the article? Everything they did, didn't ultimately find a sustainable and repeatable business model. Instead theres all this perceived market validation of "oh look, investors say we're valuable", instead of market validation that's sustainable and repeatable.
I don't know anyone there and mean no one ill will, but without this, it certainly makes people wonder how making businesses lose money with deals for people who never come back is something you want to repeat, or how it can educate customers to become better customers (and pay full price).
I appreciate your judgement of me to be "pithy", but it's not. Snarks annoy me just as much. You can jump to the conclusions that you want but it's often fair to ask what someone meant instead of deciding what I meant in your positive and constructive open-mindedness.
This place for me is about learning to create a real business and not the lame bantering about distractions from this one requirement of any successful startup.
What I don't get is this; how does Living Social do ~$500mm in revenue and still fail to be in the black? It's not like they have any physical merchandise. All their expenses should be personnel, servers and bandwidth right? How are they bleeding through over $500mm in a year then? All the employees are overpaid? Paying too much for servers?
They count it as revenue before paying the merchant. Their true revenue is probably much lower than $500mm.
Did PrivCo or some related business entities have a short position in LivingSocial when the PrivCo statement was made on LivingSocial? Well, not in any simple sense since apparently LivingSocial is not public yet. But a short position on a related company?
Can you have a short position in a privately held company? I don't think so, but maybe there's a financial vehicle for that.
What I don't get is this; how does Living Social do ~$500mm in revenue and still fail to be in the black? It's not like they have any physical merchandise. All their expenses should be personnel, servers and bandwidth right? How are they bleeding through over $500mm in a year then? All the employees are overpaid? Paying too much for servers?
It's gross revenue rather than net. Take 50% off the top for paying merchants. Then the expenses you mentioned (sales cost, software design, hosting, etc.). My guess though is that their major cost is customer acquisition. That seems to be the norm in this space. They're buying customers for $5 and making $2.50 off them (numbers theoretical, as an example) hoping to make the rest back later when they've won the marke…
UPDATE: Just got off the phone with Hamadeh, who is standing by his original report. He says O'Shaughnessy is misleading his own employees, and that classifying the round as "equity" is a technicality given all of the debt-like provisions PrivCo continues to believe were attached. He also says that PrivCo spoke with a LivingSocial spokesman prior to publishing, and sent him a draft of the report with a request for any needed corrections. When nothing came back four hours later, PrivCo published. As you might imagine, now I've got a new call into LivingSocial.