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What really happened at LivingSocial?

finance.fortune.cnn.com

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Re: What really happened at LivingSocial?

#51

Post by dailyrorschach »

tptacek wrote: post #42
dailyrorschach wrote: post #39

Well now the story is updated. Quoted below: 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 hi…

This is exactly what I would do if I was an evil publication: make a prediction as to the trendlines of a business, write up a report full of false evidence, send a draft to the target and then declare it was the target's responsibility, not mine, to ensure that my report was correct. What's different after this followup is that now CNN/Fortune is suspect too, because repeating this verbatim is unethical.

I don't have a firm opinion on the matter yet. I was initially suspicious of the initial report as I had never heard of them (PrivCo). However, I do work in advertising/PR and if someone submitted a claim like this to a spokesperson within four hours, we would at least say there are considerable and factual errors with your report, etc. This of course may have happened.

My interest in following this story is personal as I live in DC and have many friends still employed at the company.

I'd disagree that CNN is being unethical here, their story/angle is about the process and getting to the bottom of the PrivCo report.

Re: What really happened at LivingSocial?

#52

Post by microtherion »

mdc wrote: post #31
jpdoctor wrote: post #15

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.

He says it slides but "gets nowhere near 4x". That's clear enough to preclude 5x.

Maybe it slides right from 3x to 5x ?-)

Re: What really happened at LivingSocial?

#53

Post by [deleted] »

enraged_camel wrote: post #10
j45 wrote: post #7

What happened is in the end it didn't appear to have a repeatable and scalable business model. Edit: For the record, I read the article, I forwarded it to colleagues interested in the space, and the only thing worthy of it for me was my comment -- don't start one of these without a business model. All this PR commentary about misunderstandings about finances, funding all ties back to one thing -- they don't make mone…

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."

[deleted]

Re: What really happened at LivingSocial?

#54

Post by bruceb »

losvedir wrote: post #44
tptacek wrote: post #2

LivingSocial's response is extremely damning of "PrivCo".

Was the "UPDATE" to the article published when you left your comment? UPDATE: Just got off the phone with Hamadeh [PrivCo CEO], 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 spok…

I wonder if it was on the record or off the record. If it is a leak then I wonder if LS would check all the emails of top employees to find the leaker (if they were dumb enough to send from company email).

PrivCo saying they "...sent him a draft of the report with a request for any needed corrections. When nothing came back four hours later.." they assumed everything is true is a weak though.

I guess I will send LS an email saying I am the new CEO, please email back if this needs to be corrected...

...I will let you guys know if they don't respond, in which case, D.C. here I come!

Re: What really happened at LivingSocial?

#55

Post by josh2600 »

pg wrote: post #34

This comes on top of an article a few days ago that (to people in the business at least) was almost as preposterous, in which their ranking criterion for VC funds was number of acquisitions. http://www.privco.com/top-20-venture-capital-firms-with-the-...

But pg, don't you know? "Size Matters"?

All kidding aside, it seems almost criminal that a company would create such damaging news as a way of generating publicity (speaking, of course, about LivingSocial). I just can't fathom what would drive someone to do this, unless someone who was leaving LivingSocial wanting to spread a lot of damaging news about their old employer.

Re: What really happened at LivingSocial?

#56

Post by bitcartel »

graycat wrote: post #37
jbail wrote: post #30

Earlier quoted context omitted.

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.

Right. Sorry about leaving out the last paragraph. But one might try being short on a related public company, say, GroupOn.

That boat has long sailed. Anybody who wanted to short Groupon would have done it more than a year ago, when the stock was trading around $20-$25.

Re: What really happened at LivingSocial?

#58

Post by sgrove »

tptacek wrote: post #46
losvedir wrote: post #44

Earlier quoted context omitted.

Was the "UPDATE" to the article published when you left your comment? UPDATE: Just got off the phone with Hamadeh [PrivCo CEO], 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 spok…

The update makes PrivCo look even worse, by implying that it was LivingSocial's responsibility to ensure that their bogus report was accurate. Look, I can play that game right now: I'll write a 3 page report on Dropbox's impending bankruptcy, send it to them, and when they don't respond report it as fact.

Be sure to do it only if they don't respond within four hours.

Re: What really happened at LivingSocial?

#59

Post by mixedbit »

I think the main problem with this business model is that it is not really beneficial for large number of advertisers. I heard so many times about local businesses that were screwed by Groupon, because they offered too many deals at too low prices (often below costs) and most people who bought deals did not return later. Groupon seemed not to care about providing a service that is really beneficial to advertisers, instead they concentrated on short term grow.

A lot of successful innovation today is about eliminating middlemen. Local deals companies do just the opposite. They are a new middleman that tries to cut a large percentage from local businesses income. I don't think this is sustainable.

Re: What really happened at LivingSocial?

#60

Post by Macsenour »

officemonkey wrote: post #45
mikek wrote: post #19

> our major competitor's market cap is now $3.9B He can't say "Groupon?" Seriously?

Never define yourself by the competition.

But didn't he? I mean, quoting their cap number, it's obvious who he is talking about, so why not just say the name?
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