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Earlier quoted context omitted.
They count it as revenue before paying the merchant. Their true revenue is probably much lower than $500mm.
If they keep ~50% of the coupon price wouldn't that just mean $250mm then? Still a big number.
LivingSocial's response is extremely damning of "PrivCo".
LivingSocial's response is extremely damning of "PrivCo".
Agreed. But LivingSocial's response is also very damming of LivingSocial. They're fooked, to use a technical term.
Earlier quoted context omitted.
Grounds for libel I think, if true.
Libel (or slander) is really hard to prosecute in America, and with IMHO good reason. IANAL, but this doesn't seem like libel per se, so damages and malice would both need to be proven by the plaintiff.
Earlier quoted context omitted.
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…
FOUR HOURS. That's how much time they claim to have given LivingSocial before running the report. Horsewhip these clowns off the stage now. It's actually even worse if underlying trend they're "reporting" on is true, because they've poisoned the well.
"I don't think the real story here is the details of the financing," Hamadeh [PrivCo CEO] said. "It's what's going to happen to the little guys, all of the merchants who are really the company's unsecured creditors, if LivingSocial goes bankrupt... You'll see that we were right in six or nine months."
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.
No, he says explicitly it does not get near 4x.
I chose a phrase as an example (hence the abbrev "eg"): You chose a different phrase.
If you want to instead parse the phrase you chose for half-truths, we can do that. It will not change the substance that there is all sorts of potential for half-truths.
He doesn't mention the allegation that LivingSocial owes more to merchants right now than they have on hand. As others here have mentioned, that's going to hurt the quality of deals they're able to put together at a time when they need to be building confidence with customers and merchants.
He also doesn't mention the threat of more closures and layoffs. From a business perspective, it makes no sense to pay high salaries to college educated 20-somethings to do customer support from expensive downtown DC loft office space, but he never mentioned that in any of the all-hands meetings when he said we would be profitable soon.
The constant theme in communication from management at LivingSocial is always "don't listen to what others are saying about us; they don't know the full picture." I wonder how much longer they can keep that up.
If they do go under, there will be a massive rush on all the talent that will suddenly become available. The brain drain is already beginning. A number of very talented engineers (not just Chad Fowler) have already left. They've been diplomatic about it, but the fact is that they saw better opportunities elsewhere. Anybody who says that the tenuousness of LivingSocial's continuing existence isn't at least a small factor has a bridge to sell you.
People won't jump ship all at once, but this is going to be a huge problem for recruitment. Salespeople and customer support staff are a dime a dozen. No news there. But anybody talented enough to be a developer at LivingSocial (and the talent is considerable) would have to be quite desperate to come on board at this time. HN readers know that the caliber of developer they need can choose where they work. Would you sign on in this environment?
LivingSocial's response is extremely damning of "PrivCo".
What I do not understand is: what does an 'investor' expects 'injecting' 110 million dollars on a bankrupt business? There is nothing livingsocial can do to revert its current trajectory. It's not about the company, but the very core of its business model does not work, not one but dozen of similar companies failed early, are livingsocial and groupon trying to run some sort of ponzi scheme on desperate investors and…
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-...
privco's sales people e-mailed the address on my company's domain and offered research services. when we declined, four days later an article ran on privco (an 'exclusive') reporting that we refused comment on something we had never seen which was an article full of made-up dire horseshit. so I was left explaining to my employees why this company was out to get us and no, I wasn't misleading them about our finances.…