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What really happened at LivingSocial?

finance.fortune.cnn.com

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Re: What really happened at LivingSocial?

#81

Post by ebbv »

lawdawg wrote: post #12
ebbv wrote: post #9

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.

Ahhhh, ok. That seems like shady accounting to me, then. Calling any money "revenue" before the merchants get their share.

Re: What really happened at LivingSocial?

#83

Post by larrys »

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.

"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."

With respect to the "4 hours later" I would like to know what the standard is in the news business before "going to press" with a story.

I'm not entirely certain that a news organization would wait more than 4 hours if they feel they are publishing information or trying to scoop someone. Each news organization is different of course and has different standards. I don't think this is as unusual as it sounds (I could be wrong of course).

I will ask a writer(customer we have) at the NY Times what the standard is for this (I'll be lucky if they reply to me within 4 hours of course).

Re: What really happened at LivingSocial?

#84

Post by tptacek »

larrys wrote: post #83
tptacek wrote: post #46

Earlier quoted context omitted.

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.

"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." With respect to the "4 hours later" I would like to know what the standard is in the news business before "going to press" with a story. I'm not entirely certain that a news organization would wait m…

The NYT would be confident in the sourcing of its information if it was rushing something to press. PrivCo's "source" (generously stipulating it exists) didn't even know who LS's investors were.

Re: What really happened at LivingSocial?

#85

Post by damoncali »

tptacek wrote: post #70
damoncali wrote: post #57

Earlier quoted context omitted.

Agreed. But LivingSocial's response is also very damming of LivingSocial. They're fooked, to use a technical term.

No it wasn't. They drily pointed out material falsehoods in a report. The onus is not on them to publish a counter-report that tells the opposite story. The PrivCo report is now a dead letter. It doesn't warrant a detailed response. If PrivCo is stopped-clock-twice-a-day right, well, they just fucked us all by poisoning the well.

I meant financially. They look to be in a terrible position.

Re: What really happened at LivingSocial?

#87

Post by tptacek »

philwelch wrote: post #72
tptacek wrote: post #2

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

How do we know LivingSocial is the truthful one? Companies in their death throes have published bigger lies.

Because PrivCo published material falsehoods that are easy to refute alongside the (likely) falsehoods that are harder to refute.

Re: What really happened at LivingSocial?

#88

Post by damoncali »

TylerE wrote: post #24
jdminhbg wrote: post #14

Earlier quoted context omitted.

> What I do not understand is: what does an 'investor' expects 'injecting' 110 million dollars on a bankrupt business? According to the PrivCo article, they got first rights on liquidation. So they'd be either getting a huge part of a miracle turnaround, or most of their money back when the company was sold off in bankruptcy. Of course that article appears to be completely wrong, so I guess it doesn't actually matter…

What value will the company have in bankruptcy. That's a lot of Aeron chairs and used iThings to get anywhere close to $100m in value.

I'm half joking, but have you seen their offices?

Re: What really happened at LivingSocial?

#89

Post by datasage »

doktrin wrote: post #64
ebbv wrote: post #9

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?

There are a couple disparate pieces to their earning puzzle that don't quite add up to me : 1. Many here seem to feel that taking 50% is unfair to their merchant partners. Yet, they are nonetheless struggling to turn a profit 2. Like any other coupon, LS deals run the risk of un-use. Speaking for myself, I have forgotten about at least 4 separate deals, and am not an active "daily deals" consumer. How can LS ever be…

By growing and getting into new markets you can stay ahead of the curve. But once you hit saturation, its going to catch up with you. On top of that there is fatigue for this model all together.

Re: What really happened at LivingSocial?

#90

Post by sharkweek »

thepumpkin1979 wrote: post #33

Off-topic: Don't get me wrong, I'm on the side of whoever is telling the truth here, however, this CNN report/posting seems to be right on time in favor of Living Social, how does that work? do the PR department just email CNN and ask them "Hey, can you make a blog post quoting an internal mail to dimiss the lies PrivCo said early today?" No sarcasm here, does it really work that way or is just my imagination?

I work in the PR space -- most of the time it comes down to relationships and resource. Having the email address and even the slightest of personal relationships with influential journalists can work wonders in times like this.

A lot of times these writers are on the hunt for sources for their articles, and making yourself available to answer questions or give quotes, whether you're the founder or someone in the PR/Marketing dept, will go a long way down the road when you're looking for coverage on a new feature or want to clarify some bad press.

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