What really happened at LivingSocial?

"Two of the three investors listed on the PrivCo site as participating in the round didn't participate, and one isn't even an investor in the company."

Re: What really happened at LivingSocial?

#5

Post by eduardordm » Thu, Feb 21, 2013, 6:29 PM UTC

tptacek wrote: post #2

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 employees?

Re: What really happened at LivingSocial?

#6

Post by tptacek » Thu, Feb 21, 2013, 6:31 PM UTC

eduardordm wrote: post #5

tptacek wrote: post #2

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…

I don't care. I don't follow LivingSocial or the "daily deals" space, but I do follow startup news, and it's good to know that "PrivCo" is not to be trusted.

Re: What really happened at LivingSocial?

#7

Post by j45 » Thu, Feb 21, 2013, 6:34 PM UTC

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 money. Companies that make money don't hide it, and have a hard time hiding it.

Whether a PrivCo is funding them or not -- my original point stands.

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.

Re: What really happened at LivingSocial?

#8

Post by socalnate1 » Thu, Feb 21, 2013, 6:37 PM UTC

eduardordm wrote: post #5

tptacek wrote: post #2

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…

I disagree. Daily deals can work, but only at the right scale, with the right focus on the right types of markets

What groupon, livingsocial, et al assumed was that this was an endless market and would work for every type of business. This is clearly not the case. Whether these particular companies can get to the right size and find the right market remains to be seen - but I don't believe this is a "ponzi scheme" at all.

Re: What really happened at LivingSocial?

#9

Post by ebbv » Thu, Feb 21, 2013, 6:38 PM UTC

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?

Re: What really happened at LivingSocial?

#10

Post by enraged_camel » Thu, Feb 21, 2013, 6:38 PM UTC

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."