8 ms·

What really happened at LivingSocial?

102 points by speric 14y ago

BostonCFO2 14y ago
GLASSDOOR.com LivingSocial 190 EMPLOYEE reviews livingsocial.com HQ: Washington, DC Write a Review “Lies, Unprofessional Management, Abuse” Current Marketing Consultant in Township Washinton, NJ – Reviewed Dec 4, 2012 Cons – Daily HR violations Lies “Executives are in over their head” Former Senior Marketing Associate in Washington, DC – Reviewed Feb 27, 2013 – New Communication is pathetic. I sold takeout and delivery and I was never told when the product was going to launch until I read about it in the news. Not efficient - managers take over a month to make simple decisions that could be made in one hour. Its a "fake it till you make it" hierarchy. Directors and executives are all talk and basically take 50 PTO days and play on their computers all day. Not very motivating Advice to Senior Management – Restructure the whole organization. Hire seasoned directors and executives instead of 20 somethings who just want to make money and have fun. Culture should be more strict. Strategic Account Manager-Intel VMware – Reston, VA “Cool brand but dying industry” Former Account Manager in San Diego, CA – Reviewed Feb 22, 2013 – New Cons – incompetent management and dying product. Advice to Senior Management – get out in the field “Sinking Ship” Former Sales in New York, NY – Reviewed Feb 21, 2013 – New Advice to Senior Management – Get out now, company won't last very long “Horrible Place, Worst Experience Ever!!!!!!!!!!!!!!!” Former Account Manager in Washington, DC – Reviewed Sep 8, 2012 No one is happy. Employees are crying in the bathrooms and taking long lunch breaks for job interviews. People are dropping left and right, either getting fired for not hitting outlandish goals or leaving for positions with an actual career path. Comp plan changes for no reason and terrible direction. All the while, they punish employees by having them go on performance plans or firing them while they are experimenting with plans. When questioned about the extremely high turnover, terrible responses such as "we only want the best" or "that's the nature of sales" is given. Instead of being an innovate company, they just want to copy others. Worst of all, they set your expectations during the interview so high, while knowing too well that you will never make that overall comp. They are crooks! Given how badly Groupon peformed post IPO, they can no longer go IPO, so everybody is leaving. Be warned, stay away!!!! Advice to Senior Management – Stop treating employees as a number and be honest with them. “Long hours, very hard to move, do not look behind the curtain” Current Inside Sales in Washington, DC – Reviewed Jul 16, 2012 LivingSocial talks a big game about how innovated they are but their sales department is a carbon copy of every other sales department out there, if you've worked in one whip cracking sales department you've worked at LivingSocial's. The one they got going for them is a lot of young people who dont know any better and don't mind drinking the kool aid. They'll be delusional and talk about the great perks but they really don't know any better. Also, I find a lot of the practices unethical. We were told not to post fake reviews on ratings sites so that our merchants look better. But then LivingSocial corporate/HR does the same thing The biggest con is a con in itself. “Bread and Circuses replaces all values” Former Employee in Washington, DC – Reviewed Jun 7, 2012 I would think an organization who communicates to their employees that they are not like that wouldnt: lay off influential employees, punish those who do not bend the rules, force employees into roles they are not comfortable with and threaten them with unemployment if they don't comply, make false promises, not consider all factors when coming up with performance plans, etc - Inadequate leadership. This stems from having too many on staff that are not experienced enough to handle the tasks at hand. - Inept leadership. I do not need the VP of sales to tell me to make more money to "just sign better deals." My eyes could not roll further back into my head. - Comp plan changes with no rhyme or reason and terrible direction. All the while, they punish employees by having them go on performance plans or firing them while they are experimenting with plans. When questioned about the extremely high turnover, terrible responses such as "we only want the best" or "that's the nature of sales" is given. Instead of being an innovate company seems as if they want to follow lock step behind others. - And worst of all, the Bread and Circus. LivingSocial has taken a page out of the formula the Romans used to keep the populace at bay. They knew that conditions were terrible and so to keep the general populace at bay, the Romans gave away bread and held circuses for entertainment. LivingSocial does the same and disguises it as "culture." Take away the bread and circuses and you have an extremely unhappy employee base. Advice to Senior Management – Be an actually innovative company. Senior Wholesaler/External Practice Management Consultant Advice to Senior Management – RETRENCH! get back the good, upscale subscribers and lose the tanning, National, and kettleball deals! “Pitiful” Current Account Executive Manager in Orlando, FL – Reviewed Feb 26, 2012 Disgusting Local Management. Selfish to point of "winning becomes more important than ethics and honesty" Gossipy, easily put down competition when competition clearly outshines Living Social. Most unethical group of people to work with. If you have ethics, morals, scruples, a sense of fairness and have been up to this point descent - THIS IS NOT THE PLACE FOR YOU. If you posses those traits run to DC and get the job. You will fit in at all levels right up to the President. By the way if I was an investor quickly demand your money back and RUN! Advice to Senior Management – EGO's so big - they all think they are Local God's so full of Self Worship. “I drank the Kool-Aid and woke up in Sugar Shock” Former Marketing Consultant in Brooklyn, NY – Reviewed Feb 5, 2012 “Don't waste your time!” Current Marketing Consultant in Los Angeles, CA – Reviewed Dec 1, 2011 Linux Systems Administrator – new MITRE – McLean, VA “Great Employees, bad communication.” Horrible communication. Leadership was held by those with little experience who did not know how to manage people. More Poor management; job was not what I interviewed for” Former Employee – Reviewed Dec 10, 2012 Strategic Account Manager-Intel “Lack of Integrity and Honesty” Former Employee – Reviewed Nov 13, 2012 Sr. Management and BP (lacking integrity and emotional maturity) Hiring people who lack certifications and credentials Advice to Senior Management – Be honest with your employees and be sure to provide them with a solid support and development system in which you are willing to back up. “Absolutely miserable experience full of stress and LOW PAY” Current Marketing Consultant – Reviewed Jun 3, 2012 management that is clueless You will be churned and burned and replaces without a thought Groupon is offering better cuts and we are supposed to tell the merchant "oh well, we are God and won't do that" Don't be fooled by these phony HR planted reviews. This is a miserable existence where you will literally wake up in the middle of the night thinking "I have to get another deal." If you have any more that 5 years in sales....walk away from this. You get into sales for autonomy and the money. With this, you have NEITHER. “Dying industry - TERRIBLE salary, zero respect for staff, unrealistic goals” Current Account Executive, Outside Sales – Reviewed Mar 4, 2012 “Merchants don't want to run deals!” Current Senior Marketing Consultant-Outside – Reviewed Jan 4, 2012 I have been at LS over 18 months. My biggest issue is that most merchants are now pretty savvy to the "deal" space and no longer want to participate. Both LS and Groupon have a bad reputation. They are unhappy with type of customer they are getting, no repeat business, only deal seekers and in some cases have been pushed to brink of bankruptcy. I would like to leave as I feel morally that what we are selling is no longer in the business owners best interests and my conscience is getting the better of me... Advice to Senior Management – sell before it is too late! I was misled and made a huge mistake by coming on board” Current Marketing Consultant – Reviewed Dec 20, 2011 Markets are saturated. Trying to get 20 new clients every month is nearly impossible unless you're in a new or huge market Advice to Senior Management – You reap what you sow. I'm checked out. “Holding on by a thread” Former Employee – Reviewed Dec 12, 2011 Advice to Senior Management – You are a lawsuit waiting to happen “Karma is not going to be kind Livingsocial - you are headed towards a train wreck!” Current Marketing Consultant – Reviewed Dec 3, 2011
BostonCFO2 14y ago
GLASSDOOR.com LivingSocial 190 EMPLOYEE reviews livingsocial.com HQ: Washington, DC Write a Review “Lies, Unprofessional Management, Abuse” Current Marketing Consultant in Township Washinton, NJ – Reviewed Dec 4, 2012 Cons – Daily HR violations Lies “Executives are in over their head” Former Senior Marketing Associate in Washington, DC – Reviewed Feb 27, 2013 – New Communication is pathetic. I sold takeout and delivery and I was never told when the product was going to launch until I read about it in the news. Not efficient - managers take over a month to make simple decisions that could be made in one hour. Its a "fake it till you make it" hierarchy. Directors and executives are all talk and basically take 50 PTO days and play on their computers all day. Not very motivating Advice to Senior Management – Restructure the whole organization. Hire seasoned directors and executives instead of 20 somethings who just want to make money and have fun. Culture should be more strict. Strategic Account Manager-Intel VMware – Reston, VA “Cool brand but dying industry” Former Account Manager in San Diego, CA – Reviewed Feb 22, 2013 – New Cons – incompetent management and dying product. Advice to Senior Management – get out in the field “Sinking Ship” Former Sales in New York, NY – Reviewed Feb 21, 2013 – New Advice to Senior Management – Get out now, company won't last very long “Horrible Place, Worst Experience Ever!!!!!!!!!!!!!!!” Former Account Manager in Washington, DC – Reviewed Sep 8, 2012 No one is happy. Employees are crying in the bathrooms and taking long lunch breaks for job interviews. People are dropping left and right, either getting fired for not hitting outlandish goals or leaving for positions with an actual career path. Comp plan changes for no reason and terrible direction. All the while, they punish employees by having them go on performance plans or firing them while they are experimenting with plans. When questioned about the extremely high turnover, terrible responses such as "we only want the best" or "that's the nature of sales" is given. Instead of being an innovate company, they just want to copy others. Worst of all, they set your expectations during the interview so high, while knowing too well that you will never make that overall comp. They are crooks! Given how badly Groupon peformed post IPO, they can no longer go IPO, so everybody is leaving. Be warned, stay away!!!! Advice to Senior Management – Stop treating employees as a number and be honest with them. “Long hours, very hard to move, do not look behind the curtain” Current Inside Sales in Washington, DC – Reviewed Jul 16, 2012 LivingSocial talks a big game about how innovated they are but their sales department is a carbon copy of every other sales department out there, if you've worked in one whip cracking sales department you've worked at LivingSocial's. The one they got going for them is a lot of young people who dont know any better and don't mind drinking the kool aid. They'll be delusional and talk about the great perks but they really don't know any better. Also, I find a lot of the practices unethical. We were told not to post fake reviews on ratings sites so that our merchants look better. But then LivingSocial corporate/HR does the same thing The biggest con is a con in itself. “Bread and Circuses replaces all values” Former Employee in Washington, DC – Reviewed Jun 7, 2012 I would think an organization who communicates to their employees that they are not like that wouldnt: lay off influential employees, punish those who do not bend the rules, force employees into roles they are not comfortable with and threaten them with unemployment if they don't comply, make false promises, not consider all factors when coming up with performance plans, etc - Inadequate leadership. This stems from having too many on staff that are not experienced enough to handle the tasks at hand. - Inept leadership. I do not need the VP of sales to tell me to make more money to "just sign better deals." My eyes could not roll further back into my head. - Comp plan changes with no rhyme or reason and terrible direction. All the while, they punish employees by having them go on performance plans or firing them while they are experimenting with plans. When questioned about the extremely high turnover, terrible responses such as "we only want the best" or "that's the nature of sales" is given. Instead of being an innovate company seems as if they want to follow lock step behind others. - And worst of all, the Bread and Circus. LivingSocial has taken a page out of the formula the Romans used to keep the populace at bay. They knew that conditions were terrible and so to keep the general populace at bay, the Romans gave away bread and held circuses for entertainment. LivingSocial does the same and disguises it as "culture." Take away the bread and circuses and you have an extremely unhappy employee base. Advice to Senior Management – Be an actually innovative company. Senior Wholesaler/External Practice Management Consultant Advice to Senior Management – RETRENCH! get back the good, upscale subscribers and lose the tanning, National, and kettleball deals! “Pitiful” Current Account Executive Manager in Orlando, FL – Reviewed Feb 26, 2012 Disgusting Local Management. Selfish to point of "winning becomes more important than ethics and honesty" Gossipy, easily put down competition when competition clearly outshines Living Social. Most unethical group of people to work with. If you have ethics, morals, scruples, a sense of fairness and have been up to this point descent - THIS IS NOT THE PLACE FOR YOU. If you posses those traits run to DC and get the job. You will fit in at all levels right up to the President. By the way if I was an investor quickly demand your money back and RUN! Advice to Senior Management – EGO's so big - they all think they are Local God's so full of Self Worship. “I drank the Kool-Aid and woke up in Sugar Shock” Former Marketing Consultant in Brooklyn, NY – Reviewed Feb 5, 2012 “Don't waste your time!” Current Marketing Consultant in Los Angeles, CA – Reviewed Dec 1, 2011 Linux Systems Administrator – new MITRE – McLean, VA “Great Employees, bad communication.” Horrible communication. Leadership was held by those with little experience who did not know how to manage people. More Poor management; job was not what I interviewed for” Former Employee – Reviewed Dec 10, 2012 Strategic Account Manager-Intel “Lack of Integrity and Honesty” Former Employee – Reviewed Nov 13, 2012 Sr. Management and BP (lacking integrity and emotional maturity) Hiring people who lack certifications and credentials Advice to Senior Management – Be honest with your employees and be sure to provide them with a solid support and development system in which you are willing to back up. “Absolutely miserable experience full of stress and LOW PAY” Current Marketing Consultant – Reviewed Jun 3, 2012 management that is clueless You will be churned and burned and replaces without a thought Groupon is offering better cuts and we are supposed to tell the merchant "oh well, we are God and won't do that" Don't be fooled by these phony HR planted reviews. This is a miserable existence where you will literally wake up in the middle of the night thinking "I have to get another deal." If you have any more that 5 years in sales....walk away from this. You get into sales for autonomy and the money. With this, you have NEITHER. “Dying industry - TERRIBLE salary, zero respect for staff, unrealistic goals” Current Account Executive, Outside Sales – Reviewed Mar 4, 2012 “Merchants don't want to run deals!” Current Senior Marketing Consultant-Outside – Reviewed Jan 4, 2012 I have been at LS over 18 months. My biggest issue is that most merchants are now pretty savvy to the "deal" space and no longer want to participate. Both LS and Groupon have a bad reputation. They are unhappy with type of customer they are getting, no repeat business, only deal seekers and in some cases have been pushed to brink of bankruptcy. I would like to leave as I feel morally that what we are selling is no longer in the business owners best interests and my conscience is getting the better of me... Advice to Senior Management – sell before it is too late! I was misled and made a huge mistake by coming on board” Current Marketing Consultant – Reviewed Dec 20, 2011 Markets are saturated. Trying to get 20 new clients every month is nearly impossible unless you're in a new or huge market Advice to Senior Management – You reap what you sow. I'm checked out. “Holding on by a thread” Former Employee – Reviewed Dec 12, 2011 Advice to Senior Management – You are a lawsuit waiting to happen “Karma is not going to be kind Livingsocial - you are headed towards a train wreck!”
tptacek 14y ago
LivingSocial's response is extremely damning of "PrivCo".
- BostonCFO2 14y ago
  GLASSDOOR.com LivingSocial 190 EMPLOYEE reviews livingsocial.com HQ: Washington, DC Write a Review “Lies, Unprofessional Management, Abuse” Current Marketing Consultant in Township Washinton, NJ – Reviewed Dec 4, 2012 Cons – Daily HR violations Lies “Executives are in over their head” Former Senior Marketing Associate in Washington, DC – Reviewed Feb 27, 2013 – New Communication is pathetic. I sold takeout and delivery and I was never told when the product was going to launch until I read about it in the news. Not efficient - managers take over a month to make simple decisions that could be made in one hour. Its a "fake it till you make it" hierarchy. Directors and executives are all talk and basically take 50 PTO days and play on their computers all day. Not very motivating Advice to Senior Management – Restructure the whole organization. Hire seasoned directors and executives instead of 20 somethings who just want to make money and have fun. Culture should be more strict. Strategic Account Manager-Intel VMware – Reston, VA “Cool brand but dying industry” Former Account Manager in San Diego, CA – Reviewed Feb 22, 2013 – New Cons – incompetent management and dying product. Advice to Senior Management – get out in the field “Sinking Ship” Former Sales in New York, NY – Reviewed Feb 21, 2013 – New Advice to Senior Management – Get out now, company won't last very long “Horrible Place, Worst Experience Ever!!!!!!!!!!!!!!!” Former Account Manager in Washington, DC – Reviewed Sep 8, 2012 No one is happy. Employees are crying in the bathrooms and taking long lunch breaks for job interviews. People are dropping left and right, either getting fired for not hitting outlandish goals or leaving for positions with an actual career path. Comp plan changes for no reason and terrible direction. All the while, they punish employees by having them go on performance plans or firing them while they are experimenting with plans. When questioned about the extremely high turnover, terrible responses such as "we only want the best" or "that's the nature of sales" is given. Instead of being an innovate company, they just want to copy others. Worst of all, they set your expectations during the interview so high, while knowing too well that you will never make that overall comp. They are crooks! Given how badly Groupon peformed post IPO, they can no longer go IPO, so everybody is leaving. Be warned, stay away!!!! Advice to Senior Management – Stop treating employees as a number and be honest with them. “Long hours, very hard to move, do not look behind the curtain” Current Inside Sales in Washington, DC – Reviewed Jul 16, 2012 LivingSocial talks a big game about how innovated they are but their sales department is a carbon copy of every other sales department out there, if you've worked in one whip cracking sales department you've worked at LivingSocial's. The one they got going for them is a lot of young people who dont know any better and don't mind drinking the kool aid. They'll be delusional and talk about the great perks but they really don't know any better. Also, I find a lot of the practices unethical. We were told not to post fake reviews on ratings sites so that our merchants look better. But then LivingSocial corporate/HR does the same thing The biggest con is a con in itself. “Bread and Circuses replaces all values” Former Employee in Washington, DC – Reviewed Jun 7, 2012 I would think an organization who communicates to their employees that they are not like that wouldnt: lay off influential employees, punish those who do not bend the rules, force employees into roles they are not comfortable with and threaten them with unemployment if they don't comply, make false promises, not consider all factors when coming up with performance plans, etc - Inadequate leadership. This stems from having too many on staff that are not experienced enough to handle the tasks at hand. - Inept leadership. I do not need the VP of sales to tell me to make more money to "just sign better deals." My eyes could not roll further back into my head. - Comp plan changes with no rhyme or reason and terrible direction. All the while, they punish employees by having them go on performance plans or firing them while they are experimenting with plans. When questioned about the extremely high turnover, terrible responses such as "we only want the best" or "that's the nature of sales" is given. Instead of being an innovate company seems as if they want to follow lock step behind others. - And worst of all, the Bread and Circus. LivingSocial has taken a page out of the formula the Romans used to keep the populace at bay. They knew that conditions were terrible and so to keep the general populace at bay, the Romans gave away bread and held circuses for entertainment. LivingSocial does the same and disguises it as "culture." Take away the bread and circuses and you have an extremely unhappy employee base. Advice to Senior Management – Be an actually innovative company. Senior Wholesaler/External Practice Management Consultant Advice to Senior Management – RETRENCH! get back the good, upscale subscribers and lose the tanning, National, and kettleball deals! “Pitiful” Current Account Executive Manager in Orlando, FL – Reviewed Feb 26, 2012 Disgusting Local Management. Selfish to point of "winning becomes more important than ethics and honesty" Gossipy, easily put down competition when competition clearly outshines Living Social. Most unethical group of people to work with. If you have ethics, morals, scruples, a sense of fairness and have been up to this point descent - THIS IS NOT THE PLACE FOR YOU. If you posses those traits run to DC and get the job. You will fit in at all levels right up to the President. By the way if I was an investor quickly demand your money back and RUN! Advice to Senior Management – EGO's so big - they all think they are Local God's so full of Self Worship. “I drank the Kool-Aid and woke up in Sugar Shock” Former Marketing Consultant in Brooklyn, NY – Reviewed Feb 5, 2012 “Don't waste your time!” Current Marketing Consultant in Los Angeles, CA – Reviewed Dec 1, 2011 Linux Systems Administrator – new MITRE – McLean, VA “Great Employees, bad communication.” Horrible communication. Leadership was held by those with little experience who did not know how to manage people. More Poor management; job was not what I interviewed for” Former Employee – Reviewed Dec 10, 2012 Strategic Account Manager-Intel “Lack of Integrity and Honesty” Former Employee – Reviewed Nov 13, 2012 Sr. Management and BP (lacking integrity and emotional maturity) Hiring people who lack certifications and credentials Advice to Senior Management – Be honest with your employees and be sure to provide them with a solid support and development system in which you are willing to back up. “Absolutely miserable experience full of stress and LOW PAY” Current Marketing Consultant – Reviewed Jun 3, 2012 management that is clueless You will be churned and burned and replaces without a thought Groupon is offering better cuts and we are supposed to tell the merchant "oh well, we are God and won't do that" Don't be fooled by these phony HR planted reviews. This is a miserable existence where you will literally wake up in the middle of the night thinking "I have to get another deal." If you have any more that 5 years in sales....walk away from this. You get into sales for autonomy and the money. With this, you have NEITHER. “Dying industry - TERRIBLE salary, zero respect for staff, unrealistic goals” Current Account Executive, Outside Sales – Reviewed Mar 4, 2012 “Merchants don't want to run deals!” Current Senior Marketing Consultant-Outside – Reviewed Jan 4, 2012 I have been at LS over 18 months. My biggest issue is that most merchants are now pretty savvy to the "deal" space and no longer want to participate. Both LS and Groupon have a bad reputation. They are unhappy with type of customer they are getting, no repeat business, only deal seekers and in some cases have been pushed to brink of bankruptcy. I would like to leave as I feel morally that what we are selling is no longer in the business owners best interests and my conscience is getting the better of me... Advice to Senior Management – sell before it is too late! I was misled and made a huge mistake by coming on board” Current Marketing Consultant – Reviewed Dec 20, 2011 Markets are saturated. Trying to get 20 new clients every month is nearly impossible unless you're in a new or huge market Advice to Senior Management – You reap what you sow. I'm checked out. “Holding on by a thread” Former Employee – Reviewed Dec 12, 2011 Advice to Senior Management – You are a lawsuit waiting to happen “Karma is not going to be kind Livingsocial - you are headed towards a train wreck!”
socalnate1 14y ago
This in particular makes PrivCo look stupid: "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."
- FinTechCTO 14y ago
  I read the PrivCo report and they didn't say who invested in the emergency funding round (except that Amazon did and that some of its other previous investors put up money and participated, some passed and did not). This is the language, which I thought to me was pretty clear: "According to PrivCo sources, the financing effort was led by LivingSocial's largest outside shareholder, Amazon.com, with participation from some of its major venture capital investors (who had already invested $823,624,695 in equity in LivingSocial - per PrivCo V.C. Funding data - before today's emergency debt financing) in the hopes of salvaging what they can, with strict terms in place to ensure they are first to be paid upon a sale or bankruptcy. (Prior investors in LivingSocial include: Lightspeed Venture Partners, Grotech Ventures, Revolution Ventures, and U.S. Venture Partners; the VC firm confirming today's deal terms preferred not be to named. PrivCo is not suggesting any particular firm named above participated in the new financing.)" http://www.privco.com/livingsocial-receives-emergency-110m-cash-infusion-from-existing-investors-to-avoid-bankruptcy http://www.privco.com/livingsocial-receives-emergency-110m-c... So LivingSocial damage-control CEO's "Talking Points Memo" spin is either because he's confused and mis-read/misunderstood, or more likely is making an "ad hominem" response (that is, try to attack the character of who he's debating, but without addressing the substance of their argument). And how come all of his details weren't provided to employees Tues or wed. or whenever his email bragging about the round, but then some were only dragged out of him / forced out next day (on liquidation preferences, on being a "down round" (major down round, minimum of 75% by his subtle hint, Reuters citing experts reviewing the docs say implied valuation much lower, maybe as low as the $110M itself. There are 400 laid off employees from LivingSocial who by next week have to decide to excercise their soon to expire common stock options and write a check for lots of money to livingsocial to buy the commmon stock at whatever strike price their options were at (anywhere from $1b to $2b to $5.7B valuation if granted in past year). One I know asked what she should do (she would have to write a check for "tens of thousands of dollars" to livingsocial to buy LS common stock, which if the valuation is under a Billion (and cmon it obviously is, look at Groupon look at Amazon's own auditors valuation of less than $100M). Now she didn't know what a liquidation preference is, or in this case accurately reported by PrivCo to be more than the 1x liquidation preference but "multple times" the $110M provided (as even CEO - though said nothing about it in Memo 1, fessed up in Memo 2 yes it is a several times liquidation preference, based on finanial metrics, but won't possibly go as high as 4x." Even if it's 3x, that $330M, plus the former $850M preferred raised. What I am going to tell her? And 4,000 employees who are deciding whether to stay or leave based on what their common stock options are worth sticking around for, and being misled by their CEO (again nothing said in Memo 1 at ALL about impact on common - which cmon folks is worthless - and in memo 2 says "ok I admit it, your common stock is diluated - but "not much" - even though we just got funding with multiple x liquidation preferences, we must pay that back plus interest ("dividends") within 4 years, then throwing out we might IPO and then it won't matter. That's Chutzpah to say that with a straight face. I think PrivCo did those employees a service, those 400 laid off about to write a check for LivingSocial common stock- and would have based on the glowing Memo 1 from the CEO - and now are correctly thinking they probably shouldn't as by any math they would be giving their hard earned savings to LivingSocial for a security (its common stock, not preferred) that is worth zero now. Kudos to PrivCo, we need more whistleblowers, whether co is public or private like here. Praying for the rest of the 4000 employees now tonight.
j45 14y ago
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.
- enraged_camel 14y ago
  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."
  - larrik 14y ago
    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 snark against a company already dealing with false "news" reporting.
    - j45 14y ago
      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. 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.
ebbv 14y ago
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?
- mattmaroon 14y ago
  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 market.
  - kjackson2012 14y ago
    They can't claim the merchants' money as gross revenue, if they are using GAAP. It's the same issue that Groupon ran into and got slapped for.
    - mattmaroon 14y ago
      Groupon changed from "gross revenue" (which did not deduct money paid to merchants) to "net revenue" (which did). I believe they did this willingly because they were going to IPO, not because they were "slapped" or due to GAAP. Living Social is private and can do whatever they want, but they probably are using net if they're comparing themselves to Groupon. Otherwise they're making themselves look half the size when they are really a quarter, which I suppose could be purposeful.
  - hinathan 14y ago
    There's so e serious irony there if those are the numbers, given that that's what the merchants are supposed to be doing.
- phpnode 14y ago
jpdoctor 14y ago
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.
- pg 14y ago
  No, he says explicitly it does not get near 4x.
  - jpdoctor 14y ago
    > 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.
- brodney 14y ago
  "There is no "4x liquidation preference." (Once again, typical of almost all venture rounds, there is a liquidation preference, but it slides up or down based on a key metric and gets nowhere near 4x.)"
- mdc 14y ago
  He says it slides but "gets nowhere near 4x". That's clear enough to preclude 5x.
  - microtherion 14y ago
    Maybe it slides right from 3x to 5x ?-)
    - jpdoctor 14y ago
      Or never gets lower than 6x, as another example.
  - deleted 14y ago
mikek 14y ago
> our major competitor's market cap is now $3.9B He can't say "Groupon?" Seriously?
- officemonkey 14y ago
  Never define yourself by the competition.
  - Macsenour 14y ago
    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?
    - danielweber 14y ago
      They are in a space where mind-share is really important. (I think that mind-share being important is a sign you are in a risky business, but that's neither here nor there.)
      - Macsenour 14y ago
        But to his own employees? I understand in a public PR, but his letter was internal.
        officemonkey 14y ago
        You train like you fight.
- deleted 14y ago
  [deleted]
graycat 14y ago
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?
- josh2600 14y ago
  It is difficult, at best, to know anyone's position in a private company without insider knowledge. While it might be theoretically possible to short something using a company like SecondMarket, the prevailing wisdom is that if it's not public it's probably not being shorted.
  - graycat 14y ago
    Ah, yes, as I just corrected, but how 'bout being short on GroupOn?
    - josh2600 14y ago
      I think everyone is, or has been, short on GroupOn.
- jbail 14y ago
  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.
  - graycat 14y ago
    Right. Sorry about leaving out the last paragraph. But one might try being short on a related public company, say, GroupOn.
    - bitcartel 14y ago
      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.
dailyrorschach 14y ago
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 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.
- tptacek 14y ago
  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.
  - milkshakes 14y ago
    > What's different after this followup is that now CNN/Fortune is suspect too, because repeating this verbatim is unethical. You trusted them before?
    - tptacek 14y ago
      More than I trust TechCrunch, less than I trust Reuters.
  - dailyrorschach 14y ago
    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.
joeco 14y ago
If you believed the Privco report when you first read it, I have a bridge you may be interested in.
- damoncali 14y ago
  The LS version is not much prettier.
thepumpkin1979 14y ago
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?
- sharkweek 14y ago
  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.
pg 14y ago
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-most-private-tech-company-exits-in-2012 http://www.privco.com/top-20-venture-capital-firms-with-the-...
- josh2600 14y ago
  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.
- isquared 14y ago
  The whole thing seems like it's written for a middle school newspaper. Might as well be ranking superheroes.
- damoncali 14y ago
  I once was peripherally involved in a large commercial real estate deal in a major city. The press (a major paper- I forget which one, specifically, but you'd recognize it) reported the value of the deal without including the debt, which was most of the financing. It is hard to be more wrong about financial matters than that, but that is the state of financial journalism.
- jhg23 14y ago
  Ehh that ranking should have included IPO exits, which LP's do care about, but then again, it did expressively state that it was based on their annual M&A report.....which, given the topic, could not include ipo exits....but then again, this data is so shady, a list is better than no list.
crag 14y ago
IMHO PrivCo's report appears to be a good ole-fashioned hatchet-job. The real question is who is PrivCo working for? Or are they just trying to generate press with down news?
mixedbit 14y ago
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.
onetimecomment 14y ago
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. we do not have the resources to sue. wish livingsocial and the other companies targeted by these pieces of shit would. it's all a giant scam. what hurts the most is the pubs that parrot the 'research', like cnn did this time around, which gives it credibility. edit: a16z and google pay them for their research. sad. http://www.privco.com/testimonials http://www.privco.com/testimonials
- BostonCFO2 14y ago
  That's an outright lie. No PrivCo salespeople and research people interact whatsoever or coordinate whatsoever. And salespeople deal with partners at top VC firms, major law firms, etc. They would never email some random little crappy company an email off their domain, not would they ever waste their once a week featured research note covering a mom and pop operation like you sound. Who would even read it? This is completely made up and libelous. Expect a subpoena for your IP address because that's a made up outright defamatory lie. Leaving aside it makes no logical sense whatsoever, go read PrivCo's featured research notes and the companies the subjects of them (usually new IPOs like Zynga, Facebook etc., which you obviously aren't) right on PrivCo.com home page for all to see. Which "Company" were you supposedly featured in your fantasy world?
- FinTechCTO 14y ago
  That's an outright lie. Look at their website, they only do featured research on major companies usu about to IPO (some positive and Buy Rating some Avoid IPO/sell). So far has mostly been right every time (Avoid ZYNGA, Avoid Groupon, FB fair value = $24 not $38). positive on Workday and Palo Alto Networks (both up over 50% since IPO) positive on Twitter, negative on Foursuare. But they're major companies. What article is YOUR admittedly tiny company? That's clearly an outright lie. You're a shill for LivingSocial's PR firms scrambling obviously for anything. So link to this "article/analyst research note" that they would bother doing on what you say is a tiny crappy business. Go ahead, link now. Otherwise, proof you're a liar and being libelous and deserve what you get for anonymously investing this story.
funkbot 14y ago
Parts of the PrivCo report might not be accurate, but I don't trust a word Tim O'Shaughnessy says. We were told long ago that we'd be profitable by now, and then there was a round of layoffs. Is he under any obligation to be truthful about any of this? It's an internal email within a private company. Take anything he says with a grain of salt. 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?
- bruceb 14y ago
  " 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" So true and the same comment I was going to make. I was in the Seattle office and thought the same thing 2 years ago.
jinushaun 14y ago
The more damning evidence is Chad Fowler's recent departure from LS to Wunderkinder.
PrivCoTeam 14y ago
PrivCo has absolutely NO short positions in any private company we cover. These are PRIVATE companies and with rare exception do not trade. Nor do we earn any fees from private companies we cover (and we do NOT accept paid advertising, unless you count a the standard Google links). We have no agenda other than to try and publish facts, and what LivingSocial announced yesterday immediately struck us as misleading and fishy based on everything we knew about the company and it's dire financials. The press release and memo to employees (imagine you are one of those trusting hardworking employees, or a local daily deals merchant they owe money to "soon") - over $300 Million worth actually, but have only $76 million - made it seem as if the company was doing so well financially that their happy investors who had invested at a $5.7 Billion valuation wanted to double down on their investments and bet even bigger. NOTHING WAS FURTHER FROM THE TRUTH. The company was NOT doing fine, lost over $400 Million last year, was running low on cash, and had to take a massive valuation haircut and grant all sorts of special preferences in order to get this last lifeline of cash. Their financials can't be papered over...and they verified to the penny as public Amazon.com owns 31% now of the company. Look them up...if you know anything about finance or accounting you will reach the same conclusions as PrivCo did. LivingSocial will soon require mass layoffs, and will be insolvent or sold for pennies on the dollar by the end of this year is our prediction. (And we hope we're wrong, and don't make a dime either way, as we don't want to see 4,000 trusting employees lose their jobs). But the numbers don't lie and we stick by our prediction. The PrivCo Team www.privco.com
- btilly 14y ago
  Nobody is debating whether LivingSocial has a world of problems. We're debating the veracity of all of the non-public details that made your report interesting. Well, in theory we are. Only one side of the debate seems to have showed up.
  - PrivCoTeam 14y ago
    CNN/Fortune story just updated again to say insiders confirm that LivingSocial was down to JUST $28M IN CASH in February right before taking yesterday's financing. Do the math: looking at their 2012 financials on PrivCo: http://www.privco.com/livingsocial-receives-emergency-110m-cash-infusion-from-existing-investors-to-avoid-bankruptcy http://www.privco.com/livingsocial-receives-emergency-110m-c... That is, LivingSocial's operating expenses are about $1.4 Billion/year (Revenue + Operating loss = about $1.4 Billion they spend a year). That's $120 Million a month of expenses. $4 million a day. MEANING NEW FORTUNE/CNN UPDATE to their story confirms LIVINGSOCIAL WAS DOWN TO JUST 7 DAYS OF CASH! How is that NOT the very definition of a "distressed financing" situation? Correct the record CNN and Fortune - shame on you - and admit when you're wrong - (and by the way they just deleted this posting from the article comments). LivingSocial was down to a dangerously low level of cash just as PrivCo's sources confirmed, only a week, maybe 2, left, before paychecks would start bouncing and the whole house of cards came down. This is the very definition of a "distressed financing."
ImprovedSilence 14y ago
Fisrt time I've heard of privco, but just one look at their site screams 1998 scammy website. Ya know, the kind with bold lettering, a sticky caps lock, and looks kinda like those chain emails your grandma keeps forwarding....
deleted 14y ago
[deleted]
PrivCoTeam 14y ago
Fortune just reported that insider's confirm LivingSocial was down to JUST $28M IN CASH in February right before taking yesterday's financing? If my math is right, looking at their 2012 financials on PrivCo: http://www.privco.com/livingsocial-receives-emergency-110m-cash-infusion-from-existing-investors-to-avoid-bankruptcy http://www.privco.com/livingsocial-receives-emergency-110m-c... Their operating expenses are about $1.4 Billion/year (Revenue + Operating loss = about $1.4 Billion they spend a year). That's $120 Million a month. $4 million a day. THEY WERE DOWN TO JUST 7 DAYS OF CASH! How is that NOT the very definition of a "distressed financing" situation? T hey were down to a dangerously low level of cash and regardless of the financing terms or structured as technically debt or technically equity, that yes this was a distressed financing situation.
- jhg23 14y ago
  In LivingSocial's Operating loss for 2012 was a 1 time write down of goodwill (about $600 million), which is a non cash expense, so should not be included in calculation of operating expenses.

102 points by speric 14y ago

GLASSDOOR.com LivingSocial 190 EMPLOYEE reviews livingsocial.com HQ: Washington, DC Write a Review “Lies, Unprofessional Management, Abuse” Current Marketing Consultant in Township Washinton, NJ – Reviewed Dec 4, 2012 Cons – Daily HR violations Lies “Executives are in over their head” Former Senior Marketing Associate in Washington, DC – Reviewed Feb 27, 2013 – New Communication is pathetic. I sold takeout and delivery and I was never told when the product was going to launch until I read about it in the news. Not efficient - managers take over a month to make simple decisions that could be made in one hour. Its a "fake it till you make it" hierarchy. Directors and executives are all talk and basically take 50 PTO days and play on their computers all day. Not very motivating Advice to Senior Management – Restructure the whole organization. Hire seasoned directors and executives instead of 20 somethings who just want to make money and have fun. Culture should be more strict. Strategic Account Manager-Intel VMware – Reston, VA “Cool brand but dying industry” Former Account Manager in San Diego, CA – Reviewed Feb 22, 2013 – New Cons – incompetent management and dying product. Advice to Senior Management – get out in the field “Sinking Ship” Former Sales in New York, NY – Reviewed Feb 21, 2013 – New Advice to Senior Management – Get out now, company won't last very long “Horrible Place, Worst Experience Ever!!!!!!!!!!!!!!!” Former Account Manager in Washington, DC – Reviewed Sep 8, 2012 No one is happy. Employees are crying in the bathrooms and taking long lunch breaks for job interviews. People are dropping left and right, either getting fired for not hitting outlandish goals or leaving for positions with an actual career path. Comp plan changes for no reason and terrible direction. All the while, they punish employees by having them go on performance plans or firing them while they are experimenting with plans. When questioned about the extremely high turnover, terrible responses such as "we only want the best" or "that's the nature of sales" is given. Instead of being an innovate company, they just want to copy others. Worst of all, they set your expectations during the interview so high, while knowing too well that you will never make that overall comp. They are crooks! Given how badly Groupon peformed post IPO, they can no longer go IPO, so everybody is leaving. Be warned, stay away!!!! Advice to Senior Management – Stop treating employees as a number and be honest with them. “Long hours, very hard to move, do not look behind the curtain” Current Inside Sales in Washington, DC – Reviewed Jul 16, 2012 LivingSocial talks a big game about how innovated they are but their sales department is a carbon copy of every other sales department out there, if you've worked in one whip cracking sales department you've worked at LivingSocial's. The one they got going for them is a lot of young people who dont know any better and don't mind drinking the kool aid. They'll be delusional and talk about the great perks but they really don't know any better. Also, I find a lot of the practices unethical. We were told not to post fake reviews on ratings sites so that our merchants look better. But then LivingSocial corporate/HR does the same thing The biggest con is a con in itself. “Bread and Circuses replaces all values” Former Employee in Washington, DC – Reviewed Jun 7, 2012 I would think an organization who communicates to their employees that they are not like that wouldnt: lay off influential employees, punish those who do not bend the rules, force employees into roles they are not comfortable with and threaten them with unemployment if they don't comply, make false promises, not consider all factors when coming up with performance plans, etc - Inadequate leadership. This stems from having too many on staff that are not experienced enough to handle the tasks at hand. - Inept leadership. I do not need the VP of sales to tell me to make more money to "just sign better deals." My eyes could not roll further back into my head. - Comp plan changes with no rhyme or reason and terrible direction. All the while, they punish employees by having them go on performance plans or firing them while they are experimenting with plans. When questioned about the extremely high turnover, terrible responses such as "we only want the best" or "that's the nature of sales" is given. Instead of being an innovate company seems as if they want to follow lock step behind others. - And worst of all, the Bread and Circus. LivingSocial has taken a page out of the formula the Romans used to keep the populace at bay. They knew that conditions were terrible and so to keep the general populace at bay, the Romans gave away bread and held circuses for entertainment. LivingSocial does the same and disguises it as "culture." Take away the bread and circuses and you have an extremely unhappy employee base. Advice to Senior Management – Be an actually innovative company. Senior Wholesaler/External Practice Management Consultant Advice to Senior Management – RETRENCH! get back the good, upscale subscribers and lose the tanning, National, and kettleball deals! “Pitiful” Current Account Executive Manager in Orlando, FL – Reviewed Feb 26, 2012 Disgusting Local Management. Selfish to point of "winning becomes more important than ethics and honesty" Gossipy, easily put down competition when competition clearly outshines Living Social. Most unethical group of people to work with. If you have ethics, morals, scruples, a sense of fairness and have been up to this point descent - THIS IS NOT THE PLACE FOR YOU. If you posses those traits run to DC and get the job. You will fit in at all levels right up to the President. By the way if I was an investor quickly demand your money back and RUN! Advice to Senior Management – EGO's so big - they all think they are Local God's so full of Self Worship. “I drank the Kool-Aid and woke up in Sugar Shock” Former Marketing Consultant in Brooklyn, NY – Reviewed Feb 5, 2012 “Don't waste your time!” Current Marketing Consultant in Los Angeles, CA – Reviewed Dec 1, 2011 Linux Systems Administrator – new MITRE – McLean, VA “Great Employees, bad communication.” Horrible communication. Leadership was held by those with little experience who did not know how to manage people. More Poor management; job was not what I interviewed for” Former Employee – Reviewed Dec 10, 2012 Strategic Account Manager-Intel “Lack of Integrity and Honesty” Former Employee – Reviewed Nov 13, 2012 Sr. Management and BP (lacking integrity and emotional maturity) Hiring people who lack certifications and credentials Advice to Senior Management – Be honest with your employees and be sure to provide them with a solid support and development system in which you are willing to back up. “Absolutely miserable experience full of stress and LOW PAY” Current Marketing Consultant – Reviewed Jun 3, 2012 management that is clueless You will be churned and burned and replaces without a thought Groupon is offering better cuts and we are supposed to tell the merchant "oh well, we are God and won't do that" Don't be fooled by these phony HR planted reviews. This is a miserable existence where you will literally wake up in the middle of the night thinking "I have to get another deal." If you have any more that 5 years in sales....walk away from this. You get into sales for autonomy and the money. With this, you have NEITHER. “Dying industry - TERRIBLE salary, zero respect for staff, unrealistic goals” Current Account Executive, Outside Sales – Reviewed Mar 4, 2012 “Merchants don't want to run deals!” Current Senior Marketing Consultant-Outside – Reviewed Jan 4, 2012 I have been at LS over 18 months. My biggest issue is that most merchants are now pretty savvy to the "deal" space and no longer want to participate. Both LS and Groupon have a bad reputation. They are unhappy with type of customer they are getting, no repeat business, only deal seekers and in some cases have been pushed to brink of bankruptcy. I would like to leave as I feel morally that what we are selling is no longer in the business owners best interests and my conscience is getting the better of me... Advice to Senior Management – sell before it is too late! I was misled and made a huge mistake by coming on board” Current Marketing Consultant – Reviewed Dec 20, 2011 Markets are saturated. Trying to get 20 new clients every month is nearly impossible unless you're in a new or huge market Advice to Senior Management – You reap what you sow. I'm checked out. “Holding on by a thread” Former Employee – Reviewed Dec 12, 2011 Advice to Senior Management – You are a lawsuit waiting to happen “Karma is not going to be kind Livingsocial - you are headed towards a train wreck!” Current Marketing Consultant – Reviewed Dec 3, 2011

BostonCFO2 14y ago

tptacek 14y ago

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

BostonCFO2 14y ago
GLASSDOOR.com LivingSocial 190 EMPLOYEE reviews livingsocial.com HQ: Washington, DC Write a Review “Lies, Unprofessional Management, Abuse” Current Marketing Consultant in Township Washinton, NJ – Reviewed Dec 4, 2012 Cons – Daily HR violations Lies “Executives are in over their head” Former Senior Marketing Associate in Washington, DC – Reviewed Feb 27, 2013 – New Communication is pathetic. I sold takeout and delivery and I was never told when the product was going to launch until I read about it in the news. Not efficient - managers take over a month to make simple decisions that could be made in one hour. Its a "fake it till you make it" hierarchy. Directors and executives are all talk and basically take 50 PTO days and play on their computers all day. Not very motivating Advice to Senior Management – Restructure the whole organization. Hire seasoned directors and executives instead of 20 somethings who just want to make money and have fun. Culture should be more strict. Strategic Account Manager-Intel VMware – Reston, VA “Cool brand but dying industry” Former Account Manager in San Diego, CA – Reviewed Feb 22, 2013 – New Cons – incompetent management and dying product. Advice to Senior Management – get out in the field “Sinking Ship” Former Sales in New York, NY – Reviewed Feb 21, 2013 – New Advice to Senior Management – Get out now, company won't last very long “Horrible Place, Worst Experience Ever!!!!!!!!!!!!!!!” Former Account Manager in Washington, DC – Reviewed Sep 8, 2012 No one is happy. Employees are crying in the bathrooms and taking long lunch breaks for job interviews. People are dropping left and right, either getting fired for not hitting outlandish goals or leaving for positions with an actual career path. Comp plan changes for no reason and terrible direction. All the while, they punish employees by having them go on performance plans or firing them while they are experimenting with plans. When questioned about the extremely high turnover, terrible responses such as "we only want the best" or "that's the nature of sales" is given. Instead of being an innovate company, they just want to copy others. Worst of all, they set your expectations during the interview so high, while knowing too well that you will never make that overall comp. They are crooks! Given how badly Groupon peformed post IPO, they can no longer go IPO, so everybody is leaving. Be warned, stay away!!!! Advice to Senior Management – Stop treating employees as a number and be honest with them. “Long hours, very hard to move, do not look behind the curtain” Current Inside Sales in Washington, DC – Reviewed Jul 16, 2012 LivingSocial talks a big game about how innovated they are but their sales department is a carbon copy of every other sales department out there, if you've worked in one whip cracking sales department you've worked at LivingSocial's. The one they got going for them is a lot of young people who dont know any better and don't mind drinking the kool aid. They'll be delusional and talk about the great perks but they really don't know any better. Also, I find a lot of the practices unethical. We were told not to post fake reviews on ratings sites so that our merchants look better. But then LivingSocial corporate/HR does the same thing The biggest con is a con in itself. “Bread and Circuses replaces all values” Former Employee in Washington, DC – Reviewed Jun 7, 2012 I would think an organization who communicates to their employees that they are not like that wouldnt: lay off influential employees, punish those who do not bend the rules, force employees into roles they are not comfortable with and threaten them with unemployment if they don't comply, make false promises, not consider all factors when coming up with performance plans, etc - Inadequate leadership. This stems from having too many on staff that are not experienced enough to handle the tasks at hand. - Inept leadership. I do not need the VP of sales to tell me to make more money to "just sign better deals." My eyes could not roll further back into my head. - Comp plan changes with no rhyme or reason and terrible direction. All the while, they punish employees by having them go on performance plans or firing them while they are experimenting with plans. When questioned about the extremely high turnover, terrible responses such as "we only want the best" or "that's the nature of sales" is given. Instead of being an innovate company seems as if they want to follow lock step behind others. - And worst of all, the Bread and Circus. LivingSocial has taken a page out of the formula the Romans used to keep the populace at bay. They knew that conditions were terrible and so to keep the general populace at bay, the Romans gave away bread and held circuses for entertainment. LivingSocial does the same and disguises it as "culture." Take away the bread and circuses and you have an extremely unhappy employee base. Advice to Senior Management – Be an actually innovative company. Senior Wholesaler/External Practice Management Consultant Advice to Senior Management – RETRENCH! get back the good, upscale subscribers and lose the tanning, National, and kettleball deals! “Pitiful” Current Account Executive Manager in Orlando, FL – Reviewed Feb 26, 2012 Disgusting Local Management. Selfish to point of "winning becomes more important than ethics and honesty" Gossipy, easily put down competition when competition clearly outshines Living Social. Most unethical group of people to work with. If you have ethics, morals, scruples, a sense of fairness and have been up to this point descent - THIS IS NOT THE PLACE FOR YOU. If you posses those traits run to DC and get the job. You will fit in at all levels right up to the President. By the way if I was an investor quickly demand your money back and RUN! Advice to Senior Management – EGO's so big - they all think they are Local God's so full of Self Worship. “I drank the Kool-Aid and woke up in Sugar Shock” Former Marketing Consultant in Brooklyn, NY – Reviewed Feb 5, 2012 “Don't waste your time!” Current Marketing Consultant in Los Angeles, CA – Reviewed Dec 1, 2011 Linux Systems Administrator – new MITRE – McLean, VA “Great Employees, bad communication.” Horrible communication. Leadership was held by those with little experience who did not know how to manage people. More Poor management; job was not what I interviewed for” Former Employee – Reviewed Dec 10, 2012 Strategic Account Manager-Intel “Lack of Integrity and Honesty” Former Employee – Reviewed Nov 13, 2012 Sr. Management and BP (lacking integrity and emotional maturity) Hiring people who lack certifications and credentials Advice to Senior Management – Be honest with your employees and be sure to provide them with a solid support and development system in which you are willing to back up. “Absolutely miserable experience full of stress and LOW PAY” Current Marketing Consultant – Reviewed Jun 3, 2012 management that is clueless You will be churned and burned and replaces without a thought Groupon is offering better cuts and we are supposed to tell the merchant "oh well, we are God and won't do that" Don't be fooled by these phony HR planted reviews. This is a miserable existence where you will literally wake up in the middle of the night thinking "I have to get another deal." If you have any more that 5 years in sales....walk away from this. You get into sales for autonomy and the money. With this, you have NEITHER. “Dying industry - TERRIBLE salary, zero respect for staff, unrealistic goals” Current Account Executive, Outside Sales – Reviewed Mar 4, 2012 “Merchants don't want to run deals!” Current Senior Marketing Consultant-Outside – Reviewed Jan 4, 2012 I have been at LS over 18 months. My biggest issue is that most merchants are now pretty savvy to the "deal" space and no longer want to participate. Both LS and Groupon have a bad reputation. They are unhappy with type of customer they are getting, no repeat business, only deal seekers and in some cases have been pushed to brink of bankruptcy. I would like to leave as I feel morally that what we are selling is no longer in the business owners best interests and my conscience is getting the better of me... Advice to Senior Management – sell before it is too late! I was misled and made a huge mistake by coming on board” Current Marketing Consultant – Reviewed Dec 20, 2011 Markets are saturated. Trying to get 20 new clients every month is nearly impossible unless you're in a new or huge market Advice to Senior Management – You reap what you sow. I'm checked out. “Holding on by a thread” Former Employee – Reviewed Dec 12, 2011 Advice to Senior Management – You are a lawsuit waiting to happen “Karma is not going to be kind Livingsocial - you are headed towards a train wreck!”

socalnate1 14y ago

This in particular makes PrivCo look stupid: "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."

FinTechCTO 14y ago
I read the PrivCo report and they didn't say who invested in the emergency funding round (except that Amazon did and that some of its other previous investors put up money and participated, some passed and did not). This is the language, which I thought to me was pretty clear: "According to PrivCo sources, the financing effort was led by LivingSocial's largest outside shareholder, Amazon.com, with participation from some of its major venture capital investors (who had already invested $823,624,695 in equity in LivingSocial - per PrivCo V.C. Funding data - before today's emergency debt financing) in the hopes of salvaging what they can, with strict terms in place to ensure they are first to be paid upon a sale or bankruptcy. (Prior investors in LivingSocial include: Lightspeed Venture Partners, Grotech Ventures, Revolution Ventures, and U.S. Venture Partners; the VC firm confirming today's deal terms preferred not be to named. PrivCo is not suggesting any particular firm named above participated in the new financing.)" http://www.privco.com/livingsocial-receives-emergency-110m-cash-infusion-from-existing-investors-to-avoid-bankruptcy http://www.privco.com/livingsocial-receives-emergency-110m-c... So LivingSocial damage-control CEO's "Talking Points Memo" spin is either because he's confused and mis-read/misunderstood, or more likely is making an "ad hominem" response (that is, try to attack the character of who he's debating, but without addressing the substance of their argument). And how come all of his details weren't provided to employees Tues or wed. or whenever his email bragging about the round, but then some were only dragged out of him / forced out next day (on liquidation preferences, on being a "down round" (major down round, minimum of 75% by his subtle hint, Reuters citing experts reviewing the docs say implied valuation much lower, maybe as low as the $110M itself. There are 400 laid off employees from LivingSocial who by next week have to decide to excercise their soon to expire common stock options and write a check for lots of money to livingsocial to buy the commmon stock at whatever strike price their options were at (anywhere from $1b to $2b to $5.7B valuation if granted in past year). One I know asked what she should do (she would have to write a check for "tens of thousands of dollars" to livingsocial to buy LS common stock, which if the valuation is under a Billion (and cmon it obviously is, look at Groupon look at Amazon's own auditors valuation of less than $100M). Now she didn't know what a liquidation preference is, or in this case accurately reported by PrivCo to be more than the 1x liquidation preference but "multple times" the $110M provided (as even CEO - though said nothing about it in Memo 1, fessed up in Memo 2 yes it is a several times liquidation preference, based on finanial metrics, but won't possibly go as high as 4x." Even if it's 3x, that $330M, plus the former $850M preferred raised. What I am going to tell her? And 4,000 employees who are deciding whether to stay or leave based on what their common stock options are worth sticking around for, and being misled by their CEO (again nothing said in Memo 1 at ALL about impact on common - which cmon folks is worthless - and in memo 2 says "ok I admit it, your common stock is diluated - but "not much" - even though we just got funding with multiple x liquidation preferences, we must pay that back plus interest ("dividends") within 4 years, then throwing out we might IPO and then it won't matter. That's Chutzpah to say that with a straight face. I think PrivCo did those employees a service, those 400 laid off about to write a check for LivingSocial common stock- and would have based on the glowing Memo 1 from the CEO - and now are correctly thinking they probably shouldn't as by any math they would be giving their hard earned savings to LivingSocial for a security (its common stock, not preferred) that is worth zero now. Kudos to PrivCo, we need more whistleblowers, whether co is public or private like here. Praying for the rest of the 4000 employees now tonight.

j45 14y ago

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.

enraged_camel 14y ago
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."
- larrik 14y ago
  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 snark against a company already dealing with false "news" reporting.
  - j45 14y ago
    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. 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.

ebbv 14y ago

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?

mattmaroon 14y ago
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 market.
- kjackson2012 14y ago
  They can't claim the merchants' money as gross revenue, if they are using GAAP. It's the same issue that Groupon ran into and got slapped for.
  - mattmaroon 14y ago
    Groupon changed from "gross revenue" (which did not deduct money paid to merchants) to "net revenue" (which did). I believe they did this willingly because they were going to IPO, not because they were "slapped" or due to GAAP. Living Social is private and can do whatever they want, but they probably are using net if they're comparing themselves to Groupon. Otherwise they're making themselves look half the size when they are really a quarter, which I suppose could be purposeful.
- hinathan 14y ago
  There's so e serious irony there if those are the numbers, given that that's what the merchants are supposed to be doing.
phpnode 14y ago

jpdoctor 14y ago

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.

pg 14y ago
No, he says explicitly it does not get near 4x.
- jpdoctor 14y ago
  > 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.
brodney 14y ago
"There is no "4x liquidation preference." (Once again, typical of almost all venture rounds, there is a liquidation preference, but it slides up or down based on a key metric and gets nowhere near 4x.)"
mdc 14y ago
He says it slides but "gets nowhere near 4x". That's clear enough to preclude 5x.
- microtherion 14y ago
  Maybe it slides right from 3x to 5x ?-)
  - jpdoctor 14y ago
    Or never gets lower than 6x, as another example.
- deleted 14y ago

mikek 14y ago

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

officemonkey 14y ago
Never define yourself by the competition.
- Macsenour 14y ago
  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?
  - danielweber 14y ago
    They are in a space where mind-share is really important. (I think that mind-share being important is a sign you are in a risky business, but that's neither here nor there.)
    - Macsenour 14y ago
      But to his own employees? I understand in a public PR, but his letter was internal.
      - officemonkey 14y ago
        You train like you fight.
deleted 14y ago
[deleted]

graycat 14y ago

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?

josh2600 14y ago
It is difficult, at best, to know anyone's position in a private company without insider knowledge. While it might be theoretically possible to short something using a company like SecondMarket, the prevailing wisdom is that if it's not public it's probably not being shorted.
- graycat 14y ago
  Ah, yes, as I just corrected, but how 'bout being short on GroupOn?
  - josh2600 14y ago
    I think everyone is, or has been, short on GroupOn.
jbail 14y ago
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.
- graycat 14y ago
  Right. Sorry about leaving out the last paragraph. But one might try being short on a related public company, say, GroupOn.
  - bitcartel 14y ago
    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.

dailyrorschach 14y ago

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 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.

tptacek 14y ago
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.
- milkshakes 14y ago
  > What's different after this followup is that now CNN/Fortune is suspect too, because repeating this verbatim is unethical. You trusted them before?
  - tptacek 14y ago
    More than I trust TechCrunch, less than I trust Reuters.
- dailyrorschach 14y ago
  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.

joeco 14y ago

If you believed the Privco report when you first read it, I have a bridge you may be interested in.

damoncali 14y ago
The LS version is not much prettier.

thepumpkin1979 14y ago

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?

sharkweek 14y ago
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.

pg 14y ago

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-most-private-tech-company-exits-in-2012 http://www.privco.com/top-20-venture-capital-firms-with-the-...

josh2600 14y ago
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.
isquared 14y ago
The whole thing seems like it's written for a middle school newspaper. Might as well be ranking superheroes.
damoncali 14y ago
I once was peripherally involved in a large commercial real estate deal in a major city. The press (a major paper- I forget which one, specifically, but you'd recognize it) reported the value of the deal without including the debt, which was most of the financing. It is hard to be more wrong about financial matters than that, but that is the state of financial journalism.
jhg23 14y ago
Ehh that ranking should have included IPO exits, which LP's do care about, but then again, it did expressively state that it was based on their annual M&A report.....which, given the topic, could not include ipo exits....but then again, this data is so shady, a list is better than no list.

crag 14y ago

IMHO PrivCo's report appears to be a good ole-fashioned hatchet-job. The real question is who is PrivCo working for? Or are they just trying to generate press with down news?

mixedbit 14y ago

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.

onetimecomment 14y ago

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. we do not have the resources to sue. wish livingsocial and the other companies targeted by these pieces of shit would. it's all a giant scam. what hurts the most is the pubs that parrot the 'research', like cnn did this time around, which gives it credibility. edit: a16z and google pay them for their research. sad. http://www.privco.com/testimonials http://www.privco.com/testimonials

BostonCFO2 14y ago
That's an outright lie. No PrivCo salespeople and research people interact whatsoever or coordinate whatsoever. And salespeople deal with partners at top VC firms, major law firms, etc. They would never email some random little crappy company an email off their domain, not would they ever waste their once a week featured research note covering a mom and pop operation like you sound. Who would even read it? This is completely made up and libelous. Expect a subpoena for your IP address because that's a made up outright defamatory lie. Leaving aside it makes no logical sense whatsoever, go read PrivCo's featured research notes and the companies the subjects of them (usually new IPOs like Zynga, Facebook etc., which you obviously aren't) right on PrivCo.com home page for all to see. Which "Company" were you supposedly featured in your fantasy world?
FinTechCTO 14y ago
That's an outright lie. Look at their website, they only do featured research on major companies usu about to IPO (some positive and Buy Rating some Avoid IPO/sell). So far has mostly been right every time (Avoid ZYNGA, Avoid Groupon, FB fair value = $24 not $38). positive on Workday and Palo Alto Networks (both up over 50% since IPO) positive on Twitter, negative on Foursuare. But they're major companies. What article is YOUR admittedly tiny company? That's clearly an outright lie. You're a shill for LivingSocial's PR firms scrambling obviously for anything. So link to this "article/analyst research note" that they would bother doing on what you say is a tiny crappy business. Go ahead, link now. Otherwise, proof you're a liar and being libelous and deserve what you get for anonymously investing this story.

funkbot 14y ago

Parts of the PrivCo report might not be accurate, but I don't trust a word Tim O'Shaughnessy says. We were told long ago that we'd be profitable by now, and then there was a round of layoffs. Is he under any obligation to be truthful about any of this? It's an internal email within a private company. Take anything he says with a grain of salt. 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?

bruceb 14y ago
" 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" So true and the same comment I was going to make. I was in the Seattle office and thought the same thing 2 years ago.

jinushaun 14y ago

The more damning evidence is Chad Fowler's recent departure from LS to Wunderkinder.

PrivCoTeam 14y ago

PrivCo has absolutely NO short positions in any private company we cover. These are PRIVATE companies and with rare exception do not trade. Nor do we earn any fees from private companies we cover (and we do NOT accept paid advertising, unless you count a the standard Google links). We have no agenda other than to try and publish facts, and what LivingSocial announced yesterday immediately struck us as misleading and fishy based on everything we knew about the company and it's dire financials. The press release and memo to employees (imagine you are one of those trusting hardworking employees, or a local daily deals merchant they owe money to "soon") - over $300 Million worth actually, but have only $76 million - made it seem as if the company was doing so well financially that their happy investors who had invested at a $5.7 Billion valuation wanted to double down on their investments and bet even bigger. NOTHING WAS FURTHER FROM THE TRUTH. The company was NOT doing fine, lost over $400 Million last year, was running low on cash, and had to take a massive valuation haircut and grant all sorts of special preferences in order to get this last lifeline of cash. Their financials can't be papered over...and they verified to the penny as public Amazon.com owns 31% now of the company. Look them up...if you know anything about finance or accounting you will reach the same conclusions as PrivCo did. LivingSocial will soon require mass layoffs, and will be insolvent or sold for pennies on the dollar by the end of this year is our prediction. (And we hope we're wrong, and don't make a dime either way, as we don't want to see 4,000 trusting employees lose their jobs). But the numbers don't lie and we stick by our prediction. The PrivCo Team www.privco.com

btilly 14y ago
Nobody is debating whether LivingSocial has a world of problems. We're debating the veracity of all of the non-public details that made your report interesting. Well, in theory we are. Only one side of the debate seems to have showed up.
- PrivCoTeam 14y ago
  CNN/Fortune story just updated again to say insiders confirm that LivingSocial was down to JUST $28M IN CASH in February right before taking yesterday's financing. Do the math: looking at their 2012 financials on PrivCo: http://www.privco.com/livingsocial-receives-emergency-110m-cash-infusion-from-existing-investors-to-avoid-bankruptcy http://www.privco.com/livingsocial-receives-emergency-110m-c... That is, LivingSocial's operating expenses are about $1.4 Billion/year (Revenue + Operating loss = about $1.4 Billion they spend a year). That's $120 Million a month of expenses. $4 million a day. MEANING NEW FORTUNE/CNN UPDATE to their story confirms LIVINGSOCIAL WAS DOWN TO JUST 7 DAYS OF CASH! How is that NOT the very definition of a "distressed financing" situation? Correct the record CNN and Fortune - shame on you - and admit when you're wrong - (and by the way they just deleted this posting from the article comments). LivingSocial was down to a dangerously low level of cash just as PrivCo's sources confirmed, only a week, maybe 2, left, before paychecks would start bouncing and the whole house of cards came down. This is the very definition of a "distressed financing."

ImprovedSilence 14y ago

Fisrt time I've heard of privco, but just one look at their site screams 1998 scammy website. Ya know, the kind with bold lettering, a sticky caps lock, and looks kinda like those chain emails your grandma keeps forwarding....

deleted 14y ago

[deleted]

PrivCoTeam 14y ago

Fortune just reported that insider's confirm LivingSocial was down to JUST $28M IN CASH in February right before taking yesterday's financing? If my math is right, looking at their 2012 financials on PrivCo: http://www.privco.com/livingsocial-receives-emergency-110m-cash-infusion-from-existing-investors-to-avoid-bankruptcy http://www.privco.com/livingsocial-receives-emergency-110m-c... Their operating expenses are about $1.4 Billion/year (Revenue + Operating loss = about $1.4 Billion they spend a year). That's $120 Million a month. $4 million a day. THEY WERE DOWN TO JUST 7 DAYS OF CASH! How is that NOT the very definition of a "distressed financing" situation? T hey were down to a dangerously low level of cash and regardless of the financing terms or structured as technically debt or technically equity, that yes this was a distressed financing situation.

jhg23 14y ago
In LivingSocial's Operating loss for 2012 was a 1 time write down of goodwill (about $600 million), which is a non cash expense, so should not be included in calculation of operating expenses.