What’s the Endgame for LivingSocial?

LivingSocial logoLast week LivingSocial CEO Tim O’Shaughnessy resigned from the site he co-founded (as a community of social lists before it became a deals site in 2009). The company posted his email to employees announcing his resignation:

Like you, I have given my all to the mission of this company. And I remain 100% convinced the ingredients for success are here. Additionally, I’ve given much thought to the many opportunities that stand in front of us and the benefits that could come from a new perspective and a new voice and approach at the top to lead us there. My responsibility is to recognize that now is the best time to transition leadership – when that full set of ingredients is available to be used most effectively to shape the company’s future.

The company has raised just under $950 million dollars in about five years, including from Amazon. In 2011 LivingSocial was to go public but Groupon’s rocky experience after its IPO scuttled that plan.

A spokesperson for LivingSocial said the company has a very “healthy balance sheet” and is in a strong financial position. That may or may not be PR-speak and O’Shaughnessy may have been forced out by the board. But if it’s not the case and O’Shaughnessy is willingly resigning, his move is enlightened. The company needs to further diversify or be reinvented (as Groupon is trying to do) and O’Shaughnessy’s no longer the guy to do it.

There is probably a much longer post mortem in order about what happened to the deals industry: too many sites, too-aggressive sales, a race for scale rather than focus on quality, not enough merchant education and so on.

Many deals sites are selling their assets, disappearing or have disappeared. A few will survive and some may even thrive (e.g., Zulily). But the heady days of 2009 and 2010 are gone for good it would appear.

Coupons and deals will always be popular but the manic buying and selling of daily deals that fueled the rapid rise of Groupon, LivingSocial and others is definitely over.

My guess is that the endgame for LivingSocial is absorption by Amazon. What do you think?

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4 Responses to “What’s the Endgame for LivingSocial?”

  1. Dave Oremland says at

    As a Washingtonian it would sadden me to see LS fold.  There would go a lot of jobs.  I don’t recall if I had forwarded this link to you, Greg:  It was a reddit from a person laid off from LS.  I found some of the comments very interesting.  What was revealing was how expensive it was to ultimately get deals.

    http://www.reddit.com/r/washingtondc/comments/140hoq/laid_off_from_livingsocial_ama/

    On the one hand people use LS’s and Groupons to this day.  People like deals.  But building a profitable business around it is a whole different story.

    On another context it is amazing to see the incredible visibility an LS or a Groupon can give to an smb.  Its pretty unmatcheable.    

    Now….how does one make that work profitably…and do so in a way wherein 50 competitors can’t match it???  oi.  that appears to be a tough one.

  2. Greg says at

    Thanks Dave. I agree with much of what you’re saying. Deals are evergreen as a general proposition although I think many people have burned out on the Groupon model. 

    Some version of daily deals or its equivalent will continue to be with us. And like you I would be sorry to see lots of people lose their jobs. 

  3. Amazon to enter Korea? and Apple opens a Tmall store says at

    […] Something else, that I am beginning to see in a variety of markets is consolidation. This is a natural by product of market maturation for me or it could be a case of new businesses looking to become big players in a market. A prime example of this is Groupon, the company that just never wants to become quiet. They have been investing and buying heavily in a wide variety of businesses. Their acquisition of ideeli is a simple case of a distressed platform that needed a buyer. Add to that the acquisition of Ticket Monster then you realise that Groupon is going to be around for a long time. Where does leave LivingSocial? […]

  4. Currumbin Builders says at

    How much does the overall strategy of Amazon now effect the future of Living Social? Whereas Groupon is its own entity, and can recreate itself, will Living Social need to ensure that its strategies align with the direction that Amazon is heading in? If Living Social did want to go on a buying spree like Groupon, would Amazon finance that?

  5. Greg Sterling says at

    I think you’re right that Amazon has some veto power over LivingSocial. I forgot what % share they own w/o checking. But I doubt they would finance an aggressive acquisition strategy for LS. However I think they value what LS brings to them (Amazon Local). 

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