LivingSocial Archives - Serious Startups

We reported early this morning that Washington DC based daily deals starutp Living Social was planning on laying off 400 people. That came to fruition later this morning and was announced by company spokesperson Andrew Weinstein.

Weinstein confirmed all 400 layoffs and said that they were spread across sales, editorial and customer service. They are also looking to streamline all of their operations and with that they are centralizing customer service to an office in Tuscon Arizona. Customer service jobs that were based at the companies DC offices are either being cut or moved to Tuscon. There may be some job openings at the Tuscon customer service office later on.

This may not bode will for Living Social who just received a major tax break from the DC government. Under the deal for the $32.5 million dollar tax break, LivingSocial is supposed to move to a massive, centralized headquarters and keep 1000 employees in DC.

Living Social is also trying to calm the editorial and social swell from the announcement. Many journalists, bloggers and investors in daily deals, are starting to worry that the once hot space is “over”. Weinstein told CNN “We think this actually puts us on the right path for long-term growth and profitability,”

Groupon, Living Social’s biggest rival and the big winner in the daily deals space, is going through turmoil themselves. It’s been widely rumored that the board of directors at Groupon is looking to replace CEO Andrew Mason. Their stock has performed dismally since going public and there has been a lot of executive turnover at their Chicago headquarters.

To add to LivingSocial’s problems, a month ago Amazon reported a $169 million dollar write down on it’s $175 million dollar investment in LivingSocial.

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Several startup and tech sites are reporting that Washington DC daily deals startup, Living Social will lay off as many as 400 people later today (Thursday). The Washington DC Business Journal is credited with starting the rumor based on sources “with knowledge of the daily deal giant’s plans”

The news was escalated Wednesday when Pando Daily founder Sarah Lacy tweeted out a link to a short news brief on her site about the possible layoffs.

As early as two months ago at The Brandery’s demo day, Living Social CEO and Co-Founder Tim O’Shaughnessy led no one to believe that the company was in this much trouble. O’Shaughnessy was the keynote speaker at the branding focused accelerators investor event.

According to The Business Journal, the cuts are supposed to affect several of the company’s nationwide offices, including headquarters in DC which is spread across six offices downtown.

The layoffs may cause even more trouble, as Living Social just won a $32.5 million dollar tax break from the DC government, contingent on opening a 200,000 square foot centralized headquarters and maintaining a headcount of over 1,000. The company last reported 4500 employees globally, and while the 400 layoffs alone wouldn’t seem to affect that tax break, the question lays on what else happens with the company.

Living Social isn’t the only daily deals company that’s having problems. It’s been widely rumored, and some say leaked, that rival Groupon’s CEO Andrew Mason may be ousted by his board of directors. Groupon has struggled since going public, despite the fact that they are still making money.

Living Social suffered a net loss of $566 million in the third quarter. Much of that was in the form of a $496 million dollar write down of some of it’s 2011 acquisitions. Revenue also slipped from $138 million dollars in the second quarter to $124 million in the third.

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