What is LivingSocial? LivingSocial Review

LivingSocial is located in Washington, D.C. It was founded in 2007 and is the second largest group buying website in the United States after Groupon. In 2016, LivingSocial announced that it was acquired by Groupon.

Background

In 2007, LivingSocial was founded by four good friends, Aaron Batalion, Tim O'Shaughnessy, Eddie Frederick and Valeriy Aleksenko. Initially, the company was a technology consulting company called "Hungry Machine". Their first work was to develop apps that were hooked up to Facebook, such as voting apps. They named it "Hungry Machine" to motivate themselves to never be satisfied, to be as hungry as wolves, and to be as resolute as machines in execution.

Later, "Hungry Machine" became a company that sent emails to customers with sales information from merchants. In 2009, "Hungry Machine" was renamed LivingSocial.

Business Model

Although the group buying models are similar, each group buying website has its own characteristics. LivingSocial launches a group buying transaction every weekday in each of its service cities. The price of group buying goods or services is at least 50% off. Stores participating in group buying activities do not need to pay any upfront fees. LivingSocial collects about 30% of the revenue commission. Similar to many group buying models, users can only activate and use group buying coupons after the group buying transaction is completed.

But LivingSocial is more flexible than its biggest competitor Groupon in that it does not set a minimum number of group purchasers, so users do not have to worry about losing out on discounts due to too few group purchasers. In addition, in order to encourage more users to participate in group purchases, LivingSocial also launched a new "promotion for free" model. After users purchase group purchases, they can send the group purchase link to their friends. If they attract three other friends to purchase, the promoted user can enjoy free purchases.

Staff changes

In 2014, LivingSocial laid off 400 employees. In October 2015, LivingSocial laid off another 200 employees. In March 2016, LivingSocial announced another 160 layoffs. After closing its customer service center in Tucson, Arizona within two months, it will lay off another 120 employees, bringing the total number of layoffs to 280, accounting for more than 50% of the company's total employees. After several layoffs, LivingSocial's employees were reduced from 4,500 in 2011 to about 200 in 2016.

Leadership Changes

Since its founding, LivingSocial has gone through many leadership changes:

In March 2012, co-founder Eddie Frederick resigned as president and resigned from the board of directors.

In March 2013, co-founder and CTO Aaron Batalion stepped down from his position.

In January 2014, LivingSocial CEO Tim O'Shaughnessy announced his resignation and will continue to serve as CEO until a successor is appointed.

In July 2014, LivingSocial announced that Gautam Thakar, then CEO of eBay shopping site, would take over as CEO.

Hacking incident

On April 26, 2013, LivingSocial announced that its database had been hacked, affecting 50 million registered users. The announcement stated that credit card information stored in a separate database had not been compromised, but user information including passwords (which had previously been encrypted by LivingSocial as a precaution) had been leaked. On May 1, 2013, the attorneys general of Connecticut and Maryland sent a joint letter to LivingSocial requesting more information about the incident, as well as more details about the company's data management policies and procedures.

Development History

-In 2009, Living Social acquired a small company, Buy Your Frenzy Ad Drink, whose main business was to promote new products of alcohol companies by attracting online users to bars and boost offline sales.

-In January 2010, LivingSocial raised $5 million in Series B funding, with funding still coming from Grotech Ventures and AOL founder Casey.

-In March 2010, LivingSocial received another round of financing of US$25 million. In addition to Grotech and Case, US Venture Partners also joined the group as an investor.

-In October 2010, LivingSocial acquired Urban Escapes, a New York-based outdoor adventure vacation company, and launched a tailor-made leisure vacation service for young people in major American cities.

-In December 2010, Amazon invested $175 million in LivingSocial.

- In 2011, LivingSocial acquired a majority stake in Spanish group buying website Let's Bonus SL and entered the Spanish, Italian, Portuguese, Argentinian and Mexican markets. It later sold LetsBonus in 2015.

-In March 2011, LivingSocial acquired Ruby/Rails consulting company InfoEther.

-In June 2011, LivingSocial acquired DealKeren, which offers daily deals in Indonesia, and its parent company Ensogo, which offers daily deals in Thailand and the Philippines.

- In August 2011, LivingSocial acquired TicketMonster for $350 million. TicketMonster was one of the largest daily deal sites in South Korea, with an annual operating expense of $800 million. In November 2013, LivingSocial sold TicketMonster to Groupon for $260 million.

-In 2011, LivingSocial had revenue of $238 million but a loss of $499 million.

-At the end of 2011, LivingSocial planned to raise $400 million in funds, but ultimately only received $176 million.

-In March 2012, LivingSocial purchased Jump On it for $40 million.

- In April 2012, LivingSocial acquired mobile and online ordering provider ONOSYS. ONOSYS operates in Cleveland, Ohio and serves more than 75 restaurant chains.

-On February 21, 2013, LivingSocial received an additional investment of US$110 million from investors.

-In October 2016, LivingSocial, the second largest group buying website in the United States, announced that it would be sold to Groupon at a discount.