LivingSocial, the daily deals site owned in part by Amazon, has suffered a massive cyber attack on its computer systems, which an email from CEO Tim O’Shaughnessy — just sent to employees and obtained by AllThingsD.com — said resulted in “unauthorized access to some customer data from our servers.”

The hack includes customer names, emails, birthdates and encrypted passwords.

The breach has impacted 50 million customers of the Washington, D.C.-based company, who will now be required to reset their passwords. All of LivingSocial’s countries across the world appear to have been affected, except in Thailand, Korea, Indonesia and the Philippines, as LivingSocial units Ticketmonster and Ensogo there were on separate systems.

One positive note in a not-so-positive situation: The email sent to employees and customers noted that neither customer credit card nor merchant financial information was accessed in the cyber attack.

This is the latest big data breach in the consumer Internet space, which has seen troublesome incursions into some high-profile companies recently, including Zappos, LinkedIn and Evernote.

When asked for comment on the email, a LivingSocial PR spokesman confirmed the attack and that 50 million customers were impacted.

The attack comes at a tough time for the company, since it has been trying to turn itself around after a downturn across the daily deals landspace. LivingSocial got a large cash infusion recently from investors to help staunch its losses. Amazon owns 29 percent of the company.

More to come, but here’s the email sent to employees, including one that will be sent to customers soon:

Re: Security Incident

LivingSocialites –

This e-mail is important, so please read it to the end.

We recently experienced a cyber-attack on our computer systems that resulted in unauthorized access to some customer data from our servers. We are actively working with law enforcement to investigate this issue.

The information accessed includes names, email addresses, date of birth for some users, and encrypted passwords — technically ‘hashed’ and ‘salted’ passwords. We never store passwords in plain text.

Two things you should know:

1. * The database that stores customer credit card information was not affected or accessed.

2. * The database that stores merchants’ financial and banking information was not affected or accessed.

The security of our customer and merchant information is our priority. We always strive to ensure the security of our customer information, and we are redoubling efforts to prevent any issues in the future.

To ensure our customers and merchants are fully informed and protected, we are notifying those who may have been impacted via email explaining what happened, expiring their passwords, and requesting that they create new passwords. A copy of the note is included below this email.

If you have any questions or concerns, please visit Pulse –https://pulse.livingsocial.com/intranet/Home/more_updates.html — for a list of frequently asked questions. If you have additional questions that aren’t answered in the FAQs, please submit them via email to XXX@livingsocial.com.

Because we anticipate a high call volume and may not be able to answer or return all calls in a responsible fashion, we are likely to temporarily suspend consumer phone-based servicing. We will be devoting all available resources to our web-based servicing.

I apologize for the formality of this note, which the circumstances demand. We need to do the right thing for our customers who place their trust in us, and that is why we’re taking the steps described and going above and beyond what’s required. We’ll all need to work incredibly hard over the coming days and weeks to validate that faith and trust.

– Tim

Subject: An important update on your LivingSocial.com account

LivingSocial recently experienced a cyber-attack on our computer systems that resulted in unauthorized access to some customer data from our servers. We are actively working with law enforcement to investigate this issue.

The information accessed includes names, email addresses, date of birth for some users, and encrypted passwords — technically ‘hashed’ and ‘salted’ passwords. We never store passwords in plain text.

The database that stores customer credit card information was not affected or accessed.

Although your LivingSocial password would be difficult to decode, we want to take every precaution to ensure that your account is secure, so we are expiring your old password and requesting that you create a new one.

For your security, please create a new password for your *email_address* account by following the instructions below.

1. Visit LivingSocial.com

2. Click on the “Create a New Password” button (top right corner of the homepage)

3. Follow the steps to finish

We also encourage you, for your own personal data security, to consider changing password(s) on any other sites on which you use the same or similar password(s).

The security of your information is our priority. We always strive to ensure the security of our customer information, and we are redoubling efforts to prevent any issues in the future.

Please note that LivingSocial will never ask you directly for personal or account information in an email. We will always direct you to the LivingSocial website — and require you to login — before making any changes to your account. Please disregard any emails claiming to be from LivingSocial that request such information or direct you to a different website that asks for such information.

If you have additional questions about this process, the “Create a New Password” button on LivingSocial.com will direct you to a page that has instructions on creating a new password and answers to frequently asked questions.

We are sorry this incident occurred, and we look forward to continuing to introduce you to new and exciting things to do in your community.

Tim O’Shaughnessy

CEO, LivingSocial

“We built a culture I am proud of and millions of consumers around the world have experienced their local cities because of our products,” Batalion wrote. “My decision to depart has in no way been easy. The experience and, most importantly, the friendships … have been the best of my career.”

Batalion co-founded LivingSocial in 2007 with partners Tim O’Shaughnessy, Eddie Frederick and Val Aleksenko, and has been on board ever since. Over the past few years, the company has taken on large investments from outside partners, including hundreds of millions from Lightspeed Venture Partners, T. Rowe Price and the online retail giant Amazon.

But the company has faced sharp criticism in recent years, as it has yet to turn a profit, and posted upward of $600 million in operating losses for fiscal year 2012. More recently, the company laid off 400 employees — approximately 10 percent of its workforce — in an attempt at cutbacks and an aim toward profitability.

In his departure announcement, which was first reported by TechCrunch, Batalion didn’t indicate any future plans.

A LivingSocial spokesman confirmed Batalion’s departure, but offered no further comment.

Chief Executive Tim O’Shaughnessy announced the investment in a memo to employees Wednesday. “This new investment round will allow us to dedicate the resources we need, while also building a significant cash reserve against unanticipated events or bumps in the road,” he said in the memo.

Read the rest of this post on the original site »

Judge headed up marketing at the electronics retailer for four years, until May, when he resigned to explore new opportunities. At LivingSocial, Judge will be responsible for overseeing online and offline advertising, brand management, social media and communications.

In a release, LivingSocial’s CEO Tim O’Shaughnessy said, “With his experience and strategic insight, Barry will help us reach millions of new consumers and businesses around the world.”

Judge joined Best Buy in 1999 to help the company launch its online presence at bestbuy.com, and then held a number of positions before becoming CMO in 2008.

The timing of Judge’s arrival is a little curious, given that in November the daily deals company slashed 10 percent of its workforce, or about 400 people, in order to try to achieve profitability.

Of course, as the second-largest in the space, LivingSocial could arguably have some branding issues as it battles Groupon’s much stronger presence in the marketplace.

Additionally, the Washington, D.C.-based company is attempting to distance itself from the stigma of the daily deals business by focusing on producing and curating events. Groupon is doing the same, by expanding into the sale of physical goods, and by becoming a technology company that builds tools aimed at local merchants.

Separately, Chad Fowler, LivingSocial’s SVP of technology, announced today on his personal blog that he is leaving the company. He said he’s taking a role as CTO of a technology startup in Berlin, and will remain at LivingSocial until the end of January. Fowler joined LivingSocial through its acquisition of InfoEther almost two years ago.

A spokesman confirmed that employees received the news this morning. Of the 4,500 people on staff, 400 were handed pink slips. Less than half of the layoffs occurred in the company’s Washington, D.C., headquarters, with a couple dozen taking place in its international offices. As Bloomberg previously reported, Eric Eichmann, the company’s president of its international business unit, is also leaving the company.

The layoffs in D.C. were mostly related to customer service, editorial and administrative functions. Many of the customer service jobs will be relocated to Tucson, Az., where the company opened a call center this summer. Additionally, some employees who were located in some of its smaller markets in the U.S. were let go, but none of the company’s regional offices in Seattle or San Francisco were closed.

Unlike Groupon, LivingSocial is a privately held company, so it’s not always clear how it is doing, but since Amazon owns a large stake in the company, some of its financials are disclosed on a quarterly basis. As evidenced by Amazon’s third-quarter earnings in October, it appeared that LivingSocial was in a real slump.

Amazon reported a quarterly net loss of $274 million, or 60 cents a share, including an impairment charge totaling $169 million, or 37 cents a share. In Q3, LivingSocial reported a $565 million operating loss on revenue of $124 million, and revealed operating expenses of $193 million. In a memo obtained by AllThingsD, CEO Tim O’Shaughnessy explained that most of the losses in the quarter involve non-cash items related to acquisitions made last year that are no longer worth as much. What’s more, for the first time since 2009, LivingSocial had positive operating cash flow.

Still, based on the company’s revenue and operating expenses alone, there appears to be a gap of almost $70 million a quarter that the company will have to account for eventually, either through growing revenue or cutting expenses.

The LivingSocial spokesman said that the decision to make the cuts today was part of a global review of the business; the company is looking to come up with a way to free up resources to make investments in marketing and mobile, while also aligning the cost structure with where the business is today. LivingSocial is also cutting back a new takeout and delivery feature that was launched in 20 markets. One area it is not eliminating is its adventures and events business, which organizes one-off events in cities around the country, ranging from river-rafting trips to wreath-making classes.

The layoffs come as LivingSocial’s biggest competitor faces its own issues. Groupon is struggling to continue its rapid growth, and has watched its stock price tumble 80 percent since going public a year ago. Today, Groupon’s CEO Andrew Mason is meeting with the company’s board to determine whether a more seasoned executive is what is needed to run the company going forward.

The losses not only make the retail giant look bad, but it also makes the Groupon competitor appear as though it is in a real slump. But in a memo, obtained by AllThingsD, which was distributed to LivingSocial employees this afternoon, CEO Tim O’Shaughnessy claims the results are not as bad as they look. “You’re likely to see news articles saying that we hurt Amazon’s earnings and lost a ton of money,” he wrote in the memo, adding, “That doesn’t tell the full story.”

Amazon’s third-quarter net loss was $274 million, or 60 cents a share, including an impairment charge totaling $169 million, or 37 cents a share, related to the Washington, D.C.-based daily deals company.

Other LivingSocial results from Q3 to be revealed in Amazon’s filings:

• Revenue of $124 million.
• Operating expenses of $193 million.
• Operating losses of $565 million.
• Net loss of $566 million.

Most of the losses in the quarter, however, involve non-cash items related to acquisitions made last year that are no longer worth as much, O’Shaughnessy explained. There’s more good news: for the first time since 2009, LivingSocial had positive operating cash flow. In other words, most of these losses are just on paper.

Hopefully, Amazon investors will buy that story. After the company initially reported results, its stock was down more than 6 percent in after-hours trading, but has since rebounded some. It is now trading down only 2 percent.

Here’s the memo:

Hey all –

This afternoon, our investor and partner Amazon.com announced its quarterly earnings. Because our financials for the quarter had a material impact on its results, Amazon included some information about our numbers in its announcement, and current estimates on some of our financials will be included in a filing that comes out tomorrow as well. This is similar to past quarters.

From those announcements, you’re likely to see news articles saying that we hurt Amazon’s earnings and lost a ton of money. That doesn’t tell the full story, so I wanted to share some more info on our third-quarter results with you, so you — and the customers you serve — can better understand what they mean.

First, here’s what you can glean from Amazon’s filings: We had roughly $124 million in revenue last quarter, our operating expense was approximately $193 million, and we had an operating loss of around $565 million and an overall net loss of about $566 million for the quarter.

Sounds like a lot of losses, right? Or maybe you wonder how our losses could be higher than our operating expenses? Well, what the numbers don’t fully explain is that more than 95% of our estimated losses in the quarter involved non-cash items, in particular an estimated charge of around $496 million related to the write down of “goodwill” in acquisitions we made last year and another $45 million or so related to stock compensation and other items.

In layman’s terms, we took a charge of around $496 million because we had to revalue some of the companies we acquired last year. As you know, the market has also dropped over that same time for similar public tech companies. Those changes in valuation showed up as an “impairment” in our financial statements, but they do not affect the day-in, day-out operations of the business.

When you look at our financial position, the story is very different. For the third quarter of 2012, our global revenue nearly doubled on a year-over-year basis. More important, for the first time since 2009, we had positive operating cash flow for our company on a global basis in the month of September. In other words, we ended the last month of the quarter with more money in the bank than we had at the beginning of the month, marking an important milestone on our path to profitability and long-term success.

The September numbers from Yipit also show strong competitive trends. From August to September, we gained a whopping six points of North American market share against Groupon, as our share jumped from 21% to 24% while theirs fell from 56% in August to 53% in September. While those numbers included our world-record-setting Starbucks deal, they also showed strong growth without it.

In the big picture, all of these trends mean that LivingSocial is gaining control over our own destiny, an enviable position for any start-up and one that allows us to aggressively execute against our vision to build the leading platform for local commerce worldwide.

I know each of you is working hard and making strong moves every day to help us reach our goals. Thanks for all your efforts.

- Tim

The online retailer’s net loss totaled $274 million, or 60 cents a share, on sales of $13.81 billion. Those numbers fall below analyst estimates and are at the midpoint of the ranges Amazon was projecting.

Wall Street expectations for the quarter were a net loss of eight cents a share on revenue of $13.9 billion. Amazon’s own forecast consisted of sales between $12.9 billion and $14.3 billion, representing growth between 19 percent and 31 percent compared with the year-ago period. It also expected an operating loss between $350 million and $50 million, down from operating income of $79 million a year ago.

The third quarter 2012 includes a loss of $169 million, or 37 cents a share, related to its stake in LivingSocial, the Groupon competitor. AllThingsD obtained the memo that LivingSocial’s CEO Tim O’Shaughnessy sent to employees today that explained the whole backstory.

In the company’s earnings press release, Amazon’s CEO and founder Jeff Bezos defended the company’s decision to keep margins thin, which is something investors and analysts always struggle to value. “Our approach is to work hard to charge less. Sell devices near breakeven and you can pack a lot of sophisticated hardware into a very low price point,” Bezos said.

Although Amazon never discloses exactly how many devices it is selling (another point of contention), he provided vague results, like these: The recently announced Fire HD is the company’s best-selling product, and the next two bestselling products worldwide are the Kindle Paperwhite and the $69 Kindle.

“We’re selling more of each of these devices than the No. 4 bestselling product, book three of the ‘Fifty Shades of Grey’ series,” Bezos said.

Amazon provided guidance for the fourth quarter, which is typically the busiest time of the year for all retailers. It’s projecting a wide range of income, which could consist of a profit or loss:

• Net sales are expected to fall between $20.25 billion and $22.75 billion, growing between 16 percent and 31 percent compared with fourth quarter 2011.
• Operating income is expected to range between a loss of $490 million and a gain of $310 million; Amazon had a $260 million operating income in the fourth quarter 2011.

In that short time, the venue has hosted 50 events, from a three-hour iPhone photography class that was followed by a round of beers, to ordinary yoga.

The experiment has represented a massive investment.

The historic building was meticulously remodeled to blend old exposed brick walls and antique chandeliers with modern accents like bamboo floors and large flat-screen TVs. (See the accompanying slideshow for a better look.)

While it’s too early to call the clubhouse a success, there are some signs that the concept is starting to pay off.

And if LivingSocial can replicate the venue across other cities, it could be able to distance itself not only from the stigma of the daily deals business, but also from Groupon, which despite being the category leader, has struggled as a public company.

In a presentation to the media earlier this month, LivingSocial’s co-founder and CEO Tim O’Shaughnessy said he wants LivingSocial to be to local commerce what Amazon is to online retailing and what Google is to search.

“In a three- to five-year timeframe, I want LivingSocial to be a tab that you keep open in your browser all day long,” O’Shaughnessy said. “We think that there has to be that integrated commerce platform for local commerce, and we really hope it’s LivingSocial.”

Productions

It’s still early days for 918 F Street, but LivingSocial has produced dozens of events there, and thousands of events elsewhere.

Packages have included zip-lining, wine tasting, beer festivals and small concert series. LivingSocial even once organized a summer camp for adults. Inside of 918 F Street, there’s a test kitchen for three dozen students, an art studio for painting classes and various empty rooms that can be set up for different events. A commercial kitchen allows chefs to host pop-up restaurants at the venue to try out new dishes or concepts — LivingSocial is there to fill the seats.

Sometimes the concepts are juvenile, perhaps, but when you mix in alcohol, as they usually do, it’s hard not to compare the place to a virtual Club Med, or a YMCA on steroids.

One benefit to producing its own events is that LivingSocial can solve one of the biggest problems in the daily deals space: Unique inventory. Too many providers are all selling the same stuff. By default, the F Street deals are all exclusives.

For example, a recent event called “Sumo, Sake and Sushi” sold out in 40 minutes.

Not only was it popular for consumers, but for merchants, too. The event was being used to help promote a new restaurant in town.

“When you own the experience, you can produce something great for your membership, and then you have the opportunity to bring in sponsors,” said Doug Miller, who is in charge of new business initiatives at LivingSocial.

So far, the approach is working.

The company says that 25,000 people from the D.C. area have already attended events in the four months the building has been open, and that 83 percent of the merchants had never worked with the company before — including using daily deals.

More validation

In research shared with AllThingsD, Yipit reports that the venue has generated roughly $1 million in gross billings since opening, and that the deals sold there were consistently double the gross billings of the average LivingSocial deal.

Furthermore, the researcher found that 918 F Street’s gross billings per deal have grown steadily — from $18,000 in February to more than $22,000 in May — and perhaps most surprisingly, it already accounts for 10 percent of LivingSocial’s D.C. business (even though it hosts fewer than 10 deals per month in the building).

O’Shaughnessy said the company is still fine-tuning the approach, but of the 50 different types of activities hosted at the venue, only two have not been profitable.

Additionally, he noted that people who participated in events at 918 F Street became more valuable customers, because they were more likely to spend with LivingSocial afterward, whether it’s to return for another event or to buy more vouchers.

Expansion plans

The company was reluctant to say if — or when — it would bring the concept to other markets, but maybe it won’t have to.

In May, LivingSocial announced a partnership with AEG, which owns and operates some of the most well-known venues across the U.S. Together, the two companies plan to co-produce events, by packaging regularly occurring events, like concerts or sports, with other activities or transportation.

If LivingSocial decides to go it alone and build replicas of 918 F Street, it will need additional capital.

As the second-largest daily deals provider in the U.S., LivingSocial has raised $600 million, and already has 5,000 employees. The company’s CFO, John Bax, said it does not need to raise more capital today, based on how it is currently configured.

A baby step away from Groupon

By becoming an entertainment and media brand, LivingSocial is distancing itself from the daily deals business, and from Groupon.

This is true for one main reason: Most of the deals that LivingSocial produces and hosts at the venue or elsewhere are not daily deals in the traditional sense of offering half-off the price — that’s because they are full price.

“Already it [full price] is a significant percentage of what we do. It will be a driver for a lot of what we do, but not the primary driver,” O’Shaughnessy said.

But LivingSocial is not just drifting away from Groupon. Groupon is also finding its own way in determining the future of the daily deals business.

While LivingSocial focuses on producing and curating events, Groupon is determined to become a technology company by building software, such as online calendar tools and payment technologies aimed at the local merchant.

LivingSocial says it also has plans to test out at least three concepts in the payments and loyalty space this summer, but it is not as interested in developing any hardware, and does not want to compete directly with payment processors.

With the two different approaches to the market, it’s anyone’s guess what the daily deals market will look like in three to five years.

During an all-day media event today, the company’s top executives provided a very broad overview of the privately held company.

It also gave us a tour of its six-story building in Washington, D.C., that it uses for hosting events, including art classes, pop-up restaurants and exercise classes. Later, it gave us an option of checking out a mixology class or trapeze lessons. (Personally, I opted to learn how to make refreshing beverages on this blistering 95-degree day!)

Dickson Chu, LivingSocial’s SVP of merchant services, said this summer it will test out at least three concepts with merchants in the payments and loyalty space. He declined to provide specifics, but LivingSocial’s CEO Tim O’Shaughnessy verified that it was not interested in competing directly with payment processors.

That’s sort of a novel comment given that so many companies have recently entered the space to compete against Visa, MasterCard and American Express, like PayPal or Square.

“We have a big business here, and we probably aren’t going to be a real active Square competitor,” the company’s chief said.

Over the past several months, critics have wondered if the daily deals business is sustainable and if it will be able to continue to attract consumers at the same rate. After all, the novelty of getting meals, spa treatments and other services at 50 percent off starts to wear thin. As a result, providers in the space have begun to cast a wider net by branching into other areas of local commerce.

In particular, Groupon, the industry leader, has been vocal about providing technology solutions to local merchants, including online scheduling software and rewards programs that track consumer spending. More recently, reports have surfaced that Groupon is testing out a mobile payments product, including an aggressively priced service that is much cheaper than the big payments processors like Visa and MasterCard, and even than the emerging players like Square and PayPal.

Over lunch at Kushi, a Washington, D.C., sushi restaurant that has run three LivingSocial deals, owner/chef Darren Norris said he spent $17,000 on his restaurant’s point of sales system, and it’s “the worst built machine in the restaurant.” In response, Chu said LivingSocial isn’t particularly interested in making hardware, but “we will solve that problem.”

Since joining the company in December from Citibank (and before that, PayPal), Chu has been investigating other services they could offer to merchants. One idea is to come up with a way for LivingSocial to automate a restaurant’s Facebook page or other social channels, which small business owners don’t typically have the time to keep up to date.

During the company’s update on the state of the business, the executives declined to comment on the private company’s financials. O’Shaughnessy also said it had no immediate plans to file to go public. Amazon continues to own roughly a third of the company, and reported as part of its financial results that the company had an operating loss of $92 million on revenues of $110 million in the first quarter.

Here are some of the figures that LivingSocial did provide:

• has 67 million subscribers
• operates in 600 markets in 20 countries
• has worked with 115,000 merchants
• employs 5,000 employees
• has raised $600 million in capital
• says 20 percent of purchases occur on mobile devices, and that its apps are being downloaded 100,000 times a week for a total of 11.5 million times
• says 25 percent of revenue now comes from non-core daily deals, such as travel, family, adventures, Amazon.com — many of which are full-priced.

The Washington, D.C.-based company will also be trying out a poorer-man’s option, called Instant Ordering, that offers takeout and delivery from a wider selection of restaurants.

Both services will be offered at full price, breaking the company’s tradition of offering deep discounts to restaurants, spas and other experiences.

Initially, the services will be available in LivingSocial’s hometown as the kinks get worked out of the system, but the company has ambitions to take it wider.

“We think it’s going to really resonate with people,” said Tim O’Shaughnessy, co-founder and CEO. “If merchants can figure out how to expand their tables outside their restaurant, that’s a whole new revenue stream and introduction to people for them.”

The Instant Ordering service will leverage restaurants that already have existing delivery or takeout options, but Room Service will be for restaurants that have never tried it before. LivingSocial will provide the vans and the delivery personnel, and will drop off the food at a designated time. It will also pick up the plates the next day.

It sounds a little bit like Kosmo, the venture-capital-backed free delivery service that exploded during the dotcom boom, but Room Service is working with high-end restaurants, which probably have larger margins to play with than a movie rental or a pack of cigarettes.

In a description of the service, LivingSocial writes: “Along with an elegantly plated meal on ceramic dishware, we’ll provide you with everything you need, from a cloth napkin to candles. As for those dirty dishes? We’ll take care of those, too. Just place them in a LivingSocial Room Service container, leave them outside your door the next day, and we’ll pick them up.”

We hear there’s chocolate for dessert, too. Just not on your pillow.

Starting on Tuesday, 70 merchants will be participating in the company’s Instant Ordering service; Room Service will kick off on Thursday and Friday with just one. The service’s guinea pig is D.C.-based Kushi, a sushi restaurant co-owned by Ari Kushimoto Norris.

Kushi will offer two set menus for $66 each. The first offers several small plates, including shrimp and pork skewers, with a plate of sushi. The second offers vegetarian small-plate options, such as mushrooms and soba noodles with a plate of sushi.

Kushimoto said the price compares to a meal at the restaurant, with tip included. An undisclosed portion of the revenue will go to LivingSocial. O’Shaughnessy explained that the value of Room Service is not in the discount that the company is typically known for giving, but in the convenience and experience of the service.

Kushimoto said she believes it will be an attractive service for working families that don’t have a babysitter, but have the capacity to spend money on a regular basis in restaurants.

One of the challenges she dealt with in early trials involved retaining the quality of the food — in other words, keeping the warm plates hot and the cold plates chilled. But delivery is something Kushimoto has always wanted to try. Since LivingSocial is hiring the delivery drivers and promoting the service, she doesn’t have to worry about taking on the risk of hiring extra personnel before it takes off.

Both new services will be part of the company’s “Instant” offering, which include being able to buy a discount via a mobile phone and redeem it in a matter of minutes. Instant is currently live in 22 metropolitan areas.

So far, the variety of merchants offering deals in any particular neighborhood can be low, but by offering a list of options, where you can get take-out or delivery, the catalog will grow, albeit at full price. Of course, merchants will have the option of offering a discount, and users will be able to redeem prior offers.

We are now posting the full videos from the recent AsiaD conference, which took place in Hong Kong in October.

Over the next week or so, we’re going to follow the schedule of the actual event. Up now: LivingSocial CEO Tim O’Shaughnessy, along with the head of the daily deals site’s two recent acquisitions in Asia, Daniel Shin of South Korea’s TicketMonster and Paul Srivorakul of Indonesia’s Ensogo Group.

The panel, interviewed onstage by Ina Fried, talked about a range of topics, from its Asian expansion to thoughts about rival Groupon to the future of the social buying space.

Here’s the video:

]]> http://allthingsd.com/20111109/the-livingsocial-trio-talk-asian-expansion-groupon-and-more-the-full-asiad-interview-video/feed/ 0 http://allthingsd.com/20111020/livingsocial-video-highlights-from-asiad-video/ http://allthingsd.com/20111020/livingsocial-video-highlights-from-asiad-video/#comments Thu, 20 Oct 2011 11:50:55 +0000 Beth Callaghan http://allthingsd.com/?p=134808 LivingSocial CEO Tim O’Shaughnessy took the stage at AsiaD today alongside the co-founders and CEO of two companies he’s recently acquired — Ticket Monster’s Daniel Shin and Ensogo Group’s Paul Srivorakul — to dish with Ina Fried about the daily deals racket. Video highlights below:

]]> http://allthingsd.com/20111020/livingsocial-video-highlights-from-asiad-video/feed/ 0 http://allthingsd.com/20111019/livingsocial-dishes-about-its-deals-live-at-asiad/ http://allthingsd.com/20111019/livingsocial-dishes-about-its-deals-live-at-asiad/#comments Thu, 20 Oct 2011 06:45:43 +0000 Peter Kafka http://allthingsd.com/?p=133862 While AllThingsD is just making its debut in Asia, LivingSocial has been on the ground for a while here, recently scooping up deal sites in Thailand, Korea and elsewhere.

CEO Tim O’Shaughnessy is being joined on stage by Daniel Shin and Paul Srivorakul, the heads of the two Asian acquisitions, to talk about things here as well as some of the broader issues of overload, fatigue and competition facing the deals industry. I think the word “Groupon” might come up once or twice as well.

2:48 pm: Good afternoon. Joining Ina and the gang a minute or two late.

Tim is explaining the evolution of daily deals — and the room left for growth in the industry.

Ina: You guys pioneered the use of “instant” deals to dump off unsold inventory right away. How’s that working out?

Tim: It’s live in 15 cities so far. We’re “starting to see some pretty strong growth.” For consumers, “it’s really a paradigm shift that has to occur” — when they think about going to lunch, they don’t think about LivingSocial. But three and a half years from now, we want LivingSocial to be the first place they go.

Ina: Give us all the details about your next funding round. Kara commands it.

Tim: Like Dave Goldberg said, “everybody gets funding at some point in time.”

Ina: Private versus public — what’s your preference?

Tim: Obviously, being private gives you more flexibility. It lets us try out things like Instant, because our investors are comfortable with experimentation, etc.

Ina: So what does Groupon’s IPO mean for you?

Tim: It gives them something to worry about that we don’t have to worry about. But obviously there are good things about going public, too.

Ina: So when are you going public?

Tim: Like Dave Goldberg said … But you’re not going to see an S-1 from us tomorrow.

Ina: Daniel, Paul, talk a bunch, ok?

Daniel: I grew up in the States, and when I moved to Korea, the fact that Korean venture wasn’t really as developed helped us. And the group-buying concept made a lot of sense once we started talking to merchants. We launched Ticket Monster in May 2010 with $10k in capital. We grew very quickly — we did a lot of things that LivingSocial is doing. We expanded product categories quickly. Right now, local business makes up a meaningful part of our business, but not the majority. And linking up with LivingSocial made a lot of sense because it allowed us to expand all over the world.

Ina: And now you’re in the shoe business?

Daniel: Heh. We launched a fashion shoe site a week ago.

Paul: Our market is still in its infancy. We funded a digital agency as well as an ad network. And when we saw the daily deal market in January, we realized right away how much potential there was — how it connected advertising directly to sales.

We funded the company — my two older brothers and I — with $100,000.

My middle brother is the CTO. My oldest brother does sales. We started in Thailand first. It’s changing how consumers behave. Someone walked into our office, holding a phone, showing us a picture of a deal he wanted. This model has leap-frogged the traditional e-commerce model.

In a lot of our markets, we had to start with ATM transfers, because we didn’t have enough trust built up to do credit card deals. But now we’re getting there — in Indonesia, we do phone payments.

Ina: So how far can you push into new markets once you have this customer relationship?

Tim: We’ve got a giant megaphone in every city we work in — more subscribers in most cities than the daily newspaper for that town. So that’s a valuable communication mechanism.

So far it’s been a big landgrab, planting the flag both in the U.S. and internationally. But the next evolution of the business will be about bringing technology into the ecosystem, and bringing the offline part of this into the experience.

Ina: Give me examples of deals that worked in one country that you ported to other markets.

Paul: We’ve learned a lot from TicketMonster and from LivingSocial. LivingSocial in particular has given us a three-year head start, technologically speaking, from our competitiors.

Ina: And have international markets affected how LivingSocial has done work in America?

Tim: A little bit. You see the ways that people operate, the stuff that they sell — half of our employee base is overseas, so it’s hard not to be influenced.

Ina: Amazon is now an investor and a channel for you. How’s that working?

Tim: We power Amazon Local. It gives our merchants a chance to appear on other places, so that’s good. And Amazon knows a lot about e-commerce, so that’s very very helpful.

Ina: And now Amazon is doing deals on its Kindles — what does that mean for you guys?

Tim: I think it means consumers will accept ads if they get something cheaper or free — that’s a model that’s proven out over time.

Ina: What about deal fatigue?

Tim: The signal-to-noise ratio is off on that, based on the data we see. “We see very very strong performance” on our deals — that’s why we can invest so heavily on this stuff. Our share of wallet will go up over time — we’d be doing a bad job if it wasn’t.

Ina: Jack Dorsey was on earlier talking about building an intelligence network for stores, via Square. It seems like you are doing analogous stuff — does that make him a competitior?

Tim: It’s pretty early to see where Square is going. But overall, “the merchant business is going to be massively disrupted” in the next couple years. Right now they all have tons of different systems, none of which are very compatible, or easy to modify. Think about how much pain is involved in that.

Ina: In a year, are we still going to think of you as a daily deal company, instead of local commerce, etc?

Tim: In three to five years, if consumers want to interact with a local business, and they’re not actually there — we want them to come to us.

Q&A:
Q: If you did go public, how would your S-1 differ from Groupon’s? What metrics would you use?

Tim: People have lots of questions about profitability — regardless of S-1 issues. But “that story can be told in a very very strong way … and that story will get heard over time, more and more.”

Ina: So daily deals is a real, strong business, not just an abitrage/float business.

Q: What’s your China approach, compared to Groupon?

Tim: So far “a lot of observation.” We look around at different markets, and every six months, we consider a new market, and if we think we can be profitable in 24 months, we go in. But we haven’t seen that yet in China.

Ina: Other big markets you’re circling around?

Tim: We’re in 25 countries so far. There’s probably double that with the right characteristics, but we have to be disciplined about our approach.

Ina: How much demand are you getting from customer retention tools, as opposed to customer acquisition?

Tim: So the first part is to get people through the door. And we take retention seriously, but “working down that funnel” requires a lot of technology investment down the line. Consumers get the paradigm of punchcards/loyalty cards, and there hasn’t been a digital version of that. But that will come.

Paul: We have a loyalty rewards program — cash back for customers. That works well for retention.

Daniel: In Korea, we’re sponsoring punchcards for our merchants. But one day we’ll move that to a digital app. Also we want the coupons to be easier to use — that will make the transaction more accurate, and easier to track.

Ina: How big is mobile to your future?

Tim: “I think of mobile devices as walking local devices.” Our best users, a disproportionate number of them, purchase through mobile apps. And ratio of purchases via mobile is growing at a point a month. Right now mobile is still a minority, “but it’s well into double digits.”

And we’re done. Thanks for reading.

LivingSocial Session Photos

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]]> http://allthingsd.com/20111019/livingsocial-dishes-about-its-deals-live-at-asiad/feed/ 0 http://allthingsd.com/20111018/asiad-essay/ http://allthingsd.com/20111018/asiad-essay/#comments Wed, 19 Oct 2011 00:00:00 +0000 Kara Swisher and Walt Mossberg http://allthingsd.com/?p=133141 And so our international expansion of D: All Thing Digital starts and we could not be more proud that it begins here in Hong Kong, with AsiaD.

So why Asia? It seemed the most obvious choice for us, as we looked at the global landscape for tech. While the whole world has now been engulfed in the powerful trends of digitalization, perhaps nowhere else has been as important a place for understanding where it is headed next than this region, which is home to companies critical to the next phase of innovation.

There’s no question that Silicon Valley, which has been the base for most of the key players — such as Google, Apple, Facebook and more — has driven the digital revolution over the past decade. But as we look out onto what’s to come, it’s clear to us and many others that what’s coming next and even the next great company might be born here.

That’s why we have created a conference that mixes both important speakers from U.S. tech and also from all over Asia.

Given that smartphones are in ascendance globally, having Andy Rubin, who runs Google’s Android efforts, is a no-brainer. The longtime mobile exec is at the top of an aggressive push by the Internet giant to dominate the important sector across the world.

Speaking of domination, Alibaba Group’s Jack Ma efforts to make the company a powerhouse in China and elsewhere are hard to ignore. His recent tussle and interest in Yahoo, as he has built a wide-ranging Internet giant, should make for an interesting interview.

Expect a deep dive into what makes the future Web work with Twitter and Square founder Jack Dorsey, who is someone breaking new ground as he tears down old digital paradigms. With Twitter, Dorsey redefined the real-time world and how the virtual one communicates; with Square, he is upending the payments arena.

Nvidia is not only a pioneer of graphics chips, but now its processors are widely used in the latest mobile devices. That’s why its founder and CEO Jen-Hsun Huang has a lot to say about the future of the fastest-growing sector of computing, from smartphones to tablets and whatever’s next.

Asus Chairman Jonney Shih has presided over the Taiwanese tech giant since the early 1990s. Most recently, the company pioneered the netbook market and is now plunging deeply into the tablet business, making Shih perfect to discuss these key issues in Asia and around the world.

Kazuo “Kaz” Hirai is widely considered the second in command at the consumer electronics giant Sony, in charge of its key computer entertainment division, as well as now serving as executive deputy president of the whole company. As Sony struggles to reassert its dominance in tech, Hirai will be a key player in that effort.

Bradley Horowitz — as head of product management for Google+, the search giant’s aggressive effort to break Facebook’s hammerlock on social networking — has a perfect perspective to talk about the fast-growing area and where it is going globally. With locally-based social companies springing up all over Asia, can Google establish one the whole world will use?

At Microsoft, Andy Lees is leading one of the software giant’s most important initiatives, as president of its Windows Phone division. His come-from-behind-Google-and-Apple job includes mobile software and hardware, as well as its key partnership with Nokia, and Lees will need to win in markets globally, especially in Asia.

Peter Chernin is one of Hollywood’s top players and execs. But he’s also been increasingly active in media investing in Asia of late, and has a lot to say about the global nature of entertainment in the digital age.

John Roese heads the North American R&D team for Huawei, the Chinese telecom giant making everything from heavy-duty gear for networks to mobile phones and tablets. Roese will also talk about the phenomenon of a Chinese-owned company emerging on the world technology stage.

We also felt that it was important to hear from Silicon Valley start-ups, which have enjoyed unprecedented growth and funding in the Web 2.0 era. But as they seek to expand beyond the U.S., a critical move for them all, we’ve assembled a panel of entrepreneurs to discuss it, including: Brian Chesky, CEO and co-founder of Airbnb, the popular online vacation rental site; former Google exec Sukhinder Singh Cassidy, who is running the recently funded Joyus, a new premium video commerce site trying to pioneer a new way to shop online; and David Goldberg, who is now running one of tech’s most successful start-ups at SurveyMonkey, the dominant online survey company.

Yahoo co-founder and former CEO Jerry Yang, who will appear with the Internet giant’s Asia head Rose Tsou, needs little introduction. For all of the noise around the company these days, Yahoo has a huge footprint in the region, maintains a big e-commerce business there and holds massive stakes in key firms, such as Yahoo Japan and China’s Alibaba.

And so does LivingSocial, whose CEO and co-founder Tim O’Shaughnessy, who will appear along with founders of two of its Asian units, Daniel Shin and Paul Srivorakul, which the daily deals site just bought as part of its aggressive move into Asia.

Because of Samsung’s increasing importance as a global player in smartphones and tablets, it was natural to invite Dr. Won-Pyo Hong, who heads global product strategy for the Korean giant’s mobile business. That has surged in the past year to make Samsung a leader in Android-based phones and tablets, and a significant challenger to Apple.

Also key in the mobile arena is Cher Wang, chairman of HTC, the important and innovative handset and tablet maker which has been a key player in Android’s success story. Add to that HTC buying an operating system, which would further strengthen its hand in the competitive market, and it’s clear it is in a pole position on the critical mobile market going forward.

Finally, we are also glad to bring back Al Gore, who had a memorable interview at the fourth D: All Things Digital conference in 2006. The former VP and Nobel Peace Prize winner is now chairman of Current TV and also continues as a prominent environmental activist. He is also on the board of Apple, while also being a senior adviser to Google, as well as a partner in the famed Silicon Valley venture capital firm, Kleiner Perkins.

In total, along with some very cool demos to show off, it’s going to be an exciting AsiaD, and we are thrilled most of all to welcome our first international audience. So get ready for a busy three days here and we hope you will like what we have to show you.

]]> http://allthingsd.com/20111018/asiad-essay/feed/ 0 http://allthingsd.com/20111004/final-asiad-speakers-apples-phil-schiller-and-former-vp-al-gore/ http://allthingsd.com/20111004/final-asiad-speakers-apples-phil-schiller-and-former-vp-al-gore/#comments Wed, 05 Oct 2011 00:15:32 +0000 Kara Swisher http://allthingsd.com/?p=128535

And then there was Schiller and Gore.

That would be Apple’s SVP of worldwide product marketing Phil Schiller and former Vice President Al Gore, who round out the stellar list of speakers at our upcoming AsiaD conference.

Taking place from Oct. 19 to 21 in Hong Kong, the lineup is already impressive, with a mix of speakers from China, Japan, Korea and Taiwan, as well as Silicon Valley and elsewhere.

The previously announced speakers include: Alibaba Group’s Jack Ma; Google Android head Andy Rubin; Twitter inventor and product guru, as well as Square co-founder and CEO, Jack Dorsey; Nvidia founder and CEO Jen-Hsun Huang; Asus Chairman Jonney Shih; Sony president and second-in-command Kazuo “Kaz” Hirai; Google+ guru Bradley Horowitz; Hollywood big shot Peter Chernin; Huawei’s North American R&D head John Roese; Microsoft’s Windows Phone head Andy Lees; and a panel of Silicon Valley start-up stars — Joyus’ Sukhinder Singh Cassidy, SurveyMonkey’s Dave Goldberg and Airbnb’s Brian Chesky; Yahoo co-founder Jerry Yang and Asia head Rose Tsou; LivingSocial’s Tim O’Shaughnessy, along with founders of two of its Asian units, Daniel Shin and Paul Srivorakul; Samsung mobile head Dr. Won-Pyo Hong; HTC CEO Peter Chou, who replaces Chairwoman Cher Wang.

Schiller, who reports to Apple’s CEO Tim Cook (and before that, Steve Jobs) is a member of the executive team of the tech icon, where he has worked for 17 years. He is responsible for a swath of Apple’s outward-facing businesses, including product marketing, developer relations and business marketing.

Today, in fact, he was onstage at Apple’s iPhone event, outlining some of its new product offerings. In addition, Apple just opened its first retail store in Hong Kong.

Gore, who had a memorable interview at the fourth D: All Things Digital conference in 2006, needs little introduction. The former VP and Nobel Peace Prize winner is now chairman of Current TV and also continues as a prominent environmental activist.

Gore is on the board of Apple, while also being a senior adviser to Google, which is a neat trick. At the same time, he is a partner in the famed Silicon Valley venture capital firm, Kleiner Perkins, and co-founder and chairman of Generation Investment Management, a partnership that is focused on sustainable investing.

And, as most people know, he knows a thing or two about the Internet.

Walt Mossberg and I could not think of two better people to add to the lineup we have for AsiaD, which has very few seats left.

See you in China in two weeks!

]]> http://allthingsd.com/20111004/final-asiad-speakers-apples-phil-schiller-and-former-vp-al-gore/feed/ 0 http://allthingsd.com/20110912/even-more-asiad-speakers-yahoos-yang-htcs-wang-samsungs-hong-and-more/ http://allthingsd.com/20110912/even-more-asiad-speakers-yahoos-yang-htcs-wang-samsungs-hong-and-more/#comments Tue, 13 Sep 2011 05:08:36 +0000 Kara Swisher http://allthingsd.com/?p=119818

With AsiaD just a little over a month away, Walt Mossberg and I are adding even more speakers to the list, for what we hope will be an awesome event in Hong Kong.

Taking place from Oct. 19 to 21, the conference lineup is already impressive, with a mix of speakers from China, Japan, Korea and Taiwan, as well as Silicon Valley and more.

The previously announced speakers include: Alibaba’s Jack Ma; Google Android head Andy Rubin; Twitter inventor and product guru, as well as Square co-founder and CEO, Jack Dorsey; Nvidia founder and CEO Jen-Hsun Huang; Asus Chairman Jonney Shih; Sony president and second-in-command Kazuo “Kaz” Hirai; Google+ guru Bradley Horowitz; Hollywood big shot Peter Chernin; Huawei’s North American R&D head John Roese; Microsoft’s Windows Phone head Andy Lees; and a panel of start-up stars — Joyus’ Sukhinder Singh Cassidy, SurveyMonkey’s Dave Goldberg and Airbnb’s Brian Chesky.

Now, to add to the kitty:

Yahoo co-founder and former CEO Jerry Yang, who will appear with the Internet giant’s Asia head Rose Tsou. For all of the noise around the company these days, Yahoo has a huge footprint in the region, maintains a big e-commerce business there and holds massive stakes in key firms, such as Yahoo Japan and China’s Alibaba. One of Yahoo’s first big investments came from Asian investor Masa Son, in fact, way back when.

Also on deck is LivingSocial’s CEO and co-founder Tim O’Shaughnessy, who will appear with Daniel Shin, the CEO and co-founder of South Korea’s Ticket Monster, which the daily deals site just bought as part of its aggressive move into Asia. Competing there with its U.S. rival Groupon, as well as a myriad of local social buying services, the market is a tough one.

Because of Samsung’s increasing importance as a global player in smartphones and tablets, we thought it was important to have Dr. Won-Pyo Hong. He heads global product strategy for Samsung’s mobile business, which has surged in the past year to make the Korean tech giant a leader in Android-based phones and tablets, and a significant challenger to Apple.

Also key in the mobile arena is Cher Wang, the chairwoman of three Taiwan companies, including HTC, the important and innovative handset and tablet maker which has been a key player in Android’s success story. But just this week she talked about the possibility of HTC buying an operating system, which would further strengthen its hand in the competitive market.

That’s it for now, but we will have more big names to come, as well as some pretty cool demos we will be putting onstage at AsiaD. So stay tuned.

]]> http://allthingsd.com/20110912/even-more-asiad-speakers-yahoos-yang-htcs-wang-samsungs-hong-and-more/feed/ 0 http://allthingsd.com/20110223/livingsocial-offers-screaming-deal-on-one-night-hotel-stay-for-10000/ http://allthingsd.com/20110223/livingsocial-offers-screaming-deal-on-one-night-hotel-stay-for-10000/#comments Wed, 23 Feb 2011 23:11:49 +0000 Tricia Duryee http://emoney.allthingsd.com/?p=3073 Group-buying site LivingSocial has kicked off a luxurious offer today, and while it is half off the retail price, it’s still not cheap.

For the bargain-basement price of $10,000, you will receive a one-night stay for four in the Penthouse at the Fairmont in San Francisco, a four-course dinner, a commemorative Tiffany china set for four, monogrammed robes, Bulgari amenities–and not just any rental car, but a Maserati Quattroporte for the day.

The package normally costs $20,000, but for the next six days on LivingSocial’s travel site, it will be sold for 50 percent off. Still a little out of your price range? Well, if you can scratch together $2,000, you can enjoy a one-night stay for two in the Presidential Suite (without the china set and other extras), another half-off deal.

Hardly the usual dinner out or day-spa offer, but seven packages (mix unknown) have already been purchased!

The penthouse deal may be one of the most expensive yet to pop up as the race heats up between the various players competing for a foothold in the relatively young space of offering heavily discounted items in return for selling high volumes.

Another big-ticket item that sold recently was on the flash-sales site Gilt Groupe, which was offering 2011 Volkswagen Jettas for $5,995 (or 63 percent off the regular price of $15,995). Quantities were limited to three.

Gilt Groupe also has its daily deals business, called Gilt City, which offers premium and often luxurious deals in several U.S. cities. It also has a companion travel site, called Jetsetter, that offers exotic trips around the world or even closer to home. A current offer on the site is for ritzy digs at a New York City hotel for $205 a night (including a shower with a view).

In an interview with Tim O’Shaughnessy, CEO and co-founder of LivingSocial.com, late last year, he said that the company is increasingly putting the focus on hand-crafted curated packages, which will help them differentiate from market-leading Groupon or the dozens of other clones hitting the market.

If you ask us, a $10,000 one-night stay in a San Francisco hotel would count as an eye-catcher.

It’s hard to know if this package is truly a bargain, since prices on hotel rooms can vary so drastically, and this deal isn’t really found anywhere else.

But if you take their word for it, the one-night stay for four in the penthouse normally fetches $10,000 a night. The exclusive china set costs $1,600. The monogrammed robes, Bulgari amenities and rental Maserati…well, we don’t know.

Here’s a description of the penthouse from the listing: “Your decadent digs in the recently renovated eighth-floor Penthouse feature three bedrooms, a formal dining room that seats 60, a two-story circular library with gold-leaf rotunda, a Persian-tiled billiard room, and an expansive terrace where Sean Connery famously received a haircut in ‘The Rock.’”

Is there a pull-out couch? Heck, I’m sure someone would be willing to sleep on the floor.

Just in case you are wondering, the fine print is tolerable.

The deal expires at the end of the year, the driver must have insurance, be at least 25 and have a valid driver’s license, and reservations are required.

]]> http://allthingsd.com/20110223/livingsocial-offers-screaming-deal-on-one-night-hotel-stay-for-10000/feed/ 1 http://allthingsd.com/20101221/livingsocial-ceo-has-big-plans-now-that-amazon-is-in-his-back-pocket/ http://allthingsd.com/20101221/livingsocial-ceo-has-big-plans-now-that-amazon-is-in-his-back-pocket/#comments Tue, 21 Dec 2010 15:07:27 +0000 Tricia Duryee http://emoney.allthingsd.com/?p=871 Groupon’s co-founder and CEO Andrew Mason has stolen the spotlight recently, by appearing on the “Today Show” and being interviewed on “Charlie Rose.”

But it’s hard not to make news when you turn down a $6 billion buyout offer from Google.

Meanwhile, Tim O’Shaughnessy, CEO and co-founder of LivingSocial.com, has remained relatively quiet. As the head of the second-largest company in the local, group-buying space, it wasn’t because he didn’t have anything to talk about.

Just about 24 hours before Groupon’s rejection leaked out, LivingSocial announced it had secured $175 million from Amazon, and $183 million in total new investments. In that same release, the Washington, D.C.-based company confirmed that it was booking revenues of more than $1 million a day on average and is projected to book well over $500 million in revenue in 2011.

To be sure, Groupon and LivingSocial are pulling away from the pack when it comes to defining the nascent daily-deals market. O’Shaughnessy, who claims that the two have 90 percent market share combined, said: “I think the idea conceptually that you can buy things online and go interact with merchants in offline is starting to take hold and be widespread. But it’s really been less than two years…It’s definitely the first couple of innings right now.”

Here’s our interview with O’Shaughnessy:

eMoney: Give me an update on where your business is today.

O’Shaughnessy: As of yesterday [Dec. 16], we were in 136 markets. We launched five new markets yesterday. We tend to do them in batches, and five or eight will go out at once. Overall, we’ve been averaging a market a day.

What about up-to-date figures on uniques?

We are at more than 10 million, or I think the last number we said publicly was 12 million. That’s primarily Canada and the U.S. that are signed up for the daily deal. We are in five countries today. [LivingSocial is in the U.S., Canada, the U.K., Ireland and Australia.]

What’s the competition like internationally?

Groupon has been acquisitive, and they’ve become established in lots of places. The U.S. is the most mature by a large margin, and there’s some countries with a few players that have established themselves, and finally, there’s some countries out there that’s a fairly green-field environment.

It’s fairly established that Groupon is No. 1, and LivingSocial is No. 2. But there’s a huge debate about who is No. 3?

There’s a pretty big gap. One of the things I’ve said is that it’s a pretty easy business to get into. All you have to do is know how to process a payment, and have a brother-in-law that has a restaurant that is willing to participate. But it’s a hard business to scale.

We have a competitive spreadsheet with 200 names on it, and if you do a couple of filters on how many deals someone has run, starting with 100, the vast majority drop off. And then if you up it to 500, you are up to the top two. It’s a pretty big drop-off.

Six months ago, we [Groupon and LivingSocial] collectively had 90 percent market share, and last month that was still true.

In that time, the market got bigger, and some others have grown for sure, but our market share has grown quite a bit. The signal-to-noise ratio is off, relative to who is doing what.

Is that what gives you confidence?

That’s one data point to look at, but what gives me confidence is what I see and I know we do every day. The degree of effort that goes into it and how many things can go wrong when you are managing merchant relationships, that’s what gives me the confidence.

What about the critics who say there’s no loyalty in this business–a consumer will always go with the provider who has the best deal for the business they want to visit.

There’s some loyalty that’s there, and I think people buy through us pretty regularly. They know that it’s going to be a merchant that’s vetted, and we work really hard at that. We are a good solid legit company that’s able to deliver. People place value on that. The brand matters, and enhancing user trust is an important thing.

What about the critics who say the margin will erode over time?

I think that the erosion of margins is just like any single other business if you stop innovating and do the same thing over and over. If we continue to innovate and provide additional value to merchants, the value per dollar increases. I don’t tend to be hugely concerned about the margin front.

The conduit has been 50 percent off a service, but there’s additional value we can provide to merchant communities and consumer communities. Overall, we aren’t not going to do the same thing over and over.

Can you give me an example?

We’ve started working with merchants in completely different ways, and sometimes we are going and operating events. We just did something called “tubbing and tasting,” where we worked with three merchants.

You could pick 10 to 12 Saturdays, and you’d meet in Midtown Manhattan, where a coach bus would take you to a snow hill, where you’d go snow tubbing. At the lodge, there was a bonfire and s’mores, and a beer tasting with a bunch of microbrews.

In that circumstance, we worked with three merchants–a coach company, a ski mountain and a brewery–in an entirely different way than how they associate with folks. I think it cost $60 and it sold out virtually every Saturday in January and February. I don’t see anyone else doing that, by finding unique hand-picked, curated ways to work with local businesses.

So, how will you be working with Amazon?

Right now, our first step is focusing on getting the relationship from a financial perspective locked down, and we’ll figure it out at a later point.

I assume the funding will go toward expansion?

We will be very aggressive on additional market launches as we build up our brand and user base. It’s very much a global game, and this is a global opportunity. We’ve gone from one country to five, and we’ll likely continue to expand globally.

A lot of this year was laying a foundation and the building blocks, and adding more value for the merchants, like LivingSocial Escapes. It’s on fire right now. It’s a weekend getaway, or a “staycation.” They are curated packages that are within a short driving distance from where you live. We also have LivingSocial Family Edition, which has things parents can do with their kids.

Your plans include tripling your employee count next year to 1,800 and more than doubling the number of cities you are in to 300?

We will continue to be pretty aggressive. Earlier this year, we were in six markets and we added 130 markets this year. We are a little more mature and one would hope that means we could move faster next year. We were around 30 employees, and over 600 now. It’s been a pretty crazy ramp-up.

The timing of your investment was so closely timed to Groupon-Google’s negotiations.

I’m a firm believer that we can’t control what other people do. Obviously, the deal we did with Amazon takes time to put together. We had decided awhile ago, if we want to become the biggest player in local commerce, we should be aligned with the biggest e-commerce company. That’s a lot of [what was] driving it. The timing was very coincidental.

So, no regrets?

No, not at all. We are thrilled and excited and expect to gain more market share over the coming year.

]]> http://allthingsd.com/20101221/livingsocial-ceo-has-big-plans-now-that-amazon-is-in-his-back-pocket/feed/ 1 http://allthingsd.com/20101201/amazon-poised-to-make-a-major-strategic-investment-in-livingsocial-to-counter-groupoogle-threat/ http://allthingsd.com/20101201/amazon-poised-to-make-a-major-strategic-investment-in-livingsocial-to-counter-groupoogle-threat/#comments Wed, 01 Dec 2010 21:15:57 +0000 Kara Swisher http://kara.allthingsd.com/?p=37889

With the red-hot acquisition dance between Google and Groupon sucking up all the attention, it’s easy once again to ignore the No. 2 player in the fast-growing social buying space–LivingSocial.

But not everyone is–according to sources close to the situation, the Washington, D.C.-based company that also focuses on local deals is in advanced talks for a major strategic investment–as high as $150 million–by online retail giant Amazon, at a very hefty valuation of over one billion dollars.

Sources said there will also be a deep operating partnership between the pair, as part of the deal.

Sources said the investment negotiations with Amazon is not complete yet, of course, and could fall apart.

But interest in LivingSocial has heightened of late, given the $6 billion in cash, stock and earnouts that BoomTown has reported that Google is considering ponying up to purchase the category leader, Chicago-based Groupon, and grab ahold of its 12 million users across the globe and $500 million in annual revenue.

But LivingSocial–which has been thriving even in Groupon’s flashier shadow–has 10 million subscribers worldwide in more than 120 markets and five countries, including the U.S., Canada, the U.K., Ireland and Australia.

And, as the start-up noted when LivingSocial announced its acquisition of Jump On It recently, it is currently booking an average of more than $1 million a day and is projected to book well more than $500 million in revenue in 2011.

That is what is apparently attracting Amazon, which has almost no profile in this lucrative local space, despite some attempts at its own solution. It bought a small and quirky daily deals site Woot, for $110 million in June.

But, rather than sell, sources said LivingSocial management wants to keep the company independent, and thinks a sale of Groupon will give it a huge opportunity for growth.

Why? Well, even though Groupoogle or Goopon are fun to say, the inevitable regulatory review could drag on, resulting in a slowing down of innovation in the bigger Google culture and the distinct possibility of newly rich Groupon execs flying the coop (in private planes).

More investment money should help.

LivingSocial announced in April that it had raised $14 million in a Series C round, after grabbing $25 million in a Series B venture financing only a month before. And it raised $10 million on top of that since 2008.

Sources estimated at the time that the valuation for LivingSocial was several hundred million dollars.

The newest round was led by Lightspeed Venture Partners; Earlier investors U.S. Venture Partners, Grotech Ventures and former AOL head Steve Case.

A report of the Amazon interest in LivingSocial was first posted several weeks ago in a in VentureBeat, a day before BoomTown first broke the news of the Groupon and Google discussions.

Both Amazon and LivingSocial declined to comment.

But here is an October video interview I did with LivingSocial CEO Tim O’Shaughnessy on a recent visit to Silicon Valley.

The entrepreneur has worked at AOL, as well as at Case’s Revolution Health in Washington, before moving on to the local deals start-up.

Enjoy:

]]> http://allthingsd.com/20101201/amazon-poised-to-make-a-major-strategic-investment-in-livingsocial-to-counter-groupoogle-threat/feed/ 3 http://allthingsd.com/20101019/livingsocials-tim-oshaughnessy-about-local-deals-and-not-being-groupon/ http://allthingsd.com/20101019/livingsocials-tim-oshaughnessy-about-local-deals-and-not-being-groupon/#comments Tue, 19 Oct 2010 15:09:51 +0000 Kara Swisher http://kara.allthingsd.com/?p=35730 Yesterday, before LivingSocial announced the acquisition of the social adventure company Urban Escapes, BoomTown sat down to talk with its CEO and co-founder Tim O’Shaughnessy.

The entrepreneur has worked at AOL, as well as at Steve Case’s Revolution Health in Washington, D.C., before moving on to the local deals start-up. Case was an early investor.

LivingSocial now has about 10 million subscribers to its social discount offers online, where it competes head-to-head with Groupon, which has garnered much of the attention in the hot arena.

Both companies have been garnering huge fundings, which are being used in a race for dominance in the space.

O’Shaughnessy talked about all this and more in the video interview below, which we did in Palo Alto, Calif.:

]]> http://allthingsd.com/20101019/livingsocials-tim-oshaughnessy-about-local-deals-and-not-being-groupon/feed/ 4 http://allthingsd.com/20101019/livingsocial-buys-urban-escapes-as-social-discounting-market-heats-up/ http://allthingsd.com/20101019/livingsocial-buys-urban-escapes-as-social-discounting-market-heats-up/#comments Tue, 19 Oct 2010 11:15:02 +0000 Kara Swisher http://kara.allthingsd.com/?p=35729

LivingSocial, the No. 2 social local deals start-up, announced today that it has bought Urban Escapes, a social adventure company.

Terms of the deal were not disclosed.

LivingSocial now has about 10 million subscribers to its discount offers online, where it competes head-to-head with Groupon.

Both companies have been garnering huge fundings, which is being used in a race for dominance in the space.

After the recent $135 million funding of Groupon that valued the Chicago-based company at upward of an eye-popping $1 billion, LivingSocial announced to that it had raised a more modest $14 million in a Series C round.

The Washington, D.C. start-up had raised $25 million in a Series B venture financing only a month before that. And it raised $10 million on top of that since 2008.

In addition, big companies have become focused on the fast-growing arena, such as recent acquisition interest from Yahoo in Groupon.

Here is the official press release about the latest LivingSocial deal:

LivingSocial Redefines Social Adventure with Acquisition of Urban Escapes

Unique, Exclusive Experiences Now Offered to LivingSocial’s Network of 10 Million Subscribers

Washington, D.C.–October 19, 2010–Leading social shopping site LivingSocial (www.livingsocial.com) today announced the acquisition of social adventure company Urban Escapes. LivingSocial will now be able to exclusively offer its 10 million subscribers-strong worldwide community a host of diverse, fun and unique adventures and experiences, produced by a team of on-the-ground experts.

“By working closely with merchants in all of our markets, LivingSocial has helped thousands of people across the country experience fun and exciting things to do in their neighborhood,” said Tim O’Shaughnessy, CEO and Co-Founder of LivingSocial. “With the acquisition of Urban Escapes, we will now have the ability to help curate some amazing experiences and adventures exclusively for our members.”

From “Zen Escape Yoga Hikes” to “Boulder and Brew Tours™,” Urban Escapes redefines social adventure, and its unique itineraries promote a fun and active lifestyle and a chance to escape the day-to-day rat race. Urban Escapes staff will work directly with LivingSocial representatives in five introductory markets designing and creating one-of-a-kind experiences and adventures for LivingSocial customers.

“People who use LivingSocial are already looking for fun, new things to do in the area they live or where they’re visiting,” said Maia Josebachvili, founder and president of Urban Escapes. “We’re passionate about organizing experiences you could never arrange on your own and this acquisition is the perfect opportunity for us to expand these completely unique, guided experiences around the globe.”

As the premiere local activity discovery engine, LivingSocial lets anyone find restaurants, shops, activities and services popular in their area at a savings of 50% to 70%. Handpicked adventures from Urban Escapes offer unique adventures and experiences at affordable prices to the LivingSocial community.

Terms of the deal were not disclosed.

]]> http://allthingsd.com/20101019/livingsocial-buys-urban-escapes-as-social-discounting-market-heats-up/feed/ 3 http://allthingsd.com/20100916/in-25-city-expansion-livingsocial-tries-to-play-catch-up-with-groupon/ http://allthingsd.com/20100916/in-25-city-expansion-livingsocial-tries-to-play-catch-up-with-groupon/#comments Thu, 16 Sep 2010 13:00:56 +0000 Kara Swisher http://kara.allthingsd.com/?p=33823

Trying to keep up with the lightning-fast expansion of social buying leader Groupon, LivingSocial announced today that it has launched in 25 new cities in the U.S., Canada and the U.K.

It is now in 89 cities, compared with 230 where the heavily funded Groupon is doing business.

The Washington, D.C.-based LivingSocial also recently raised another round of venture funding, bringing its total to $50 million.

What does LivingSocial and Groupon, as well as a growing list of rival clones, do for all that investment?

In general, most offer a daily deal with a huge discount on a wide range of products and services–from spas to skydiving–in dozens of U.S. cities, for large groups of potential buyers on the Web, through email, mobile apps or via social networking sites like Facebook and Twitter.

Using social tools, the idea is to use collective buying power to get low prices and push customers to local businesses.

If a deal reaches the number of buyers it needs, which can be in the thousands, these services sell vouchers to the consumers and collect a hefty fee for the sale from the businesses it sends customers to.

The plus for many small businesses is to get a crack at a lot of new consumers–think of it as social networking lead generation.

Here is the official press release from LivingSocial on its market expansion:

LivingSocial Continues Rapid Expansion, Launching 25 New Markets Across the US, Canada and UK

With its second major multiple-city launch in 2010, LivingSocial now operates in 89 markets.

Washington D.C., September 16, 2010–Leading social shopping site LivingSocial, today illustrated rapid expansion by announcing that its Daily Deals program is now live in 25 additional markets across the US, Canada and the UK. Since July, LivingSocial has launched, on average, one market per day, and now reaches a total of 89 markets and more than 85 million people globally.

Launching today:

· United States: Albuquerque, Charleston, Chattanooga, Cincinnati, Colorado Springs, Dayton, El Paso, Fresno, Grand Rapids, Greenville, Honolulu, Hudson County, Milwaukee, North Jersey, Salt Lake City, Savannah, Tucson, Virginia Beach, Westside/South Bay (Los Angeles County) and Wilmington

· Canada: Calgary, Edmonton and Mississauga

· United Kingdom: Glasgow and Leeds

“We’re finally in Hawaii! We love launching in great new markets–places we all enjoy visiting and taking in the local culture. We’re really excited to work with merchants in all of these new markets to offer residents and visitors a chance to try out restaurants, shops, services, and attractions at amazing prices,” said Tim O’Shaughnessy, CEO and co-founder of LivingSocial. “We’re growing fast, but our Deal experience will remain the same–top quality merchants, significant savings, and customized and tailored deals.”

LivingSocial is the premiere social shopping site that lets anyone find shops, restaurants, activities and services popular in their area. The company has dedicated area experts on the ground in every market, constantly researching the best in local attractions to bring a savings of up to 90% to consumers.

Cashing in on LivingSocial Deals is easy: the site offers a new promotion every morning, announced via its website, newsletter, Twitter, Facebook, iPhone or Android app. Live for 24 hours, the Deal is available to anyone who clicks on it. Additionally, LivingSocial’s unique referral model gives users their Deal for free if they refer three friends who also participate. With an extensive user base, LivingSocial is able to provide local merchants with the unprecedented ability to reach both local customers and a worldwide audience.

For a full list of markets or to sign up your city, go to http://livingsocial.com.

]]> http://allthingsd.com/20100916/in-25-city-expansion-livingsocial-tries-to-play-catch-up-with-groupon/feed/ 1 http://allthingsd.com/20100429/social-e-commerce-goes-into-overdrive-livingsocial-raises-another-14-million/ http://allthingsd.com/20100429/social-e-commerce-goes-into-overdrive-livingsocial-raises-another-14-million/#comments Thu, 29 Apr 2010 11:30:29 +0000 Kara Swisher http://kara.allthingsd.com/?p=27847

Could the social group-buying space get any frothier?

Well, yes, it could.

After the recent $135 million funding of Groupon that valued the Chicago start-up at upwards of an eye-popping $1 billion, rival LivingSocial announced to today that it had raised a more modest $14 million in a Series C round.

The Washington, D.C. start-up had raised $25 million in a Series B venture financing only a month ago. And it raised $10 million on top of that since 2008.

Sources estimated the valuation for LivingSocial is several hundred million dollars now.

The newest round was led by Lightspeed Venture Partners; Earlier investors U.S. Venture Partners, Grotech Ventures and Steve Case’s Revolution are also participating.

Ironically, Case’s former No. 2 at AOL (AOL), Ted Leonsis has been an early investor in Groupon.

LivingSocial said it will use the new pile of cash to expand to dozens of new markets, adding it was launching four new cities now: Portland, Orange County, Charlotte and Philadelphia.

It now operates in 18 cities across the country.

For those in Silicon Valley who do not consider these prices for all these social e-commerce sites high at all, BoomTown is here to tell you that in the real world the figure is not actually modest, except in comparison.

But LivingSocial will need every penny if it is to compete with Groupon and a growing spate of competitors in the local space, much as is also happening in the social status update arena.

The local outcome for most will inevitably be a sale to a big Internet company like Amazon (AMZN).

Or oblivion, especially since so many similar offerings makes the whole market confusing for both local businesses and customers

In general, most offer a daily deal with a huge discount on a wide range of products and services–from spas to skydiving–in dozens of U.S. cities, for large groups of potential buyers on the Web, through email or via social networking sites like Facebook and Twitter.

Using social tools, the idea is use collective buying power to get low prices and push customers to local businesses.

If a deal reaches the number of buyers it needs, which can be in the thousands, these services sell vouchers to the consumers and collect a hefty fee for the sale from the businesses it sends customers to.

The plus for many small businesses is to get a crack at a lot of new consumers–think of it as social networking lead-generation.

This kind of thing has been tried before, of course, centering on consumers who group together to get discounts on items by purchasing in bulk.

In Web 1.0, there were many group-buying sites, most of which failed badly. One of the more high-profile ones, Mercata, received $90 million in funding from investors, including Paul Allen’s Vulcan Ventures.

No matter in 2010!

That’s due to the VC frenzy going on, spurred by winner-take-all theories–Groupon, for example, got most of its recent mountain of cash from champion Russian overspenders, Digital Sky Technologies.

However it turns out, here is LivingSocial’s official press release:

LivingSocial Raises $14 Million Series C Round Led by Lightspeed Venture Partners; Launches in Portland, Orange County, Charlotte and Philadelphia

Company Also Begins Offering Hyperlocal Deals in Seattle Area–Users Can Now Get Deals Even Closer to their Homes

$14 Million Round Comes on Heels of $25 Million Series B Announcement Last Month

Washington D.C., April 29, 2010–LivingSocial, the social commerce leader behind LivingSocial Deals and top Facebook applications Visual Bookshelf and Pick Your Five, today announced that it has completed a $14 million Series C round of venture funding led by Lightspeed Venture Partners, with U.S. Venture Partners, Grotech Ventures and Steve Case’s Revolution, LLC participating. Because of the rapid growth, and high user demand, LivingSocial will use the capital infusion to expand into additional markets–bringing Deals to dozens more cities throughout the U.S. in 2010. This additional funding comes on the heels of the company’s recent $25 million Series B round announced last month.

“We’ve known and admired the LivingSocial team for a long time, and I have bought many of their terrific local offers. They’ve done an excellent job of growing their user base through smart media buying and excellent knowledge of social channels and virality,” said Jeremy Liew, managing director of Lightspeed Venture Partners. “With this financing round, LivingSocial is very well positioned to bring their great offers to even more people.”

LivingSocial is also launching its Deals program in four new markets: Portland, Orange County, Charlotte and Philadelphia. This brings LivingSocial live in 18 cities across the country with major plans to expand to dozens of markets throughout the year.

“We’re constantly receiving requests from our users to expand and launch in their markets, and this recent funding round will allow us to do just that,” said Tim O’Shaughnessy, CEO and co-founder of LivingSocial. “We’re really excited to introduce LivingSocial to Portland, Orange County, Charlotte and Philadelphia to continue generating huge savings for our users and even bigger returns for our merchants.”

LivingSocial users throughout the country saved an average of more than $32 each in March, and have saved tens of millions of dollars since the launch of Deals in 2009. By signing up for LivingSocial’s free daily online service, people are saving an average of 50-70% at their favorite places, such as the hottest local restaurants, spas, sporting events, hotels, and other local attractions.

Because LivingSocial wants to give consumers more availability to the program, the company is launching hyperlocal deals for the Seattle area. Now consumers in areas like Tacoma and Bellevue will start getting deals targeted to their location, in addition to Seattle proper. Hyperlocal deals not only help more consumers explore new things in their city, but these deals also provide merchants with a greater opportunity to reach local audiences on the LivingSocial Deals platform.

LivingSocial is now live in 18 markets including: Washington, D.C., New York City, Boston, Atlanta, Austin, Seattle, San Francisco, Los Angeles, the Twin Cities, Chicago, Raleigh Durham, Denver, San Diego, the San Fernando Valley, Portland, Orange County, Charlotte and Philadelphia. Dozens of additional cities are expected to roll out in the coming months. For more information or to sign up your city, go to http://livingsocial.com.

]]> http://allthingsd.com/20100429/social-e-commerce-goes-into-overdrive-livingsocial-raises-another-14-million/feed/ 3 http://allthingsd.com/20100323/a-deal-on-a-haircut-thats-what-friends-are-for/ http://allthingsd.com/20100323/a-deal-on-a-haircut-thats-what-friends-are-for/#comments Tue, 23 Mar 2010 21:19:29 +0000 Katherine Boehret http://solution.allthingsd.com/?p=1128

Last week, I went to my hair salon and paid half of what I usually spend because of a deal that I—and more than 2,000 other people—bought online two months earlier. When I bought the deal, I suggested it (via email) to two friends, who each bought it and I was rewarded with two $10 credits. I used those to buy a deal at a local restaurant that gave me $40 toward food and drink for just $20. And the cycle continues.

Welcome to the world of group buying, Internet style, where the power of the Web can be utilized to offer surprisingly large discounts to a sizable number of people for things they actually want to buy.

Many of the group-buying sites work by negotiating deals with local merchants and promising to deliver crowds in exchange for discounts. The sites differ from other buying sites in how they work and what they do to reward users who share deals.

Several of these group-buying sites are available nationwide, mostly in big cities. I focused on Groupon.com, which is available in 42 cities, and LivingSocial.com, which works in 13 cities. Both are popular in Washington, D.C., where I live, though others may be more well-known in your area. If group-buying sites aren’t popular near you yet, they may soon start working there thanks to business models that allow them to work in all sorts of locations.

Other sites offer similar or slightly different selling techniques. Woot.com, a pioneer of group buying on the Web, started in 2004 by specializing in flash sales, selling a different item each day for just 24 hours or until it sells out. The site evolved from a wholesale distribution company and is known for its focus on selling technology gadgets. Another site called Tippr.com works in Seattle (not D.C., where I live, so I can’t yet use it) and uses a patented technology that makes discounts bigger as more people join a deal. New York-based Gilt.com and Ideeli.com focus on selling high fashion items at less expensive prices and can offer deals that last longer than a day.

Here’s how sites like Groupon and LivingSocial work: They ask retailers in a city to offer steep discounts ranging from around 50% to 90% off on things that would appeal to locals. Examples include 79% off spa services, 54% off at paintball, 57% off at a restaurant with Malaysian cuisine and half off for doggie day care. The site lists one retailer a day and takes a portion of the revenue generated by a deal. (Groupon usually takes half while LivingSocial takes between 30% to 50% depending on the arrangement with the merchant.)

Some sites, like Groupon, will only make the deal official if a certain number of people purchase it, while LivingSocial and others offer the deal regardless of how many people buy it.

People can be notified of these deals by signing up for daily emails from the site or by checking social networks like Twitter and Facebook. They may then purchase deals by logging onto the group-buying site and printing vouchers from the site. With most sites, you’re buying a deal for at least half off the real cost (i.e. paying $20 for $40 at a restaurant).

Both Groupon and LivingSocial will work with iPhone apps. Once downloaded, users can enter their login credentials into these apps so they can access that account’s purchased deals, allowing them to show the coupon on the iPhone at the establishment to get the deal.

Each deal comes with restrictions. For example, most of them expire within about six months or so (the date is printed on the coupon voucher and saved in your online account so you don’t forget). Some deals restrict the number of coupons per person, like the way my salon’s deal restricted people from buying more than three coupons; if three were purchased, they all had to be used in the same visit.

Since these sites work best when many people use them, they use a rewards system to motivate people to tell their friends about the deals they’ve bought. If someone shares Groupon with a friend using a special referral Web link, that friend must sign up for the site within 72 hours of clicking on the link. Then, when that person makes a purchase, the original sharer gets a kickback of $10 in Groupon credit to use toward future deals. This won’t work if the invitee isn’t a first-time Groupon customer.

LivingSocial’s rewards system works a little differently. If you buy a deal and share it with friends using a special Web link, you can get the deal free of charge if three friends use that link to sign up for the site and buy the deal. Separate from that, LivingSocial encourages users to invite friends to simply sign up for the site. If the invitee signs up, he or she gets $5 toward deals. If he or she purchases a deal, the original inviter also gets $5 toward deals.

Both Groupon and LivingSocial put a lot of emphasis on choosing deals that will serve as city guides to the hip and fun activities going on around town. Groupon divides some of its 42 cities into areas: For example, Washington, D.C., is divided into The District, Northern Virginia and Montgomery County—three unique zones that locals will appreciate seeing listed separately.

Not every deal is successful on group-buying sites. Groupon’s idea of selling tours of Gary, Ind., shortly after Michael Jackson’s death didn’t convince enough buyers to want to visit the King of Pop’s hometown. LivingSocial admits that some of its deals were too specific to be popular, like a dog-training class that didn’t fetch enough buyers. The site’s CEO Tim O’Shaughnessy says there might not have been enough people with new dogs at the time of the deal.

If you haven’t tried one of the many group-buying Web sites and you live in an area where they’re available, you’ll want to check them out—or find someone who already uses them to invite you so you can both get rewarded.

Edited by Walter S. Mossberg.

Write to Katherine Boehret at mossbergsolution@wsj.com

---

Buying in Numbers

With most group-buying Web sites, getting more people to buy into the deal gets you a better discount.

Site Name	Number of Cities	Rewards for Sharing With Friends	Type of Deals	iPhone App
Groupon.com	42	$10 for you if new invitee joins and buys a deal	Hip city locales and activities	Yes
LivingSocial.com	13	Free deal if 3 friends buy it; $5 to invitees who sign up; $5 to you if they buy a deal	Hip city locales and activities	Yes
Tippr.com	1	Deal gets better as more people buy it	Hip city locales and activities	No
Woot.com	online	None	Technology gadgets	Yes
Gilt.com	online	$25 for each invitee who buys	High fashion	Yes
Ideeli.com	online	$25 for each invitee who buys	High fashion	No

]]> http://allthingsd.com/20100323/a-deal-on-a-haircut-thats-what-friends-are-for/feed/ 0 http://allthingsd.com/20100311/latest-trend-for-vcs-is-overfunding-group-buying-start-ups-livingsocial-nabs-25-million/ http://allthingsd.com/20100311/latest-trend-for-vcs-is-overfunding-group-buying-start-ups-livingsocial-nabs-25-million/#comments Thu, 11 Mar 2010 14:52:32 +0000 Kara Swisher http://kara.allthingsd.com/?p=25442

Start-ups that offer users big discounts via socially-charged local group-buying services are getting a lot of attention these days, especially from venture firms.

Today, it’s Washington, D.C.-based LivingSocial, which just announced a $25 million Series B round, led by U.S. Venture Partners.

The funding will be used to expand its footprint of cities, among other initiatives.

Sites such as LivingSocial feature a “daily deal” with a huge discount from a wide range of local businesses, such as restaurants and spas. They use social networking sites like Facebook and Twitter to turbocharge consumers into action.

This kind of thing has been tried before, of course, centering on users who group together to get discounts on items by purchasing them in bulk.

In Web 1.0, there were many group-buying sites, most of which failed badly. One of the more high-profile ones–Mercata–got $90 million in funding from investors, including Paul Allen’s Vulcan Ventures.

Still, the group-buying space is getting mighty competitive of late. Recently, Chicago-based Groupon grabbed $30 million from, among others, Accel Partners.

BoomTown, in fact, did a video interview with Groupon founder Andrew Mason last week, after which I was inundated with press releases from a half-dozen wannabe competitors.

Ironically, for businesses based on discounting, there seem to be no price cuts when it comes to group-buying start-up funding.

Here’s the full press release:

Social Commerce Leader LivingSocial Raises $25 Million Series B Round, Led by U.S. Venture Partners

Funding to Fuel Expansion to Dozens of Cities by Year End; Chicago, Denver, Raleigh Durham, and San Diego launch today

Washington D.C., March 11, 2010–LivingSocial, the social commerce leader behind LivingSocial Deals and top Facebook applications Visual Bookshelf and Pick Your Five, today announced that it has completed a $25 million Series B round of venture funding led by U.S. Venture Partners, with Grotech Ventures and Steve Case’s Revolution, LLC participating. With this round of funding, LivingSocial Deals is launching in four additional cities: Chicago, Denver, Raleigh Durham and San Diego, making the program live in 13 markets across the country, growing to dozens of cities by year-end. By signing up for LivingSocial’s free daily online service people are saving an average of 50-70% at their favorite places, such as the hottest local restaurants, spas, sporting events, hotels, and other local attractions, giving local merchants the Web prowess of viral marketing proven through LivingSocial’s explosive Facebook success.

“With more than a million people already using LivingSocial Deals, online group buying is a movement that is clearly resonating with consumers,” said Tim O’Shaughnessy, CEO of LivingSocial. “This round of funding enables us to accelerate our growth throughout more cities and combine our feet-on-the-street approach with our social channel expertise to offer our 85 million customers great deals at local businesses, while giving merchants a no-risk way to get customers through their doors.”

LivingSocial is the premier local activity discovery engine–the place where anyone can find out what’s “hot” in and around their city. As a result, it not only gives local merchants an innovative way to reach nearby customers, but also leverages LivingSocial’s unprecedented social media knowledge to grant merchants access to the company’s extensive community of more than 85 million people. With LivingSocial, merchants get the viral power of the Internet, the reach of the LivingSocial community, and the leverage of the iPhone platform.

LivingSocial today also launched an affiliate program for sites large and small, producing a revenue opportunity for affiliates, such as blogs and other sites, and broadening the advertising reach for merchants to the farthest ends of the Web. LivingSocial affiliates can generate revenue by delivering amazing discounts targeted to their loyal readers. Creating a centralized affiliate program gives participating merchants reach into new media, without requiring them to create, develop and manage individual relationships with an ever-growing cast of bloggers or other local content sites. More information can be found at http://livingsocial.com/affiliates.

“Local merchants deserve the ability to link online advertising spend with store visits, not just site visits,” said Ted Maidenberg, Principal at U.S. Venture Partners. “LivingSocial is at the forefront of a profound shift in the way local merchants engage with new and existing customers. This investment will allow them to continue to evolve the program and reach new markets so more merchants can reap the rewards of what LivingSocial has to offer.”

LivingSocial’s group buying service has grown rapidly since its launch in August 2009, expanding from Washington, D.C., to New York City, Boston, Atlanta, Austin, Seattle, San Francisco, Los Angeles, the Twin Cities, Chicago, Raleigh Durham, Denver, and San Diego, with more cities rolling out in coming months. Also, with the first social savings iPhone application, LivingSocial users can get savings on-the-go and be alerted when new deals are available through push notifications and even redeem directly from their iPhone. LivingSocial users throughout the country have already saved millions of dollars, with tens-of-millions more on tap throughout 2010.

“We’re really excited to bring LivingSocial to Chicago, Denver, Raleigh Durham and San Diego as these markets have such vibrant populations,” added O’Shaughnessy. “The deals we offer reflect the diversity and unique nature of each city, encouraging the exploration of nightlife, culture, entertainment, and outdoor activities.”

For more information or to sign up for your city, go to http://livingsocial.com.

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