RIP LivingSocial: The fast rise and slow demise of a daily deals company | Hacker News Reader

RIP LivingSocial: The fast rise and slow demise of a daily deals company

washingtonpost.com

82 pointsdannylandau24 comments

I met a group of 6 living social employees in 2011 at a local meetup. They spoke so negatively about their company AND their partners/customers. This wasn't just run of the mill complaining about work or customers, it was really vile and made me sick. I vowed to never use their service and encouraged others to not use them. Why am I posting this? Because it is fundamental to any startups culture to be careful about how they present themselves to the rest of the tech community and the world.

I'd be interested to hear some specifics on why they were so bad. IIRC bezos/Amazon invested in LS so it'd be interesting to find out what they didn't vet properly.

> As executives reflect on LivingSocial’s fatal moment, all point to a security breach in April 2013. Hackers gained access to the account information of 50 million subscribers, and LivingSocial forced all of them to reset their passwords. About 20 percent never came back.

I don't know how they came to this number, but at least it's something to point to when the c-level executives decide password security is something that they can just skip doing. Obviously part of that 20% is are just dead accounts but still, something to show next time you're in this situation.

80% of total members continued to use the website after the password reset? That seems too high. Perhaps they meant 80% of active members. Unless the website had an incredibly low churn rate.

Or c-level executives will remember this tidbit before they let their security folks talk them into a password reset after a breach. You have to wonder whether a company in that situation has other options, like blocking logins from previously unseen IPs (for users who don't change passwords).

You think a company that was using SHA1 [0] to hash passwords was actually logging IP addresses?

[0] - https://arstechnica.com/security/2013/04/why-livingsocials-5...

Hmm, isn't that the opposite of a good example? Here's what I feel like a C-level exec would take away from that story: if you ask users to reset their password, you'll lose 20% of them.

my viewpoint was once there is a breach there will be anger and maybe 20% of our customers don't come back. not resetting passwords and possibly further endangering your customer base seems like a bad idea.

but i can see someone taking your viewpoint... which is worrying.

> As the longtime manager put it: “When I look at LivingSocial’s legacy, more than anything else, we basically gave a lot of people their MBAs in scaling a company very fast.”

Oh nice, the people at the company that grew too quickly learned how to do it again. Tight.

This is something I latched on to too; does scaling imply stability and business fitness? Otherwise scaling is not the correct word in this context - thin yet brittle hypergrowth that over-extends the emotions and focus of employees and the correct use of economic resources.

Perhaps they learned the highly valuable mistakes that can make the second time easier?

To be fair, LivingSocial's problem wasn't "growing too quickly". Their problem was that their business model evaporated as consumer trends changed.

Building a solid business model is important, but so too is scaling it. At least these guys learnt half of the recipe.

They raised a billion dollars, were valued at one time at 6 billion, and in the end were worth $0. Their lasting impact is other smaller startups who might or might not ever become anything. What a strange world we live in.

The key takeaway I've got is that sometimes it's hard to see when you're inside the fad.

Interesting that the VC (Jeremy Liew) is the also behind Snapchat. You win some, you lose some, and in Venture investing, the wins take care of the losses.

This is always the case. Even Sequoia has made blunders before - turning down Salesforce and investing in Webvan, to name a few.

There are two types of mistakes for VCs:

1 - Investing in the wrong company

2 - Missing the right company

The first bucket has limited financial downside. (You only lose what you invested) The real cost is time and attention. (An investor can only sit on a fixed amount of boards)

The second can be a lot more painful, because the upside can be 10-100x. Missing out on Salesforce (or Yelp, or pick your winner) can be even tougher.

What does a $0 acquisition even mean? What would the purpose be?

The acquiring company acquires the target company's assets in return for assuming its liabilities. No cash changes hands.

What allowed Groupon to survive in this same market (where deals are a waning fashion)?

If I understanding this correct - Groupon is now a monopoly?

Not really, not without an extremely narrow definition of what market they occupy.

The "daily deals" model is only one of many ways for businesses to offer deals and try to find new customers, and for customers to find discounts. Groupon/LivingSocial/etc have many competitors, all the way down to simply advertising specials and promotions with a sign in the window.

A monopoly on “an industry that doesn’t really exist” - citing the article.

In the same sense that YCombinator has a monopoly on news forums run by startup incubators.

How is Groupon doing?

How long does Groupon have left?

Reply on news.ycombinator.com