Poor guys. I met Seth and the first few employees back at Dreamit Ventures. Seth is a brilliant guy, and for such a young guy he was quite impressive. It's a shame to hear that things arent looking great for the company at present. I havent been following the storyline of SCVNGR religiously, but this does sound a bit like the company got pushed into trying to be a home-run when it was a sure thing as a single or double. Unfortunately, when funding is in the mix the incentives point in the direction of trying to become gigantic at all costs. To be honest, I feel this is the same thing that did in the first startup I was a member of - we knew we could be a successful business but the pressure to become the next LinkedIn for fundraising reasons caused us to pivot and crush ourselves as we got over-extended and ran out of runway. I'd hate to see the same thing happen to SCVNGR.
Theory: The first pivot to LevelUp was planned partially to change the name to something more memorable. They thought they might as well pivot to something else more profitable while they were at it.