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LivingSocial forecasts 400 layoffs

Screenshot of livingsocial website

LivingSocial rumored to layoff 400

Twitter and Facebook spawned an ecosystem of companies that seek to turn social traffic into cold hard cash. From app developers to social game pioneers like Zynga to group discount middlemen like Groupon, the types of companies drawn to the irresistible siren call of the economic and technical bounties of social networking are only limited by entrepreneurs’ imaginations. Now fast forward a few years from the heady days of social company IPOs and many of these outfits have hit reality. Sure, many are still flush with venture capital funding and quite a few have established some traction. Still, there are others who found themselves panning for gold in ever shifting sands that look like it is moving against them. One particular social subniche that is facing uncertain future prospects is LivingSocial. This daily deal service is a venture capital darling. It has raised $800 million in funding and was looking to seize social networks and turn some of that yummy and sticky social interaction and exponential marketing into some hard dollars. Well, the narrative didn’t quite pan out as the typical optimistic story you’d find in the pages of Tech Crunch and others.

To date, the dailydeals company has racked up a net loss of $566 million. A large chunk of this loss is due to some bad acquisitions from 2011. Moreover, the company’s total revenues fell to $124 million in the third quarter-a hefty slide from the second quarter’s $138 million. While these quarterly revenue number seem big, you have to view them against the fact that LivingSocial employs 4,500 employees. Now, that’s some serious monthly burn rate. It is no wonder then, that the company is rumored to be expecting 400 lay offs. Is this another example of a spectalura flamout ala Digg or is this just a hiccup?

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