LivingSocial makes big cuts as it moves away from vouchers

Steven Loeb · March 16, 2016 · Short URL: https://vator.tv/n/4406

The company lets half its workforce go as it puts its effort behind its card-based rewards program

Things have been tough for companies in the daily deals space, and LivingSocial is no exception. The company had raised nearly $1 billion in funding, but has, in the last few years, seen many cuts as the space began to lose favor.

The good news is that the company has a plan to turn it around. The bad news is that that means a large amount of the staff is going to have to go to make that happen.

LivingSocial announced big cuts on Wednesday, revealing that 160 of its employees are being let go. In addition, the company also said that it is closing down its call center in Tucson, Arizona.

The call center shutdown will mean another 120 being laid off, a spokesperson for LivingSocial told me, though they will be staying with the company for two months as it transitions its customer service function to an outsourced solution.

That adds up to 280 people out of work, or roughly 50 percent of LivingSocial's entire staff. After all is said and done, LivingSocial will have a headcount of 200 employees. 

This is the third time that LivingSocial’s President and CEO Gautam Thakar has cut down the size of the staff since he took over the job in June of 2014. He previously cut 400 jobs in November of 2014, followed by another 200 in October of last year. That adds up to 880 employees who lost their jobs in just the last year and a half.

When the company’s co-founder, and long-time CEO, Tim O’Shaughnessy, announced that  would be stepping down in January of 2014, he said at the time was that the company needed a new direction, and a new vision.

That is what Thakar has been trying to put in place, and, in addition to the lay offs, he also outlined some f the new products that LivingSocial has been testing, in order to move in a new direction. 

That includes Restaurants Plus, LivingSocial’s card-linked solution that it launched last year. It allows users to automatically get discounts on meals when they use a registered card at a participating restaurant. It's a different model than the typical voucher-based deals that the company is known for.

The company says that the service has seen high adoption from merchants in the restaurant category and positive early feedback from consumers.

This could prove to be the key to LivingSocial's future, as Thakar said that he wants to expand the program beyond dining, and he even told Re/Code that the company is looking at raising venture capital to fund the expansion of the program. 

That's big news because, while LivingSocial raised $934.73 million in funding, it has not raised any outside money since in over three years. The last time was its $110 million round in February of 2010. Previous nvestors in the company have included Amazon, Grotech Ventures, IDG Ventures, Lightspeed Venture Partners, and U.S. Venture Partners, among others, but it's not clear who the investors in the new round might be. 

LivingSocial is evolving from a multi-category, multi-country voucher-based business to a North America-based marketplace focused on experiential categories,” Thakar said in a statement.

It has been a tougher journey than I would have liked, but we have remained focused over the last year on the initial goal of being breakeven in our voucher business. We have aggressively sought operational efficiencies through simplification, automation and outsourcing, culminating in the completion of the initial phase of our turnaround today.”

(Image source: themuse.com)

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