LivingSocial just can’t catch a break, but maybe a new CEO can help pull the struggling business out of the toilet.
Today, the daily deal site’s cofounder and CEO, Tom O’Shaughnessy, announced that he is stepping down. He is the third of LivingSocial’s four founders to depart within the past two years. Eddie Frederick resigned in March 2012, followed by the departure of Chief technology officer Aaron Battalion a year later.
Chief information officer Val Aleksenko is now the last founder standing.
LivingSocial has had a rough couple years. It rose to fame and fortune during the daily deals hype of 2010 and 2011 –the company brought in $50 million a month in 2011, and there were rumors of a $10 billion to $15 billion IPO. It was valued at $2.9 billion.
A recent estimate pegs LivingSocial’s valuation at a measly $48.4 million.
LivingSocial grew like wildfire in its heyday, going from four to 4,500 employees in a relatively short period of time to support demand. It also raised boatloads of venture capital money. The company raised $176 million in 2011, bringing its total to $808 million.
But then the whole daily deals fad began to flounder.
Consumers lost interest in the idea, and it turned out to be an unsustainable business model. And then there’s rival Groupon’s IPO debacle.
LivingSocial closed out 2012 with a whopping $650 million net loss and laid off 10 percent of its workforce.
Things weren’t look good for LivingSocial, and then investors sunk another $110 million into the company in February to “build our reserves, solidify our long-term plans, and execute against our vision for the future,” O’Shaughnessy said at the time.
But now O’Shaughnessy won’t play a significant role in building that future.
The Washington Business Journal got a copy of the e-mail O’Shaughnessy sent to employees, where he said that “we now have the most stable and healthy business that we have ever had,” which seems like a dubious claim.
“I remain 100 percent convinced the ingredients for success are here,” he said.”Additionally, I’ve given much thought to the many opportunities that stand in front of us and the benefits that could come from a new perspective and a new voice and approach at the top to lead us there.”
Part of this future has to be finding a way to make money other than through daily deals. Because at this point, O’Shaughnessy’s vision of profitability seems very far away.
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