Photo by Donnie Weatherhead
The D.C.-based daily deals company LivingSocial is cutting its worldwide payroll by roughly 400 jobs, including about 160 who work in its six offices spread across Washington.
In a memo to employees, LivingSocial’s founder and chief executive, Tim O’Shaughnessy, writes that the layoffs come after a “top-to-bottom review” of the company’s operations and so that it can “enter 2013 with a growth strategy.” Though it turned a small profit in the first half of 2012, LivingSocial showed losses of $566 million in the third quarter, most of which came from writedowns on its acquisitions.
The layoffs, which were first reported by Washington Business Journal, appear to most directly impact the company’s takeout and delivery service, which has struggled gain prominence as an online food ordering platform. A LivingSocial employee who was laid off today tells DCist that it was “no secret” that the takeout and delivery system was failing.
Washington Business Journal also reports today that LivingSocial’s customer service unit is also taking a major hit, with D.C. employees getting axed in favor of a new call center located in Tucson, Ariz.
Several editorial employees are also among those losing their jobs today. The former LivingSocial employee told DCist yesterday that in recent weeks, the company has pushed its writers away from snappy, original prose in its daily offerings and toward quick, product-friendly bullet points.
“The mood here is very tense,” the ex-LivingSocial staffer says. “Lots of tears.”
With so many jobs being cut in LivingSocial’s home city, the news throws into the spotlight the tax incentive deal struck earlier this year between the company and the District government. Under that package, LivingSocial is due to receive up to $32.5 million in corporate income tax refunds beginning in fiscal 2016, assuming it meets certain criteria. Chief among those requirements is that it employs at least 1,000 people in D.C., and adds at least 50 each year. A spokesman for Mayor Vince Gray told DCist that the structure of the tax incentive deal protects the District from having to pay out if LivingSocial cannot meet those and other expectations.
Tim O’Shaughnessy’s memo:
LivingSocialites —
Over the past couple of months, the leadership team has been conducting a top-to-bottom review of all our operations, products, and opportunities, so we can enter 2013 with a growth strategy and cost structure that is aligned for success in the coming year and beyond. The result of that review is a plan that will help us continue and in some cases increase our investments in vital areas like marketing, sales, and product development, but it also forces us to make some tough choices, including substantial cuts to non-employee related expenditures, such as outside contractors and professional services, and—unfortunately—a reduction in the number of positions in many areas of the company.
Before the end of the day, business managers across the company will be notifying some members of their teams that their positions are being eliminated. We intend to provide every employee with the respect and appreciation that they deserve as we work through this decision.
I know you will have a lot of questions. The senior leadership team and your manager will be sharing additional information with you later today, tomorrow, and in the coming days and in coming weeks.
These decisions are never easy. I cannot thank all of you enough for the hard work, dedication, energy, and passion that you have put into our work together. Thank you all.
– Tim
