Photo by Donnie Weatherhead
The 160 people who no longer work at LivingSocial’s D.C. offices first heard the company would be laying off a sizable chunk of its payroll from reading the news, says one person who was laid off by the daily deals company today.
“Yes, a lot of us saw it coming,” the former LivingSocialite tells DCist. “Unfortunately, there was no communication about this internally, only from outside news sources.”
Tim O’Shaungessy, LivingSocial’s founder and chief executive, wrote in a company-wide memo earlier today that the layoffs came after a “top-to-bottom review” of the company’s operations. He also wrote that LivingSocial is trying to “enter 2013 with a growth strategy,” a resolution that comes after a third quarter of 2012 in which the firm took a $566 million loss after writing down several businesses it has acquired recently.
“The goal of this is not just short-term profits, it’s to build a longterm plan for success and profitability,” says LivingSocial spokesman Andrew Weinstein. “The cost structure of the company needed to be aligned with that plan. It’s a painful but important step.”
In total, LivingSocial cut about 400 jobs today, or about 8 percent of its worldwide payroll of 4,500 employees. In D.C., many of the cuts came from the editorial and customer service departments, while other U.S. offices saw their sales teams diminished. Customer service in particular is an area where LivingSocial hopes to find significant savings by moving the operation to a new call center in Tucson, Ariz.
LivingSocial announced in July that it was The cost structure of the company needed to be aligned wiht that plan“>hiring 180 employees to staff a new customer service call center in Tucson, a city that is a hub of the call center industry, Weinstein said. But a reputation for industrious telephonic interaction isn’t the only attraction Tucson offers. Average annual salaries in that sector begin at roughly $27,000.
But in D.C., the former LivingSocial employee says that the workplace culture was also deteriorating. The company, as profiled in a recent Washington City Paper cover story, spends considerable resources on trying to make its offices fun places to work, including the efforts of a dedicated “Culture Team.” However, the laid-off staffer left feeling the culture was only enjoyed by a certain set.
“It was a very ‘survival-of-the-fittest’ type of atmosphere,” the ex-LivingSocialite says. “If you knew someone from a different department, or were friends with certain people (especially developers and engineers), then your life was made easier because you could get work done with side favors rather then going through the right venues and following the right processes.”
This, coupled with an environment the person says favors “white, frat-boy-bro” types, led to frequent redundancies and inefficiency in company projects.
“I’m sure some emotions are charged right now,” says Weinstein, the LivingSocial spokesman, says. “We’re trying to be responsible but the culture is very important. We intend to focus more, not less, on providing a workplace that everyone enjoys and feels that is both personally and professionally rewarding.”
But Weinstein says even though the layoffs were unfortunate, the company believes it can grow in the near future. It plans to make new hires in its D.C. offices, but those positions will be weighted toward programming and development, especially on mobile applications.
LivingSocial has reasons beyond mobile phone accessibility to expand, though. The tax incentive deal the company received from the District of Columbia earlier this year would give it a $32.5 million break, but only if it meets certain preconditions concerning its payroll, continued expansion and physical attachment to D.C. (in the form of a consolidated headquarters of at least 200,000 square feet).
By fiscal 2016, the company will need to have 1,000 employees in the District, with a pledge to add 50 more each year through 2025. After today, meeting that number will be a climb.
Pablo Maurer contributed reporting.
