Living Social

LivingSocial is an online business that offers daily deals and discounts.

Business model

LivingSocial offers a new deals each day to its members who subscribe via email. Once a deal has been purchased, members are e-mailed their redemption vouchers the following business day. In addition, there is a referral scheme which makes the offer for a member free if three referrals from the member purchase the offer. Members must either print out their vouchers or download the LivingSocial app on their Android, iPhone, iPad, or iPod to redeem.

LivingSocial also provides new customer leads at no upfront cost to merchants, however LivingSocial takes a cut of the deal revenue. Merchants can also control what the offer involves and may choose to cap purchases, as not to overwhelm their business.

Products

Daily Deals

Daily Deals are offers of discounts on various services and products. “Consumers find hometown deals they like on the sites, sign up, persuade others to do so, then get a cut-rate dinner, haircut, yoga class or other product or service.”

Instant

On March 7, 2011 Living Social launched Instant Deals in Washington DC as a test market for future expansions.Since then, LivingSocial Instant has been expanded to San Francisco, New York City, Seattle, Chicago, Portland, Los Angeles, Minneapolis and London. LivingSocial Instant is a mobile feature that lets consumers find deals within a half-mile radius with an iPhone App.One can also use an Android app.

Escapes

LivingSocial Escapes is a site offering discounts on travel. LivingSocial Escapes Deals last seven days; the margins and the pricing are not the same as the daily deal structure, but discounts (value) are significant. LivingSocial Escapes’s first package, a rock star weekend in Chicago, included a discounted stay at the Hard Rock Hotel, drinks at its bar, 10 downloads from iTunes and a Gibson guitar rental. New packages are announced every Wednesday.  Tim O’Shaughnessy, CEO of LivingSocial, said the brand is about offering “really cool things to do at great value” and this new travel experience is consistent with that notion.

Adventures

After LivingSocial's acquisition of UrbanEscapes in October 2010, the company launched LivingSocial Adventures. LivingSocial Adventures includes deals like “Zen Escape Yoga Hike” and “Boulder and Brew Tours”.

Families

September 2010, LivingSocial introduced LivingSocial Families. Family Edition deals offer the same discounts but for family-oriented activities like zoos, museums, day trips, aquariums, art classes, and more.

History

LivingSocial was founded as Hungry Machine in 2007 by four employees from Revolution Health Group. The company's first major application was their Visual Bookshelf application on Facebook which allowed users to catalog and share their favorite books with friends. Later, the company released PickYourFive and other Polls applications, making LivingSocial the number one application developer on Facebook as measured by page views. After acquiring BuyYourFriendADrink.com in 2009, LivingSocial launched a daily deals business, which since has become its highest grossing venture to date.

Funding

The company received $5 million in Series A funding in 2008. In January 2010, LivingSocial raised $5 million in Series B funding from Grotech Ventures and AOL Founder Steve Case. Two months later, on March 11, 2010, the company announced a $25 million round led by U.S. Venture Partners, Grotech and Case. LivingSocial then acquired $14 million Series C round, from Lightspeed Venture Partners with U.S. Venture, Grotech and Case contributing. Most recently, US Venture Partners and Grotech invested an additional $10.23 million of equity offering to the company. Its fundraising for 2010 comes to $50 million. In December 2010, LivingSocial received a $175 million investment from Amazon.com. LivingSocial also received an additional $8 million investment from Lightspeed Venture Partners. In March 2011, less than four months after the $175 million Amazon investment, LivingSocial raised an additional $400 million from prior investors like Amazon and Lightspeed Venture Partners, and several new ones including T. Rowe Price and Institutional Venture Partners. As of early April, LivingSocial is valued at more than $3 billion.

In 2011, LivingSocial completed a $400 million round of funding valuing LivingSocial at $3 billion.