Several startup and tech sites are reporting that Washington DC daily deals startup, Living Social will lay off as many as 400 people later today (Thursday). The Washington DC Business Journal is credited with starting the rumor based on sources “with knowledge of the daily deal giant’s plans”
The news was escalated Wednesday when Pando Daily founder Sarah Lacy tweeted out a link to a short news brief on her site about the possible layoffs.
As early as two months ago at The Brandery’s demo day, Living Social CEO and Co-Founder Tim O’Shaughnessy led no one to believe that the company was in this much trouble. O’Shaughnessy was the keynote speaker at the branding focused accelerators investor event.
According to The Business Journal, the cuts are supposed to affect several of the company’s nationwide offices, including headquarters in DC which is spread across six offices downtown.
The layoffs may cause even more trouble, as Living Social just won a $32.5 million dollar tax break from the DC government, contingent on opening a 200,000 square foot centralized headquarters and maintaining a headcount of over 1,000. The company last reported 4500 employees globally, and while the 400 layoffs alone wouldn’t seem to affect that tax break, the question lays on what else happens with the company.
Living Social isn’t the only daily deals company that’s having problems. It’s been widely rumored, and some say leaked, that rival Groupon’s CEO Andrew Mason may be ousted by his board of directors. Groupon has struggled since going public, despite the fact that they are still making money.
Living Social suffered a net loss of $566 million in the third quarter. Much of that was in the form of a $496 million dollar write down of some of it’s 2011 acquisitions. Revenue also slipped from $138 million dollars in the second quarter to $124 million in the third.