I'm a fan of the underdog. The guy that nobody really pays attention to because they're so focused on whatever shiny object is in the public eye. The guy who is quietly innovating and creating the most amazing stuff. Tim is that guy. He and 3 co-founders started a company in DC originally focused on making Facebook apps. Just 13 months ago, they had 30 employees. Before that, it was just the 4 of them above a 7-Eleven in Georgetown. Today, they have 1,20o employees and are easily growing past 2,000 this year.
Tim told some awesome and amazing stories about Livingsocial's growth in this hour-long video (at bottom), including:
- How they ended up with a cross-dressing Superbowl commercial, and how the ROI has justified the ad spend
- How they went from 30 people 13 months ago to 1,200 today, growing to 2,000+ this year
- How they transitioned from the statup phase --> find biz model that works --> scaling phase
- Thoughts on company culture -- specifically that when you're growing as fast as they are, it's OK to state culture; and about their "Surprise & Delight" kitten jumping from cupcake
- How they take submissions for annual company motto by employees; and everyone votes. It was "strong moves" in 2010 and it's "boom" in 2011
- They get 6,000 resumes per week, he easily sees that growing to 10,000 per week
- About how the true opportunity is not in the daily deals business, but rather the local commerce business.
- Details on the three businesses LivingSociali is in:
- Daily deals has an average price point $35
- Local travel is about a "weekend in a box" or "staycations" (Currently a $500MM - $700MM business for LivingSocial). It's really disrupting OTAs. Largest 'flash sales' business.
- Living Social adventures: LS operates & produces it themselves. Example: "Become a Canadian for a night" ... Pick any of next 6 Saturdays... rented out ice rink... Poutine... Canadian beers... use scale to work w/ merchants in a different way... rent ice rink during downtime, fill rink during 6 straight Saturdays... LivingSocial employee puts this together. Run 500,000 people through those types of events this year -- average price point $180
Interestingly, the local travel & adventures businesses aren't "50% off types" of businesses. So while daily deals = core engine, the brand is evolving to focus on value, not just discounts.
- On raising money: LS has done 5 rounds of funding since Dec 2009... "which means I'm very good at Powerpoint, at this point" ...
- When they started raising money: "we had a little money coming in the door.... didn't have a track record.... tougher experience... when the model had started to work, and "we got to the point where you could give us a dollar and we were pretty sure we could turn it into $2, things changed drastically"... timing became important... "should we wait 2 months because we think the company can get a 50% higher valuation in 2 months" ... did a round, then 6 weeks later someone called and said "what are we going to need to pay to get into your company.... we threw out a ludicrous number, and they said "ok" ...
- How he picked 3 or 4 terms that really matter... as an entrepreneur pick the 1 or 2 that you really want to maintain... "maintaining board control was very very important for us" in the beginning, wanted to make sure they had the freedom to do that. "we were arrogant enough to not really care about liquidation preference at that early stage." ... "if we can't build this to beyond what the liquidation preference would be, we would be very disappointed anyway" ... "we have more leverage now... we have a very non-standard liquidation preference structure at this point"
- How he keyed in on the main important points of the business by pretending that it was 3 years ahead and I wrote an article titled "how livingsocial won the local commerce space" ... what are the 3 subheadings... and he realized he wanted to lock down the largest player in the space... consumer branding needed to go to a different level... needed to be a global brand... need to be a lot more diversified
- He closed amazon strategic partnership in early december... in january 1/2 off amazon... seeing first operational benefit now... were selling 80 per second... fastest selling item in history of web
- He bought a 230 person company w/ similar culture to expand past the US
- Revenue has doubled since nov... added 6MM users in January
- Number of people signing up is 3x to 4x what it was 60 days ago
- Demographics skew 60/40 female
- They have a 4 founder group, all still there... when they started, everyone had a different skillset... were all at revolution health previously...
- The challenges of making LS a global enterprise: "we do a lot of meetings at 2am now".... practical considerations, book revenue in different currencies... how do you change product so it works in different cultures... 35% of employee base is outside the US... #1 strategy = find people that have done this effectively before and get them working for us asap
- Mobile: meaningful but not yet significant portion of revenue... about to launch pilot in DC: LivingSocial Instant... "you're in reston town center, there are 15 places you could go for lunch... manager at Clydes can pay $5 now and get any entrÃ©e... works off hardware POS at the restaurant."
- LS broke $1.1MM in ad revenue in a month (not sure when)... went into VCs and said they wanted to push biz forward; had more leverage
Here's the video: