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LivingSocial CEO Tim O’Shaughnessy to Resign
In his resignation letter, O’Shaughnessy says he is leaving his troubled DC-based deals company is as “stable and healthy” as it’s ever been.
After five bumpy years in the online coupon industry, LivingSocial CEO Tim O’Shaughnessy will step down from his position later this year, he told his employees today. O’Shaughnessy’s resignation, first reported by Washington Business Journal, will take effect once the company finds a replacement.
LivingSocial hopes to have O’Shaughnessy’s successor lined up in the first half of 2014. Sara Parker, a spokeswoman for the DC-based company, says that stepping aside as chief executive was O’Shaughnessy’s choice.
“Tim initiated the conversation with the board late last year, recognizing that the company is entering a new chapter in 2014 with a stable, scaled business, substantial resources on the balance sheet, and the opportunity to refocus attention on growth,” Parker says. “He believes it is in the best interests of the company for a change of leadership to bring new perspective as LivingSocial enters this next phase.”
Since its founding, LivingSocial has been through several phases. O’Shaughnessy and three friends started their venture in 2007 as Hungry Machine with a focus on Facebook apps, but changed the company’s name in 2009 when it entered the daily deals business. LivingSocial grew rapidly and internationally, eventually growing to more than 5,000 employees at its peak.
However, LivingSocial’s recent history has been somewhat troubled. The company has never achieved profitability, and lost $107 million over the first nine months of 2013. LivingSocial also drastically pared down its payroll at the end of 2012, and now has 600 employees in DC down from nearly 1,000 at its peak. It seems increasingly unlikely that LivingSocial will live up to its end of the $32.5 million tax incentive deal it signed with the District government in 2012, which requires the company to be profitable, have a local staff of more than 1,000, and build a consolidated headquarters.
LivingSocial is privately held, but its finances are public because publicly traded Amazon owns 33 percent of the company. News of O’Shaughnessy’s impending departure comes just three weeks before Amazon is due to file its annual earnings report for 2013 with the Securities and Exchange Commission.
LivingSocial has also suffered technical embarassments, such as last April when hackers obtained the personal information of 50 million customers, and last November, when its website went offline for nearly two days.
In the past year, LivingSocial has also shifted its business model away from daily deals with local merchants and toward discounts available for weeks or months at a time.
But O’Shaughnessy is trying to put a good spin on his announcement. “We now have the most stable and healthy business that we have ever had, and the luxury of having hundreds of millions of dollars in the bank to take us to the next level,” he writes in an email to employees. “As the steward of this organization, one of the hardest decisions I need to make is about who is best suited to lead LS into its next stage of growth.”
If there’s another accomplishment O’Shaughnessy can point to, it’s that he outlasted his rival, former Groupon CEO Andrew Mason, who was fired last February.