“The first deal we ran we started in just one city – in Washington D.C., our home base – and we sold 53 vouchers to a local sushi restaurant,” said Aaron Batalion, co-founder of LivingSocial. “On our one-year anniversary we were live in 53 markets. So, it’s been a pretty exciting year in launching this product.”
LivingSocial Deals, one of three products LivingSocial has released, reached the Omaha market on July 13, two weeks before its one-year anniversary. Today, deals are offered in 58 cities, including four cities outside of the U.S., two in the United Kingdom and two in Canada.
LivingSocial’s other products are the Facebook applications Visual Bookshelf and Pick Your Five. This past April, the company closed their fourth round of funding, bringing their total amount raised to 49 million dollars.
To learn more about the history of LivingSocial, their success in the daily deal landscape, and their arrival in Omaha, I spoke with Batalion (left).
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“What we wanted to do was build in an incentive that didn’t exist for the merchants’ sake but actually existed for the consumers’ sake,” Batalion said. “We only pick one great merchant in every location per day. We wanted the users to be incentivized to participate and share [it] with their friends.”
So be it, the LivingSocial model: one deal per day, Monday through Friday, up to 90% off. If a user buys it shares the supplied unique link, and three of his or her friends also buy it, the user’s deal is free.
“We’ve spent a lot of time over the past two and a half to three years building applications virally on platforms like Facebook,” Batalion said. So, when they considered entering the daily deal market last summer, they brought in over eight years of combined experience.
The team of four co-founders – Tim O’Shaughnessy, CEO, Eddie Frederick, president, Val Aleksenko, CIO, and Batalion, CTO – met while working for Revolution Health. “We had just completed building a consumer healthcare portal along with that team, and we were at a decision point [to either] stick around and work on the next thing at Revolution or to all leave and start something on our own.”
Needless to say, they decided on the latter, pursuing work on their already-launched Facebook application, Visual Bookshelf, and taking on consulting clients. One year later, they launched another Facebook application, Pick Your Five (example below, from apps.facebook.com/livingsocial), which, like their previous product, let users pick things they cared about and display them on their profile.
“We built a very simple experience on top of this data that we had been collecting about different places, people, and things, and it exploded…it went from zero to 35 million users in about three weeks,” Batalion said.
Their next endeavor, however, was to connect people with what they cared about online with something they could do offline. Last summer they purchased a company called Buy Your Friend A Drink (left, screenshot from crunchbase.com), a website which sent online users to local bars to redeem drink vouchers. From there, Batalion said, LivingSocial Deals was born.
LivingSocial, which has launched three successful products in the last three years, has served a total of 85 million users. Even with plenty of other ideas in the hopper, the team of four co-founders plans to stay focused on its most recent product. Batalion believes there’s plenty more to accomplish and offer its users as well as “continual expansion to other cities, other towns, [and] other countries across the world.”
“I think part of becoming the source of local content, or the source of discovery in your local town, is beyond just merchants and beyond just deals,” Batalion said. “We hope to be kind of the place that you know and recognize to live socially in your town, to come check out what you should be doing, what you should check out. It’s a larger idea of local discovery that I think is going to be very interesting.”
As far as when or if they’ll add Des Moines to their list of growing cities, Batalion said, “I can not predict future city launches, but there might be a very good chance that happens soon.”
Below are a few more topics Batallion addressed. To see our interviews with the individuals behind the other two daily deal websites that serve Omaha, see our articles:
- Groupon founder talks about Omaha launch, Midwest startup culture
- Omaha World-Herald launches Daily Deal Omaha
Silicon Prairie News: How do you sign up local merchants?
Aaron Batalion: One thing that’s very important to us is to actually know your local market, and that’s why we have people on the ground in all of our [58] live markets…we want to work with really great local merchants that may be unfound or that may be new. […] You don’t find out about those things online all the time, it really helps to have someone on the ground in the local market working with local merchants.
What’s behind the 365 Things To Do feature that you offer to each of your markets?
I think the 365 component, which is simply one cool thing to do every day of the year in your town, speaks to the idea that we are not just showcasing a merchant, we’re actually a local discovery engine of really great things to do…it’s not the same as say clicking a button that says ‘I only want to hear about spas in my town,” there’s a serendipitous component of this that’s really interesting. […] That local discovery component we think is an important part of this story, the 365 functionality of our product speaks to that.
LivingSocial has had three successful ideas in the past three years, how do you cut other ideas?
Part of building a company and part of being successful is about deciding when an idea is good and when an idea is crap, and when you really should pivot. The hardest part is when you have an idea that actually is good but you think you can do better. We had a successful consulting company but we decided two and a half years ago to stop doing consulting work and focus full-time on our product that connected you with the thing you cared about – the LivingSocial interest applications – and that was a hard decision.
Looking back now it was probably [an] extremely good decision on our part. It was very safe to stay in consulting, there were clients, there was money, there was revenue, but we wanted something more, and I think each time we’ve made this decision it’s always been, ‘We believe we can do better and we believe we can do more.’ […] The original name of our company when we started as a consulting firm was Hungry Machine, and it speaks a lot to our drive and dedication to continually do really well and be hungry…if you’re no longer hungry you won’t succeed.
You’ve remained based out of D.C., the city where you founded the company three years ago, what’s kept you there?
We found an incredibly awesome group of investors really early on, on the East Coast, and we sort of stayed under the radar in many ways. You know, some would say, ‘Maybe it’s easier to hire in Silicon Valley if you’re looking for folks,’ but in reality we have a really strong, tight crew that really cares about what we do and I think we’re happy where we are. […] If you’re located in Omaha, if you’re located in Washington D.C., you’re only a plane flight away from any meeting or any conversation, but when go home you can focus and sort of do what you care about the most, which is building your company and being successful.
