The Daily Flux

code/life imbalance

LivingSocial, knowing your business, and gloating

21 February 2013

Yes, LivingSocial is imploding. Yes, we saw it coming. Yes, we knew that the multi-billion-dollar valuation was silly and to be short-lived.

It’s easy to be snarky. And fun! I get a laugh from my friends, I get to show how smart I am for having “seen it a mile away”, all from the comfort of my armchair, having taken no risk.

But when I participate in such snark, I also feel a bit hollow inside. Because I know people, human beings, work there. Hell, I know people who work there. And sarcasm and snark only pile on insult for these (typically) innocent people.

And an additional danger: flippant, snarky responses are rooted in an “I was right” mindset, preventing us from learning anything more. But there is always more to learn.

My daily deal near-miss

A few years ago, I helped create a startup with some pretty audacious (and ultimately insane) goals. Things weren’t panning out with the original, mathematically-impossible business model, and we discussed “pivoting” into the daily deals space.

It was around then that my pre-arranged 3-month contract came up, and although I received some pressure to stay, I made the decision to leave, while my friends stayed behind. And their daily deal business started to catch fire.

I watched their office jump from 3 to 5 to 10 to 50-plus employees. I still held a significant stake in the company and wanted to see them succeed, but something about this rate of expansion concerned me. In fact, a friend of mine worked there for exactly one day before the environment creeped him out to the core and he quit.

My friends told me that the company had to expand quickly, that everyone in the daily deals space was growing more quickly than was sustainable, because only the largest survive, while the smaller firms would wither and die. (Interestingly, the opposite seems to have happened.)

Their work environment disintegrated as the pressure ratcheted up, paychecks started bouncing, and the entire thing became a news-worthy fiasco. I was comfortably off in another position elsewhere, but it still broke my heart to see my friends suffer (and to toss yet another worthless stock grant into the shredder).

Don’t let bad business models catch you by surprise

One lesson in this is simple: Take the time to analyze the business model of the companies you choose to work with. Do they make money? From whom? Who benefits? Look at the founders. Are there happy customers in their wake, or a string of disappointed people?

Do a gut check. Does it feel right, or does it feel like you’re selling out a little? You know, that feeling when you put that thing you want, but don’t need, on a credit card? The trading of the long-term consequences for an immediate thrill?

If you get that second feeling, stop. Weigh it more carefully. You may not change the decision, but your reasons need to be much more clear, or you’re creating a recipe for regret.

Being right is not a license to gloat

The other lesson is for us spectators: Maybe let’s stow the sarcasm on this one. For a lot of people, LivingSocial’s (likely) collapse is going to be very personal and very painful, so please take a moment to remember that before dancing on its grave at the expense of human beings who are hurting.