When I read in Potomac Tech Wire that LivingSocial closed a $400 million round, the figure was almost too large to comprehend. What makes LivingSocial so valuable? While I haven’t read everything there is to know about this particular investment, I have some thoughts.
It begins with leadership. CEO Tim O’Shaghnessy has a clearly articulated vision of success that inspires his team to execute and achieve astonishing results. His essay about the company’s victory over Groupon, dated July 2012, gives evidence to that fact.
Next is culture. Building a great business is all about the people. Pair deeply rooted core values with a rock-solid identity and you’re able to attract the kind of talent you need (and want). Establish a fun, empowering culture around a product or service your people are passionate about and you’ve created perpetual, positive momentum. When your people come to work energized and engaged, they naturally do the right things and your customers get the best possible experience.
Finally, LivingSocial may be disruptive. Think of Amazon. Think not only of how Amazon changed the game, but also that the company has invested $175 million in LivingSocial. Why on earth would they do that?
Amazon sees tremendous value in what goes on behind the scenes—the same value the VCs see. LivingSocial is about gaining broad and deep market intelligence and refining that data to become more and more powerful over time. The company’s intrinsic value isn’t based on an affiliate program so much as the abilitity to become a monster aggregator of consumer data and intelligence. This core compentency wholly aligns with Amazon’s.
Where does online privacy fit into all of this? I’m not quite sure yet. Anonymity and privacy are not really the same thing. I feel pretty confident that the information LivingSocial aggregates is, in fact, anonymous.
Will the mega investment pay off? I rather suspect so. It all gets back to leadership and having a strong sense of identity and purpose. And it doesn’t hurt that LivingSocial is currently #2 in the industry. Fighting to be #1 is a powerful rallying cry.