District deals purveyor LivingSocial plans to eliminate 400 employees — roughly 20 percent of its workforce — the company said Thursday, part of a broader corporate restructuring as its new chief executive tries to plot a path back to growth.
The job cuts will bring LivingSocial’s headcount to roughly 1,600 worldwide and 400 in the District, a spokeswoman said. The latest round of terminations will affect about 100 local employees.
LivingSocial has seen its payroll decline sharply since the daily deals business that fueled its meteoric rise started to erode in 2012. At its height, the company’s global headcount surpassed 4,000 and its local presence topped 1,000.
The latest round of layoffs are different, however, in that they mark the beginning of a strategic shift for the seven-year-old company. Past job losses were driven primarily by a need to slash costs, and the decision to close or divest business units in some foreign markets.
LivingSocial named Gautam Thakar chief executive in August to succeed co-founder and inaugural CEO Tim O’Shaughnessy. In an interview last month, Thakar described LivingSocial as a company with enviable assets that were spread too thin as executives searched in vain for a new revenue stream to supplement daily deals.
“I do strongly believe that this is a company that needs to be more focused and it’s a moment of refounding toward our next chapter,” Thakar said Wednesday. “We’ve tried to do too many things.”
The divisions that saw the deepest cuts Thursday offer insight into where the company is headed.
Cuts took place across the board but the sales team was hit particularly hard. Thakar said the company is moving more aggressively to offer deals that live on its Web site and mobile app for weeks or months, rather than flash deals that come and go in a single day.
As a result, Thakar said greater emphasis will be placed on retaining the merchants who run existing deals and tending to those customers more closely — not unlike more traditional advertising companies that manage clients’ accounts.
Thakar said LivingSocial also needs to bulk up its technology, particularly online tools that allow merchants to manage their own offers. That’s a departure from LivingSocial’s strategy in the early days of putting sales representatives on the ground who can interact with local business owners face to face.
“In general, I think we have perhaps compensated in the past for less investment in platform by more investment in people,” Thakar said.
“We need to invest much more and we will do so now and through next year in the areas of product technology, data and mobile,” he added.
LivingSocial plans to close the sales office in Torrance, Calif. that was opened in September 2013 with 93 employees. A spokeswoman said 14 of those workers will stay with the company. It will also cut positions at a customer service call center in Tucson.
“This is a tough decision for me personally because I’m doing it at a point where our cash position is very strong,” Thakar said. “I know I’m going to face pressures around this internally and externally.”
LivingSocial received a hefty boost to its bank account late last year when the company agreed to sell its successful Ticket Monster business in South Korea to rival Groupon. Executives said that money would be used to invest in developing new products and marketing.
Thakar decided to layoff employees now rather than after the turn of the new year, he said, because it would be “disingenuous” to keep them on board knowing the company had already decided to cut their positions.
“The timing of this is more driven by the fact we had to get it done and wanting to be more transparent with employees as soon as we could,” he said.
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