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LivingSocial Lays Off 400, Eyes Changes to Amazon Relationship

The majority of job cuts were related to the company's shift in sales strategy.

Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.

Onetime daily-deal darling LivingSocial is cutting a fifth of its staff as the company’s new CEO attempts to lay the foundation for a turnaround of the Washington, D.C.-based company. The company said approximately 400 employees, all based in North America, are losing their jobs in the cuts.

The layoffs come 11 weeks after eBay veteran Gautam Thakar joined LivingSocial as CEO to replace co-founder Tim O’Shaughnessy, who had led the company since its founding in 2007. In an interview with Re/code, Thakar said the company has been trying to pursue too many things at the same time and needs to accelerate its move away from daily deals toward offers that run continuously.

“That means we don’t need to acquire as many sellers, [which] makes it a very different situation on what we need to do on the sales side,” he said.

As a result, the company is closing its southern California sales office, and the majority of job cuts were related in some way to the shift in sales strategy, he said. Valleywag first reported news of the layoffs.

LivingSocial has raised more than $900 million in investments and closed a deal earlier this year to sell its Korean deals business to Groupon for $260 million, leaving it with “a very strong cash position,” Thakar said. He declined to say how much cash the company has in the bank, but added, “I don’t have to worry about it for a few years, if at all.”

That cash cushion, he acknowledged, will lead some of the employees being laid off to question why LivingSocial needed to cut so many jobs. But Thakar maintained the layoffs are necessary to position the company for a new path and to invest in areas that he feels have been neglected, including data science and mobile. He said he would be ready to provide more details about how he plans to reinvent the LivingSocial business by January. LivingSocial recorded a net loss of $32 million in the third quarter on $64 million in revenue.

The restructuring is just the latest bad news to hit LivingSocial over the last 18 months. Last year, turnaround efforts were severely hampered by a double whammy of a customer hack and a complete site outage that lasted a day and a half. Then, just last month, LivingSocial parted ways with its chief marketing officer, Barry Judge, after he pleaded guilty following a 2013 groping incident at the Four Seasons Hotel in Washington, D.C.

Thakar suggested that he is exploring new ways to work with Amazon, which owns about a third of LivingSocial, to help get back on track. He said he has, over the last month, held talks with Amazon about altering the commercial arrangement between the companies. Deals from LivingSocial merchants at one time made up a large portion of the promotions Amazon displayed on its own daily deals service, Amazon Local. But over time, Amazon has beefed up its own local sales team and highlighted more of the deals that its own staff has sourced.

“We both said that the current way of doing business is pretty incremental,” he said. “We would like to do something transformative, or perhaps not to do as much of the incremental stuff.”

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