When LivingSocial launched in 2007, the co-founders thought it would be interesting to match a user’s location with their interests. The model has evolved to selling vouchers to users for local experiences, and LivingSocial now serves daily deals to over 30 million subscribers. Want to know how they did it? Earlier this month, Andrew Warner of Mixergy.com interviewed LivingSocial co-founder Tim O’Shaughnessy. In the interview, Tim reflects on the early days and shares the strategies LivingSocial used to fuel its explosive growth. This post includes five of those strategies.
1. Build Connective Tissue
Tim believes LivingSocial’s over 30 million customers are “establishing that connective tissue with us, where we send [them] a great thing to do every single day”. How can you reach as many people as LivingSocial does? Tim explains, “to do that, we have to know what your email is”, so “we just made it as blatant as we possibly could”.
By requiring first-time visitors to provide an email address, Tim says you help those people who “would want to subscribe and wouldn’t really know how to do it”. Don’t miss out on this opportunity, because as Tim points out, “email is one of those things that people keep open as a tab in their browser all day long. So if you have a compelling value proposition, then it can work”.
Take Away: Email is still a powerful way to directly communicate with your users and it can amplify the viral spread of your messages. In certain businesses it may be more effective than social media.
2. Help Your Customers Find Lunch
Have you ever thought “Hey, I’m going out with one of my coworkers, we’re going to grab something to eat, where should we go to lunch today?” Tim realized, “right now, there’s really no way for merchants to compete for your business or try to compel you to go there when you’re in the market”. So the LivingSocial team created Instant Deals, which Tim thinks, “is one of the big, new places that the space can go”.
Instant Deals work by providing real time offers with all sorts of different merchants. Tim describes Instant Deals as being “like an offline Google search. If you went to Google and typed in ‘nice blue handbag,’ they’d give you a great set of results. If you typed in ‘where should I go to lunch today,’ they don’t”. Tim says Instant Deals is “really providing the answer to that” and that “it’s a really compelling experience that we can bring to our members”.
Take Away: Ask yourself: What problem am I solving? Is there a demand for my solution? If you can confidently answer those two questions, then you might be on your way to something great!
3. Learn From Your Failures
As an entrepreneur, Tim believes setbacks are a learning opportunity. When something doesn’t go exactly according to plan, Tim asks himself “What did I learn here, how can I apply that to the things that I do, and what are the things that I enjoy in life?”. For Tim, running a company means having flexibility to try new things.
If these trials fail, Tim says “as long as you have that belief in yourself, that even if it didn’t work for X or Y, you’re going to learn from it”. That way you can extract “things that are great from experiences that didn’t have a level of success that people would normally attribute to it,” and then apply them to experiences that do have that level of success.
Take Away: Your most valuable lessons will come from failures. Ironically, the more you fail the more you will unveil paths to success.
4. Steal Facebook Users
When Facebook opened up their platform in May of 2007, Tim says, “two light bulbs went off”. The first “was that if you had something mildly interesting, you could probably acquire users faster and cheaper than you ever could in the history of the web”, and “the second was that you could get generalized location data on a per user level”.
So Tim and the team started building products to attract users. First was Virtual Bookshelf, one of the larger book-sharing applications on Facebook, which “at one point in time… got more book reviews per day than Amazon.com got.” Next was LivingSocial, and in version one users inputted what they liked to do in real life which the site matched with their location. Even though Tim and his co-founders “didn’t necessarily know how we were going to monetize”, they thought “if we had those data sets, we would have an opportunity to build a product and figure out what the model was later”
Take Away: Get users by going where they are.
5. Step on the Gas!
Reflecting on the early days, Tim says, “we’ll be the first ones to admit… that we didn’t know exactly where it was going. But we built products, we’d started to build a team, we had users on it, we had a little revenue coming in. We were there”.
Tim says, “when you really do see the model and you feel that you understand the model and it how it works, you just need to totally slam the pedal down”. Tim explains that “a lot of putting the pedal down is making sure our brand is known by a lot of people, getting more users, expanding globally, and then taking these products… and really making them something that can fulfill their potential”. If you are shy about things, Tim warns, “other people will come and try to take a piece of your pie”.
Take Away: Once you figure out the model that works for your business, hold nothing back.
These are just five of the many strategies LivingSocial used to build their global market. Do you use any of these strategies in your work?
About The Author: Michael Alexis does video interviews with top bloggers and best selling authors.