Daily Tech Snippet: Monday, November 23, 2015

• Once Valued At $4.5B,  LivingSocial Offers a Cautionary Tale to Today’s Unicorns: The first thing you see when walking into the headquarters of LivingSocial is row upon row of mostly empty desks, broken up by small street signs that employees once needed to find one another when the office teemed with people. One row, “BYFAD Lane,” was named after a start-up, BuyYourFriendADrink, which LivingSocial acquired to get into the daily deals business. Other signs, such as “Sky Diving Street,” were named for some of the hottest discount coupons that the company once provided. On a recent visit, some desks were piled high with boxes of employee belongings, the detritus left behind after a round of layoffs that eliminated one-fifth of the work force. In one refrigerator, the milk was six months old. The technology industry’s boom over the last few years has been defined by the rise of “unicorns,” the private companies that investors have valued at $1 billion or more. Before the term came into vogue, LivingSocial was among the biggest unicorns of its day. It now offers a glimpse of what some of today’s unicorns might look like several years down the road if things go awry. Just four years ago, LivingSocial and its larger rival Groupon grew rapidly on a simple pitch: The companies would match customers to local businesses with a daily deal in users’ inboxes, like half off at a local deli or a two-for-one massage promotion. LivingSocial and Groupon would take a cut of each transaction. Venture capitalists anointed daily deals as the way that the Internet would invade local business, and by late 2011 LivingSocial had raised more than $800 million and reached a valuation of $4.5 billion, according to data from the research firm VC Experts. The company counted Amazon and the mutual fund giant T. Rowe Price among its investors. LivingSocial spent heavily, blanketing the airwaves with TV ad campaigns. Riding a wave of momentum, the company explored going public. Today, LivingSocial is more unicorpse than unicorn. The company never filed for an initial public offering and consumer fervor for daily deals has cooled. T. Rowe Price has written down its stake in LivingSocial to nearly zero, data from Morningstar shows. The company’s work force has shrunk to around 800 employees from 4,500 at its peak in 2011. Groupon, which did go public, is trading at more than 85 percent below its I.P.O. price.

• Airbnb raises $100 million in funding, Valuation stays flat at $25.5B: source: Apartment-sharing startup Airbnb Inc has raised over $100 million in a new round of funding, a source close to the company said. Airbnb, once a startup selling cereal, expects to achieve profitability in 2016, the source said. Airbnb revenue doubled to $340 million in the third quarter on bookings of $2.2 billion, the source said. The company expects revenue of $900 million this year. The round was done at the same $25.5 billion valuation as the previous funding round over the summer, indicating that unicorns, or private tech companies worth $1 billion or more, are finding it tougher to convince investors to buy shares at continuously escalating valuations.

• Snapchat's lackluster ad business threatens $16 billion valuation: Snapchat, maker of a free mobile app that lets users send videos and messages that disappear in seconds, is struggling to gain traction with advertisers, fuelling investor concern that its $16 billion valuation isn't justified by a business that hasn't yet shown it has a steady source of income. Even in a world where upwards of 140 private companies are reckoned to be worth $1 billion or more, Snapchat's outsized value stands out. Fidelity Investments' decision to slash the estimated value of its Snapchat stake by 25 percent in the third quarter exacerbated concern about the company's ability to meet advertisers' expectations. For Snapchat advertisers, the question is whether prices that can reach more than $500,000 for some ads is worth it when the company lags competitors in targeting specific consumers and measuring how ads perform. "If Snapchat doesn't get that figured out, they're in trouble," said Nick Godfrey, chief operating officer at RAIN, a digital strategy agency. Snapchat lost more than $128 million in the first 11 months of 2014, according to a financial statement leaked earlier this year, which also showed Snapchat had revenue of $3.1 million. Its advertising business began in mid-October. Tech media outlet Re/code estimated that Snapchat's revenue could reach $50 million in 2015, citing sources familiar with the company. Snapchat doesn't comment on its revenue or its losses. The company has raised $1.2 billion from investors, ample resources to develop its advertising techniques. But time may be limited as the company is in early discussions for an IPO, according to sources. Snapchat's $16 billion valuation was calculated at its most recent funding round in May based on how much investors were willing to pay for shares.

• Yelp Surges as Investors See Bargain Buying Opportunity: Yelp Inc. shares surged the most in six months Friday as investors see the customer-review website at bargain prices after it lost almost half of its value this year. Shares jumped 11 percent to close at $31.21 in New York, the biggest increase since May 7 and the highest price since July 28. Yelp shares plummeted July 29 after the company cut its revenue forecast and said it would stop selling national brand advertising. The stock is down 43 percent this year. Yelp Chief Executive Officer Jeremy Stoppelman is trying to convince investors the company is on the right track by boosting its local advertising sales force and pulling back from banner ads from national brands that aren’t getting responses from Yelp users. The move is part of Yelp’s shift to mobile users, who make up a larger portion of its audience than desktop users.

• Google aims for China launch of Google Play app store next year: Google, part of Alphabet Inc (GOOGL.O), aims to launch the China version of its Google Play smartphone app store next year, according to people familiar with the matter, its first major foray in the market since ending localized product support in 2010. The Google Play app store would be set up specifically for China, and not connected to overseas versions of Google Play, two of the people said. They said Google intends to comply with Chinese laws on filtering content that might be viewed as sensitive by the ruling Communist Party, and laws requiring the company to store the app store's data within China.

• Jawbone Lays Off 60, 15% Of Staff Globally, Closes NY Office. Some difficult news this week for Jawbone, maker of fitness trackers, speakers and Bluetooth headsets. TechCrunch has learned and confirmed that the company yesterday laid off around 60 employees, or 15% of staff. It’s a global round of layoffs affecting all areas of the business; and as part of it Jawbone is also closing down its New York office (which was concentrated on marketing) and downsizing satellite operations in Sunnyvale and Pittsburgh. In an emailed statement, a spokesperson said the layoffs are part of a wider “streamlining.” From what we understand, there are no specific product areas being cut as part of this restructuring. The company, in other words, will continue to sell its Jambox speakers and the Era headset, along with related accessories. More generally, however, Jawbone has been increasingly focusing is R&D, product and marketing attention on its range of UP fitness trackers.