Four years ago group buying sites were the hottest businesses in startup land with the market leader, Groupon, being lauded as the fastest growing company in history and competitor Living Social following close behind it with a $4.5 billion investor valuation at its 2011 peak.
This week the New York Times has a feature on the dire straits Living Social now finds itself in as the company slowly fades away, now only employing 800 people after boasting 4,500 staff at its peak.
Living Social’s big lesson is the risk in chasing customers at all costs. Unfortunately for most of today’s ‘unicorns’ that’s a key part of their growth strategy as an important metric is how many new users are coming on board – the fact a company is making anything from them is largely irrelevant.
While Living Social, and Groupon, are two of the early ‘unicorpses’ – fading or failed billion dollar unicorns – undoubtedly there’s more to come as market realities hit many of today’s chronically overvalued tech startups.
What? You’re saying that unbridled growth hacking is not the answer?