Deals sites stopped being fun some time ago, and now the companies that staked their entire existence on local coupons are feeling the burn. And then there's LivingSocial, which is feeling the burn because it's setting its own shirt on fire.

Everything I've gathered from employees, current and former, and headlines like this:

LivingSocial Lays Off Events Staff — Then Realizes Some Events Must Go On, and Asks Staff Back

points in one very clear, very bad direction: the company is fucked, and it's just a matter of when. After yesterday's news that LivingSocial is shuttering its New York branch—ending operations in a gigantic city is never a good thing—a source with knowledge of the company told me just how bad the move is.


They announced only the full-time layoffs. They neglected to mention the total number of part-timers who are axed (and that's a lot of people who used this as a secondary stream of income - both young and old.) That number is in the hundreds.

The company provided the following absolutely insane doublespeak explanation: "This was not a cost cutting effort, it was a business decision as we continue to focus on achieving profitability."

And how to you achieve profitability when your sales are flagging? You cut costs, slashing the substance of the events it sells access to, just like it slashed plenty of other poorly executed ideas in the past:

"This is another example of LivingSocial not being able to execute on things. There's a ton of other initiatives that have gone by the wayside - Room Service, Takeout & Delivery, Instant, Merchant Services"

If only they'd thought of that earlier, says our source:

Funny to note just how much money LivingSocial has spent outfitting each office to be "FUN!" only to shutter them. Three in DC, Seattle, NY. In fact, NYC was renovated less than a year ago.

Making the sinking ship sink smoothly, with plenty of daiquiris on the deck, is going a long way in the short term: those who still have jobs at LivingSocial are hopeful that the whole thing will turn around, and combative about any bits of reality to the contrary. But delusion won't sell more coupons.